Crain's Detroit Business, January 15, 2024 by Crain's Detroit Business

CRAINSDETROIT.COM I JANUARY 15, 2024

Corporate bankruptcies up 80% in ’23 Filings by local businesses soared last year By Kurt Nagl

Hospitals and health care systems have become increasingly tempting targets for cyberattacks. | DALE G. YOUNG

Bankruptcies hit 13-year peak

The number of metro Detroit businesses that filed for bankruptcy protection in 2023 soared 80% from the year before, outpacing the dramatic increase in corporate restructurings nationally and establishing a trend likely to continue, experts say. The U.S. Bankruptcy Court for the Eastern District of Michigan saw 26 corporate bankruptcies last year, most of which were small businesses with less than $10 million in annual revenue, according to an analysis of the filings. Just three of the cases were traditional Chapter 11 reorganization petitions. Most were Chapter 7 liquidations, which accounted for a dozen of the total filings. Chapter 7 signals a company on its way out of business for good and is typically the worst-case scenario for owners and creditors. The other bulk of cases were filed under Subchapter V

The 642 corporate filings in the U.S. in 2023 were significantly above the previous two years and marginally more than in 2020, which saw a flurry of pandemic-related filings. 800 642

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Source: S&P Global Market Intelligence

of the Chapter 11 code, a less costly and quicker way for small businesses to reorganize.

Cyberattacks ramp Many high-end up in health care condos slow to sell After record 2023, indications are 2024 will be worse | By Dustin Walsh As Santa returned to the North Pole, more than 1 million Corewell Health patients were informed their personal information had been compromised in yet another cyberattack. A third-party vendor suffered a data breach that exposed valuable patient information such as Social Security numbers, names, addresses, billing information and much more.

It was the second major on of similar announcements breach tied to Corewell an- that highlight the growing nounced in December alone. problem of cyberattacks — esA previous breach was an- pecially in health care, where nounced Dec. 1 from a different sensitive patient information vendor that also exposed the and big money combine to make organizations tempting data of a million patients. A month earlier, McLaren targets for an increasingly orHealth reported a data breach ganized cybercriminal underthat exposed the data of rough- world. ly 2.5 million patients. The list goes on and on and See CYBERATTACKS on Page 16

Gilchrist’s is among those on the market

By Nick Manes

High-end condo sales in Detroit remain slow to materialize, and for proof, look no further than the near-downtown penthouse unit listed last summer by the state’s lieutenant governor. Late last May, Michigan Lt. Gov. Garlin Gilchrist and his

See BANKRUPTCY on Page 16

family opted to list for sale the 5,600-square-foot, four-bedroom Corktown condo owned since 2014 with an asking price of nearly $1.9 million. Flash forward to the new year and the condo remains up for grabs, and the asking price has dropped 10.5% to $1.7 million. So it goes in Detroit’s long-sluggish condo market, burdened with an oversupply of inventory. See CONDOS on Page 17

FOCUS Apartments, other developments proposed near Briarwood Mall.

REAL ESTATE TD Auto Finance cuts footprint in move of its headquarters.

CONVERSATION Rocket Companies’ first CMO wants to make buying a home ‘seamless.’

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VC firm taking startup applications for DEI UnDemo Day By Anna Fifelski

Renaissance Venture Capital is accepting startup applications through Feb. 16 for its third Spring DEI UnDemo Day. The virtual event will take place April 17. Based in Ann Arbor, Renaissance Venture Capital is a venture capital investment firm with investments in over 20 venture capital firms in Michigan, Ohio, Massachusetts and more. The virtual UnDemo Day will feature Midwestern startups led by women, people of color and other underrepresented communities so they can attract venture capital. According to a 2023 report by McKinsey & Co., a management consulting firm headquartered in New York, underrepresented founders are more likely to have limited access to a startup network, community support and resources. Startups interested in applying to participate in UnDemo Day must be led by underrepresented communities includinging Arab American, Black, Hispanic/Latinx, Native American, LGBTQ+, a veteran, and/or women, and complete an application that includes basic information about their company like sector, revenue, fundraising goals and a pitch deck.

VCs and founders meet for a 1:1 session at UnDemo Day in October 2023. | RENAISSANCE VENTURE CAPITAL

“Our goal is to make useful introductions that ideally lead to investment in historically underrepresented geographies and founders,” Chris Rizik, founder

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and CEO Renaissance Venture Capital said in a news release. “The DEI UnDemo Day meetings are connections that founders may otherwise have trouble get-

Once a startup applies, its application will be made available to all venture capital investors participating in UnDemo Day. “As part of the registration process for the event, VCs will decide which founders they’d like to meet and submit their preferences to Renaissance,” a spokesperson for Renaissance Venture Capital said in an email to Crain’s. “Historically about 200 investors participate in UnDemo Day events. There is not an application for VCs, but VC registration is vetted by Renaissance to ensure participants are actively investing and doing equity deals.” Startups that participate in UnDemo Day will have access to education sessions as well as 1:1 preevent coaching organized by Renaissance based on the investor matches. “Michigan founders receive less than 2% of venture funding in the U.S.,” the spokesperson told Crain’s. “Historically underrepresented communities receive about 8% of venture funding in the U.S., collectively. The objective of UnDemo Day events is to increase these figures.” Renaissance Venture Capital will be hosting the 9th annual Fall UnDemo Day at Ford Field in October, which is open to all Michigan-based startups.

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SE Michigan car washes sold to private equity By Nick Manes

Private equity dollars continue flowing to car wash chain acquisitions, with the latest example being a metro Detroit businessman buying nearly two dozen Zax Auto Wash locations. Michigan Wash Co., formed in October, on Jan. 3 announced the acquisition of 19 Zax Auto Wash stores around Southeast Michigan. Financial terms of the acquisition were not disclosed. The venture was launched by Ammori Equity Partners, a private equity firm launched late last year by Oakland County businessman Saber Ammori, co-CEO of T-Mo-

bile dealer Wireless Vision. Bloomfield Hills-based Wireless Vision, founded in 2004, operates more than 500 T-Mobile-branded and Metro PCS Division retail stores nationwide, according to its website. The Zax acquisition serves “as an opportunity to leverage (AEP’s) core competencies that have led to over 30 years of success in customer service businesses,” according to a news release. “With the acquisition of Zax Auto Wash, we are embracing the future of the car washing business while focusing on customer service and delivering See CAR WASH on Page 14

Zax Auto Wash operates about two dozen locations in Southeast Michigan. | ZAX AUTO The nine-story, 180,400-square-foot Two Towne Square building in Southfield is getting a new largest tenant: TD Auto Finance. | COSTAR GROUP

TD Auto Finance cuts footprint in HQ move The auto lender is sharply reducing its space as it relocates to Southfield By Kirk Pinho

TD Auto Finance is slashing its real estate footprint as it plans to move its headquarters from Farmington Hills to Southfield. The auto lender is leasing about 35,000 square feet in the Two Towne Square office mid-rise, replacing its 155,000 square feet in The Standard at Farmington Hills, at 27777 Inkster Road. That represents a 77.4% reduction in its office space. The move to Two Towne Square, the 180,400-square-foot building owned by Southfield-based Redico LLC, from The Standard, which has about 286,000 square feet owned by Southfield-based Farbman Group, is expected to be complete in the late third quarter or early fourth quarter this year. TD Auto Finance has about 340 employees based at the Farmington Hills office working hybrid. With the move, TD Auto Finance will become Two Towne Square's largest user, ahead of Nemak and

Although there will be an undisAtwell LLC, both with about 22,000 square feet, according to CoStar closed cost savings, Stuart said that Group Inc., a Washington, D.C.- wasn’t the driving force behind the based real estate information ser- downsizing — which companies across the region, state and nation vice. “With 35,000 square feet, TD Auto are doing since the onset of the panFinance will be the largest tenant in demic in early 2020. “We learned pretty quickly that Two Towne and will have their company name prominently displayed atop the building,” Dale Watchowski, president and CEO of Redico, said in a statement. “Redico is confident our beautiful commercial space — Andrew Stuart, president and CEO, TD Auto Finance will provide TD Auto Finance the kind of satisfaction that we could continue to meet our customers’ needs and run our business leads to years of success.” Andrew Stuart, president and with people for the most part workCEO of TD Auto Finance, said the ing from home,” Stuart said, noting company’s hybrid work model — that its current Farmington Hills ofemployees are required to be in the fice “was probably more than we office at least two days a week in- needed, even in the old environstead of five — instituted during the ment.” COVID-19 pandemic has allowed it to slash its real estate footprint. See FOOTPRINT on Page 16

“This new facility is going to be a much better work environment from a collaborative point of view.”

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Developer disagrees that Target store plan is dead The retailer says it won’t build at key intersection By Kirk Pinho

Target Corp. says it has abandoned its plan to build a small-format location at a key Detroit intersection, but the developer behind the project says the store is still happening. In a statement to Crain’s on the evening of Jan. 9, a spokesperson for the Minneapolis-based retail giant said that due to “ongoing delays and complications” getting the project at Woodward and Mack avenues out of the ground,

the company is “no longer pursuing a store in this location.” The statement did not elaborate, and it’s not known whether the company is exploring other sites that could become Target’s only outpost in Detroit. Farmington Hills-based City Club Apartments LLC, run by Jonathan Holtzman, is the developer of that portion of the broader South of Mack Avenue development site at Woodward and Mack. See TARGET on Page 17

Target Corp. says it is no longer opening its planned small-format store (rendering shown) at Woodward and Mack avenues in Detroit. The Farmington Hills-based company developing the project, however, disagrees, citing an existing lease. | BKV GROUP JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 3

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The Bank of America Building rebranded as Somerset Atrium

he Bank of America Building in Troy no longer has, well, Bank of America as its primary tenant, so we should probably stop calling it that. That’s the thinking behind a rebranding effort for the 439,000-squarefoot building at 2600 W. Big Beaver Road now referred to Kirk Pinho being as Somerset Atrium in a nod to — you guessed it — its proximity to the luxury Somerset Collection shopping center and the office building’s six-story atrium. Gary Grochowski, senior vice president and director of agency leasing for the Royal Oak office of Toronto-based brokerage house Colliers International Inc., said around a dozen names were considered. “We sat on it and contemplated it over a couple of weeks,” Grochowski said. “We kept coming back to this just because I think it really so-

lidifies what that building is.” Among those considered but scuttled for one reason or another: The Standard, an homage to the Standard Federal Bank, which built the building and later became folded into LaSalle Bank, which then folded into Bank of America. “The Standard Atrium,” which probably isn’t coming off the way it is intended. “The Standard on Big Beaver.” You get the gist. (It’s also probably best that they didn’t select The Standard. Since there is already a building called The Standard in Farmington Hills, that might cause some confusion. Admittedly, though, it would certainly have been fun to write about yet another instance of two prominent buildings in town sharing a name, as happened briefly in 2021 with two buildings in Detroit named The Randolph — which remains one of my absolute favorite weird Detroit commercial real estate stories.) Of course, its fairly common for a big building to get a new name. In the last decade, One Detroit Center became Ally Detroit Cen-

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The exterior of the 439,000-square-foot former Bank of America Building in Troy. It is being rebranded as Somerset Atrium. | PHOTOS BY COSTAR GROUP

ter; the Compuware Corp. headquarters became One Campus Martius; and the former Detroit Free Press headquarters became The Press/321. The Maccabees Center in Southfield became The Century. The Troy Officentre became the Troy PentaCentre. And those are just a few examples. A rebrand doesn’t just include a new name, Grochowski said. It’s everything from creating a new logo or signage to a broader reintroduction of the building to the market (a small broker open house was held in December, for example). “It’s not just changing the name for the sake of changing the name,” Grochowski said. “You have to show that there’s something substantially different there.” As Grochowski, who has the Somerset Atrium listing, looks to fill it up after Bank of America scattered its roughly 350 employees across about 145,000 square feet into three other locations in Bloomfield Hills, Auburn Hills and Farmington Hills, he’ll look to highlight some of the things that set it apart. Those include everything from water features to a game room to an outdoor nine-hole putting green and fitness facility.

