CRAINSDETROIT.COM I FEBRUARY 5, 2024
Only 6 of state’s public companies have women CEOs Number increased past 20 years, but not near parity with men By Sherri Welch
Sheetz Inc. and other companies have faced opposition from residents in proposed locations in recent months. | SHEETZ INC.
Pushback ramps up on projects Suburbanites battle commercial developments — and sometimes win By Kirk Pinho
Opposition to commercial development in the suburbs is nothing new. It's difficult to say whether it is becoming more effective. But one thing is for sure: Suburbanites in Wayne, Oakland and Macomb
counties have been pushing back — very vocally in some instances — on various non-industrial, non-residential commercial developments, to some success in several cases in the last few years. Companies ranging from Altoona, Pa.-based Sheetz Inc. to Walker-based Meijer Inc. have
been spurned, at least initially, in their plans to build new stores in locations as disparate as Fraser and Plymouth Township, Livonia and Macomb Township, with denials buoyed in part with substantial resident opposition. See SUBURBS on Page 17
The number of women on public company boards and executive teams in Michigan has risen over the past 20 years, but it's still nowhere near parity with men and gains have slowed over the past two years. Case in point: The number of women who held the CEO seat at state public companies doubled in the past six years — but only from three to six, out of 83 companies examined in a new report from a Detroit-based women's leadership group. Elsewhere in the C-suite, last year 18% of the top five officers in those companies were women, compared with 7.1 percent 20 years ago. The figures are contained in a new report from Inforum, the Detroit-based nonprofit focused on women in leadership. Women of color made up only 3% of the top five named officer roles. Companies in the study with women CEOs were General Motors Co., La-Z-Boy Inc., MillerKnoll Inc., Steelcase Inc., Jack-
General Motors Co. Chair and CEO Mary Barra is the only woman top executive among Michigan publicly traded companies to have held the same role since Inforum’s 2018 report. | BLOOMBERG
son Financial and Amesite Inc. In 2017, GM, Consumers Energy Inc., and Citizens National Bank of Cheboygan had women as CEOs. GM’s Mary Barra is the only woman among state companies to hold that role throughout the years since. The share of Michigan companies with women CEOs also lags national numbers. Women hold at least 10% of CEO roles at Fortune 500 companies, researchers said. See CEOS on Page 15
Lions’ success might just be lining your pockets, too A winning season lifts per capita income and spending, researcher says
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But the lift from that rom paper bags on success carries all the our heads to paper way down to the indibags in our hands. vidual level, at least The Detroit Lions’ hisaccording to one retoric NFL season not searcher. only leaves the metro Per capita income Detroit region with pride, and spending rise but with receipts. The economic impact Dustin Walsh when an NFL franchise has a winning season of the team’s playoff run has been estimated and parsed. — particularly for a team that The city glittered on national tele- goes from one of the worst teams vision, Honolulu Blue drone in NFL history to one of the best shows and a gleaming Michigan this season. “When a team does better, the Central Station and all. That can only help the Motor City writ large. kids end up with a better ChristVOL. 40, NO. 5 l COPYRIGHT 2024 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
mas,” said Michael Davis, an associate professor of economics at Missouri S&T who studies the intersection of sports and spending. The city saw the economic benefits of the additional games in the playoffs. The economic impact of the Jan. 21 divisional round game on the city of Detroit was estimated at around $50 million. That’s after an estimated $20 million was pumped into the local economy the weekend of the Jan. 14 Wild Card game. See LIONS on Page 15
FOOD & DRINK Miss Kim chef hopes fourth Beard Award nomination is the charm. PAGE 3
Michigan Central Station in Detroit is lit up in tribute to the Detroit Lions’ playoff run. | STEPHEN MCGEE/MICHIGAN CENTRAL
REAL ESTATE Midwest architecture firms buck the national trend. PAGE 4
FOCUS Weight-loss drug demand weighs on insurers, employers and health care. PAGE 8
Tiny apartment building proposed to hide parking lot By Nick Manes
A vacant parcel in Midtown could become a stone “gatehouse” apartment building with parking on-site to help accommodate the booming restaurant scene in the Detroit neighborhood. An affiliate of Detroit-based real estate developer Robert Slattery has applied to the city’s Historic District Commission, seeking to build a four-unit multi-family project within a gatehouse at 477 W. Alexandrine St. between Cass and Second avenues. The proposed project’s design goal is “to provide a modern interpretation of a stone gate house that would obscure the view of” a 19-space parking lot in the rear part of the parcel, according to a description of the development submitted to the city. Slattery said the main objective with the plan is to provide some relief for the parking crunch in the area as it continues to attract more residents and businesses, particularly increasingly popular restaurants, including Mad Nice and the soon-to-open Vecino. The developer said he’s already obtained bank financing for the planned project of roughly $900,000. He hopes to have the parking component complete by
Above: This rendering shows a proposed residential project in Midtown with a 19-space surface parking lot in the rear. Left: The proposed residential/parking lot project would be built on a vacant lot on Alexandrine Street between Cass and Second avenues. | PHOTOS CITY OF DETROIT
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the summer and the building done by next spring. Detroit-based Sachse Construction has been tapped as the general contractor and Steven C. Flum Inc. in Hamtramck is the architect. The proposed gatehouse building would fulfill a city desire to shield parking while also providing additional housing options, Slattery said, adding that he intends to pursue city programs in an effort to charge belowmarket-rate rents. One of the four units would be reserved as office space, Slattery said, citing that the city prefers projects that are mixed-use in nature. The proposed project is scheduled to go before the city’s HDC on Feb. 7, and Slattery said he believes the body “understands that there is a need for parking in the neighborhood." The city, early this year, began rolling out a new residential parking permit program in certain hot neighborhoods, including parts of the Midtown area. The description of the project submitted to the city notes that there are few existing gatehouses in the region, pointing to one at the Ford House in Grosse Pointe Shores as well as another at the entrance to Woodmere Cemetery on West Fort Street in Detroit.
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Tax breaks sought for hotel on Joe Louis Arena site Package would include $82.1M in benefits By Kirk Pinho
Is 4th Beard nod the charm?
Developers and tourism promoters say the hotel would help address a dearth of hotel rooms in downtown Detroit.
Ji Hye Kim, chef/owner of Miss Kim in Ann Arbor, hopes to make it to the finals | By Jay Davis
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hen it comes to James Beard Foundation chef and restaurant award nominations, Ji Hye Kim admits she doesn’t want to go the Susan Lucci route. Kim last month earned her fourth straight James Beard Award semifinalist nod, this time in the category Best Chef: Great Lakes region. Kim, who is chef and majority owner of Korean restaurant Miss Kim in Ann Arbor, has yet to be selected as a finalist. “I’d be lying if I said being a finalist or winning didn’t matter to me,” Kim told Crain’s. “So many
people make it to the finals. I’d be so honored, so happy. I haven’t even imagined winning at all. Being a finalist is the next step. It’d be another acknowledgment that we’re doing good things.” Kim said the recognition helps her business, which focuses on “food (that) is rooted in Korean tradition and adapted to showcase Michigan’s bountiful produce.” “Sure it does. I feel like, with this being our fourth nomination, it’s a reflection of our consistency,” Kim said. “We’re already usually booked for Friday and Saturday dinners. I think (the
The developer attempting to build a new convention-style hotel next to Huntington Place in downtown Detroit is seeking a tax incentive package totaling more than $90 million for the project. The public buy-in for the proposed 600-room Hotel at Water Square on the former Joe Louis Arena site would come in the form of $82.1 million in net Renaissance Zone benefits over a 30-year period, and a Public Act 210 Commercial Rehabilitation Act tax break valued at $11.6 million over 10 years, totaling $93.7 million. The incentive package, the value of which was publicly disclosed for the first time during a Neighborhood Advisory Council meeting at the Huntington Place convention center Jan. 30, would not be received if the planned 25-story hotel is not built. An anticipated price tag of $396.5 million for the development was also revealed Jan. 30. Developers and tourism promoters say the hotel would help address a dearth of hotel rooms in downtown Detroit, especially in close proximity to the Huntington Place convention center. The total Renaissance Zone package is $130.6 million, but there is a state reimbursement of $48.5 million for local school and library taxes, bringing the net value of the tax break to $82.1 million, Kenyetta Hairston-Bridges, the Detroit Economic Growth Corp.’s COO and executive vice president of economic development and investment services, said during the roughly two-hour meeting. Hairston-Bridges said the
hotel would “help make Detroit more competitive in attracting national and international conventions.” Renaissance zones allow for waivers of Detroit’s income and utility users tax, city and county property taxes plus state income tax. Hairston-Bridges said the project would seek a Michigan Strategic Fund-approved Renaissance Zone designation. The approval process for such a zone was unclear Jan 30. The DEGC argues that the economic benefits outweigh the value of the incentive package, with benefits totaling close to $2.6 billion, the vast majority of which would come from spending by Detroit visitors attending conventions and events. The organization also says that without the incentives, the project could not be built. Without the incentives, according to the DEGC, the project would have a debt-service coverage ratio, or DSCR, of just
Ann Arbor chef and restaurant owner Ji Hye Kim last month earned her fourth straight James Beard Awards semifinalist nomination. Miss Kim restaurant offers authentic Korean food. | PHOTOS BY EE BURGER
nominations) do bring in more people from out of town. I think if you’re driving through Ann Arbor on your way to Chicago you’re more likely to find us because of the nominations. You see people mentioning it, too.” See KIM on Page 16
1.14, but with them, the DSCR is 1.31, meaning that it has more cash on hand to pay back its loans. In addition, project returns without incentives would be just 1.88%, compared with 7.38% with them. For comparison, the DEGC says the Detroit City Council signed off on tax incentives for north of $3 billion in mixed-use projects in 2022 and 2023, and the average return in 2022 on those projects was 7.1% and last year it was 6.4%. See TAX BREAK on Page 16
Businessman rescues sailboat supplier from bankruptcy By Kurt Nagl
Prominent businessman and philanthropist Stephen Polk has thrown a lifeline to Offshore Spars Co., buying the manufacturer out of bankruptcy for $2.4 million. Polk was the winning bidder for the assets of the Chesterfield Township-based company, which makes carbon fiber masts, booms and poles for sailboats and yachts.
It filed for Chapter 11 bankruptcy protection in May. Resolution of the bankruptcy plan, confirmed earlier this month, clears the way for the latest business opportunity for Polk, former head of Southfield-based R.L. Polk & Co., which sold to IHS Inc. in 2013. Polk, 68, will oversee operations of the company along with his son Ryan, who is learning the ropes of the family business
portfolio. Polk said he invested in the company because of its growth potential. It helps that he’s an avid sailor. “It intrigued me,” Polk told Crain’s. “The business opportunity was the most interesting, but being a sailor, it certainly was something that caught my attention when I first saw it.” See POLK on Page 16
Offshore Spars Co. makes carbon fiber masts, booms and poles for sailboats and yachts at its Chesterfield Township shop. | ANASTASIA CHEATHAM PHOTOGRAPHY FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 3
REAL ESTATE INSIDER
Midwest architecture firms buck the national trend
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ere’s some good news for architecture firms around town. Data from the American Institute of Architects, based in Washington, D.C., shows that billings for architecture firms in the Midwest increased slightly in December, a positive sign for construction in the region. According to the AIA data, in Kirk Pinho companies the Midwest reported an index score of 50.3. A score of 50 means that the number of firms reporting increased billings and the number of firms reporting decreased billings was the same for that month. Higher than 50 means the majority of firms reported an increase in billings, while lower than 50 means a majority of firms reported a decrease in billings. And although a score of 50.3 represents only “very small growth,” according to Jennifer Riskus, director of market and economic research for the AIA, that’s better than the alternative seen in other regions. In the Northeast, the AIA score was 45.9, while in the western states it was 45.3 and in the south it was 43.4, meaning all three
saw serious declines in billings. Michigan-specific data was not available. Riskus said in an email that the Midwest score “has been hovering right around the 50 mark for about the last six months, which is better than most other regions, which have been solidly below 50 during that period.” There are also signs for optimism, AIA data shows. Project inquiries increased each month in 2023 with the exception of one, although the value of new design contracts only increased in six of the 12 months. That means that while people are exploring new projects, that haven’t been committed enough to sign a contract for it. “In addition, backlogs at firms remained quite strong throughout 2023, despite declining from a record-high peak in 2022,” the AIA says. “Backlogs at firms stood at an average of 6.7 months in December, indicating that most firms still have a significant amount of work in the pipeline.” Michael Cooper, president of HED (formerly Harley Ellis Devereaux) in Southfield, said that although broader data may say that billings are generally flat, his company has been seeing more of a bump. Sectors like manufacturing, higher education, health care and
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4 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
Construction of an RH store underway near downtown Birmingham. | BETH REEBER VALONE
data centers have all been active in recent years in Michigan and elsewhere around the Midwest, contributing to increased billings. “They may be reporting it flat, but we have seen it a little bit better than that,” Cooper said. “It’s related to a handful of key markets we are tracking.” HED reported $113 million in 2022 revenue ($1.4 billion in projects under construction) to Crain’s Detroit Business, up from $86 million in revenue ($1.075 billion in
projects under construction). It is ranked the fourth-largest architecture firm in the region, by revenue, according to Crain’s list of largest metro Detroit architecture firms. It trails SmithGroup ($354.1 million in 2022); Ghafari Inc. ($163.4 million in 2022) and AECOM ($124.3 million in 2022). “As we look ahead, we are still anticipating an uptick and improvement over 2023,” Cooper said. Other construction industry ex-
perts have also recently predicted a strong 2024, including Todd Sachse, who runs Detroit-based Sachse Construction. “We are bullish,” Sachse told me in an interview late last year. “Two-thirds of our projects are outside the state of Michigan. Revenue is about 65% local and 35% out of state. We do more projects out of town, but they are smaller in revenue and size. There is still a pipeline out there. There are still opportunities out there.”
