Crain's Detroit Business, February 6, 2023, issue

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT NEED TO KNOW

` OUR NEXT ENERGY RAISES $300 MILLION

THE NEWS: Battery startup Our Next Energy Inc. raised $300 million in its series B funding round, the company said Wednesday. e investments valued the Novi-based company at $1.2 billion.

WHY IT MATTERS: e company intends to use the funds for building the second phase of a $1.6 billion battery-cell factory in Van Buren Township in Wayne County slated for completion in 2024, founder and CEO Mujeeb Ijaz told Automotive News. ONE intends to eventually hire more than 2,100 people for the plant, which is expected to reach full capacity in 2027.

` CREDIT ACCEPTANCE INCOME DROPS 42 PERCENT

THE NEWS: Credit Acceptance Corp.’s net income fell 42 percent to $127.3 million during the fourth quarter, a decline driven primarily by a need to set more money aside for potential credit losses in light of changing cash ows.

WHY IT MATTERS: e bruised credit auto lender based in South eld said that it expected to collect smaller percentages of the indirect loans it obtained from dealerships in 2021 and 2022, resulting in a $41.1 million decline in forecast net cash ow.

` STUDY FINDS MICHIGAN EV INFRASTRUCTURE ‘INADEQUATE’

THE NEWS: Over three-quarters of Michigan residents still lack easy access to public fast EV charging stations despite recent additions to charging infrastructure across the state, a Michigan think tank said in a report. Focused primarily on DC fast charging, a report from Anderson Economic Group on the status of public charging access in the state found Michigan’s infrastructure “to be inadequate for the demand.”

WHY IT MATTERS: is distribution leaves only 16 percent of the state’s population within a 10-minute trip of public DC fast charging, AEG said, in contrast to the 87 percent who have easy access to gas stations.

nounced it had made the “strategic decision” to restructure the business, resulting in a 69 percent reduction in the number of retail home lending o ces.

WHY IT MATTERS: Flagstar, last spring and prior to the closing of the $2.6 billion, all-stock acquisition by NYCB, was one of multiple metro Detroit mortgage lenders to make job cuts as the mortgage business began to decline amid surging interest rates. For the full year 2022, NYCB grew its bottom line net income 9 percent year over year to $650 million, according to its earnings report.

` LAMBERT ACQUIRES ROY PUBLIC AFFAIRS

THE NEWS: Grand Rapids-based Lambert & Co. has continued its expansion in Detroit by acquiring Roy Public A airs Management LLC and installing that rm’s founder to lead its public a airs practice. Melissa Roy, 47, began the new role of Detroit managing partner on Jan. 17, in tandem with the acquisition of her Detroit-based communications and policy advocacy rm.

` FLAGSTAR BANK TO SLASH MORTGAGE BUSINESS

THE NEWS: Flagstar Bank is making massive cuts to the lender’s mortgage business — just weeks after being formally acquired. Flagstar’s new owner, New York Community Bancorp Inc., an-

WHY IT MATTERS: e deal brings Lambert a book of business including the Downtown Detroit Partnership, Autism Alliance of Michigan, Kids Kicking Cancer and TEMO Inc., as well as a communications veteran with 20 years of experience in the eld.

EDUCATION

UM Medical School pulls support of U.S. News rankings

` University of Michigan is joining several other top medical schools in the country by withdrawing participation in the U.S. News & World Report’s annual ranking program. e university said in a statement that the methodology used by the publication isn’t useful for students or the university.

“ e fundamental problem is that an aggregated score, based on many di erent dimensions, cannot possibly help students or others evaluate institutions with respect to their individual priorities,” Marschall Runge, dean of UM Medical School, CEO of Michigan Medicine and executive vice president of medical a airs for UM, said in a press release. “Creating an overall ranking blurs each school’s individual attributes into a single score or rank that only re ects priorities set by (the publication) itself.”

As a result, the medical school will no longer submit data to the publication. e move follows competitors pulling out across the U.S., including Harvard University, Columbia University, Stanford University, e University of Pennsylvania and the Icahn School of Medicine at Mount Sinai in New York.

University of Michigan joins several other top medical schools in the country by withdrawing participation in the U.S. News & World Report annual ranking program. | UM

Michigan trucking business falls back to Earth

RACHEL WATSON

e early pandemic, conventional wisdom goes, was good to trucking. Retailers closed, stimulus checks arrived, and consumers bought goods that needed to be moved, rendering freight contracts seemingly pandemic-proof.