The atrium in the Troy property formerly known as the Bank of America Building, now being called the Somerset Atrium.

The building is somewhat of a local legend. When it opened, Standard Federal employees couldn’t bring anything to eat or drink to their workspaces — including bottled water, lunch or coffee — because of fear of crumbs or stains. It had been dubbed the “Taj Mahal” or “Fort Federal” because of the rules and the big vision for the building by the late Thomas Ricketts, the former president and CEO of Standard Federal. Subsequent bank executives worked to change

that vision from a building that was part art museum-part bank office to something more modern. It sits on a 26-acre site and includes more than 1,400 parking spots, about half of which are covered. In 2007, it became the first existing building in Michigan to receive Leadership in Energy and Environmental Design, or LEED, gold-level designation from the U.S. Green Building Council, the second-highest designation. Sol Gutman out of New York paid $74 million for it in 2017.

DTE offering buyouts to 3,000 employees — 30% of workforce By David Eggert

DTE Energy Co. is offering buyouts to about 3,000 employees, or 30% of its workforce. The Detroit-based utility did not detail specifics Jan. 9, other than to say the voluntary separation incentive program is aimed at workers primarily in corporate and staff roles. “We’re taking action to further focus on what matters most to our customers: providing increasingly safe, reliable and cleaner energy while keeping their bills affordable during this time of massive investment in transforming the way we generate and distribute energy,” Diane Antishin, vice president of human resources and

Detroit-based DTE Energy Co. is offering buyouts to approximately 3,000 workers. | DTE ENERGY

chief diversity and inclusion officer, said in a statement. “At the same time, this voluntary program

will enable us to provide new opportunities for our team members to learn, grow and contribute while keeping DTE a great place to work.” The company in November reported third-quarter earnings of $332 million, or $1.61 per diluted share, down from $387 million, or $1.99 per diluted share, in the third quarter of 2022. Roughly half of DTE’s workforce is represented by unions under collective bargaining agreements. Jackson-based Consumers Energy Co., Michigan’s other dominant utility, offered a voluntary separation plan last year. It was accepted by 405 workers, less than 10% of 4,500 nonunionized employees who were eligible.

3 Thumb area hospitals merge By Dustin Walsh

— about 2% of all U.S. hospitals — have closed with an additional 600 under the risk of closure, according to the Center for Healthcare Quality and Payment Reform. In Michigan, three rural hospitals have closed since 2005, including Corewell Health’s Kelsey Hospital in Lakeview, 48 miles northeast of Grand Rapids. Corewell said it shuttered the hospital due to low emergency room volumes and aging infrastructure. Rural hospitals, particularly independent ones, fear poor financials will force them to be acquired by a dominant health system that would end services or even shutter, leaving the local community in the lurch. The combination to form Aspire Health is likely an attempt to insulate the community from that. Memorial Healthcare, an independent hospital in Owosso, created last month a parent company, Memorial Health System, over its operations. The move is designed to allow the hospital to operate more like a health system and bring new ventures under its umbrella without tying them directly to the 102-year-old nonprofit hospital. But it’s also a defensive move as its CEO, Brian Long, has refused to seek out merger opportunities

Three hospitals in Michigan’s Thumb region are merging to become a single health system. The rural hospitals — Deckerville Community Hospital, Hills & Dales Healthcare in Cass City and Marlette Regional Hospital — are now Aspire Rural Health System, the companies announced this month. The hospitals in Marlette and Deckerville previously operated under an affiliation agreement known as United Healthcare Partners, a deal solidified in 2022. The pair now adds Hills & Dales into the system and takes on the new name. The new health system will operate under a single board made up of members from the three hospitals’ individual boards, which will be dissolved. Angie McConnachie, CEO of United Healthcare Partners, and Andy Daniels, president and CEO of Hills & Dales, will serve as coCEOs of the Aspire Rural system. “I am excited for what this means for the future of healthcare in The Thumb. I know that we are stronger together, and I look forward to all that we can achieve for our patients and communities through this combination,” McConnachie said in a press release. “Ultimately, this is about keeping local healthcare local and improving care for generations to come.” The three hospitals will continue to operate under their current names, the organization said in a press re- — Angie McConnachie, co-CEO of lease. It’s unclear what Aspire Rural Health System administrative functions will be combined in the fu- since he took over as the head of the hospital more than a decade ture. The organization said it is ago. “This isn’t a system operating merging together to preserve its “charitable, not-for-profit mis- as a multi-hospital structure,” sions to serve, to continue offer- Long told Crain’s. “We have ing charity care and services to all grown in footprint and in greater members of our community, in- vertical integration in supporting services that are hopefully symbicluding the underserved.” Rural hospitals have long faced otic with future moves. This mitifinancial constraints as rapid gates risk and allows us to continconsolidation continues to hap- ue the not-for-profit hospital but pen across the health care sector. with the ability to hang a for-profSince 2005, 104 rural hospitals it business off the system.”

“I am excited for what this means for the future of healthcare in The Thumb.”

The inaugural cohort of the Dashney Women’s Leadership Accelerator at Michigan State University’s Eli Broad College of Business. | MICHIGAN STATE UNIVERSITY

Apple exec’s gift to MSU aims to create more women CEOs By Sherri Welch

An undisclosed gift from an Apple Inc. executive to the Michigan State University Eli Broad College of Business will support efforts to get more women into the C-suite. Priya Balasubramaniam, who earned her MBA at MSU in 2001 and now serves as vice president of operations at Apple, made the gift to establish the Dashney Women’s Leadership Accelerator. The new program will provide dozens of undergraduate students each year with the skills and confidence to pursue professional leadership opportunities through mentoring, coaching, workshops and experiential learning.

“She exemplifies the The gift comes in the kind of support from wake of 2023 research from advisers that can help the Harvard Law School you turn hopelessness Forum on Corporate Govinto hope, and that is ernance that found men paramount in the creare 2.5 times more likely ation of the accelerator.” than women to become Dashney will serve CEOs and that just 10% of Priya CEOs are women, accord- Balasubramaniam as the DWLA director, offering one-on-one ing to a Forbes report. The accelerator is named for mentorship to admitted students. Broad College faculty member In the new role, she will also deHelen Dashney, who has been a velop personalized leadership mentor and friend to Balasubra- development plans and cultivate maniam for more than 20 years. a network to assist scholars after The unwavering support and they graduate and to connect mentorship she received from them with future DWLA cohorts. The accelerator was kicking off Dashney was her driving inspiration to pay it forward, Balasubra- this month with 14 DWLA Scholars. maniam said in a news release.

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Owner-occupied office building located in Southfield, MI Hills & Dales Healthcare’s hospital in Cass City. | HILLS & DALES HEALTHCARE JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 5

EDITORIAL

Detroit-Ann Arbor ties good for Michigan T he Ann Arbor Symphony Orchestra will perform in Detroit later this month. On the surface, this may not seem like momentous news, but context is crucial here: it will be the symphony’s first concert in Detroit in the A2SO’s 95-year history. What’s more, the symphony is looking to make more appearances and expand its programming in the city, Crain’s Detroit Business senior reporter Sherri Welch reported. This has significance beyond the symphony or even just the arts. It is emblematic of a strengthening connection between Ann Arbor and Detroit that can benefit both communities. Michigan’s biggest city and its largest college town are separated by just 40 miles. Yet, in many ways they can seem worlds apart. The home of the University of Michigan, Ann Arbor is a city of 120,000 where development and entrepreneurship are booming and one of the biggest community concerns is the sky-high cost of living. Detroit, with its diminished population down to one-third of its heyday, is showing signs of comeback since its municipal bankruptcy 10 years ago, but it has a long way to go. We hope Detroit will keep progressing in the right direction. Having tie-ins and

The Ann Arbor Symphony Orchestra is preparing to play in Detroit for the first time ever. | ANN ARBOR SYMPHONY ORCHESTRA

relationships with its more affluent, if smaller, neighbor to the west can’t hurt. Most prominently, in December ground was finally broken in Detroit on the University of Michigan Center for Innovation, a $250 million graduate school facility. It will be a big urban outpost for a university that was founded in Detroit in 1817 before moving to Ann Arbor two decades later. “Now the University of Michigan is back home!” Detroit Mayor Mike Duggan declared at the groundbreaking event last month.While it will take three years to build and will represent but a fraction of

the overall university, the mayor’s exuberance is understandable. UM having a prominent presence in Detroit will be good for both the city and for UM. Good for the city because the center will bring additional educated, creative students into Detroit where they are certain to make their presence felt. Good for the university — and Ann Arbor — because Detroit offers young people who wish to live in a major city center after earning their bachelor’s degree a great place to live and make an impact. Indeed, with all of the talk of Michigan’s

need to grow its population, the Center for Innovation represents a step in the right direction. As Michigan’s largest city — by far, still, despite its population loss — Detroit must be healthy and successful if the state hopes to keep and attract residents. Our universities and, in particular, UM, draw young people from all over to come to Michigan. Too often, after they graduate they head for the coasts or Chicago or another metro area. If more young people see opportunity in Detroit, that would boost the city while keeping them near their alma mater. Last year, leaders in Detroit and Ann Arbor came together to file a joint grant application to lure a federal tech hub to Southeast Michigan. This effort was another welcome sign of new connections between the cities. While the bid was ultimately unsuccessful, it was a great example of cooperation that could pay dividends with future collaborations down the road. Another opportunity to work together could relate to Detroit Metro Airport, which sits right between the two cities. The need to improve public transportation is a recurring issue in Southeast Michigan. Perhaps strengthened ties between Detroit and Ann Arbor could help make inroads for better transit in the region, starting with stronger connections to the airport.

COMMENTARY

5 education issues to watch in Michigan in 2024

ties. Progress on the most or too long, Michirecent state assessments gan has trailed show students are still leading education behind pre-pandemic states, and the COVIDlevels, with some stu19 pandemic exacerbatdents losing over a year of ed our inequities in edulearning. cation. Yet 2023 brought Indeed, recent M-STEP hope for the future as scores showed our stupolicymakers increasdents remain behind ingly demonstrated pre-pandemic levels in their commitment to Amber Arellano is executive improving teaching and director and Jeff Cobb is director grades 3-7 in English Language Arts. As The Educalearning, including of government affairs at The tion Trust-Midwest rethrough Gov. Gretchen Education Trust-Midwest. ported last year, Michigan Whitmer’s Growing Michigan Together Council, which in De- fell from 32nd in 2019 to 43rd in 4th grade cember made key recommendations to reading – an important predictor of a child’s strengthen Michigan’s public education future academic success and life outcomes – system and ensure the state has a thriving on the 2022 National Assessment for Educational Progress (NAEP). For students from workforce for decades to come. The year ahead is critical for addressing low-income backgrounds, Michigan ranked Michigan’s most pressing education chal- as the 11th worst state in 4th grade reading, lenges. These are key issues to prioritize in falling far below the national average. For Black student performance, Michigan 2024. dropped into the bottom five for 4th grade reading in 2022, down from previously being Educational recovery ranked in the bottom 10 in 2019. must be top priority Learning recovery isn’t over. Indeed, it is The pandemic brought devastating chal- just beginning. Michigan policymakers and lenges for students across the nation, partic- practitioners should prioritize and invest ularly from low-income, rural and urban with urgency in educational recovery and backgrounds, Black and Latino students, evaluate programs for their effectiveness in English Learners and students with disabili- closing gaps.