Carhartt headquarters building in Dearborn sold to Chicago buyer By Kirk Pinho
A Chicago-based firm has purchased the Carhartt Inc. headquarters in Dearborn. Syndicated Equities did not disclose in a press release how much it paid for the nearly 58,000-squarefoot building at 5750 Mercury Drive near Ford Road and the Southfield Freeway/M-39. But CoStar Group Inc., a Washington, D.C.-based real estate information service, says it was part of a three-building portfolio deal for $43.1 million that also included a 68,500-square-foot building at 47519 Halyard Drive in Plymouth Township occupied by German mobility technology company AVL, plus another building totaling about 141,500 square feet in Tucson, Ariz. A top executive at Syndicated indicated in the release that Carhartt is remaining a tenant for the foreseeable future, although emails sent Jan. 30 to both Syndicated as well as the 135-year-old workwear company have not been answered. “Now, more than ever, we believe that consistent cash flow from an investment-grade tenant on a long-term lease is an excellent position to take amidst current market volatility,” Matt McCulloch, managing partner for Syndicated Equities, said in the
A Chicago-based company has purchased the Carhartt Inc. headquarters in Dearborn. | COURTESY OF SYNDICATED EQUITIES
press release. The buildings were previously owned by New York City-based Net Lease Office Properties, a publicly traded real estate investment trust (NYSE: NLOP). Documents on the Net Lease Office Properties website say that, as of Sept. 30, the annual Carhartt rent in the building is approximately $750,000 with annual 2.65% rent increases. AVL’s lease for the Plymouth Township building calls for annual base rent of
$575,235 with annual increases of 25 cents per square foot, the website says. CoStar says Carhartt leases all of its headquarters building and has occupied it since it was built in the early 2000s. Construction on the building started in September 2002, according to an April 2003 story on the Michigan Building and Construction Trades Council website. It cost $7 million to build, the story says.
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EDITORIAL
Why Whitmer’s speech has us singing the blues
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ne month after Gov. Gretchen Whitmer’s population council issued its report, painting a bleak picture of the direction Michigan is headed, she had an opportunity in her State of the State address to offer bold, new ideas for Michigan’s future. She failed. Just as Whitmer recycled the names of pop songs from the 1980s in a ham-handed attempt to make the speech more interesting, she recycled tired ideas that were thinner than music wafting from a cassette tape. Her own hand-picked population council made it very clear: Michigan is in trouble and needs help fast. Or, as Detroit Regional Chamber President Sandy Baruah put it recently: “Michigan’s house is on fire.” Whitmer might have been better off making reference to the Talking Heads’ 1983 classic “Burning Down the House.” Senate Minority Leader Aric Nesbitt posited that the governor’s speech was designed more as a public relations tool to position her on the national stage rather than a serious policy prescription for Michigan’s future. He very well may be right. She offered up free preschool and free community college. But how to pay for it? That will have to wait until her budget presentation later, we’re told.
Michigan Gov. Gretchen Whitmer delivers her State of the State address last month. | AP
As expected, Whitmer proposed a rebate for new car purchases, and an even sweeter deal if the vehicle was made in a unionized factory. For one, the amount of money proposed — $25 million — isn’t enough to make a serious difference and wouldn’t last more than two or three weeks, let alone the fact that the
government should not be meddling in management-worker relations by favoring unions in this way. Furthermore, what does this rebate do to help Michigan gain high-knowledge, high-wage jobs and grow the population? The answer is it doesn’t, because it’s a gimmick that might sound enticing in a speech
but isn’t a serious policy proposal. Let’s be real. Here are just a few of the statistics bandied about recently about Michigan’s current condition: ◗ 49th in population growth. ◗ 39th (and falling) in personal income per capita. ◗ 37th in the number of residents with a post-secondary degree or credential. ◗ Less than one-third of students are proficient in reading or math at either third- or fourth-grade levels. Business leaders and many others agree Michigan must take a hard look at its K-12 system to improve outcomes. The state needs high, universal standards for what a high school diploma should be. Whitmer offered no serious K-12 reforms during her State of the State. On economic development, she nibbled around the edges with proposed rebates and tax cuts, but didn’t come close to offering “a roadmap to transform our economy” as her council recommended. Yes, Michigan’s problems are decades in the making and, of course, they can’t be solved in one speech. But at this moment when it seems everyone agrees Michigan is headed in the wrong direction, Whitmer failed to meet the moment, show leadership and offer a concrete vision for a more prosperous future. Instead, all we got was nostalgia. “Glory Days,’’ anyone?
COMMENTARY
Michigan keeps creating incentives to leave the state
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tinue to move to other states for ov. Gretchen Whitmer’s better opportunities. “Growing Michigan ToIn 2010, the Mackinac Center gether Council” report asked Professor Michael Hicks of should have contained new ideas Ball State University to conduct a for attracting residents, but it only study about what causes people repeats our state’s history. It is a to move from one state to anothnew edition of an old story in er. Among other findings, he rewhich the state buys or creates exported that for every 10% inpensive reports that conveniently crease in the differential between justify and excuse what state offi- Michael Michigan’s state and local taxes cials wanted to do anyway. LaFaive is the and those of other states, an adThe report is stuffed with old senior director ditional 4,700 of our citizens may ideas and tired concepts. It has of fiscal policy move away every year. The in54 references to “funding” — at the come tax hike the state imposed translation: raising taxes. The re- Mackinac under Gov. Jennifer Granholm port also claims we can improve Center for our economic well-being with Public Policy, a conceivably chased tens of thousands of our fellow citizens from taxpayer handouts to corpora- free-market our beloved state. And that’s just tions, unions and other favored research and one tax increase. groups. In other words, hike educational The Democrats who control job-killing taxes and spend the institute in state government today look to money on demonstrably ineffec- Midland. do more tax-related damage to tive subsidy programs. Taxes matter, not just to economic state population trends. Last fall, Whitmer growth but also to interstate migration. called for a paid family and medical leave Michigan is quickly losing ground to com- law, which would increase payroll taxes to petitors. Fourteen states have individual cover the extra costs of mandated benefits. income tax rate reductions that take effect The Michigan Chamber of Commerce exin 2024, according to the Tax Foundation. amined the bills widely viewed as the legMeanwhile, Michigan’s income tax rate is islative vehicle for this idea and estimated expected to increase from 4.05% to 4.25%. the annual tax cost increase at $1 billion. As the tax gulf expands between the Great In December, a tax increase on cigarettes Lakes State and others, people will con- and related products was introduced; it
will likely take another $400 million. These tax hikes do not involve the corporate handouts so popular with many state politicians. Whitmer’s population council has recommended giving more money to favored businesses. This would be on top of the staggering $4.1 billion in corporate welfare authorized by the Legislature in 2023 alone. The spending included hundreds of millions in subsidies for the controversial and hyper-secretive deals with Ford/CATL and Gotion Inc. Maybe all of that would be fine if the subsidy programs worked, but scholars have found that subsidies for big corporations have instead a “starkly negative” employment impact. Smaller firms may do better with such deals, but not always. Evidence also shows that specific assistance for specific purposes — like underwriting business incubators as well as green and hightech jobs — has not been a costeffective gambit either, particularly in Michigan. One 2010 study that included 32 incubators from Michigan found that incubated firms did not have higher survival rates, sales or employment growth. Past Michigan-specific subsidy programs that targeted smaller high-tech or green firms, such as the Michigan Economic Growth Authority or 21st Century
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 | FEBRUARY 5, 2024
Jobs Fund, also have failed miserably. My 2020 study with Michael Hicks showed that each created jobs, but at a cost of incentives offered of between $125,000 and $330,000 per job per year. That is not a sustainable level of spending. Lansing lawmakers want to impose job-killing taxes under the ruse of creating jobs then spend the money on business subsidies that have been repeated and expensive failures. It’s a formula designed to fail. There’s a better way. Scholars have studied what makes a state’s population grow and what causes people to move from one state to another. My colleague, Hannah Kling, has reviewed nearly 100 studies and published a review of the
Taxes matter, not just to economic growth but also to interstate migration. findings. What works are uncomplicated and low taxes, lighter regulatory burdens on the labor market, and quality public services. This can improve inbound migration and thus, population growth, more than any exotic industrial policy programs.
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.
Telemus Capital merges with Chicago firm By Anna Fifelski and Nick Manes
With widespread consolidation in the global wealth management industry increasingly becoming the norm, the trend continues to play out in metro Detroit as well. Case-in-point: Southfield-based financial advisory firm Telemus Capital LLC is merging with Kovitz Investment Group Partners LLC, a Chicago headquartered wealth management firm, Telemus told Crain’s. Both firms are part of New York City-based Focus Financial Partners and are forming the second “hub” within the wealth management giant that went private last year in an all-cash, $7 billionplus deal with private equity firm CD&R. Focus has invested in more than 90 firms across the United States. Focus owns around 50% of each of its firms and will purchase the remaining fraction of those interested in becoming hubs. Kovitz and Ketoret Capital LLC — the latter of which was acquired in January by Telemus, as Crain’s reported — will make up the second hub, with plans to integrate more firms throughout the year. “The goal is not just synergies and interest in integration, it’s also centralization, so that we get the benefits of the merged companies,” Kovitz Principal and coChief Investment Officer Mitchell Kovitz said.
Lyle Wolberg
Mitchell Kovitz
more than they enjoy right now and utilize their strengths more so than what they are right now.” Wolberg will operate as the combined company’s principal and senior wealth adviser. The deal to merge Telemus and
Kovitz under the ownership of Focus Financial is just the latest in what has been a whirlwind of M&A activity in the wealth management space, which is only expected to pick up. A global survey by Citigroup last year found that as many as 69% of 170 participants in the survey agreed that industry consolidation will continue to accelerate, according to a Reuters report on the survey. Wolberg said many smaller, independent firms struggle with increased compliance costs is helping drive the wave of consoli-
dation. The centralization of two the companies is not mandated by Focus, Telemus or Kovitz, Kovitz told Crain’s. But it is determined by the companies involved that might want to grow and increase their services. “A lot of mergers don’t work out,” Kovitz said. “People don’t like giving up control, there’s financial issues, stock ownership, all those things are problems. Here we have a set of firms where we know people we’ve seen every year at the Focus conferences and we’ve often worked with them
collaboratively on things.” Both firms will take other culture, services and growth into consideration when expanding the hub in the future. “I wouldn’t be surprised, the way things are going, that we have four or five more acquisitions that follow up in the next six to 12 months,” Wolberg said. “But they have to fit right and everybody has their own schedule.” In November, Focus created its first hub with the merger of The Colony Group, headquartered in Boston, and Maryland-based Connectus Wealth Advisors.