In reality, it was more complicated — and those same conditions are having an impact years later.

e transportation industry is on shaky ground, as depressed freight rates and volume meet rising costs brought on by in ation, labor shortages, stubborn supply chains and more expensive insurance. Trucking, which carries about 70 percent of freight tonnage in the U.S., bears the brunt of those headwinds.

Trucking companies large and small led for bankruptcy in 2022, and in Michigan, Holland-based Mulder Holding Co. shut down its trucking division altogether to focus on warehousing and brokerage.

READY FOR THE RUNWAY

5 young Detroit designers headed to New York for Fashion Week show

SHERRI WELCH

Detroiter Shawn Woodward has long dreamed of seeing his art walk down a New York runway.

He’s about to see that dream come true at the age of 18.

Woodward is one of ve local youth whose head-to-toe or “total look” designs will be featured in a runway show Feb. 7 in the run-up to New York Fashion Week as part of Boys & Girls Clubs of Southeastern Michigan’s fashion industry club program.

It’s the chance of a lifetime, he said, to show his Skullxer brand apparel with cut fabric applied to pants, shirts and coats to create a painted-on look.

He’s hoping the opportunity will help springboard his brand.

“Not a lot of people, especially young designers, get a chance to be featured in New York Fashion Week with designers and have mentors they can work with,” he said.

“I didn’t expect this.”

e ve aspiring Detroit designers, aged 13-19 who are headed to New York, will get a rst-hand look at the behind-the-scenes work it takes to make those designs a reality.

e event at Louis Vuitton will also feature designs from ve established New York designers who have been mentoring them for the past six months.

Each of the ve youth going to New York are building their own

businesses, which is one of the reasons they were selected, President and CEO Shawn Wilson said.

e Detroit Pistons and NBA Foundation are sponsoring the trip.

When they return from New York, they’ll take their designs and exhibits to the stages at BGCSM’s local clubs to inspire hundreds of their peers, Wilson said.

“ is is part of what makes our industry clubs unique. We have to help our youth build a sense of self-e cacy...that they believe they can be successful,” Wilson said. “Performance-based accomplishments help do that.”

Supply chain journal FreightWaves reported that high diesel costs and sinking freight rates pushed trucking conditions to an 18-month low in October, second only to April 2020. Industrywide, overall tonnage hauled dipped by 3.7 percent in October and November due to an oversupply of carriers and less demand for shipping, according to a fourth-quarter report by third-party logistics provider Evans Transportation Services.

At the same time, trailers and trucks are getting more expensive. Operating costs hit an all-time high in 2022 of $1.86 per mile, according to the Evans report.

Michigan trucking executives say one new challenge is an oversupply of carriers. That’s due in part to drivers who left their companies or entered the industry during the pandemic to work as owner-operators for “spot” rates — the price to move a product at one point in time, as opposed to long-term contract rates that make up most of the industry.

Birmingham could turn to Realtors to help diversify retail mix

Downtown Birmingham isn’t hurting for retail options, but one city group has suggested a new strategy to bring in more quality and variety of shops.

Last month, the Birmingham Shopping District Board voted to research and discuss the possibility of an incentive-based program that would entice area real estate professionals to help ll vacant commercial space in the downtown area.

e program is in the preliminary stage, according to Cristina Sheppard-Decius, the new executive director of the Birmingham Shopping

District. Realtors who recruit retail businesses to downtown Birmingham based on a to-be-determined criteria would qualify for an incentive, Sheppard-Decius told Crain’s.

“Our goal for the area is quality and diversity of businesses over

quantity,” said Sheppard-Decius, who began her role with the city on Dec. 1 after working in downtown economic development roles in Dearborn and Ferndale. She was also a Crain’s 40 Under 40 honoree in 2009.

e move comes after the city ended a three-year relationship with Bloomeld Hills-based CC Consulting, operated by Principal Cindy Ciura. Ciura, who also has helped bring retailers to the Somerset Collection in Troy and Campus Martius in downtown Detroit, helped ll six retail space vacancies over those three years.