Preparations for a looming federal funding cliff 2024 marks the final year in which districts can spend the federal relief funding that was earmarked to help students recover from the COVID-19 pandemic. In September, the end of this needed funding will leave many districts in a precarious place. State and national data show educators continue to face multiple post-pandemic crises, including in raising student achievement, student attendance and mental health. In fact, without additional state investments, district budgets could be slashed by an average of $1,200 per student in the 202425 school year through a combination of declining enrollment and the end of the Elementary and Secondary Emergency School Relief (ESSER) funds, according to a recent brief by The Education Trust. That loss of funding will be felt most acutely in Michigan’s higher-poverty districts, many of which have been depending on the funding to support critical needs. Last year Michigan policymakers made an historic step that will help districts, especially those who serve higher percentages of students with the greatest needs, through the passage of the state’s Opportunity Index. This historic change in the state’s school funding formula means that Michigan will for the first-

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. 6 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

time consider for concentration of poverty in school districts, which will help drive additional funding to students from lowincome backgrounds to meet their needs. The creation of the Opportunity Index is a significant step forward for Michigan, but it’s certainly not enough. The state continues to trail leading education states such as Massachusetts, which invests far more in students with the greatest needs — and has far better student outcomes across key measures. Indeed, only transformational and historic changes in how schools are funded will fill the gap. Currently, the Opportunity Index is a weighted funding formula enshrined in law that invests up to 47% more for students in districts with the highest concentrations of poverty, but the state has not committed to fully fund that amount. We should change that. Let’s commit to protecting and fully funding the Opportunity Index, as recommended by the Governor’s Council, while also increasing funding for English Learners and providing full funding to support the needs of students with disabilities.

Strong fiscal transparency and accountability needed As important as the ESSER dollars have been, many stakeholders have been frustrated by a lack of transparency and ac-

Sound off: 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.

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COMMENTARY Continued from page 6 countability for this crucial spending to help students catch up. Along with considering a school funding formula that is far more equitable, Michigan policymakers should design systems to ensure that dollars intended for students who are underserved actually reach them in their schools and classrooms. Michigan lacks such a system now. California demonstrates the importance of and need for such a new system. A decade ago, California laudably changed its school funding formula to dramatically increase investments in education but did not put appropriate systems in place to track whether dollars were being spent on students with high needs. Tragically, auditors have found that on average only 55 cents of every dollar earmarked for students with the greatest needs was actually reaching their schools. Michigan can learn from those lessons before it’s too late. Putting new systems of accountability and transparency in place for school funding should be a priority for our state leaders in the coming year.

factor to improving student outcomes, which is why Michigan’s increasingly acute teacher shortage is so concerning. Recent reports have continued to document a shortage of substitute teachers, inadequate levels of certified staff and concerning rates of mobility among teachers in some schools, especially in rural and urban districts. Yet, we really don’t even know how serious the problem is because Michigan lacks strong sys-

tems to track educator vacancies. As with any ailment, it’s impossible to prescribe a solution without being able to diagnose the problem. That’s why Michigan should start by requiring that districts collect and publicly report teacher vacancy data. At the same time, Michigan policymakers have a great opportunity to invest in our students by investing in their teachers. The statewide Michigan Partnership for Equity and Opportunity coalition is cham-

pioning efforts to close the salary gap by raising the salary floor for teachers. This will help to recruit teachers to Michigan, as well as to hard-to-staff districts. Defraying or eliminating the costs associated with teacher licensing exams is another strategy other states are using to eliminate one of the barriers to teacher recruitment. As our state and nation emerge from the devastating learning and other losses wrought by COVID-19, state and local leaders should re-

double efforts to ensure Michigan students not only catch up but accelerate their learning. Becoming a Top 10 state for education has long been a goal of our organization and our diverse, bipartisan statewide coalition. Now, as committed leaders from across both sides of the aisle have signaled their commitment, let’s work together to address these issues and place our state on the path toward educational excellence for every child.

Improving early literacy should be a priority Being successful in reading in the early grades is a major predictor for academic success for students later in school, and yet too many of our students struggle to read. Indeed, Michigan was facing an early reading crisis even before COVID-19, with early literacy rates that were lower than they were almost 20 years ago, according to the national assessment. Our state has a tremendous opportunity to change this trajectory. We can start by passing bi-partisan legislation to screen for dyslexia, one of the most common barriers to early reading success. Senate Bills 567 and 568 would strengthen the state’s Read by Grade Three Law by improving how schools screen and identify students that need support. Among other improvements, these bills would require schools to use valid and reliable screening assessments to identify and monitor early elementary students who struggle with decoding and word recognition and use a multi-tiered system of support, which may include in targeted small groups to receive more intensive support or receive personalized instruction, to help students who display the characteristics of dyslexia. These are evidence-based strategies that our policymakers can support now to address one of Michigan’s greatest education challenges and dramatically improve outcomes for thousands of children.

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Addressing teacher recruitment and shortages Effective teachers are the single most important school-based JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 7

COMMERCIAL REAL ESTATE

1,000 apartments, other developments proposed near Briarwood Mall By Kirk Pinho

A joint venture is proposing 1,000 apartments and other uses on about 20 acres in south Ann Arbor near Briarwood Mall. The development team, Ann Arbor-based Oxford Cos. and suburban Columbus, Ohio-based Crawford Hoying, plans the more than $400 million, multi-phase Arbor South project as the first under the city’s new TC-1 zoning ordinance geared toward creating density along a pair of transit corridors outside of downtown. The project, first reported by MLive.com last month, would be built on largely vacant land surrounding Oxford’s headquarters in the 303,000-square-foot, 10-story 777 Eisenhower Plaza office building at South State Street northeast of Briarwood Mall. The development team anticipates a fall site-plan approval with the first residential building opening in summer 2026. In addition to the residential units, the development is envisioned to include 76,000 square feet of commercial space with retail, restaurant and entertainment uses; a hotel; three parking decks; and parks and community gathering spaces. In an interview, Brent Crawford, principal and founder of Crawford Hoying, said the buildings on the site would be no more than roughly six stories, or 75 feet tall, and the first phase would have a few hundred residential units and some commercial space as it seeks to create an initial wave of density. “We will go a little bit faster pace because it works much better if you have enough density, both residential and commercial, on the site for it to be a vibrant location,” Crawford said. “Where we’ve seen people not do as well as where they sort of wait to see how things go and it’s really hard to create momentum when you do that.” Crawford said that 10% to 15% of the project’s total unit count will be considered affordable, perhaps at the 60% Area Median Income range. The Washtenaw County AMI, which is determined by the federal government, is $99,200 for a two-person household and $124,000 for a four-person household. So 60% of the AMI would be $59,520 for a two-person household and $74,400 for a four-person household. Brownfield tax-increment financing is expected as part of the project financing package, Crawford said, although the precise dollar figure is not known. All of the project’s phases are 8 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

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A joint venture is targeting the 20 acres surrounding the 777 Eisenhower Plaza building on Ann Arbor’s south side for a large-scale mixed-use development. | COSTAR GROUP

An artist representation of the proposed Arbor South mixed-use development near Briarwood Mall in Ann Arbor. | LORD AECK SARGENT

anticipated to be complete by 2029, Crawford said, with staggered construction time frames for each so there is not a lengthy lag time between buildings. Crawford, a graduate of Ohio State University, said he has been

to Ann Arbor for football games and other occasions. “It’s an incredible place,” he said. “When the opportunity came, and we were able to go back up, every time I went to go there, I could see why it’s voted one of the

best places in America to live.” A resident participation meeting was Jan. 9 at 777 Eisenhower Plaza. The TC-1 district encompasses close to 70 properties ranging from 0.21 acres to 13.6 acres along

Eisenhower Parkway east and west, and State Street north and south for more than 200 acres. It requires buildings to be at least two stories and allows new construction of up to 55 feet, 75 feet, 120 feet and 300 feet tall, depending on how far back it is from a single-family residential zoning area. Last month, the Ann Arbor City Council signed off on a new development on the Briarwood Mall site itself, which the TC-1 zoning classification does not encompass. Others working on the Arbor South project include the Detroit office of Atlanta-based architecture and design firm Lord Aeck Sargent and Ann Arbor-based civil engineering firm Midwestern Consulting LLC. Oxford paid $29.5 million for the 777 Eisenhower Plaza building in August 2018, according to CoStar Group Inc., a Washington, D.C.based real estate information service. Jeff Hauptman, CEO of Oxford Cos., said the building is 94% leased, and CoStar says the University of Michigan is the primary tenant with more than 100,000 square feet.

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Auto supplier seeks to sublease local HQ By Kurt Nagl

Titan Tool & Die took over the assets of Shiloh Industries’ plant at 27101 Groesbeck Highway in Warren. | COSTAR GROUP

Auto supplier takes over closed Shiloh plant in Warren By Kurt Nagl

A Windsor-based tool and die supplier has taken over the former Shiloh Industries plant in Warren, which closed last year with more than 100 layoffs, as the new operator aims to crack into the U.S. market. Titan Tool & Die Limited, a tier two supplier, purchased the assets of the plant on Groesbeck Highway late last year with intentions to relaunch production this month, CEO Domenic Chimienti told Crain’s. The company is not affiliated with Shiloh, though the Ohio-based auto parts maker will be Titan’s first customer in the U.S. Shiloh approached Titan last spring about its intention to disinvest in certain operations and asked Chimienti if he was interested in an asset acquisition. “We looked at it and it made sense for us to take the leap into the United States,” Chimienti said. “It’s business to get our feet wet.” Financial terms of the transaction were not disclosed. The purchase included five press machines, a dozen welders and various other pieces of equipment, making for a deal likely in the millions of dollars. Chimienti said he will retain 2025 former Shiloh employees and add staff as production scales up. “We’re going for slow growth here,” he said. “We’re not going to blow ourselves up.” Most of the employees laid off by Shiloh were represented by Iron Workers Regional Shop Local Union No. 851, which negotiated a severance package for im-

pacted workers, union President and die shops and small parts Michael Baumann said. He said makers across metro Detroit. he is having discussions with Ti- Metalmite Corp., a CNC machine tan about possible union repre- shop founded 50 years ago in a sentation under the plant’s new Rochester basement, was the latest victim, filing for bankruptcy owner. “We met with them, and they Jan. 4. Proper Tooling laid off 130 said there were several investors people in Warren when it closed who want to make money,” Bau- last year. Before that, Tru Tech mann said. “I told them I’d like to Systems Inc. wound down operawork together and turn this tions in Mount Clemens and Romeo-based Cammand Machining around and make money.” Shiloh was losing millions of LLC filed for bankruptcy. Supply chain woes and vehidollars at the Warren plant before shutting it down, Baumann told cle production volatility over the Crain’s last year. Shiloh could not past two years have only exacerbated the financial distress in be reached for comment. Kentucky-based MiddleGround the business, but its problems Capital subsidiary Grouper Hold- run much deeper. The outsourcings bought Shiloh out of banking of manufacturing over the ruptcy in 2020 with a stalking past couple of decades to lower horse bid of $218 million. Prior to labor-cost countries such as the restructuring, Shiloh hashed Mexico and China gutted local out an agreement with its lenders production. “This industry’s been ravaged at to keep the company operational. A supplier of lightweighting, all ends. It’s just not a great landnoise and vibration products for scape right now,” Chimienti said. cars and commercial vehicles, Shiloh operates 25 plants worldwide with $475 million in annual revenue, according to its website. — Domenic Chimienti, CEO, Titan Tool & Die Titan Tool & Die is a much smaller operation with about 130 total em- “It’s a tough go.” Titan has a backup plan should ployees. It was founded in 1956 in the Windsor basement of Joseph the bottom fall out in its U.S. purSzecsei, who had worked as a ma- suit, Chimienti said, but he’s up chinist and toolmaker for Ford for the challenge and confident in Motor Co., according to the com- the move. “Our business model has been pany’s website. Its customers include General Motors Co., Mag- successful, so we just want to parna, Multimatic Inc. and Benteler lay that into the U.S. market and open a lot of different things for us Automotive Corp. Times have been dark for tool over here,” he said.