“...We see this as an unbelievable opportunity for both our people and our clients.” — Telemus CEO Lyle Wolberg Following the merger between Telemus and Kovitz, each firm will operate under its current name and brand for the immediate future. The companies have a combined $11 billion in assets under management. Kovitz has 105 employees and four locations, one of which is in California. Telemus has 50 employees and locations throughout Ann Arbor and the Chicago area, and was ranked No. 12 on Crain’s 2023 list of largest money managers with $2.98 billion under management. Telemus CEO Lyle Wolberg said the merger allows both firms to better serve their clients by integrating the other’s strengths into its offerings. For example, the executives pointed to Telemus’ insurance group and corporate executive services, which the Kovitz team will now be able to utilize for its clients. “One of the reasons we decided to take this next evolution in Telemus by joining forces is (because) we see this as an unbelievable opportunity for both our people and our clients,” Wolberg said. “By being the first firm to join with Kovitz as a hub, we’re going to have a greater opportunity for people to find things that they maybe enjoy FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 7
HEALTH CARE
Weight-loss drug demand weighs on insurers, employers, health care By Dustin Walsh
The masses concerned about their mass are inundating doctors with requests for new — and costly — anti-obesity drugs. The runaway demand for drugs like Ozempic and Wegovy that are proven to help people lose weight are also causing costs to add up for those who pay for them and has doctors with their hands full — except for weight-loss surgeons. Dr. Amy Rothberg, a clinical professor at the University of Michigan Medical School and director of the university health system’s metabolism, endocrinology and diabetes division, sees patients for one half-day a week, about 10 patients, but receives more than 50 calls per week on the drugs such as Wegovy and Zepbound. “There is a substantial uptick in people seeking these specific anti-obesity drugs,” Rothberg said. “We’re seeing people who have struggled with obesity and people who see it on social media that are coming in for the first time. We’re all inundated with messaging, phone calls and appointments about them. It’s very demanding. It takes a lot of resources we have to employ to have communications with the patients and the insurance companies to figure out who gets it and who doesn’t.” With 41% of Americans classified as obese, the drugs are in hot demand, but insurers are playing catchup, and until more long-term data on use of the drugs is collected, problems throughout the health care system will persist.
Ozempic injection pens move along a conveyor at the Novo Nordisk A/S production facilities in Hillerod, Denmark. | PHOTOS BY BLOOMBERG
Pound peelers The drugs, known as GLP-1 agonists, were first approved by the U.S. Food and Drug Administration in 2005 as medications used to manage blood sugar in patients with Type-2 diabetes. GLP-1 is a hormone in your small intestine and the medicine works by triggering the release of insulin from the pancreas as well as preventing glucose from entering the bloodstream. But it has been found to also slow down digestion and increase the sensation of a full stomach — making it an effective drug for obese patients needing to lose weight. Ozempic, made by Danish pharmaceutical giant Novo Nordisk, hit the U.S. market in January 2018 for use in diabetes treatment, but quickly made its way to wealthy patients who could get an off-label prescription for the drug to use for weight loss. Ozempic 8 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
A dose of the injectable weight loss drug Wegovy.
A scientist uses a culture flask and pipette in the cell therapy labs at the Novo Nordisk A/S research facilities in Malov, Denmark.
has not been approved by the Food and Drug Administration for that use, but doctors are still allowed to prescribe it. When late night host Jimmy Kimmel hosted the Oscars in March last year, he commented on how good everyone looked. “When I look around this room, I can’t help but wonder: Is Ozempic right for me?” the comedian said, a nod to Ozempic’s rumored widespread use among the Holly-
wood elite. Eli Lilly’s Mounjaro was FDA approved for treating diabetes in May 2022 and joined Ozempic in being prescribed off-label to doctors to patients willing to pay the steep prices. Rothberg cringes at the thought of these medicines being used to tone the already toned. “These are not vanity drugs,” Rothberg said. “They should not be prescribed for people that want
to lose 10 pounds. These are valuable tools for a portion of the population. Certainly we’re faced with an epidemic of obesity, so we need these drugs for those people.” And the addition of more drugs isn’t satiating demand. Wegovy, also made by Novo Nordisk, received FDA approval for weight loss in 2021. Other similar drugs are also hitting the market. Eli Lilly’s Zepbound received FDA approval in November, for instance. However, shortages of the GLP1 agonists began plaguing the market in late 2022, leading to critical issues for diabetic patients seeking their medication.
Effective but costly Atheer Kaddis, vice president and chief pharmacy officer for Blue Cross Blue Shield of Michigan, said the insurer’s pharmacy costs doubled between early 2022 and 2023, largely due to the rise in GLP-1s. “That’s for two reasons,” Kaddis said. “Ozempic and Mounjaro are now the preferred treatments for Type-2 diabetes. And on the obesity side, we’re seeing a lot of social media advertising and promotion of these drugs for weight loss. Because of these phenomena, we’re seen a significant rise in utilization.”
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Wegovy costs the insurer about are down across the globe. “Bariatric surgeons are seeing $1,600 per month and Zepbound costs about $1,200 per month, he a 10% to 30% drop in business,” Pesta said. “People are trying the said. What patients pay varies, de- medications first. Before patients pending on their insurance plan, would see their primary care from the full cost until a deduct- physician and they’d toss their ible is hit or as low as a $20 copay. hands up and pointed them to us, Novo Nordisk and Eli Lilly, but now they have these medicahowever, do run copay assistance tions.” But Pesta believes the hype of programs that knock the out-ofpocket costs to $500 to $600 per these drugs will die down and they become integrated with barmonth, Kaddis said. Due to the increased populari- iatric surgery and other weight ty and high cost of the drugs, management schemes. The drugs are taxing to take, reBCBSM is now requiring prior authorization for the drugs, quiring a weekly or sometimes something it didn’t do when daily injection into the belly, he GLP-1s first hit the market to said. “It’s great because it’s starting treat diabetes. “It’s only when we saw all the the discussion of treating obesity off-label use for these drugs for as a disease, not a disease of lack weight loss that we started man- of willpower,” Pesta said. “But not aging them from a critical criteria everyone knows you need to be standpoint,” Kaddis said. “The on these medications for life. costs have had a major impact on Once the meds stop, weight gain payers and employer groups. is the most common occurrence. We’re trying to do our part, but Not everyone wants to be on an only for the patients that appro- injection for the rest of their lives.” Kaddis said of those insured priately qualify to get these therapies. We’re not trying to restrict through BCBSM taking Wegovy access, but we want them to go to or Zepbound, only about 20% to 30% remain on the drugs past 18 the right patients.” To qualify, patients must have months. Kaddis believes this is likely a BMI over 30 or above 27 with a cardiovascular condition. And due to the injection routine, the BCBSM requires patients receiv- expense of the drugs and, most ing the drugs to be enrolled in a commonly, due to side effects. “The drugs work, but they are “lifestyle modification program,” which usually puts patients on a not magic,” Kaddis said. “We’re regimented diet and exercise seeing a lot of patients unable to tolerate the nausea associated routine. Currently, Medicare doesn’t with the drugs.” Pesta said that failure rate will cover any weight-loss drugs. Medicaid insurers in Michigan hamstring long-term use of the can. And rules surrounding pay- drugs by many and likely change ment for the drugs can vary for how they are used long-term. He sees their use most approprivate insurance. With several more GLP-1s in priately as an adjunct medicine development, costs could come following bariatric surgery on down with increased competi- obese patients. “There’s probably going to be a tion, but Rothberg is skeptical. “Hopefully we won’t see a treatment paradigm shift,” Pesta greater shortfall for the people said. “Like surgery paired with that need them,” Rothberg said. chemo for colon cancer, we can “But I am skeptical about prices coming down, only because of the lessons we learned from insulin. Many companies make insulin, but — Dr. Amy Rothberg, University of Michigan Medical School prices never came down. Not, at least, until the government stepped in.” have the bariatric surgery and Insulin prices dropped from then use the medications to immore than $100 to a $35 cap after prove outcomes for some people.” Legislature passed the Inflation Rothberg stresses the GLP-1s Reduction Act in 2022. Prices are not a medical miracle. While were officially capped at the start they are popular and effective, of this year, though most drug- they do not treat the root causes makers lowered insulin prices of obesity in Michigan and the last year. nation. “This is as much a societal Failure leads to a new plan? problem as it is a medical problem,” Rothberg said. “We are not The GLP-1s are also shaking up addressing the fundamental reasons people have obesity in the the bariatric surgery sector. Dr. Carl Pesta, surgeon, medi- first place. We live in a nutrient cal director of the Bariatric Sur- poor environment and many are gery Institute at McLaren Ma- short-changed and don’t have comb Hospital and president of access to proper care. This is just the American Society for Meta- a Band-Aid if people are still acbolic and Bariatric Surgery Foun- cessing the dollar store for their dation, said bariatric surgeries nutritional needs.”
“Hopefully we won’t see a greater shortfall for the people that need them.”
National in-home health care startup launches with 8,000 patients in Detroit By Gabriel Perna, Modern Healthcare
Dr. Rahul Rajkumar founded Accompany Health in 2022 because he said low-income Americans with complex medical needs deserve better than what the health care system has given them. On Jan. 30, the company launched publicly with a $56 million Series A funding round. Accompany provides primary, behavioral and social care to low-income patients through at-home provid-
ers and virtual platforms. The company is working with a health plan customer with 8,000 members in Detroit but declined to identify it. Accompany is reimbursed by the payer through a value-based care arrangement based on patient outcomes. Rajkumar said the company will look to add an additional market in the next year. “When you’re sick, when you have chronic diseases and you’re in the health care system, it can be very scary, confusing and lonely,”
Rajkumar said. “The ethos of our company is no one should go into this alone.” Accompany offers patients a community health worker, advanced practice clinician, physician, psychiatrist, social worker and pharmacist, Rajkumar said. The team either acts as the patient’s primary care provider or augments existing medical relationships, he said. The initial visit is done at a patient’s home and then the team can treat patients virtually or in person.
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FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 9
$27.5M center linking business and academia to benefit Great Lakes takes big steps toward reality By Tom Henderson
Progress is well underway on the $27.5 million Freshwater Research & Innovation Center just north of Traverse City on West Bay in Elmwood Township, just north of Traverse City. The center planned for Elmwood Township is a collaboration announced late in 2022 between Houghton-based Michigan Technological University and its Traverse City operation and four local organizations — the Discovery Center & Pier; Northwestern Michigan College; Traverse Connect, the regional chamber of commerce; and 20Fathoms, a business incubator. Last June, the state Legislature approved $15 million in funding in the 2024 budget for the project, money coming from funds funneled to the state through the federal American Rescue Plan Act. That funding is contingent on the project raising an additional $12.5 million by the end of this year, which the center’s partners are working furiously to raise. The state’s Department of Natural Resources is the administrator of the $15 million. “All I am doing now is fundraising for this,” said Matt McDonough, the CEO of the Discovery Center. He said he is meeting with foundations and writing formal requests for grants ranging from $250,000 to $3.9 million. The Discovery Center & Pier is a nonprofit organization that works with a range of organizations and schools to provide free Great Lakesbased programs to area students, with an emphasis on underserved youth and people with disabilities. McDonough said last year, the Discovery Center provided programming through its “All Aboard,” “Discovering Careers in Marine Technology” and “Discovery Fishing at the Pier” programs. In addition to foundations and other nonprofits, funding sources could include the Michigan Economic Development Corp., the National Science Foundation, the U.S. Environmental Protection Agency, and the U.S. Department of Commerce’s National Oceanic and Atmospheric Administration. McDonough said he expects the additional fundraising to include $2 million to $5 million in other state funding. The plan for the new center is to get university researchers and for-profit startups tackling such issues as early detection and remediation of synthetic perfluoroalkyl and polyfluoroalkyl substances, or PFAS, the so-called forever chemicals that have been impervious to degradation; microplastics that have become dangerously ubiquitous in bodies of water; the proliferation of invasive species of mussels; lead contamination; and nutrient runoffs from land. Northwestern Michigan College brings expertise on water-related research to the center. It grants bachelor’s degrees through its Great Lakes 10 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
Matt McDonough, CEO of Discovery Center & Pier, in front of the newly rehabbed, improved old coal dock where ships involved in the Freshwater center will conduct research. | TOM HENDERSON
A rendering of the planned Freshwater Research & Innovation Center north of Traverse City. | DISCOVERY CENTER & PIER
Maritime Academy and the Great en years off,” he said. Since the project was anLakes Water Studies Institute, and was the first community college in nounced, almost $8 million has the state to offer bachelor’s degrees, been spent on infrastructure improvements at the former Traverse through those entities. In turn, Michigan Tech’s partner- City Light and Power coal dock ship with the Freshwater center will across from the Discovery Center augment a wide range of research complex, where research vessels and projects now underway at the connected with work at the FreshMichigan Tech Research Institute in water Center will be docked. Houghton. McDonough said he is optimistic that at least two other state universities will join Michigan Tech and Northwestern Michigan College in having faculty and students at the new center. He said he had three meetings with both Central Michigan University and Grand — U.S. Rep. Debbie Dingell Valley State University and The research center will be built hopes to soon announce formal reacross M-22 from the pier. The $8 lationships. McDonough is confident million included $3 million in state enough in the mission of the new funding, $1.3 million in federal center and its eventual success funding and $3.2 million in private that he is already planning on a funding, from about 50 gifts from second building of similar size on foundations and individuals, rangthe Discovery site. “It’s maybe sev- ing from $50 to $825,000.