“We looked at it and it made sense for us to take the leap into the United States.”

Spanish automotive interiors supplier Antolin is seeking to sublease its North American headquarters space in Auburn Hills as it considers options for its footprint in metro Detroit. The company, which changed its name from Grupo Antolin last February, is marketing the 112,000-square-foot office and R&D space it leases at 1700 Atlantic Blvd., according to a brochure from Bowman Ecker, the Troybased real estate firm representing the supplier. The sublease term would run through June 2025. The building itself is being marketed for sale by Bingham Farms-based owner Burton-Katzman LLC with an asking price of $12.86 million. Mark Bowman said his supplier client is considering options for office space elsewhere in the market in Auburn Hills and beyond as is typical when a lease nears its end.

“What (Antolin) is doing is just looking at their options before they consider a renewal,” he said. “Renewal is a possibility, but they want to consider all their options in the market.” The company could not be reached for comment. In addition to its administrative base, Antolin maintains a sizable manufacturing presence in Michigan, with plants in Shelby and Canton townships. The company informed the state last month that it was closing its plant in China Township, near St. Clair, and laying off 150 people. Antolin, whose customers include the Detroit 3 automakers, named a new CEO in October who is tasked with carrying out a transition plan that seeks to boost margins and expand business in North America, China and the rest of Asia. Antolin ranked No. 55 on Automotive News Europe’s list of top 100 global suppliers, with original equipment sales to automakers of $4.6 billion in 2022.

Antolin is marketing the 112,000-square-foot office and R&D space it leases at 1700 Atlantic Blvd. in Auburn Hills. | COSTAR GROUP

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cotsdetroit.org/soupcity JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 9

Michigan among worst for moves out: U-Haul By Anna Fifelski

Michigan jumped two places among states on one measure of population migration in 2023, though it remains near the bottom of the ranking as Texas and Florida continue to dominate. Michigan ranked 46th among states on the U-Haul Growth Index in 2023, up two slots from 48th in 2022. For the third consecutive year, Texas topped the list with the largest net number of one-way movers in, followed by Florida. U-Haul bases its index on each state’s net gain or loss of one-way moving equipment from customer transactions in a calendar year. According to a news release, the U-Haul Growth Index is compiled from more than 2.5 million oneway U-Haul truck, trailer and U-Box moving container transactions that occur annually across the U.S. and Canada. While U-Haul migration trends do not correlate directly to population or economic growth, the U-Haul Growth Index can be an effective gauge of how well states and cities are attracting and maintaining residents. Ranking lower than Michigan in outmigration were New Jersey, Illinois, Massachusetts and California, respectively. California netted the largest loss of one-way movers for the fourth year in a row. U-Haul declined to share raw transactional numbers for incoming and outgoing customers/ equipment for Michigan, but shared that notable net-gain markets include Grand Rapids, Farm-

U-Haul bases its index on each state’s net gain or loss of one-way moving equipment from customer transactions in a calendar year. | BLOOMBERG

ington Hills, Sterling Heights, Hamtramck, Muskegon, Walker, Saginaw, Holland, Wyoming, Brighton, Rockford, Kalamazoo, Flint and St. Clair Shores. The figures come amid a push to turn around Michigan’s stagnant population numbers. Gov. Gretchen Whitmer appointed Hilary Doe as the state’s first Chief Growth Officer in June to work alongside Michigan’s Growing Michigan Together Council to boost economic growth

and grow Michigan’s population. According to U.S. Census Bureau estimates, Michigan saw population growth in 2023 for the first time since 2020. In 2020, the population of Michigan increased 0.86% to 10,070,627. Since, it has fallen 0.32% and 0.05% in 2021 and 2022, respectively. By 2022, Michigan lost approximately 37,346 people. Though still down from the growth the state saw in 2020, Michigan’s population increased

0.04% in 2023, or 3,980 people, up to 10,037,261 residents. That ranked it 35th among the states. Michigan ranked 50th among all states and the District of Columbia with just 1% population growth from 2000 to 2020, ahead of only 51st-ranked West Virginia, which recorded a 1% decline over the two-decade period. Whitmer announced a $20 million national talent-attraction marketing campaign called “You Can In Michigan” in October. In

November, the governor attended the first of a series of roundtables by the Michigan Women’s Commission, geared at getting more women into high-paying jobs and attracting and retaining younger people as a way to boost the population. Michigan’s population continues to get older as younger, well-educated residents move out of the state for more opportunities. Political and business leaders are aiming to reverse these trends. In October, Detroit Mayor Mike Duggan and Ann Arbor Mayor Christopher Taylor discussed a partnership in an application for a federal “Tech Hub” designation in an attempt to attract startups and young entrepreneurs, though all four regional applicants in Michigan were ultimately passed over for the designation. There’s agreement that technology plays a large role in the attraction of young people, though current college students in Michigan have told Crain’s that they see better opportunities out of state. Doe told Crain’s in August that she believes future job outlook is a critical factor in attracting young people. “One of the critical things to consider here isn’t just reversing losses but growing in important ways to take advantage of Michigan’s real economic opportunity in this era, to be at the tip of the spear in the green transformation, both EVs but also renewables and have a workforce that’s ready to take on some of those challenges,” Doe said.

Michigan’s largest credit union names a new CEO By Mark Sanchez

Sandra Jelinski, who has led Lake Michigan Credit Union through unprecedented growth to become the largest credit union based in Michigan, plans to retire in March after more than two decades as president and CEO. Directors at the Grand Rapids-based LMCU named Julie Leonard to succeed Jelinski starting March 4. Leonard is executive vice president and chief financial officer of Tampa, Fla.-based Suncoast Credit Union, which ranks as the 10th largest credit union in the U.S. with more than $17 billion in assets. During Jelinski’s 23-year tenure, LMCU grew from $300 million in total assets to about $13 billion with nearly 500,000 members. The credit union extended across the state, opening offices in several markets, and in the last decade moved into Florida through the acquisition of community banks in markets on the Gulf Coast. LMCU has seven branches in Southeast Michigan, according to its website. LMCU today ranks as the 16th-largest credit union in the U.S. “LMCU has been my profes10 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

Sandra Jelinski

Lake Michigan Credit Union is the largest credit union based in Michigan and the 16th-largest in the nation. | LAKE MICHIGAN CREDIT UNION

sional home, and so much more, so the decision to retire is certainly bittersweet,” Jelinski said in an announcement on the leadership transition. “Working alongside our Michigan and Florida teams, who are more than 1,650 strong, it has been a true privilege to help our members realize their financial dreams and goals. LMCU is blessed to have one of the absolute best management teams and Board of Directors, whose combined experience, talent, and drive will benefit my successor as they work together to drive the credit union to

new heights and execute our longterm growth strategies.” LMCU has 69 offices, including 48 in Michigan and 21 in Southwest and Central Florida. The credit union reported it had $12.94 billion in total assets and more than 483,500 members, according to a Sept. 30 quarterly financial statement filed with federal regulators. LMCU also had $11.6 billion in total deposits and $11.35 billion in loans, which included $1.51 billion in commercial loans. It recorded $126.8 million in net income for the first nine months of 2023.

Julie Leonard

Jelinski’s “vision to transform the credit union into one of the leading financial institutions in the country, including expanding operations in Michigan and Florida, has positively shaped the last several decades,” Gretchen Tellman, board chair for LMCU, said in a statement. “We wish Sandy all the best in her well-deserved retirement and are so very grateful for the leadership she has provided to LMCU, as well as the unwavering commitment she has had to serving our members, staff, and local communities.” In Leonard, LMCU gets a new CEO with experience as an executive at a large credit union. Suncoast Credit Union had $17 billion in assets and $1.46 billion in deposits with more than 1.1 million members, according to a Sept. 30 quarterly report to the National Credit Union Administration. The credit union, which has

77 branch offices across Florida, recorded $116.6 million in net income during the first three quarters of 2023. Leonard “brings a great depth of experience in financial services, and a keen understanding of the Florida market, as well as being a Michigan native,” Tellman said. “She has clearly demonstrated that she is a charismatic, capable, and experienced leader, as well as a great team builder who is deeply engaged with the community. We are confident she will continue LMCU’s remarkable growth trajectory and solid commitment to always doing what is right for our members.” Leonard said in LMCU’s announcement that she was “thrilled to be selected as the leader of such an amazing and successful credit union.” “What an honor to join such a talented team that improves the lives of its members and has such a positive impact on communities across Michigan and Florida,” she said. “I look forward to working closely with the LMCU team to serve and positively impact our members by building on the impressive success LMCU has experienced under Sandy Jelinski’s leadership.”

What 54-54 stalemate means for state house By David Eggert

LANSING — The Michigan Legislature is kicking off 2024 in a quandary, with the House deadlocked until Democrats presumably regain their narrow majority in spring special elections. What does it mean? When the two-year session resumed last week, Republicans could block Democratic bills from reaching Gov. Gretchen Whitmer after a year in which Democrats enacted many of their policies into law. Here’s a look at the dynamic:

Impasse The House is split 54-54 after two Democrats were elected mayor in Warren and Westland. The vacant districts are heavily Democratic and expected to stay blue when they are filled in April. Democrats still have their 20-18 edge in the Senate.

Control Under House rules, Democratic Speaker Joe Tate of Detroit still has the gavel. A new leader and other officers would only be chosen under a 55-55 divide. Democrats continue to control committees and the ability to move legislation to the floor. But bills will not advance to the Senate or governor unless at least one Republican is supportive.

Friction It looks to be an uneventful, unproductive three-plus months on the House floor. Few, if any, votes are planned unless Republicans express interest in voting yes on bipartisan measures, Tate spokesperson Amber McCann said. She said Minority Leader Matt Hall “hasn’t entertained a discussion about anything other than money for his office and leadership staff and just power in the chamber.” Hall has been advocating for some form a shared power, such as more partisan balance on commit-

House Speaker Joe Tate (left) and House Minority Leader Matt Hall (second from right) are shown in the chamber in March. The House is deadlocked 54-54. | DALE G. YOUNG

tees, more input on the floor agenda and possibly more money to pay for caucus staff. The idea is that making the process more collaborative will foster bipartisanship. “The House of Representatives is evenly divided between both parties, and Republicans and Democrats are in shared power, whether there’s a formal agreement or not,” he said in a statement, noting a resolution he introduced in November to require a shared power agreement would be formally read Jan. 11. “If we work together, the months ahead will be tremendously successful.” A power-sharing deal, however, is a bridge too far for Tate given the temporary nature of his lost 56-54 majority and the fact that the seats

will almost assuredly be filled by Democrats. McCann said she expects a lot of committee work in the coming months, including on the budget, the “No. 1 priority,” once it is presented by Whitmer in February. That, she said, should enable time to complete the spending plan by a summer deadline when the districts are no longer vacant. “This is not shared power,” Whitmer said, saying she interned in the Legislature when there was shared power to reflect a 55-55 divide in the 1993-94 session. “This is a situation where the people of Michigan elected Democratic majorities in both the House and Senate. Two legislators ran and now they are serving as mayors of their

hometowns. ... It has not changed anything functionally in the House, that we’re in this moment where we’ve got two specials playing out. We’ve got to stay focused on finding some common ground.” Asked if she had talked with House Republicans about what might be able to get done in the first four months, she said she “touched based with a handful of House Republicans (this month). We had fruitful conversations.”

Bipartisanship Both sides agree there are issues they could tackle together. It just may not happen now, though the situation is fluid. Whitmer, who will deliver her

sixth annual State of the State speech on Jan. 24, said the 54-54 split “is an opportunity to double down on places where we can find some common ground.” She mentioned economic development, a research-and-development tax credit and the budget. Tate has listed economic development as a priority, along with addressing high prescription drug costs. Hall wants to focus on creating a coordinated economic growth strategy, fixing roads, helping kids learn and lowering residents’ cost of living. The Senate, meanwhile, is expected to take a business-as-usual approach. Any legislation it sends to the House could wait until later for final action.

Advantasure plans to shut down Southfield operations By Dustin Walsh

Health insurance administrator UST HealthProof is closing the Michigan operations of Advantasure Inc. The California-based company acquired the Virginia-based Advantasure subsidiary from Blue Cross Blue Shield of Michigan in March last year. Advantasure, which provides back office, compliance and call center services largely to Medicare Advantage plans, employs roughly 900 overall, but is eliminating 251 jobs reporting to its 1000 Town Center office in Southfield, UST Healthproof said in a Worker Adjustment and Retraining Notification Act of 1988 notice filed with the state late last year. The company plans to close the

Advantasure is closing its office at 1000 Town Center in Southfield.

Southfield office. Most of the impacted employees work out of state but report to the Southfield office, the company said in the WARN notice. Only 54 of the laid-off workers reside in Michigan. The company offered no explanation as to why it was closing its

Southfield operations in the WARN notice and did not immediately respond to a request for more information. BCBSM formed Advantasure in 2016 as part of its emerging markets division that focused primarily on Medicare Advantage services to itself and other plans. At the time of the sale to UST Healthproof, BCBSM said it would maintain its contracts with Advantasure under the new owners. It’s unclear whether those contracts are impacted by the closing of its Southfield office. Representatives from BCBSM did not immediately provide details on those contracts to Crain’s. Medicare Advantage, a federal program that allows private insurers to sell Medicare plans with wraparound services, has been a

fast-growing sector in health insurance in recent years. More than 40% of U.S. Medicare beneficiaries 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% of Medicare recipients in Michigan were enrolled in a Medicare Advantage plan. More than half of all retirees in Michigan are on a Medicare Advantage plan and those plans are growing at upwards of 10% annually for BCBSM, Todd Van Tol, executive vice president of health care value, told Crain’s in 2022. But last year many hospitals across the country began dropping contracts with private Medicare Advantage plans, according to reporting by Becker’s Hospital Review.

The hospitals claim the private plans were denying an excessive amount of prior authorization claims and were slow to reimburse for services. San Diego-based Scripps Health, which operates five hospitals, told Becker’s the system was on pace to lose $75 million from Medicare Advantage contracts in 2023. “It’s become a game of delay, deny and not pay,’’ Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker’s. At least a dozen other systems have dropped certain plans since last year. It’s unclear whether the pushback on private Medicare Advantage plans had any impact on Advantasure’s decision to terminate its Michigan employees. JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 11

Funding, talent — or whether to stay in business at all — are top of mind for nonprofit leaders By Sherri Welch

Funding, talent and mergers — and even dissolutions — are among the issues that are top of mind for Michigan’s nonprofit leaders for the coming year. Funding and talent issues are nothing new, but those pressures have reached a level that’s left some nonprofits talking about winding down their operations, leaders said. While total charitable giving is flat or increasing slightly with multimillion-dollar donations, giving among middle- and lower-income donors continued to bottom out heading into 2024, leaders said. That’s an issue especially for the small and community-based nonprofits that make up 93% of the sector and rely on individual giving, said Kelley Kuhn, president and CEO of the Michigan Nonprofit Association. Medium-sized and larger nonprofits that operate with government contracts to provide services in areas like mental health, among others, are also coming into the new year with added funding uncertainties under the continuing resolution for the federal budget that runs through Feb. 2. “When there’s uncertainty in the state or federal budget … (nonprofits) cannot plan effectively for the year ahead,” Kuhn said, noting the looming elections are adding yet another level of uncertainty around funding and operations. The drop in mid-sized and small gifts for the past couple of years could also have long-term impacts on nonprofits, something that’s a big concern for leaders not only in Michigan but nationally, given that the country is not in recession and giving should not be dropping at the levels it is, said Kyle Caldwell, president of the Council of Michigan Foundations. “Here’s the rub: That (giving) pipeline is going to show up in 10, 15, 20 years when everybody’s looking for legacy giving,” he said. “If they don’t have their habits of giving early, they cannot form

Neway Works Inc. tutor Camila Ash works with a student from Austin Catholic High School. | NEWAY WORKS

derway and projected to continue in the coming years, Caldwell said. The whole culture of giving is being diminished, he said, with the lack of in-school education on giving back and the losses of federal tax deductions for charitable giving and Michigan’s charitable tax credits. “Those incentives all used to exist where people had some pretty regular habits and nonprofits marketed … (but) all of that has been largely diminished,” he said. “We’ve got to put incentives back in to help people think about giving short- and long-term.” Kuhn and Caldwell said their organizations will push hard this year for the restoration of the Michigan Charitable Tax Credits. And CMF will actively advocate for restoration of federal tax incentives, as well, taking one of the largest delegations of nonprofit leaders to Wa s h i ng t o n , D.C., in late February to meet with legislators and advocate for that and — Kyle Caldwell, president, Council of Michigan Foundations other support them later, and so there’s going to for the sector. be this drop there that the high At the same time, CMF and its end will just not hold for nonprof- foundation members are expandits.” ing efforts to help shape American The loss of individual gifts will Rescue Plan Act dollars in comapply more pressure on limited munities for the greatest longfoundation funds to make up for term impact aimed at solving the drops, Caldwell said, and chronic issues for residents. Over foundation giving cannot grow at the past two years, foundations the speed to make up for the mon- have provided funding to commuey thousands of individual givers nity foundations around the state contribute to nonprofits. to help grassroots groups gain a If the nonprofit sector doesn’t voice in investment decisions. build a habit of giving among doCMF is working with the Michinors at all levels, it won’t benefit gan Department of Natural Refrom the wealth transfer that’s un- sources to administer $25 million

“We’ve got to put incentives back in to help people think about giving short- and long-term.”

12 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

in ARPA funds, directing them to local units of government in marginalized communities that have not seen state funding to support parks and recreation programs and projects, Caldwell said. Parks and recreation investments have been a big placebased strategy among Southeast Michigan-based foundations investing in the Detroit riverfront, the Joe Louis Greenway and other projects, he said. “All of those projects are, have great momentum, but there are still smaller communities…that still just have not been able to access those dollars. This project is designed to help them draw down some of those state dollars to build parks and rec that hopefully is part of a larger strategy for the region,” Caldwell said. In Southeast Michigan, CMF is talking with cities including Inkster, Pontiac and Saginaw. Statewide, it’s in conversations with local governments in Benton Harbor-St. Joseph, Gaylord and areas in the middle of the state, as well as the Upper Peninsula, he said. The grants are due out in April.

Workforce shortages Ongoing workforce shortages continue to impact nonprofits along with other sectors, Kuhn said. With rising operational costs and limited budgets for overhead, many nonprofits have struggled to not only remain competitive on pay but to be able to offer employees a living wage and support systems like child care. “In the nonprofit sector if we can’t hire enough employees to

provide the vital services … it means that families and individuals can’t access things like basic human needs or all of the services that a nonprofit might provide,” Kuhn said. Nonprofits are also facing the so-called “glass cliff,” Caldwell said. They’ve recruited women and leaders of color to the top roles in their organizations to ensure they are acting equitably and bringing the voices of underrepresented communities into the work. But there’s a gap in support for those new leaders who are facing massive organizational debt and culture issues. “Helping nonprofit boards support new leaders in a new way is going to be really important,” said Caldwell at CMF, which is helping connect foundation and nonprofit mentors to the new leaders. At the highest levels of their organizations, nonprofits are also facing increased demands to find and engage new board members as their predecessors term out. “What’s keeping them up at night is they’re really looking at how to deepen the engagement and recruitment of new board members, where to find new board members, and how (the way) new board members want to engage is much different than how they have traditionally engaged,” Kuhn said.

Going dark? Amid all of the funding and talent issues, the buzz of dissolutions and mergers is picking up, Kuhn said. The limited influx of COVID relief dollars helped some nonprofits hang on through the pandemic

and beyond, but financial pressures on some nonprofits are ramping back up as they dissipate, she said. “Not only is the funding running out, but also our leaders are getting burned out,” she said. There are more nonprofits phasing out than there used to be, Caldwell said. “But we’re not sure if that’s a matter of actual catching up on the bookkeeping versus actual closure of nonprofits,” he said. At the same time, many small nonprofits that applied for relief dollars through the Nonprofit Relief Fund last year needed assistance in registering with the state and securing a charitable solicitation license to be eligible for the grants, Kuhn and Caldwell said. So there were many new nonprofits registering with the state. The net effect is not yet clear. “That is a trend that I would I would definitely track,” Caldwell said. MNA offers resources on how to start nonprofits, Kuhn said. Now it’s working to ensure it can provide the same for nonprofits that elect to dissolve. It plans this year to post resources for nonprofits considering shutting down on the MNA website, along with referrals for agencies like Michigan Community Resources that can assist them. “We’re hearing more and more that people are bringing (dissolution) into conversation, and we want to ensure that as the state association we have resources to direct and point people to… including the step-by-step process on how to legally and properly dissolve an organization centering on those they’ve served first,” Kuhn said.

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit crainsdetroit.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ARCHITECTURE

DISTRIBUTION

FINANCIAL SERVICES

Hobbs+Black Architects

National Food Group

Member Driven Technologies

We are delighted to share the exciting news of Betsy Hobbs Wagner’s appointment as the President of Hobbs+Black Architects. With an impressive 25-year tenure at our firm, Betsy has played a pivotal role in its growth and development, serving as a Senior Vice President and Director of Business Development. Her unparalleled ability to cultivate enduring relationships, coupled with her tireless work ethic and positive attitude, has been instrumental in propelling Hobbs+Black to new heights.

National Food Group, a national wholesale and retail food distributor, has named Tom Downey its new Chief Financial Officer. Downey was previously the CFO for Michigan Milk Producers and a Senior Director of Turnaround and Restructuring at Alvarez & Marsal. He started his career with Ernst & Young. With his background, knowledge and unique skill set, Downey will be an integral part of the National Food Group leadership team and help provide a strategic financial vision well into the future.