The result was dredging and expanding the marina basin; a new dock system for ships; a bridge to Elmwood Township Park; utility improvements; shade and rain structures; a three-season outdoor classroom pavilion that will finish construction in February and barrier-free sidewalks and parking. Upcoming improvements at the marina will include an adaptive kayak launch, installing more docks, building a ticket office and installing cranes for loading and unloading equipment from research vessels. McDonough is meeting with township officials on Feb. 20 to get site-plan approvals for that round of improvements. Grand Rapids-based Cornerstone Architects has done renderings and floor plans for the twostory, 35,000-square-foot building. There will also be what is being billed as the Dockside Learning Lab, a 3,000-square-foot structure on
“Comprehensively exploring and mapping the Great Lakes will strengthen our understanding of their underwater environment so that we can better protect them.”
the pier. The tax-exempt land owned by the Discovery Center is now home to a variety of tenants, including the Great Lakes Children’s Museum, the Maritime Heritage Alliance, the Inland Seas Education Association and Traverse Area Community Sailing. “All of the buildings were nearing or at the end of their useful lives,” McDonough said. “Everyone is moving off site. We gave them two years’ notice this past summer.” Mel Drumm, the museum’s board president, described the upcoming move as “a great opportunity,” saying the museum had outgrown its space, and it will be better to own its building instead of renting. McDonough said a 7,200-squarefoot steel building now used for storage may be moved off site for use by the Maritime Heritage Alliance, a nonprofit that teaches ship-building skills and will continue to operate a schooner at the Discovery Pier to take customers on daily trips on the lake. He said he hopes to put construction on the center out for bid in September or October and have groundbreaking as soon as October 2025. The state requires the ARPA funding to be spent on construction by the end of 2026. He said the plan is to have 80 percent occupancy the first year of operation and 100 percent the second. Eric Roberts, the executive director of the business incubator 20Fathoms, which is just south of M-22 from the Discovery Center, said his organization will expand its operations into the research center to support startups and early-stage companies. Jay Meldrum is executive director of Michigan Tech’s Traverse City Research Center, which currently has offices in Traverse Connect’s building in downtown Traverse City. He said his offices will move into the research center when it opens. He said his areas of interest include the electrification of boats through shoreside charging stations and high-resolution mapping of the Great Lakes beds. On Jan. 17, U.S. Reps. Lisa McClain and Debbie Dingell introduced the Mapping Great Lakes Act, a bill that would authorize $200 million for the National Oceanic and Atmospheric Administration to conduct high-resolution mapping of the Great Lakes lakebed. “Comprehensively exploring and mapping the Great Lakes will strengthen our understanding of their underwater environment so that we can better protect them and the many species they contain and continue to foster the economic prosperity they have supported for generations,” Dingell said in a press release. Northwestern Michigan College is hosting what is billed as the Lakebed 2030 Conference from Sept. 17-19 in Traverse City to focus on the scientific, economic and environmental impacts of mapping.
Struggling Bagger Dave’s appears to be nearing its end By Jay Davis
DTE in January filed its transportation electrification plan, a blueprint for accommodating new EVs on the grid. | BLOOMBERG
DTE eyes rebates to support installation of EV chargers By David Eggert
DTE Electric is planning to offer rebates to support the installation of more than 19,000 electric vehicle chargers from 2025 through 2028, triple the number of rebates issued to date. The utility in January filed its transportation electrification plan, a blueprint for accommodating new EVs on the grid. The Michigan Public Service Commission will consider the $124.8 million proposal when the company seeks future rate hikes. The plan has fullscale, permanent EV programs unlike DTE’s existing rebate offerings, which regulators consider to be pilots. DTE projects Southeast Michigan will have about 326,000 EVs within five years, a seven-fold increase from roughly 46,000 today. It wants to give rebates for Level 2 and DC fast chargers as follows: ◗ Shifting from a $500 home charger rebate regardless of income to covering full installation costs — both the charger and any required upgrades to electrical wiring and breaker panels — for lowerincome customers only. The eligibility threshold would be 200% of the federal poverty level, or approximately $60,000 for a fourperson household. DTE estimates issuing 10,900 rebates to support 100% of lower-income households buying EVs. It would cost $24 million, or $2,200 per rebate. ◗ Increasing to $5,000, from $2,000, the rebate for businesses with multi-unit dwellings. That would result in 4,130 rebates covering 45% of the estimated market in the regular-income subsegment. The company also wants to fully cover charger and installation costs for an estimated 485 landlords with low-income tenants, 90% of the market in low-income subsegment, at a cost of $14,400 per rebate. It is more expensive to install chargers at apartment complexes due to the cost of trenching and
extending electrical wires to parking lots. The total cost would be $27.7 million. ◗ Providing increased support for fast chargers along major highways and roads in disadvantaged communities and rural areas, 35% of the estimated market, while continuing to offer such “onroute” rebates in other communities, too. It would cost $37 million to issue 620 rebates, at $50,000 or $70,000 a rebate depending on where the charger is installed. ◗ Continuing its $70,000 fast charger rebate for school and transit buses. It would cover 100 school bus rebates, 30% of the market, and 33 transit bus rebates, 100% of the market. It is proposing to still offer $2,500 or $70,000 rebates — 3,020 total — for fleets owned by businesses or governments. The total cost would be $36.1 million. Pina Bennett, DTE’s director of electric sales and marketing, said the Detroit-based utility plans to cover the full charger installation costs for low-income customers and landlords with lowincome tenants because “cost is a significant barrier. ... Where our market analysis shows that there is a charging gap is in this high cost, not just of the charger but also the charger installation. So that is what we are aiming to support. Of course, one of the other key guiding principles we have is equity, so that we help remove barriers for EV adoption.” The company’s existing rebate programs, she said, have demonstrated that charging-related costs are not a significant obstacle for more affluent homeowners. Several elements of the existing programs were left out of the new proposal, including subsidies for moderate- and highincome owners of single-family homes along with a business-
specific rebate. The utility would not support workplace charging, focusing on multi-unit housing instead, or public destination charging. Businesses, though, could still qualify for rebates if they lease housing, are near major roadways or have EV fleets. DTE solicited feedback from 110 stakeholders. About half, 54, participated, and their input led the utility to make changes. Many participants were from the EV industry. Others represented local governments, small businesses, environmental groups, economic development agencies and the clean-energy industry. The plan’s overall cost would be $145 million, including about $20 million for program administration, education and outreach, technology and data expenses. In the short term, Bennett said, the blueprint would “create a little bit of a rate pressure on customers as we set up this program.” But long term, it would also give cus-
DTE projects Southeast Michigan will have about 326,000 EVs within five years, a seven-fold increase from today. tomers $56 million in rate relief because the additional load from EV charging will be spread over the the grid’s fixed asset costs, “which then puts downward pressure on rates,” she said. As of December, DTE had issued 6,323 rebates through its Charging Forward program, and an additional 461 were pending. Most, 78%, were for homes. “As the new fuel provider for vehicles, it is our role as a utility to make sure that we help the state of Michigan accelerate the transition to EVs and help them achieve their decarbonization goals,” Bennett said.
The Bagger Dave’s brand looks to be on its last leg. North Dakota-based fast food operator BT Brands Inc. on Jan. 26 announced plans to later this year convert the remaining Bagger Dave’s locations to another concept, according to a news release. BT Brands owns an almost 40% share of Bagger Dave’s. The proposed change will be put to Bagger Dave’s shareholders to align a new name with a new business strategy, the release states. The restaurants will continue to operate as Bagger Dave’s until a decision on a new concept is made. Bagger Dave’s, operating as Bagger Dave’s Burger Tavern Inc., currently has six locations, down from a high of more than 25 at its peak. The remaining restaurants are in Berkley, Birch Run, Chesterfield Township and Cascade Township, outside Grand Rapids. Bagger Dave’s also operates locations in Centerville, Ohio, and Fort Wayne, Ind. The Berkley location is the original, which opened in 2008. “All six stores are in excellent locations representing an original investment of more than $5 million,” BT Brands CEO Gary Copperud said in the release. The
stores range from 4,000 to 6,000 square feet, carry full liquor licenses and are in excellent condition, he said. “We have had several restaurant professionals look at the locations over the last year, and all agree the units provide an outstanding footprint for a conversion opportunity,” Copperud said in the release. “We look forward to identifying a dynamic growth opportunity, providing potential career growth for all current employees of Bagger Dave’s. We see the opportunity for Bagger Dave’s shareholders, including BT Brands, to earn significant returns from a successful conversion.” The move comes after the brand has had its share of ups and downs. Bagger Dave’s at the end of 2014 had 24 locations. But the struggling burger-and-beer fast-casual chain closed 11 locations in 2015 to contain losses. Bagger Dave’s spun off from Southfield-based Diversified Restaurant Holdings Inc. in late 2016 as a separate company and went through a series of restaurant closings as it again tried to stem steep financial losses, as Crain’s reported. The company scrapped five more restaurants in early 2018. A downtown Detroit location lasted just two years.
The remaining six Bagger Dave’s Burger Tavern locations are proposed to be rebranded later this year as the company “pursues strategic alternatives,” according to a news release. | CRAIN’S DETROIT BUSINESS
NOTICE OF AUCTION AND SALE OF RECEIVERSHIP PROPERTY - CANNABIS Gene R. Kohut of Trust Street Advisors, LLC in his capacity as court-appointed receiver (the “Receiver”) of Comco, LLC (“Comco”) is conducting an auction for the sale of substantially all business assets of Comco. Comco is in the business of cultivating, producing, processing, and distributing medicinal and recreational cannabis and cannabis related products. Comco operates several cannabis provisioning centers located in Jonesville, Michigan and Hanover, Michigan. Pursuant to an order entered by the Jackson County Circuit Court on January 12, 2024 (the “Approval Order”), an auction for the sale of Comco’s assets has been scheduled for February 26, 2024, at 12:00 p.m. (Eastern Time). Any and all parties desiring to participate in the auction must make a qualified bid consistent with the procedures established by the Approval Order no later than February 16, 2024. The Approval Order authorizes the Receiver to conduct an auction, sets forth the bidding procedures for the Receiver to sell Comco’s assets free and clear of all liens, interests and encumbrances, and approves a proposed form of a purchase agreement (the “Stalking Horse Purchase Agreement”). A complete copy of the Approval Order, the Stalking Horse Purchase Agreement, the Bidding Procedures, and all related materials can be obtained by request from the Receiver’s counsel identified below. Those interested in submitting a bid for consideration should contact the Receiver’s counsel, David Dragich or Amanda Vintevoghel-Backer, at The Dragich Law Firm PLLC, (313) 886-4550, comcoauction@outlook.com.
FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 11
Former Rocket chief gets into pickleball biz rate international rating system.” Attempts to reach Farner for A longtime local mortgage exec- comment on Jan. 23 were unsucutive is getting into the business of cessful. It’s unclear if Farner’s pickleball. firm has made previous Jay Farner, who officialinvestments prior to its ly retired from his post as participation in the DUPR chief executive of Detroitfunding round. based Rocket Companies The investment into Inc. last summer at the DUPR was led by David age of 49, formed investKass, a real estate develment firm Ronin Capital oper and a team owner Partners LLC in July 2022, in Major League Picklea regulatory filing with the Jay Farner ball, and Kass will be the state shows. A news release sent Jan. 23 new chairman and owner of the says Farner’s Ronin Capital joined pickleball rating company, the some heavy hitters including for- release stated. Joining Kass is mer tennis star Andre Agassi in an Farner; Agassi; Raine Ventures; $8 million investment into Austin, Brian Yeager, chairman and CEO Texas-based Dynamic Universal of The Champions Companies; Pickleball Rating (DUPR), de- and R. Blane Walter, founder of scribed as “pickleball’s most accu- InChord Communications. The By Nick Manes
Originally popular in retirement communities, pickleball is now the fastest-growing sport in the U.S. | DUPR VIA FACEBOOK
aforementioned will be board members of the company, according to the release. Tito Machado will continue to lead the organization as its CEO. DUPR uses an algorithm to rate players regardless of age, gender, location or skill, and assigns a scale to evaluate a player’s ability. The company has more than 500,000 users and a 20% monthover-month growth rate since its founding in 2021, according to the release, which notes that the
company has a presence in more than 140 countries, including China, Germany and the United Kingdom. “As an active, passionate pickleball player I know how important it is to play against players at your level for the ultimate enjoyment of the sport,” Agassi said in the release. “DUPR is the most accurate system out there that gives all players a simple and easy way to know their skill level. With DUPR, you can also track progress, con-
nect with others and maximize more opportunities to hit the courts. I believe in DUPR’s vision to benefit pickleball and players of every level. I am excited and proud to be a part of this team.” A CNN report last year described pickleball as America’s “fastest growing sport,” and citing 2022 data from the Sports & Fitness Industry Association, noted that the game grew by 159% over the previous three years to 8.9 million players.
Fortescue CEO: Detroit ‘best place’ for EV battery plant By Kurt Nagl
A global mining and green energy company is looking to breathe new life into a vacant industrial building in Detroit with plans to invest up to $210 million and create up to 600 new jobs. Fortescue WAE received approval of $12.7 million in state incentives Jan. 23 to support an electric vehicle battery systems factory in the city’s Milwaukee Junction district, next to the Ford Piquette Avenue Plant Museum marking the birthplace of Ford Motor Co.’s Model T. CEO Judith Judson told Crain’s that plugging into the historical epicenter of automotive made sense for the company’s first U.S. plant. “We see so much opportunity in the U.S., and when we look at Michigan specifically, it really comes down to it’s an extremely attractive place to manufacture, there’s a highly skilled workforce both in manufacturing and in engineering,” said Judson, who earned her mechanical engineering degree from Kettering University in Flint before taking a co-op role with General Motors Co. “I understand and really know the value Michigan has for producing and supplying to the automotive industry.” Fortescue, based near London since its acquisition of WAE in 2022, has ambitions to get the battery factory off the ground quickly. It aims to start construction at the brownfield site this year with the goal of going into production midnext year with the first battery assembly line, according to a Michigan Economic Development Corp. briefing memo. 12 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
Fortescue WAE intends to launch production of EV battery systems in Detroit’s Milwaukee Junction by next year. | PROVIDED
Fortescue WAE plans to redevelop property in Detroit’s Milwaukee Junction neighborhood into an electric vehicle battery systems factory. | COSTAR GROUP
The bulk of the 410,000-squarefoot, six-floor building consists of manufacturing space, and there is 50,000 square feet of office space. The overhaul would include remediation of the 14-acre site, which will require extensive cleanup of asbestos and other chemical contamination. The board of the Michigan Strategic Fund approved a $9 million performance-based grant to support the project, in addition to a state tax capture capped at $2.4 million and a State Essential Services Assessment Exemption valued at $1.3 million. In December, the Detroit Brownfield Redevelopment Authority board transferred a previously approved brownfield reimbursement plan worth more than $11 million to Fortescue. Judson said she believes the project will also be eligible for the full breadth of incentives allowed for in the
federal Inflation Reduction Act. “The commitment to electrification and the incentives for battery manufacturing are very attractive,” Judson said. “That coupled with the state of Michigan’s incentives made the Piquette Avenue facility in Detroit a very attractive location for us. So the incentives in the IRA are having the desired effect of bringing new jobs to Michigan.” The jobs are expected to pay an annual wage of $45,760. Incentives were needed to steer the company away from 99 sites across 12 states that were competing for the project, according to the MEDC. “The Michigan brand is worldwide, and I think this is a testament to that reach,” MEDC CEO Quentin Messer told Crain’s. “This company is rare in that they wanted a brownfield. They wanted to try to bring back a property that has not been in commerce in many years. They wanted to bring it back be-
cause that’s part of their overall brand.” The new plant is being stood up to support customers in heavy trucking, construction, specialty vehicles and local automakers, Judson said. The company declined to name customers or comment on contracts in its pipeline. Founded in Australia, Fortescue is an iron ore mining company with $16.9 billion in revenue in its fiscal 2023. As part of a plan to decarbonize its equipment by 2030, the company acquired WAE, an offshoot of the U.K.-based Williams Formula 1 racing team focused on high-performance battery systems and electrification. The Detroit factory will produce battery power systems to support Fortescue’s own fleet as well as systems for passenger cars — the end game for the company. “One of the reasons that made Michigan attractive is the amount of automotive OEMs that are based in Michigan, because they are, when we’re looking long-term, our target customers,” she said. “It’s logistically attractive where we’ve located our production center.” The factory at 601 Piquette Ave. and 530 Piquette Ave. will produce
full battery systems, including battery modules, packs and ancillary components such as voltage converters, power distribution units, battery management systems and battery intelligence software, Judson said. The units will then be shipped from the plant to customers as a “full provider of energy to the vehicle.” Fortescue is moving forward on the Detroit project despite electrification headwinds, including softer demand than anticipated. For example, Ford is cutting production of its electric F-150 Lightning pickup by half this year, it told suppliers shortly after announcing it would cut the size of its EV battery plant in Marshall by roughly one-third. Meanwhile, GM is delaying production of its electric trucks at Orion Assembly by a year, leading to layoffs. Battery makers and EV suppliers in general face enormous risk with EV contracts that require capital-intensive build-outs with no guarantee on volumes. The wild overestimations of EV sales have left some suppliers holding the bag and pushing customers for contract protections. For Judson, the Detroit project “feels a bit like coming home.” One of her first gigs out of Kettering was working with Delphi to supply HVAC systems for Cadillacs produced at GM’s Detroit-Hamtramck Assembly, now called Factory Zero. Judson said she met with Gov. Gretchen Whitmer directly and found her “vision for growing the green transportation industry in Michigan” to be compelling. “We see Michigan as the absolute best place to be producing zero-emission power systems in the U.S.,” Judson said.
Tire-changing robot startup files for bankruptcy By Kurt Nagl
A Discount Tire-backed startup that sought to automate the process of changing car tires is liquidating in a Chapter 7 bankruptcy. Plymouth Township-based RoboTire Inc. filed for protection in the U.S. Bankruptcy Court for the District of Delaware on Jan. 19 amid financial troubles, carrying $12.7 million in liabilities, according to a court document. The company, whose founder and CEO is Victor Darolfi, listed $12.3 million in assets — the most valuable being a book of patents, copyrights, trademarks and trade secrets valued at $8 million. That intellectual property is subject to a lien by Reinalt-Thomas Corp., doing business as Discount Tire. The Scottsdale, Ariz.-based tire retail giant, which was founded in Ann Arbor in 1960, has a $1.6 million secured claim against the value of the debtor’s intellectual property. The retailer is also the startup’s largest unsecured creditor, with a separate $3.3 million claim. A spokesperson for Discount Tire declined to comment on the case. Inquiries were left with RoboTire and Alessandra Glorioso, attorney at Delaware-based Dorsey & Whitney LLP, representing RoboTire in the case. Launched in 2018, RoboTire designed technology to automate tire-changing using a robotic arm, claiming it could dramatically reduce the time it takes to complete a job. The startup landed a $7.5 million Series A financ-
Plymouth Township-based startup RoboTire landed a $7.5 million Series A financing round in 2021. | ROBOTIRE
ing round in 2021. In addition to Discount Tire, participants in that round included Detroit Venture Partners, the venture capital firm founded by billionaire Dan Gilbert. The VC firm was just a small equity investor and is not listed as a major creditor in the bankruptcy case. RoboTire had several of its systems in Arizona, Pennsylvania and Texas, where it finalized installation of a second system for Discount Tire last February, according to a news release at the
time. It also installed a tire changing system at a Detroit Garage location. In December, RoboTire and its CEO were hit with a lawsuit by New York-based receivables financing firm American Funding Services. The firm claims RoboTire and Darolfi owe it more than $130,000 after going into default Oct. 31, according to the lawsuit. While the company’s corporate address is in Plymouth Township, it also had a station at Corktown startup hub Newlab at Michigan
Central as of May. “We take pride in having our headquarters, manufacturing, and assembly facilities located in Michigan,” Darolfi said in a news release at the time. “Bringing our revolutionary technology to drivers in our home city is a payoff of our mission and further evidence of our investment in the future of mobility innovation coming out of Detroit.” The other major secured creditor in the case is Minnesota-based Farnam Street Financial Inc.,
which has a $1.6 million claim on equipment. The other large unsecured creditor in the case is Dallas-based ROBO Global Venture Fund I LP, owed $3.3 million. In total, there are around 70 unsecured creditors in the case, including dozens based in Michigan, such as Jackson-based Alro Steel, Ann Arbor-based Allied Inc., Warren-based H&P Technologies Inc., Walled Lake-based Herkules Equipment Corp. and Auburn Hills-based Michigan Glass Coatings.
Child care, restaurants among Motor City Match winners By Jay Davis
The latest round of Motor City Match cash grant winners includes the proprietor of a child care center, a multimedia production studio and multiple cafes and restaurants offering a variety of cuisine. Round 25 winners were announced at a Jan. 23 ceremony. The group includes 23 business owners who operate or plan to set up shop in 19 Detroit neighborhoods. They will share in about $1.1 million. Another $300,000 will go to eight existing businesses for physical improvements to their existing spaces. The program awarded 54 entrepreneurs in its Business Plan, Develop and Design tracks. Those awards offer support for aspiring Detroit business owners including business services, design and architectural support, training and one-on-one advising. “That being so spread out says a lot about what this program offers,” Detroit Economic Growth Corp. President and CEO Kevin Johnson said. The DEGC oversees the Motor City Match program. The big winner in Round 25 is Candie Rogers and her CircleTime with Friends Learning Center Too, which earned an $85,000 grant. The day care center will open at
Goodboy Multimedia founder Daniel Jones (top, second from left) and CircleTime with Friends Learning Center owner Candie Rogers (bottom, second from left) celebrate their Motor City Match cash grant with Detroit Mayor Mike Duggan (from left), Detroit City Council President Mary Sheffield and City Council Member Fred Durhal III and Detroit Economic Growth Corp. President and CEO Kevin Johnson.
5400 E. Seven Mile Road as the second location in addition to its Redford Township site. “We want to bring quality child care to the east side,” Rogers said. “We want to strengthen the roots
of children in the community and provide a loving, nurturing, child care center in the city.” Detroiter Daniel Jones plans to open Goodboy Multimedia at 3939 Woodward Ave., Suite 40, in Mid-
town. Jones earned a $30,000 grant for his project. Goodboy Multimedia will offer photography, videography, graphic design, live streaming, DJ and photo booth services, audience engineering and Zoom conference services. “We’re going to produce a lot of good content,” Jones said. “We want to work with small business owners, too, to help them get the word out so people can see the good things people are doing in Detroit.” Louisiana Creole Gumbo owner Joe Spencer earned a $75,000 grant to help facilitate the opening of a new sitdown restaurant at 2830 Gratiot Ave., a few miles from the original location at Eastern Market. Spencer, who has owned the business for more than 40 years, said he’s appreciative of the support. “The city has given us much love and we’re appreciative for the opportunity to grow our business,” Spencer said. “We’re excited about (the new location). We’re going from carryout to sitdown. I’m looking forward to serving (the city) for another 50 years.” In Round 25, 81% of the cash grant winners operate minorityowned businesses, while 71% are woman-owned and 68% operated by Detroit residents.