ARCHITECTURE

ENGINEERING / DESIGN

Hobbs+Black Architects

Sharrow Marine

Hobbs+Black Architects has named Tom Dillenbeck as its new Executive Vice President. Since joining the healthcare Dillenbeck studio in 2006, Tom has stayed on the forefront of the technical aspects of healthcare design and oversees mentoring of the team. Tom has developed expertise in project controls and management. In his new role he will continue to oversee quality assurance and Ruiter building and maintaining client relationships. Additionally, Martin Ruiter has been promoted to Senior Vice President. With over 30 years of experience, Martin has lent his skills to projects in municipal/ civic, education, office, road commissions, and more. As Senior Vice President, Martin is excited to expand the Hobbs+Black footprint from our Mid-Michigan office.

Greg Sharrow, inventor of the Sharrow™ Propeller and CEO and Founder of Sharrow Engineering and Sharrow Marine, the industry leader in highperformance propeller design, has been appointed to the Board of Directors of the National Marine Propeller Association. This appointment reflects Greg’s exceptional leadership and commitment to advancing innovation and sustainability in marine propeller technology, solidifies the company’s dedication to contributing to the industry’s development and growth, and sets in motion future collaboration between Sharrow and other NMPA members. The company holds over 125 patents and has received numerous accolades, including TIME naming the Sharrow MX™ Propeller as one of the Best Inventions of 2023.

Matt Baaki, a 20-year Member Driven Technologies (MDT) veteran, is now the Chief Technology Digital Officer. He Baaki oversees MDT’s technology and digital strategy, leads software development, forges partnerships, and ensures cybersecurity. Matt’s role shapes strategic direction and growth, leads the acquisition of new partnerships, drives product software development, and Major stays attuned to emerging technologies, all pivotal for MDT’s progress. Pete Major, with 25 years in banking, is now VP, of Fintech Solutions at Member Driven Technologies (MDT). Formerly at Jack Henry for 15+ years, he led Symitar implementations. Pete’s expertise spans front-office, back-office, payments, IT processing, consulting, mergers, conversions, and integrations.

Member Driven Technologies (MDT), has appointed Dan Schneider as Chief Project Officer (CPO). With 15+ years at Schneider MDT, formerly VP of Project Management, he’ll accelerate the delivery of service for credit unions, ensuring they stay competitive in today’s digital landscape and aim to shape strategies for meaningful change. Greg Lanigan, a 30-year financial services veteran, is now Chief Information Officer (CIO) at MDT. Managing state-of-theLanigan art data centers and office infrastructures, Greg, a Society for Information Management member and Executive IT Mentor, brings extensive expertise. Responsible for technical infrastructure, including Microsoft, Technical, AIX, and Cisco support, he ensures robust, secure, and flexible systems for growth.

FINANCIAL SERVICES

Member Driven Technologies Tracie Loudermilk, with 29 years in the industry and 15 years at Member Driven Technologies (MDT), was recently promoted to VP for Project & Consulting Solutions where she will oversee the Project Management Office (PMO), Implementations, Custom Solutions, and Business Consulting teams. Her diverse leadership showcases an ongoing commitment to credit unions, steering MDT toward excellence and innovation.

NEW GIG? • Plaques • Crystal keepsakes • Frames • Other Promotional Items

14 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

C O N TAC T

PRODUCTS

Preserve your career change for years to come. Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

INSURANCE / BROKERAGE

Marsh McLennan Agency Denise McClerren was promoted to Account Director within Marsh McLennan Agency’s Michigan Employee McClerren Health & Benefits practice based in Troy. With over 25 years of experience, Denise excels at providing her clients with superior service, regularly serving groups ranging from 80 to 1,800 employees. Roxy Scholly joins Scholly Marsh McLennan Agency’s Michigan Employee Health & Benefits practice as a Vice President based in Grand Rapids. With over 12 years of experience, Roxy has an in-depth understanding of benefits strategies and cost-saving tactics to help organizations achieve their goals. Roxy’s innovative mindset helps her serve as a strategic partner to organizations’ employee health and benefit programs.

CAR WASH From Page 3

quality washes at affordable prices,” Ammori said in the release, adding that the deal allows for the new owner to focus on “leveraging technology” and the overall customer experience. “Our operational background and team-focused culture will propel us into a new era of innovation, growth, and opportunities to develop a world-class brand,” Ammori added. The buyer could not be reached by Crain’s on Jan. 3 for further comment. Ammori is hardly alone in chasing deals in the increasingly popular car wash space, either locally or around the country. At present, there’s something of a battle for supremacy playing out among private equity-backed car wash brands in Southeast Michigan and beyond, as Crain’s has previously reported. Traditionally more of a momand-pop business, institutional capital has flooded the car wash space, drawn particularly by revenue from monthly subscriptions, now common at many auto wash brands. Indeed, at one car wash chain operating around the Southeast and Midwest parts of the country, employees have a goal of getting 5%-10% of daily customers to subscribe to a monthly membership, and more than 60% of revenue comes from such

Traditionally more of a mom-and-pop business, institutional capital has flooded the car wash space. automatic subscriptions, according to a 2022 report in the Wall Street Journal. Per its website, Zax Auto Wash operates 25 locations in Livingston, Macomb, Oakland, Washtenaw and Wayne counties. It’s unclear which specific locations Ammori is purchasing and whether the seller, Zax founder and CEO Brian Blaskay, will continue operating the remaining locations. “The AEP acquisition is an exciting new chapter for Zax,” Blaskay said in the release. “I believe that this strategic move will allow the local brand to benefit from a new perspective and larger corporate operating structure, something that we believe will allow each location to continue to thrive in the ever-changing car wash landscape for years to come.” Blaskay was represented in the deal by Car Wash Advisory LLC, a Miami-based M&A advisory firm focused on car wash roll-up deals. “The AEP team is well positioned to continue building the Zax brand through innovation and operational excellence,” stated John-Michael Tamburro, managing director at Car Wash Advisory.

Henry Ford Health lays out funding plan for expansion By Dustin Walsh

A perfusionist from Comprehensive Care Services operates the perfusion machine during an open heart surgery. | COMPREHENSIVE CARE SERVICES

Local medical specialty company going global By Dustin Walsh

A Plymouth-based contractor that has become the nation’s largest private company providing a medical specialty critical to some major surgeries is now expanding globally. Plymouth-based perfusion contractor Comprehensive Care Services announced it has taken a majority stake in German peer Life Systems MedizintechnikService GmbH. The deal represents a global expansion for Comprehensive Care. Life Systems employs roughly 200 perfusionists and is the largest perfusion contractor in Europe. Terms of the deal were not disclosed. Perfusionists operate the devices used during organ surgeries, most commonly open-heart surgery, that supplant the operation

of the heart and lungs that allows the patient to remain alive while the organs are not in use during surgery. Comprehensive Care employs more than 500 perfusionists across the country, about 12% of the total perfusionists nationwide, said Sean Murtha, COO at Comprehensive Care. In Michigan, Comprehensive Care has contracts with Corewell, Ascension, Henry Ford Health, McLaren and others, Murtha said. University of Michigan Health employs its own perfusionists. The company generates more than $200 million in revenue annually, Murtha said. “It’s a highly specialized profession,” Murtha said. “There’s only 21 schools in the country that train for perfusion, and there’s only about 15 people that do the job in a big system like Corewell.”

Lawrence Technological University launched the state’s only perfusion program, a master’s degree, in the fall of 2022 in partnership with Comprehensive Care. Murtha said there are 12 students in the first cohort. The 88-credit hour, fivesemester program was designed to solve a perfusionist shortage across the U.S. as the prevalence of cardiac surgeries grows annually, projected to reach 1.3 million surgeries by 2029. Because of its specialized nature, perfusionists are well paid with an average starting salary of about $140,000, Murtha said. Representatives from Life Systems approached Comprehensive Care seeking an investment partner, Murtha said. With the addition, the company is now the largest perfusionist contractor in the world.

Henry Ford Health plans to spend $4.9 billion over the next decade to fund its massive expansion efforts throughout Southeast Michigan. The Detroit health system laid out its funding vision Jan. 9 at the 42nd annual JPMorgan Healthcare Conference in San Francisco, according to multiple reports. The conference is one of the nation’s premier health care business events. Henry Ford Health’s plans include funding the merger of Ascension Health Michigan into a new joint venture with HFH that includes eight Ascension hospitals in Southeast Michigan for a total of 13 hospitals in the region and roughly 50,000 employees. It announced in February a $3 billion plan to build a new hospital tower and other developments near its existing flagship hospital in West Grand Boulevard in Detroit along with a top-rated rehabilitation hospital run by Shirley Ryan AbilityLab of Chicago. The rehab facility is being funded by $375 million from the Gilbert Family Foundation. The system will break ground in the new hospital this year with a completion date in 2029. The $4.9 billion in capital expenditures will be funded primarily by operational revenue. The breakdown is such: 66% of the expenditures will come from operations; 9%, or more than $500 million, will come from philanthropy; 10%, or as much as $400 million, from new debt; and 7%, or about $265 million, from federal energy subsidies. CEO Bob Riney has said the new hospital is expected to be emission-free with its own dedicated electric power plant. The source for the remaining 8%, or about $300 million, is yet to be determined, Robin Damschroder, Henry Ford CFO and busi-

A new, $1.8 billion hospital tower is a key part of the plan by Henry Ford Health, Detroit Pistons owner Tom Gores and Michigan State University to remake the neighborhood where Henry Ford Hospital sits. | HENRY FORD/DETROIT PISTONS

ness development officer, told the conference attendees, according to a report by Fierce Healthcare. In addition, regulators in August approved a joint venture between HFH’s insurance arm — Health Alliance Plan — and CareSource, an Ohio-based managed care health plan with members in seven states. The joint venture should help Henry Ford win a bid for a request for proposal from the Michigan Health and Human Services Department for Michigan’s Medicaid managed care contract, Riney said at the event according to reporting by Modern Healthcare. “We have a plan that is ambitious, deliverable and consistent with our diversification of what a health system needs to be,” Riney told attendees, according to Fierce reporting. “So, focused on vulnerable populations and population health, focused on tertiary and quaternary destination care, and also focused on the part of the economic vitality — because you can’t have population health without community health, and that includes economic health. We take our role in a very broad view, and we plan on continuing to deliver on that.” Crain’s sibling publication Modern Healthcare contributed to this report.

Miller’s Bar in Dearborn sold to Massage Green Spa owner By Jay Davis

Miller’s Bar in Dearborn has a new owner a little more than two years after the iconic business went on the market. Dearborn native Allie T. Mallad is the new owner of the beloved no-frills burger bar at 23700 Michigan Ave., according to a news release. Mallad purchased the 2,500-square-foot bar/restaurant from its third-generation owners, finalizing the sale Jan. 8, according to the release. The sale includes the business, trademarks, a 50- to 60-person banquet area, equipment, four apartments above the building plus a

salon, all owned by the Millers. Miller’s went on the market in October 2021, asking $4 million. The purchase price was not disclosed. Listing agent Ali Charara previously told Crain’s that brothers Dennis and Mark Miller were ready to retire from the family business, which opened in 1941. Dennis Miller passed away in late 2022 just a week shy of his 75th birthday. Mallad in the release said fans of Miller’s moving forward can expect a lot of the same things that made the bar well-known. “We are privileged and honored to have the opportunity to contin-

ue the traditions of Miller’s Bar and the profound impact that Miller’s has had on the community,” Mallad said. “Everyone can expect to enjoy the same atmosphere and the same exact traditions that the Miller family created, I will continue that amazing legacy.” Representatives for Mallad did not respond to a Crain’s request for comment. The purchase adds a new category to Mallad’s portfolio. He is the founder and CEO of Birmingham-based Massage Green Spa, which has more than 100 U.S. locations, and Red Effect Infrared Fitness, with six U.S. locations that include four in Michigan.