Since 2015, Motor City Match has awarded aid to more than 1,900 businesses, resulting in 165 new brick-and-mortar businesses currently operating across Detroit. Motor City Match has distributed $15.7 million in cash grants, with a total leveraged investment of $87.4 million, it said. Of the businesses aided by the program, 81% are minority-owned and 71% are women-owned. Thanks to a boost from American Rescue Plan Act funding, the quarterly grant pool increased to $1 million for new businesses and $250,000 for existing businesses operating in the city for at least one year. Earning the grants shows a level of dedication not often seen, Detroit City Council President Mary Sheffield said. “I’ve had the chance to engage with a lot of small business owners from our city, to hear their stories and it’s tough,” Sheffield said. “It’s a lot of long nights. Gaining access to capital can be tough. I can see what these businesses add to our neighborhoods with the services they offer.” Detroit City Council member Fred Durhal III noted that each cash grant recipient represents another business owner investing in the city’s neighborhoods. FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 13
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
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Spalding DeDecker
Great Lakes Water Authority
Spalding DeDecker welcomes Sr. Project Manager Scott DeVries, PE to the team. Mr. DeVries comes to SD with more than 33 years of experience in both the public and private sectors. Scott successfully led and completed a multitude of infrastructure projects including water distribution studies, hydrologic studies, numerous water systems evaluations, and wastewater and sanitary sewer systems. He is a welcome addition to SD’s Public Engineering group at our Lansing office.
The Great Lakes Water Authority (GLWA) has hired David W. Jones to serve as the Authority’s General Counsel. Jones brings more than 25 years of deep legal expertise to GLWA. Most recently, he served as a partner at Schenk & Bruetsch where he specialized in complex litigation, government affairs and municipal and administrative law. As a municipal law practitioner, Jones served as general counsel for several municipalities in southeast Michigan.
Antone, Casagrande & Adwers, P.C.
RSM is pleased to announce that Sara Hutton has been hired as a Senior Manager in the firm’s Washington National Tax Energy & Excise practice group. Her experience includes 5 years with DTE Energy, as well as 9 years with PwC in New York. Sara’s industry knowledge, and experience in tax consulting and planning, will allow her to focus on providing clean energy incentives and excise tax support to clients of the firm.
ARCHITECTURE / ENGINEERING
TowerPinkster Kelsey Groesbeck, PE, has been named Director of Building Science at TowerPinkster. She will lead the firm’s Building Science team which provides expertise and strategies to reduce energy use and optimize holistic building solutions. Kelsey received her Bachelor’s and Master of Science in Mechanical Engineering from Western Michigan University. A recognized industry leader and sustainable design expert, Kelsey holds advanced accreditations including LEED AP BD+C and Living Futures Accreditation.
EA Engineering, Science, and Technology, Inc., PBC, a leading provider of interdisciplinary environmental Peitsch services, is proud to announce the promotion of Arthur Peitsch, PMP, and Kevin Kowalk, P.E., to Vice President. Art joined the firm in 2014 as a Senior Scientist and was promoted to Kowalk Operations Manager for the firm’s Brighton office in 2022. His expertise includes soil/ groundwater investigation and remediation, environmental compliance, due diligence, and construction oversight. Kevin’s 20+-year career has focused on environmental site characterization, remediation, and ecosystem restoration. He serves as EA’s Deputy Sediment Practice Lead and Program Manager for several US EPA Region 5 contracts. Learn more at: https://shorturl.at/aks03
DETROIT NEWS
ENGINEERING / DESIGN HEALTHCARE / INSURANCE
Spalding DeDecker Spalding DeDecker welcomes Sr. Project Manager Steven Neumann, PS to their team. With more than 35 years of experience in survey and mapping, Mr. Neumann brings a robust skill set in right-of-way and boundary surveying, mapping, construction layout, permitting, title research, project management, and land acquisition. His past role as MDOT’s Superior Region Survey Manager and extensive expertise will help him mentor SD’s staff, enhancing their capabilities to provide superior service to clients.
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Blue Chip Partners
Walker-Miller Energy Services John R. Boladian joins Walker-Miller Energy Services as COO. Boladian will lead strategies related to program operations, Engineering, Business Development, Facilities, Outreach, and Electrification. A senior operations leader with an extensive background in energy and utility management, process integration design and implementation, cross-functional project leadership, customer service and marketing, Boladian will play a key role in steering the tremendous growth Walker-Miller is experiencing.
14 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
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Antone, Casagrande & Adwers is pleased to announce that Jesse Goldstein is joining our legal team as a Senior Attorney. He is a graduate of the University of Michigan Law School with nearly 20 years of experience representing both individual and corporate clients in immigration matters. Drawing from his vast experience in the complex and ever-changing world of immigration law, Jesse will be an exceptional advocate for our clients. Welcome, Jesse!
Blue Chip Partners, an independent RIA and award-winning wealth management firm located in Farmington Hills, announced that Daniel Dusina, CFA, former Director of Investments, was promoted to Chief Investment Officer. While Dusina’s role heading the in-house investment committee and leading the construction of client portfolios will remain largely unchanged, the promotion was meant to recognize his significant contributions and elevate him within the firm’s growing investment department.
Health Alliance Plan (HAP) HAP (Health Alliance Plan), a Michiganbased nonprofit health plan, adds Gwen MacKenzie and Christopher Stanley, M.D. as director to the MacKenzie HAP board and non-director, Clinical and Service Quality Committee board member, respectively. MacKenzie, a CEO with experience leading complex healthcare organizations, currently serves as a senior advisor in McKinsey and Company’s Global Healthcare Practice. Dr. Stanley has more Stanley than 30 years’ experience as a clinician and healthcare leader with a passion for improving equity in cost and quality of care. He currently serves as President, Healthy Populations for Henry Ford Health (HFH) where he created a wholly owned, independent population health services organization.
NONPROFITS
ProsperUs Detroit Paul Jones is now CEO of ProsperUs Detroit, a nonprofit that advances economic equity in under-resourced communities by supporting entrepreneurs with opportunities and capital needed to build businesses and neighborhoods. A native Detroiter, Jones has extensive entrepreneurship and economic development experience. The organization will continue to disrupt the systemic barriers that have historically left people of color out of opportunities to pursue economic mobility through entrepreneurship.
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McLaren to launch residency program at Port Huron hospital By Dustin Walsh
McLaren Health Care’s Port Huron hospital will welcome its first class of physician residents in July. The residency program received accreditation last month to provide clinical training to internal medicine in their postmedical school education, the Grand Blanc-based health system announced last month. The hospital will launch the program with six residents under program director Dr. Sivateja Mandava, where the post-graduate students will see patients through the Port Huron area. “We are excited to embark on this journey with our first class of resident physicians who will receive hands-on experience at an exceptional facility in a thriving community,” Erin Reis, associate chief academic officer for McLaren Health Care, said in a press release. “Achieving accreditation has been a year-long journey, made possible because of the great leadership support by both the medi-
LIONS From Page 1
But it’s more than that. The economic spillover fills the cups of metro Detroiters writ large beyond merchandise, hotels, bars and restaurants. The economic concept is pretty simple: Lions win, fans are happier, happier people are more productive at work, better workers make more money and therefore spend more money. “The success of the Lions would have increased the mood of everyone in the city and that should have caused productivity gains and consumption changes that led to some increase in income,” Davis said. There’s the economic wild card — happiness. Most of us who grew up in Michigan had dads or uncles or cousins whose moods were wholly dependent on what the Lions did on Sunday. I was lucky enough to grow up in the Barry HEALTH BENEFITS Sanders era, saving a lot of grouchy dad moments in the afternoons. Most Lions fans over the past 30 years weren’t so lucky. The Lions’ success this year, however, has had a positive therapeutic effect. We were all on the couch, but got the dopamine dump of a therapy visit on gameday without the hefty bill. And that mood lifter isn’t over just because the Lions fell short of the Super Bowl. “I think people have a lot of posCOMMERCIAL PROPERTY itive emotions that they will be carrying them in the offseason. What you've seen throughout the city, the state, and even the country is a greater social connectedness, and that helps our mental health,” said Dr. Mauran Sivananthan, a Henry Ford Health psychi-
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cal staff and hospital leadership at McLaren Port Huron.” The three-year program will add an additional six internal medicine residents annually through 2026 when it maxes out at 18 residents in the program. The Port Huron hospital currently employs 1,289 with an additional 434 medical staff. McLaren plans to add additional residency programs at that hospital in the future. There is a noted shortage of residency programs throughout the U.S., exacerbating a decade-long
physician shortage in the country. Medical school graduates are selected for residency programs annually in March — called “Match Day.” But there are fewer residency slots than medical school graduates. Last year, nearly 43,000 graduated medical school, but there were only 40,375 residency slots available, leaving nearly 2,500 potential doctors without the additional 6,000 hours of training needed to receive their medical license, according to reporting by Medical Economics.
atrist and the team psychiatrist for the Lions, Pistons and Tigers. “Detroit is known as a hard-working, blue-collar city, and when Dan Campbell came and instilled that motto of grit, that further connected the fans. The Lions are a team that we can be proud of.” Now while that pride translates to dollars and cents, it’s not enough for the collective region to run out and buy up Honolulu Blue and Silver Cadillacs. The economic effects are not huge, but they aren't nothing, either, according to Davis’ research. Davis co-authored a study in 2010 called "A Winning Proposition: The Economic Impact of Successful NFL Franchises" that laid out those marginal benefits. On average, a good NFL team — one that made the playoffs — translates to about a $120 rise in per capita income, or about $165.50 in 2024 dollars. Those effects are likely slightly more elevated in Detroit, where the Lions have had more than 50 years of bad football (minus 1992), Davis said. “We tend to see more happiness in a surprise winning team,” Davis said. “Patriots fans, for example, probably got a little jaded from all the winning.” So maybe Jared Goff is better for your economy than Tom Brady. There are, however, diminishing returns on a good football team. On average, according to the Davis study, each win is correlated to a different economic return. Having any team at all that wins just one game added about $30.86 to per capita income. That figure rose with each subsequent win to more than $165.05 in per capita gains at 10 wins. Then, the number goes down with each additional win, showing that a consis-
tently good team makes fans less One Pride and more apathetic. Bear in mind, this is all loose economic theory. The math is effectively impossible to construct the true impact of a winning football team on per capita income. The variables are far too abundant. But there are a lot of wacky cultural theories around sports, and the NFL. Take the “Redskins Rule,” for example. Starting in 1937, when the team now named the Washington Commanders moved from Boston to the nation’s capital, the outcome of the Washington football teams' last home game predicted the winner of the subsequent presidential election. Washington wins, the incumbent president wins; they lose, the opposing party wins. It correctly predicted 18 U.S. elections until 2012, when Washington lost to the Carolina Panthers, and Barack Obama defeated Mitt Romney for his second term in office. By the "rule," the presumed Republican candidate Donald Trump will defeat incumbent President Joe Biden in November because the Commanders lost 3810 to the Dallas Cowboys in their last game this season. While we wait to see if that theory plays out in 2024, we can bet the Lions’ winning season is having a strong impact here in Michigan. The water cooler talk still revolves around the Lions and who will stay and be champions, hopefully, and who departs for more money. Lions merch is still flying off shelves and fans are eager for the NFL Draft to be held in Detroit in April — then the 2024-25 NFL season.
CEOS From Page 1
sitions, compared with 10% in 2003, according to the report. Just 2% last year were women of color. They also held 26% of all director seats at Michigan public companies last year, but women of color held only 4% of the seats. Two decades ago, 9.6% of board seats at Michigan’s public companies were held by women. While women occupied a record 33.5% of S&P 500 companies’ board seats at the end of last year, the ratio was 50-50 or more at just 29 companies, according to Bloomberg data quoted in a recent Crain's New York Business story. Among other things, the latest Inforum report also found the pace of companies adding women into key positions slowed in 2023 versus two years ago. Companies added only 28 new women directors last year, compared with 47 in in 2021. “We're wondering if we're seeing a slowing of the addition of women, but what … sort of counteracts that is what we hear from executive search firms that often help with their board search is there is still a strong commitment to diversity to find diverse balance for positions,” Barclay said. The report notes that Nasdaq exchange’s board diversity rule has survived legal challenges. It requires companies listed on the
Inforum laid out its findings in its latest Michigan Women's Leadership Report, a biennial analysis it has released since 2003 to track gender diversity in Michigan's corporate leadership ranks. The report found gains in the number of women in other executive roles and on boards, as well, but noted few were women of color. "We're delighted with the progress, but there certainly is more work to do,” Inforum CEO Terry Barclay said. Researchers reviewed the U.S. Securities and Exchange Commission filings and other public data for 83 public companies in Michigan for this year’s report. That included a close looks at a total of 739 directors, 362 named executive officers (including the CEO and next four highest-paid officers) and 539 executive officers or presidents/vice presidents overseeing principal business units or those who perform policymaking functions in sales, administration or finance. “What we're seeing is that the biggest barrier is not the glass ceiling; it’s the broken rung, as McKinsey talks about it,” Barclay said. Fewer women are promoted each step along the way, she said. Inforum has a portfolio of leadership development programs that are aimed — Inforum CEO Terry Barclay at each one of these inflection points where women tend exchange to disclose board-level diversity annually and to have or to lose ground. "We are engaged in very serious explain why they do not have diwork … to do all we can to support verse directors. The requirement was challenged companies that are committed to making sure that they have the on the basis that it violated the U.S. best talent, because that's what it Constitution’s prohibition of discriminatory laws and restraints on boils down to.” If you look at employment at free speech. But in October 2023, Michigan public companies the 5th U.S. Circuit Court of Apwhere women are the CEOs, the peals ruled that Nasdaq, in making majority of the boards of those rules, was allowed to consider the companies are at least 40% wom- opinions of investors who were asking for more board diversity, en, Barclay said. Last year, women comprised since it would inform how they be23% of top-5 executive officer po- have in the market.
“We’re delighted with the progress, but there certainly is more work to do.”
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FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 15
JOB
POLK
cy of combustion vehicles as well as with the proliferation of electric vehicles, carbon fiber offers an alternative to aluminum that a lot of companies are looking at.” Ryan Polk, 29, has been working to help his father run his businesses, including Lakeland Fresh Farms, a hydroponic growing startup with Jim Nicholson, co-chair of PVS Chemicals Inc., and DroneView Technologies, a drone aerial imaging venture with Michael Singer. “To be able to work and learn from someone who has done so much in the business world is just such an amazing opportunity that I feel incredibly blessed by, and constantly learning, and a lot of fun,” Ryan Polk said, referring to his father. This marks the first time the businessman has bought a company out of bankruptcy, “a new world experience,” as he puts it. Father and son would like to cross another item off their bucket list: winning the annual Bayview Mackinac Race, in which the elder Polk has competed consistently since 2000. The acquisition of Offshore Spars is a welcome convergence of interests, his son said. “I sail with my dad every year, and it’s a pretty special experience,” he said. “To be able to sail with my dad and work with my dad is a lot of fun.”
From Page 3
A rendering of the proposed 600-room convention hotel proposed for the former Joe Louis Arena site downtown. | NEUMANN/SMITH ARCHITECTURE
TAX BREAK From Page 3
The Sterling Group is developing the project through an affiliate, Second & Atwater Associates LLC, which is registered to the company’s general counsel, Eli Halpern. The company is run by the adult children of Gary Torgow, who started the firm and is now chairman of the board of Huntington National Bank. Danny Samson, chief development officer for Sterling Group, said during the NAC meeting that the company hopes to begin construction on the hotel in the middle part of this year and wrap up in 2027. The hotel would have five podium floors with a restaurant, lobby bar, a pair of ballrooms and 50,000 square feet of meeting rooms. A pedestrian bridge would connect it to Huntington Place. It would be the second building to rise on the former Joe Louis
KIM
From Page 3
Kim opened Miss Kim in 2016 in a nearly 2,000-square-foot, 85-seat space at 415 N. Fifth Ave. in Ann Arbor’s Kerrytown neighborhood as part of the Zingerman’s Community of Businesses. She previously worked at the nearby Zingerman’s Deli, working her way up to a managing partner. Kim owns 51% of the restaurant, with Zingerman’s holding a 49% stake. Through the Zingerman’s Community of Businesses, Kim receives human resources, accounting and inventory assistance. Kim, a University of Michigan graduate, is a little more than seven years into her tenure as a business owner. The native of Korea, who moved to New Jersey at 13, left a career in the health care insurance industry to move back to 16 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
Arena site, home of the Detroit Red Wings until the Ilitch family-owned hockey team moved to Little Caesars Arena in 2017. Construction on the first building on the JLA site, a roughly 500unit market-rate apartment building called The Residences at Water Square, started in early 2022. It is anticipated to open in February. Rents begin at $2,000 and, for some units, go as high as $10,000, Crain’s reported last summer. Downtown business leaders have long called for a new convention-style hotel, citing lost event and tourism business to other cities with more rooms available for big events. Claude Molinari, president and CEO of Visit Detroit and chairman of the Detroit Regional Convention Facility Authority board that oversees Huntington Place, said in an interview in December that cities like Indianapolis have nearly 5,000 hotel rooms connected to its convention center plus 800 more on the way. Chicago has
2,400, Houston has 2,200, Columbus has 2,700, Atlanta has 3,100, Minneapolis has 4,500 and Cleveland has 600. Detroit, on the other hand, has none. The community benefits process is required when a development costs more than $75 million and receives city incentives totaling more than $1 million or cityowned real estate valued at $1 million or more. As a condition of meeting those thresholds, a group of nine residents in the area surrounding the proposed developments are selected to serve on a Neighborhood Advisory Council, which over a series of public meetings, negotiates community benefits to be included as part of the development process for those largescale projects. Those negotiated benefits can include things like jobs, local hiring, environmental protections, land use programs and local small business and resident inclusion, among a host of others.
Michigan and work for Zingerman’s. Business ownership has its highs and lows, but Kim said she loves it more now than when she started. “This is my first restaurant. Opening a restaurant is really challenging. There was a lot of learning on the job,” Kim said. “I feel like we’ve built a culture we want within the restaurant. The staff is really jelling as a team. We’re hitting our stride.” The COVID-19 pandemic played a role in that. Kim during the pandemic zigged while a lot of other restaurant owners zagged. She cut prices instead of increasing them. She kept employees on and ensured schedules would stay consistent. The restaurant closed for only a few days at the outset of the pandemic, reopening for carryout only in March 2020. The restaurant
remained carryout only for about a year and a half. “We try to be a place people can rely on. That provided consistency for our customers and our staff,” Kim said. “We kind of survived by doing the opposite of what everybody else was doing at the time. We know people raised prices because of supply chain and labor costs. We wanted to do the opposite to entice people to come in for takeout and to get them in more frequently. “A lot of restaurants during that time had a lot of instability. We stayed carryout only until it looked like everybody had the opportunity to vaccinate if they wanted, and waited until the severity of (COVID-19) was milder and it didn’t look like we’d get shut down again.” During the pandemic, Kim said she did all she could to help anyone in need. She used some
The company went bankrupt about a year after Eric Graczyk purchased it and discovered “numerous financial improprieties, breaches of warranties, and general mismanagement that had befallen the debtor under previous ownership,” according to the bankruptcy declaration. Polk said he became aware of the case in November but had known about Offshore Spars, a venerable, niche manufacturer in the marine space, for decades. With a career steeped in automotive intelligence, the businessman also was intrigued by the prospect of further leveraging the company’s carbon fiber expertise for automotive. “As I looked into it, it got more and more interesting, the opportunity that seemed to be here,” he said. As sole owner, Polk is keeping Graczyk, 43, in place to lead the company, which continued some operations through the bankruptcy proceeding. Offshore Spars is back to a dozen employees and looking to hire a few more. “Looking forward to better days ahead,” Graczyk said. “I’m so thankful that we have kind of a second chance at life, if you will.” The sale was an ideal resolution to the bankruptcy, which is not always the case, said Elliot Crowder, attorney at Southfield-based Stevenson & Bullock plc who served as debtor counsel. “We’re always hopeful to — Eric Graczyk of Offshore Spars have a result such as this, Polk has plenty to keep him where properties and jobs are preserved and business opera- busy. In addition to his role as tions are rehabilitated, and this CEO of hospitality investment case certainly met that goal,” he firm Highgate LLC, he remains active with the Detroit Zoo, said. The goal for Offshore Spars Cranbrook, College for Creative now will be continuing to deliver Studies and the Detroit Regional to its client base while looking Chamber, where he previously served as chairman. A new busifor ways to expand. “(Carbon fiber is) used for its ness pursuit only puts him furlight weight and its strength- ther away from retirement, but to-weight ratio, and that’s what that was never much of an opmakes it so attractive,” Graczyk tion anyway. “I can’t quite visualize myself said. “As the automotive industry continues to look at fuel efficien- being retired,” he said.
“I’m so thankful that we have kind of a second chance at life.”
pandemic-related aid to offer a sliding-scale cost menu. Patrons were able to choose how much they would pay for a meal, and the program lasted for about 18 months until the funding ran out. “We try to stay involved with the community,” Kim said. “I think having that presence adds to more people wanting to come into the restaurant.” Zingerman’s co-founder Ari Weinzweig called it an honor and inspiration to work with Kim and that the Beard recognition is very well deserved. “Ji Hye’s passion for traditional Korean cooking, her commitment to deep and thoughtful study of historical sources, combined with the skill and craft of her cooking have combined to make Miss Kim a magical place to dine, and a wonderful addition to the Zingerman’s Community of Businesses,” Weinzweig said in a statement to
Crain’s. These days, business is the best it’s been. Kim said sales and revenue are higher now than prepandemic. She didn’t provide specific figures, but said an increase in foot traffic has helped. She also cited being named a Best New Chef of 2021 by Food & Wine as giving her and her restaurant a higher profile. As for what’s next, Kim said she’s committed to keeping her restaurant in the area and she is working on a cookbook. For now, though, the restaurateur hopes to take the next step and become a Beard finalist. “It’d be an honor to receive that acknowledgment,” Kim said. “I don’t think it’d make me do things any differently. I try to put my head down and focus on the service and how I treat my staff. It would be a pretty emotional moment, though.”
Jeans maker Detroit Denim Co. to shut down By Jay Davis
A Detroit-based high-end jeans maker is putting away its sewing machines. Detroit Denim Co. owners Eric Yelsma and Brenna Lane on Jan. 30 announced plans to permanently close after 14 years in business in a post on its website and social media. Yelsma and Lane did not immediately respond to a Crain’s request for additional information. The move will allow the married couple to have a little more time for themselves. “After 14 years, and with full hearts, we are announcing the closure of our business,” the post reads. “While saying goodbye is bittersweet, we are looking forward to more time with family,
SUBURBS From Page 1
Chick-Fil-A, ever the source of suburban uproar in part due to its oft-crowded drive-thrus, seemingly always draws resident pushback due to traffic — an age-old concern used to argue against new commercial construction. Blowback in Rochester Hills resulted in a location on Rochester Road there being scrapped. That’s just to name a few. Car washes in Ferndale and Warren and Dearborn Heights. Mixed-use buildings in downtown Royal Oak. New retail development in Farmington Hills. Parking in downtown Birmingham. There has been stiff residential opposition to all the above projects outside of Detroit. “There’s frustration among all developers right now on how difficult it is to get projects entitled in some suburban communities,” said Ammar Alkhafaji, an Oakland County developer who is principal with The W Investors Group LLC and also an internal medicine doctor. Sheetz, the gas station and convenience store chain known for its food options, has taken a beating recently in its plans to expand to Southeast Michigan. In Livonia, the zoning board recommended the City Council not approve a rezoning request in January, Hometown Life reported. And in Fraser, the planning commission scotched a plan for a new site at 14 Mile and Utica roads, according to the Oakland Press. That newspaper also reported that Sheetz put the brakes on its proposed locations in Rochester Hills at Rochester Road and South Boulevard, and Waterford Township on Dixie Highway near Sashabaw Road. In a response to emailed questions, a Sheetz spokesman said “delays in permitting are extremely common” and that the company still intends to move forward with those stores after it addresses what were described as “site design comments.” In addition to a Romulus location approved for Wick Road west
having weekends off, and finally going on a honeymoon.” The company will operate on an abbreviated schedule until Feb. 10. A last run of 100 pairs of jeans will be produced for current customers and a closing sale will take place, the post says. A “last call” run of bags, aprons and small leather goods will also be made with remaining fabric. All current orders and repairs will be completed prior to the closure, the post reads. No new orders for repair service will be accepted. Established in 2010, Detroit Denim makes custom jeans that sell for up to $345. Detroit Denim at one point had a partnership with Ford Motor Co., promoting its jeans at the 2018 North American International Auto Show using a Ford Transit Connect
cargo van wrapped in denim. Detroit Denim operates out of a space at 4240 Cass Ave. in Midtown. The entire business runs on a made-to-order model, to which the company pivoted in May 2021 in efforts to reduce waste. The company in 2018 talked about plans to expand production and open a second location in the city, but those plans changed amid the coronavirus pandemic. “What an incredible privilege it has been to make clothes for you,” the Detroit Denim post reads. “We are incredibly proud of what we’ve built, and never could have imagined all of the thrilling experiences this adventure would throw our way. We are eternally grateful to our customers, staff, friends and family, and industry peers who have supported us along the way.”