The more than 80-year-old Miller’s Bar in Dearborn has a new owner. | CENTURY 21 CURRAN & OBERSKI JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 15

risk and the large piles of cash many systems hold. CYBERATTACKS patient “If a hacker can take (emergency From Page 1

Cyberattacks are costly to prevent and even costlier in the aftermath. And last year was the worst year for cyberattacks on record, with roughly a third of the U.S. population affected by attacks on health care organizations, more than double the number impacted in 2022. They are even impacting patient care: A cyberattack on Tennesseebased Ardent Health over the Thanksgiving holiday shut down emergency departments at several hospitals across three states. And all indications are the attacks will get worse in 2024. “Michigan had a very active cybersecurity year,” said Jack Kufahl, chief information security officer for Michigan Medicine in Ann Arbor. “We’ve not seen the peak. We see growth in the costs and attacks and the number of successful attacks year over year. There’s no reason to think 2024 isn’t going to be a challenging year for cybersecurity in health care.” Roughly 88% of health care companies experienced at least one cyberattack in the past 12 months, according to the 2023 Cyber Insecurity in Healthcare report published by the Ponemon Institute, a renowned cybersecurity research organization headquartered in Traverse City. The average number of cyberattacks experienced by those with at least one attack was 40, according to the report. Kufahl said health care systems are under constant attack, but it’s not an all-encompassing threat at all times. Most of the attacks are thwarted, but even the small fraction that gets through is dangerous and expensive. Preventing access to data is paramount as the average cost of a data breach to an organization in health care is $4.9 million, according to the Ponemon report. More than half of the 654 companies surveyed by Ponemon reported ransomware attacks over the past two years — that is where hackers hold medical records or control of systems hostage in exchange for a payout. Of those that had a ransomware attack, they experienced an average of four incidents. Ransomware is a growing problem in all sectors, not just health care. Qilin, a ransomware group affiliated with hacker gangs in Russia, hijacked the IT systems of auto supplier Yanfeng, which shut down auto production at Stellantis in November. Yanfeng did not disclose whether it paid the ransom to the hacker group or not. “The biggest attack vector (in health care) is ransomware,” said Tom Wojcinski, principal of the cybersecurity and technology management practice of Milwaukee-based consulting firm Wipfli LLP. “They keep happening because companies keep paying the ransom. It’s a big payday for cybercriminals.” Corewell and McLaren did not disclose whether the cyberattacks impacting their patients were tied to ransomware. Wojcinski said health care is ripe for ransomware attacks because of 16 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

medical records) offline, it’s going to be very difficult for that organization to provide, you can’t intake new patients into the ER, etc.,” he said. “There is just a higher urgency if those systems are offline. A health care system has a lower pain tolerance than a metal vendor doing tier three work in the auto supply chain. A health care organization is going to reach the decision to pay faster.”

U.S. corporate bankruptcy filings by month 75

Dark web But it’s not just the ransom that’s of value to cybercriminals. Medical records fetch top dollar on the dark web, Wojcinski said. Referencing a 2019 study by Trustwave Global, Wojcinski said medical records retail for up to $250 per record on the dark web, far more than a credit card number, which retails for up to $5.40. “How the data is going to be used is critical to the conversation,” Wojcinski said. “Is the attacker trying to set up fraudulent identities or is the payoff the ransom? My hunch is the ransom is the largest target, but those smaller individual targets are relevant as well.” When identities are exposed, most health care companies provide a limited time of credit report monitoring to those affected. Michigan Medicine did so for the roughly 36,000 patients impacted by a data breach in 2022. That breach was instigated by a phishing attack, where an employee opened an email that unleashed malware that gained access to the employee’s log-in credentials, a common scam for attackers. Kufahl said the cyberattack sphere operates much like a supply chain, where certain criminals gain access to data and then send that data up the chain to other criminals who combine it with other data to create a more viable threat to organizations. “Phishing is a relatively low-cost and highly effective way of gathering information like passwords,” Kufahl said. “There are actors who are in charge of nothing more than collecting large data sets of passwords, then they sell it. They can then tie that credential to a piece of malware and start combining more credentials and malware. It works like a supply chain. There aren’t many soup-to-nuts malicious actors.” Kufahl, however, said the industry is getting more and more sophisticated and is collaborating on solutions. Michigan Medicine, for instance, develops its own threat intelligence to better understand how a cyberattack may happen and by whom. Wojcinski and Kufalh are worried about generative artificial intelligence that is flooding into the health care space in the name of cost savings and efficiency. “There are unintended consequences of using AI within organizations,” Wojcinski said. “If people aren’t aware, they are sending data to a public cloud that can make it vulnerable. We are making it harder and harder for bad guys to get into the data but then offering up new vulnerabilities all the time. Right now, they have the advantage and we’re playing catch-up.”

2020

2021

2022

2023

Data compiled Jan. 2 includes S&P Global Market Intelligence-covered US companies that announced a bankruptcy between Jan. 1, 2020, and Dec. 31, 2023. Source: S&P Global Market Intelligence

BANKRUPTCY From Page 1

The types of businesses seeking bankruptcy protection spanned the gamut of industries from automotive and manufacturing to health care, construction and restaurants. If there’s one theme to pinpoint, it’s that lenders finally have come knocking, said Charles Bullock, partner at Southfield-based Stevenson & Bullock PLC and adjunct professor at Michigan State University College of Law. “This is a right-sizing of the financial sector by forcing businesses under distress to restructure, sell or liquidate. It’s just a natural market force,” said Bullock, who is involved in several local bankruptcy cases. “Nothing was happening during the pandemic other than forbearance. Emerging from the pandemic, there was an effort to get back and try to collect some of this debt.” U.S. bankruptcies hit a 13-year high in 2023, with 642 filings, according to data from S&P Global Market Intelligence. Consumer discretionary, health care and industrials were the top sectors for financial distress. The number of filings in December hit 50, a nearly 70% increase from the prior month. In metro Detroit, the first filing of 2024 came just a few days into the new year. “I think that was just the tip of the iceberg,” Bullock said of last year’s filings. “We’re at a heightened level of financial distress.” Turnaround firms around town such as Riveron Consulting LLC and Van Conway & Partners have seen an uptick in business in recent months, executives told Crain’s. Similarly, attorneys are seeing an increase in activity related to financial distress. Jon Kreucher, president and CEO of

FOOTPRINT From Page 3

“We really had too much space in Farmington Hills and, in the hybrid environment, we were kind of spread out all over the building,” Stuart said. “It wasn’t great from a collaboration point of view. You walk through the building and it felt kind of empty. This new facility is going to be a much better work environment from a collabo-

Auto supplier Unique Fabricating made one of the largest bankruptcy filings locally in 2023. | UNIQUE FABRICATING

Royal Oak-based business law firm Howard & Howard, told Crain’s recently that lender work is on the rise. “We see some banking work picking up after several years of expecting it to,” he said. “Loan workout work is picking up, creditor rights work is picking up. Commercial litigation has been very strong for us.” Volatility in the automotive supply chain was a driving factor in several bankruptcies of 2023 and will likely continue to be in 2024 as small tier one and tier two parts suppliers struggle to stay afloat without the financial cushions of automakers and tier one companies. Quality Team 1, a Detroit-based vendor to Magna and other automotive suppliers, filed for bankruptcy last month with more than $5 million in liabilities. Metalmite Corp., a family-run CNC machine shop in Rochester serving automotive and other industries, filed for bankruptcy last week with $2.9 million in liabilities. Among the largest bankruptcies in 2023 were West Bloomfield Township-based steel distributor Rapid Metals LLC and Auburn Hills-based auto supplier Unique Fabricating, which pe-

titioned for bankruptcy in Delaware. Rapid Metals had $31 million in liabilities and is being sold off into pieces to pay creditors. Louisville-based PSC Industries made a $14.7 million bid for the assets of Unique Fabricating. Most Chapter 11 cases were filed under Subchapter V, an option that became available in 2019 through the Small Business Reorganization Act. It is essentially a hybrid between a commercial Chapter 11 and an individual bankruptcy. In 2020, Congress passed a bill to increase the debt limit from $3 million to $7.5 million for companies to qualify. With COVID-19 pandemic relief money from the government drying up, and interest rates up dramatically from a couple of years ago, companies in financial distress now have fewer options for relief, Bullock said. Still, lenders are being more thoughtful about the workout process, which is in everybody’s best interest. “If you’re too aggressive, you risk a liquidation,” Bullock said. “If you’re not aggressive enough, you let things play out with no logical end. A general tap on the shoulder pushed some of these companies.”

rative point of view.” The building has amenities including an on-site restaurant and cafeteria, conference center, fitness center and covered parking deck, making it attractive to employees, Stuart said. TD Auto Finance is filling in space vacated when Huntington Bank moved its employees there to its new high-rise office on Woodward Avenue in downtown Detroit. TD Auto Finance was created

in 2011 when Toronto-based Toronto-Dominion Bank purchased Chrysler Financial Corp., as well as the 27777 Inkster office building it is currently based in, in a deal valued at $6.3 billion. Toronto-Dominion Bank is the parent of TD Bank NA, based in Cherry Hill, N.J., and TD Bank is the parent of TD Auto Finance. Chrysler Financial had occupied the building starting in 2002, and Farbman Group bought it in 2015.

Longtime CEO of The Guidance Center to retire in fall By Sherri Welch

The Guidance Center’s longtime president and CEO, Kari Walker, will retire in the fall, capping a more than 28-year career with the Southgate-based human services agency. Walker, 65, has led the Guidance Center since 2010, expanding the number of people it serves during his tenure to nearly 20,000 adults and children in Wayne County each year. Prior to that, he served as executive director program operations and chief clinical officer for 14 years. “It has been a true privilege for

Kari Walker

Laura Huot

me to help lead The Guidance Center for nearly three decades,” Walker said in a release. “I am delighted to announce Laura Huot as the new CEO, succeeding me upon my retirement. Laura’s leadership as COO has been exceptional and I am confident in her ability to guide our or-

ganization towards continued success.” Huot, 53, will succeed Walker in September. “Our Board had deep discussions about the future of the organization and what kind of leadership we need,” Board Chair Kevin Fischer, executive director of NAMI Michigan, said in the release. “We wholeheartedly agree that Laura is the perfect person to build upon the success and trajectory of The Guidance Center. Her passion for this work is palpable.” Huot has served as COO of the organization since 2015. Before that, she was vice president of programs and COO for the

Royal Oak-based Judson Center, a role she held after earlier roles at The Guidance Center. Between 2004 and 2013, Huot served as a therapist, crisis supervisor, projects director and director of children’s behavioral health for the nonprofit she’ll lead. During her time with the agency, she was instrumental in expanding the services of the Kids-TALK Children’s Advocacy Center, led the organization’s shift from in-person services to telehealth during the COVID-19 pandemic and helped The Guidance Center secure designation as a Certified Community Behavioral Health Clinic to provide access to all who need behavioral

health care, the center said. Huot holds a master of science in clinical psychology from Eastern Michigan University and a bachelor of science from Madonna University. Operating on a $55 million budget, the Guidance Center provides a wide range of programs and services at 18 locations in areas including mental health and wellness, early childhood education, intellectual and developmental disabilities support, mentoring and substance-use disorders services. It ranked No. 19 on Crain’s List of the Largest Nonprofits in metro Detroit, with just over $52 million in revenue in 2022.