of Vining Road, Sheetz said it is developing another site in Romulus at Middlebelt Road north of I-94, and on 23 Mile Road east of I-94 in Chesterfield Township. “We are eager to tell our story to Southeast Michigan, and public meetings are one venue where we get to do that,” Nick Ruffner, public relations manager for Sheetz, said in an email. “We are thrilled to continue our growth into the great state of Michigan, which will be the first new state that we have moved into in nearly 20 years. We want to make sure that our stores are reflective of the wonderful communities and neighborhoods that we will be moving into before we move forward in the process.” Meijer, too, has faced opposition, most recently in Plymouth Township, where the retailer and Southfield-based developer Redico LLC recently prevailed in a Wayne County Circuit Court lawsuit contesting a Planning Commission decision last summer that blocked the construction of a new 159,000-square-foot store at Five Mile and Beck roads. The commission, following well over an hour of sometimes contentious public comment, denied the proposal to build the store on a small portion of the former Detroit House of Corrections site. Speakers protested the store for things like traffic concerns, perceived crime and detriment to community character. Meijer and Redico then sued, and a consent judgment last month allowed for the store’s construction. Meijer has also recently faced pushback in Macomb Township and, indirectly, Farmington Hills, where one of its grocery-only stores would be an anchor tenant in a redevelopment of the Hunter’s Square shopping center at 14 Mile and Orchard Lake roads. The redevelopment would involve razing a portion of Hunter’s Square that houses the beloved Marvin’s Marvelous Mechanical Museum, a longtime, quirky staple in western Oakland County. While the Farmington Hills Planning Commission, following some three hours of public comment and other discussion, rec-
ommended a planned unit development and site plan for approval to the City Council in November, the council has postponed a decision on the matter until at least February, The Detroit News reported. Council members raised concerns about things like drivethrus, the facade and signage. Serious public efforts to save the Main Art Theatre in downtown Royal Oak weren’t successful but drew large throngs of supporters. The now-demolished theater is being replaced by an underconstruction mixed-use building with office and residential space. Voters overwhelmingly rejected a $57.4 million bond proposal in downtown Birmingham that would have paid for a new parking deck to support a new mixed-use development that would have been anchored by a new RH (formerly Restoration Hardware) store. Once that happened, RH returned — just at a different location downtown on a site that’s now resumed construction after a pause caused by a complete redesign. There isn’t much empirical data tracking suburban development opposition locally or at a broader level, nor has there been much study of its causes, experts said. But among the potential contributing factors in the swell in vocal development opposition, two of them perhaps go hand-in-hand: Social media and the tenor of contemporary political discourse. That’s according to Brian Connolly, a land use attorney who is now an assistant professor of business law in the Stephen M. Ross School of Business at the University of Michigan. Platforms such as Facebook and NextDoor have provided fertile ground for sowing the seeds of dissent to commercial projects, Connolly said. On those sites and others, information — both accurate and inaccurate — can spread quickly around the community, a departure from pre-social media days. Gone are the times when project information came primarily through things like newspaper notices about public hearings, signs on property notifying of an up-
All of Detroit Denim’s jeans are made by hand. | DETROIT DENIM VIA FACEBOOK
coming meeting or notices to surrounding property owners about pending use changes, Connolly said. “That has just enabled the formation of these more vocal, more robust opposition groups and it may be fueled by misinformation, and in many cases it probably is,” Connolly said. “People are appealing to fears and speculation rather than the actual information that’s presented in the application.” And with the abrasiveness and loudness of political discourse in recent memory, Connolly said, it’s not a surprise that coarseness and tone has entered into hyperlocal debates about, for example, the traffic around a grocery store or the noise of vacuums from a car wash.
Michigan problems Connolly also said developers in Michigan are at a disadvantage compared to elsewhere when making their cases to the public. Among the reasons: Elsewhere, Connolly said, local units of government are responsible for collecting sales taxes, meaning city, village and township coffers directly benefit beyond property taxes from, for example, a new big box store. “There’s kind of that sweetener in the pot,” Connolly said. “That can kind of blunt some of the perceived negative impact of that.” In addition, Connolly said, Michigan does not allow local governments to require developers kick in as much toward infrastructure, whereas other states do. “When neighbors are out saying that Meijer is going to generate all this traffic and there’s not the roadway infrastructure,” Connolly said, “in other states, you might see Meijer saying, ‘OK, well, we’re going to actually build out more infrastructure and we’re going to pay for the local government to do that.” Jeff Horner, a Wayne State University professor in urban planning, was a recent college graduate when he took a job with an inner-ring suburb planning department and residents in that unnamed city were concerned about
a longtime family-owned restaurant that was disappearing because the family no longer wanted to run it and a major drugstore chain wanted a new location in that spot. “The bigger dynamic here is the sociological problem of people who never want change,” Horner said. “This was an old restaurant that people had been going to their whole life, and now this little part of their life was gone. They were angry about it, you know? To be replaced by some faceless corporate store? That’s very common. This all fits.” He pointed to academic research that shows the central tension is between what’s known as exchange values — what a developer or user can make off a particular piece of land — and the use value, which is what the nearby residents derive from the property through its existing use. Those researchers, John Logan and Harvey Molotch, concluded that while companies have gotten good — not to mention creative — in how they combat resident opposition, sometimes David does beat Goliath. “Every now and then, if you get enough people to come to your township board or city council meetings and they say, ‘Goddammit, if you greenlight this, we’re going to work really hard to get you out of office,’” Horner said, which has proven effective at quashing projects. And Connolly, the UM professor, said developers now routinely build public relations and communications line-items into project budgets to combat negative public perception. At the city council dais, said one elected official, blowback over development comes with the territory and should be expected. “As a former school administrator, former city councilman, currently mayor, I have regularly encountered negativity to change or something new. The fear of the unknown is the key factor,” said Southfield Mayor Ken Siver. “And, there is never a project that comes forward where there aren’t people complaining about increased traffic.” FEBRUARY 5, 2024 | CRAIN’S DETROIT BUSINESS | 17
THE CONVERSATION
Jen Flood reflects on being Michigan’s new budget director New state budget director Jen Flood has 15 years of experience in Lansing, starting as an intern at the Michigan Economic Development Corp. and advancing to coordinate all aspects of the state’s $80 billion spending plan. Gov. Gretchen Whitmer appointed Flood, a key aide, to the position in November. She had worked in the governor’s office since day one, most recently as a deputy chief of staff overseeing legislative affairs, federal affairs, policy, appointments and community engagement. Flood, Whitmer’s fourth budget chief, grew up in Macomb County and has bachelor’s and master’s degrees from Michigan State University. She previously was a lobbyist at Dykema, a communications specialist with Byrum & Fisk Communications Advocacy, and worked in the Legislature and former Gov. Jennifer Granholm’s office. Barack Obama’s first presidential run inspired her to work in public service. She lives in East Lansing with her husband, a young son and, as of mid-January, a newborn daughter. This interview has been edited for length and clarity. | By David Eggert How did you get here? I feel really lucky to have started with the governor in her office on Jan. 1 in 2019 and worked in a number of different roles, including legislative affairs, policy, working with stakeholders. This is sort of a natural progression of helping to advance the governor’s goals and vision for the latter part of her second term. To me, the budget is where you can really advance policy and make sure that the programs that we’re standing up are implemented well and live long beyond her time in office. I worked really closely with the budget team the first five years of the governor’s administration. I was point in the governor’s office on the development of the policies that went into the budget with this group and some of the legislative strategy and negotiations. It’s a really exciting opportunity. How did you get your start in public policy? I studied economics in undergrad. The Michigan Economic Development Corp. had an internship program that I got into. While I was there, I met some of the team that was helping with Gov. Granholm’s international investment trip logistics and I came over with them to the scheduling office. I was totally hooked. What got you hooked? I grew up in one community (New Haven) that was more socioeconomically diverse. Then we moved for a school (Romeo) with better outcomes for kids. I saw the difference in outcomes for my friends from elementary school versus my friends from high school, where everyone went away to get a four-year degree. That exposure and opportunity for all kids is what motivated me to get involved in policymaking and do what we can to make sure everyone has that opportunity. How does Michigan’s budget and economic picture look for the upcoming budget cycle? We heard great news (at the consensus revenue estimating conference). The economy is strong and stable. Inflation is cooling. Our unemployment rate
Jen Flood
What has the start of your job been like? It’s been amazing to get to know the team of professionals that we have here. There’s decades and decades of experience. Getting to know the team and their expertise as we work towards building the budget, which we’ll roll out in a couple weeks, has been incredible.
is at record lows. We’re going to have a solid foundation to put together a budget in the next couple weeks. What budget items have been prioritized? We’ve really focused on investing in kids. Expanding access to child care and pre-K, we’re going to continue to build on that. Historic funding in K-12 schools and things like free meals, breakfast and lunch, for all kids. The opportunities afterward to earn a degree or certificate are going to pay dividends long into the future. They’ll change our state for the better. I also think about our investments in infrastructure, fixing the roads, cleaning up drinking water, investing in local communities, and creating jobs and sparking new opportunities in our economy. The one other thing the last couple of years — costs have been a major concern for Michiganders. We’ve been able to make some huge progress in terms of cutting taxes for working families, putting money back in the pockets of seniors. We’re excited that checks are going to start going out in the next couple of weeks for the working families tax credit. It’s coming at a time when families could really use it. At the same time that we’ve navigated a lot of challenges, the governor’s built a stable foundation of fiscal responsibility. No matter what comes in the years ahead, we
Read all the conversations at CrainsDetroit.com/TheConversation 18 | CRAIN’S DETROIT BUSINESS | FEBRUARY 5, 2024
way nationally in this space and some of the investments that we’ve made. We’ve seen states across the country follow our lead in terms of expanded health care coverage for new moms postpartum. That’s something that I’m particularly proud of.
have a record balance in the budget stabilization fund. We have a new rainy day fund for schools in case there’s ever a downturn there, to protect the investments that we’ve made. We’ve paid off nearly $20 billion in debt. You’ll see more on that in the weeks ahead. Without huge surpluses, which are dissipating, can Michigan continue to afford initiatives such as free school breakfasts and lunches? Absolutely. Throughout some of the opportunities we’ve had over the past few years because of the one-time dollars we have from the federal government and President (Joe) Biden and the congressional delegation, we’ve made some really smart investments. Also, we did that strategically. We used one-time dollars for one-time investments and made sure that anything that we’re investing in a new program that we’re standing up has the ability to sustain long beyond the governor’s time here. What has been overlooked? One thing I will point out is our investment in a program called Healthy Moms Healthy Babies, which we started during the first term. Bipartisan support, Republicans and Democrats, and it’s really getting at reducing racial disparities and improving outcomes for infant and maternal mortality. Michigan really is leading the
Is there anything you want to change about the budget office? That’s actually one of my goals in working here is to help make the budget more accessible for real people. Rather than talking about, you know, what’s the dollar amount in the line item of a budget, what does that mean for real people? The school meals is a great example. There’s a cost to that in the budget. But for a family, it means $850 in savings every single year. My parents are small business owners. I like to think of them as like a barometer. What do they care about? How do we break through to help make the budget and the priorities of this administration more accessible to real people in this state? You mentioned tax cuts that were enacted last year. Is there room in the budget for additional tax relief? Lowering costs is going to continue to be a priority from us. In the budget this year, you’ll obviously see reflected the tax cuts that we did for seniors and working families. We’ll have some other proposals along those lines. Stay tuned. (Whitmer plans to propose a tax credit for caregivers and a tax rebate for the buyers of new cars.) What do you do outside of work? I love Northern Michigan. Any excuse any season to get up north and enjoy our trails, our lakes, our beaches is my very favorite. I like to exercise, spend time with my family.
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