CONDOS From Page 1

Real estate listings website Redfin, as of Jan. 10, showed a total of 226 active condo listings in the city, with 163 listed for more than 45 days. Showings have been numerous for the Gilchrist condo, and some lower offers have been rejected, said Ryan Cooley, the listing agent for the Gilchrist condo and owner of Detroit-based O’Connor Real Estate. Beyond just the issue of oversupply, Cooley pointed to the slow return of office workers in downtown Detroit as providing another challenge to the selling of residential real estate in and around the central business district. “It’s a direct correlation,” Cooley said of the reluctance by many people to purchase properties near work when they’re not expected to be in the office five days a week. The Gilchrist family declined to comment for this report. Public records show that Gilchrist and his wife Ellen purchased the unit in 2014 for $495,000, well before the now-elected official became a statewide political figure. Cooley, the listing agent, however, did acknowledge that the size and higher price point of the unit immediately make for a much smaller buying pool. Condos and townhouses priced in the area of $300,000-$400,000 are seeing

TARGET From Page 3

The site is about seven acres, while City Club’s portion — which is envisioned to have more than 300 residential units and other uses — is about 2.4 of that. In a statement the evening of Jan. 9, Holtzman said the project is still moving forward — with Target. “We have a legally binding lease,” Holtzman’s statement through a spokesperson said. “We don’t have a letter from Target expressing their intent to cancel or modify the lease. We continue to move forward with our plans for this exciting mixeduse apartment and penthouse development.” The Detroit store wouldn’t be the

The Corktown condo of Lt. Gov. Garlin Gilchrist and his family offers city views but has struggled to sell in a tough condo market. | O’CONNOR REAL ESTATE

greater sales momentum, he said. The struggle to sell a unit such as the one owned by the family of the state’s lieutenant governor — who have said they intend to stay in the city but seek a single-family home to raise their young children — is hardly limited to geography. A report last summer by Detroit-based residential brokerage The Loft Warehouse found that with the exception of the Midtown and Brush Park areas, condo transaction activity in general has been slow.

All of that rings true to Matt O’Laughlin, an agent with Max Broock Realtors in Detroit, who pointed to a variety of larger systemic issues plaguing the market. That includes a lack of population density, minimal public transit and an overall lack of job growth. “You have two buyer pools: young professionals and empty nesters,” O’Laughlin wrote in a message to Crain’s. “The empty nesters aren’t (coming) back. Young professionals are on pause due to the interest rate debt markets.”

Still, there are indicators that the tide could be turning for condo sales, as well as the broader real estate market. Real estate listings service Realtor.com on Jan. 9 reported that nationally, new and active listings were up 9.1% and 4.9%, respectively, when compared with last December. Both are still down double digits in metro Detroit, however. With regard to condos, and specifically the Gilchrists’ unit, Cooley said a handful of prospective buy-

ers have requested showings in recent days, leaving him hopeful that an offer could emerge soon. And anecdotally, the Realtor said that recent weeks have seen an uptick in activity. As for the broader condo market in Detroit, Cooley said there’s limited construction in the pipeline, which could bring about more absorption of existing inventory. “Because of that, you don’t see huge price drops because there’s not a huge influx of new inventory,” Cooley said.

only one Target is abandoning. The retailer said in the fall that it was shuttering nine locations across the country, including seven of its small-format stores in Portland, Seattle and the Bay Area, Retail Brew reported in October. Target cited what it called “theft and organized retail crime (that) are threatening the safety of our team and guests, and contributing to unsustainable business performance.” Target also scrapped a small Philadelphia location that was nearing completion in late October, according to The Philadelphia Inquirer and other local media reports. In Detroit, the more than 31,000-square-foot store was formally announced in October 2021. It was seen as a major retail win for

the city, whose last Target store closed more than two decades ago in August 2003. “Target has been working through the complexities of being on this corner (Woodward and Mack) for almost a decade,” said Benji Rosenzweig, a retail real estate expert who is vice president in the Royal Oak office of Toronto-based Colliers International Inc. “Hopefully Target isn’t giving up Detroit and finds another location,” Rosenzweig said. “I’m confident that John (Holtzman) and his team will find another user to fill the void. There are other national tenants in the market because there still is a strong demand and need for quality retail, including basic goods and services.” In October 2022, Crain’s report-

ed that the anticipated time frame for construction to begin was that December based on documents submitted to the city for brownfield financing. But that window came and went. At the time, the project cost was $103 million and would include 344 residential units across multiple buildings, including a 16-story residential tower with 270 units, of which 20 percent would be for those making 80% of the federally designated Area Median Income. Over the summer, Holtzman said a lender backed out of financing talks on the project — formally called City Club Apartments Midtown — but also vowed to see the project through to completion with a new lender. He said at the time there was a

term sheet, although not a loan commitment, from one of his longtime lenders, Associated Bank, but the bank backed away for reasons not related to the project or the city. It’s not known when construction could begin. Elsewhere on the broader South of Mack Avenue site, construction started in the summer on the new 10-story, 154-room AC Hotel at Woodward and Eliot Street in a $49 million project led by Detroit-based The Roxbury Group. Earlier, a large multi-level parking deck with firstfloor retail was built. City Club Apartments recently listed its apartment tower in Detroit’s Elmwood Park neighborhood for sale after a substantial renovation. JANUARY 15, 2024 | CRAIN’S DETROIT BUSINESS | 17

THE CONVERSATION

Rocket Companies’ first CMO wants to make homeownership ‘seamless’ As the first chief marketing officer at Rocket Companies Inc., Jonathan Mildenhall is tasked with developing a corporate narrative to pitch Americans and Canadians on the concept that homeownership and everything it entails should be a seamless experience. The 56-year-old British-American marketing veteran with a background working for companies including Airbnb and Coca-Cola acknowledges he’s got his work cut out for him. In his new role, Mildenhall will be developing and overseeing a marketing strategy and eventual campaign for all of the Detroit-based umbrella organization’s businesses, which includes one of the nation’s largest mortgage lenders, a home-listing venture, title services and consumer finance. Starting the new role Jan. 8, Mildenhall enters the position during a period of uncertainty for the housing market at large, as interest rates are expected to fall later this year, but limited inventory and construction continue to keep prices high. | By Nick Manes What drew you to this new position at Rocket Companies? Varun (Krishna, the new CEO of Rocket Companies) — who I have a historic relationship with — sent me a text and said, “Hey, I’ve got an audacious idea, can we jump on the phone?” His audacious idea was to consolidate all of the Rocket products, services and different brands within Rocket Companies under one CMO. What made that a compelling proposition to you? The reason why it was compelling is because I started to really appreciate the role that homeownership has had for me as an individual. I was born in a project in the north of England. I shared a bedroom with my two older brothers until I went off to college. When I got to college, I lived in a tiny little bedroom that was 25 pounds a week, but compared to where I grew up it was like a palace. And then by the time I was 24, I was lucky enough to be the first person in my family to buy their own home. And as a result of that, I started to get this incredible sense of pride, dignity, security and identity. And over the course of my 15-year career in London before I moved to the U.S., I actually generated more wealth through buying and selling my homes — I only had one home at a time, but I would sell my home every (few) years and buy something a little bit bigger — and actually ended up creating more wealth for myself through homeownership over that 15-year period than I did through my career in advertising. How does that personal experience translate into a marketing campaign? If brands like Nike, (which) sell shoes, and Coke that sells great soda, and Airbnb that sells travel, it’s those brands that can become culturally significant and can actually start to shape in certain ways the cultural conversation in North America and around the world. And I am so confident that we can elevate the Rocket brand narrative and have the Rocket brand narrative become one of the most important brand narratives in North America.

the next few years, the cost of financing will come down. That means home sales will increase. And so I do believe that there are going to be fiscal policies ... that will create greater access for first-time home buyers that have been quite challenging over the last two years. So if interest rates come down, and new homes start to be built, we’ll be able to create — from a marketing perspective — the right kind of educational campaigns, community-driven campaigns, that can help young, first-time buyers understand the opportunities that will present themselves, and have over the last two years they’ve been denied.

Veteran marketer Jonathan Mildenhall is tasked with unifying the different Rocket Companies’ products and offerings into one brand voice.

Now that feels audacious. I mean, it’s as audacious as (Krishna’s) text was to me initially. But when I started to meet the people and started to really understand the products and the services, I knew that ... I had to take this job because I really believe that over the next five years, Rocket is going to become one of the most important brands in North America. From a marketing perspective, why does it make sense in your mind to undertake this consolidation that you mentioned? The vision is to make homeownership — and financial security and ultimately financial freedom that ultimately should come from that — seamless. And so whether that’s how one goes about searching for homes, how one goes about financing a home, how one goes about releasing some of the equity that is built in homes for other things ... To help everybody understand that with Rocket you can have a lifetime relationship and not just a transactional relationship around all of your home ownership needs. That’s really not been done before. There isn’t an ecosystem of products and brands under one branded umbrella that helps people make sense of it. And because of that, a lot of people

Read all the conversations at CrainsDetroit.com/TheConversation 18 | CRAIN’S DETROIT BUSINESS | JANUARY 15, 2024

feel completely, completely overwhelmed when it comes to buying. So I’m not for one minute saying that right now what we have that, (or that) the way that other products and services work together is a seamless experience. But under (Krishna’s) leadership and what he intends to do to create that seamless ecosystem, that gives us the opportunity to start to have a more holistic, multifaceted relationship with our clients over the lifetime of homeownership. (And) the lifetime of homeownership can truly be intergenerational. One challenge with this would seem to be that despite some periods of lower interest rates, homeownership has by and large been getting more costly. How does that reality fit into the marketing strategy you aim to develop? Having not started the job yet, I don’t fully understand the true opportunities. I understand the barriers. For the last couple of decades, it’s never been more costly to finance a home and home prices have escalated beyond anybody’s expectations. And as a result of the extremely high interest rates, relatively speaking, there’s not a lot of new homes being built. That said, a lot of economic predictions suggest that over the course of

Rocket has long been a brand known for its Super Bowl advertising, sort of the biggest event of the year for marketers. Do you envision that maintaining into the future? You know, I’m a British guy. I’ve lived in the U.S. for 16 years and I’ve been involved in 11 Super Bowls. So the Super Bowl is something that I very much respect, and I know it can be used to drive significant business. I have gone down in history as being the CMO that produced the cheapest Super Bowl ad ever. Airbnb’s Super Bowl debut was produced in-house and only cost $65,000. I then spent $4 million on media, but the actual content was produced for only $65,000. And it became the second most talked about Super Bowl commercial (in 2017), second only to T-Mobile, and T-Mobile had 2 minutes with Justin Bieber. So the fact that $65,000 worth of production was second only to Justin Bieber in 2 minutes with T-Mobile made me feel incredibly proud. (The commercial) had a very simple story that was basically, “No matter the color of your skin, no matter what you worship, no matter who you love, we accept you on Airbnb.” And that’s the level of authentic storytelling that I would want to bring to the Super Bowl should we decide as a leadership team that the Super Bowl is going to create value for us going forward. And I believe it will, but the type of stories we tell may change.

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