Detroiter Shawn Woodward is one of ve local youth whose head-to-toe or “total look” designs will be featured in a runway show Feb. 7 in the run-up to New York

Fashion Week BOYS & GIRLS CLUBS OF SOUTHEASTERN MICHIGAN

Shawn Wilson, president and CEO, Boys & Girls Clubs of Southeastern Michigan.

JAY DAVIS

Commercial Realtors working with properties in downtown Birmingham may earn incentives for bringing retailers in to ll vacant storefronts like this one at 135 S. Old Woodward Ave. | JAY DAVIS/CRAIN’S DETROIT BUSINESS

Sheppard-Decius Ciura

Fate of prominent o ce buildings uncertain as hefty loans come due

If there is one asset class that has truly been left in ux during the COVID-19 pandemic, it’s o ce space.

And among the bevy of things to observe is how maturing commercial mortgage-backed securities loans on those properties shake out. at’s because as those loans come due, building owners may look to re nance their debt, or face default and foreclosure by the lender, which could take them back to sell them and recoup some of their money. Owners could also look to unload the property in advance of the maturity, or the borrower and lender could also work out loan extensions, putting o when the balance is due.

Overall, things are much more difcult today than when those loans were issued. Between rising interest rates and a tough o ce environment, among other issues, the ultimate future of these spaces is up in the air.

New York City-based Trepp LLC, which tracks CMBS data, says this year there are 11 CMBS o ce loans in the Detroit market maturing with a current loan balance of approximately $100 million (original balances of $131.4 million).

More than half of that is for the Grace Lake Corporate Center in Van Buren Township, with $53 million still owed on a $75.5 million loan that matures in April. at property, the former Visteon Corp. headquarters, is owned by New York City-based Sovereign Partners LLC, which paid $81.1 million for it in 2012. I emailed Darius Sakhai, co-founder and principal of Sovereign Partners, seeking details on the company’s plans for the debt.

But the overall amount due next year in the region dwarfs this year, Trepp data shows. In 2024, there are 13 loans on a dozen properties with current balances of $288.3 million due; the original loan balances totaled $323.3 million.

e vast majority secure some of the most well-known o ce properties in the suburbs.

South eld Town Center, which had been close to selling before a deal collapsed last year due tonancing, has a pair of loans totaling

$142 million due next year. e current balances are $128.7 million. e property, the region’s second-largest o ce complex, is owned by New York City-based 601W Cos., which paid $177.5 million for it in 2014.

One Towne Square and Two Towne Square in South eld, both owned by South eld-based Redico LLC, have $31.5 million outstanding on a $36 million loan and $12.7 million on a $15 million loan, respectively, according to Trepp.

In addition, the Redico-owned American Center at 27777 Franklin Road has a balance of $26 million on a $29 million loan due next year.

I emailed Dale Watchowski, president, CEO and COO of Redico, about the loans and what the company’s plans are for them.

And the Bank of America Building on West Big Beaver Road in Troy has $44.3 million owed on a $47.6 million loan due in September 2024, according to Trepp. Sol Gutman of New York City paid $74 million for the property in 2017.

What ends up happening with all those major suburban properties and their debt is an open-ended question. Trepp says all those borrowers are current on their loan payments.

“ ere is a signi cant amount of CMBS and life (insurance) company o ce loans rolling over in the next few years, but it is still too early to fully predict the impact on these investments,” said Joshua Bernard, principal of South eld-based Bernard Financial Group.

Several issues are at play now

complicating how things will play out, Bernard said. For example, in Detroit’s central business district, major employers, such as General Motors Co., are beginning their return to the o ce — at least in a hybrid mode.

“We still need to see what this does to marginal true desk occupancy and rental rates for co-located, ancillary and/or related other tenants in the market,” Bernard said. “ is impacts retail, parking, and street-level businesses in the CBD, too.”

Additional complicating factors: Rising interest rates and the overall state of the o ce sector, which has generally been battered as companies have trended toward hybrid work models and shedding unnecessary space, either through sublease or downsizing as leases roll over.

In general, as Trepp notes, that means some lenders have been wary to issue new o ce debt unless buildings are well-occupied with longterm tenants.

at could make things tough for those looking to re nance — something that started playing out last year.

Trepp, citing Moody’s Investment Services data, says in Q2 last year commercial real estate re nancing fell 11.2 percentage points to 73.5 percent from 84.7 percent the prior quarter, the largest drop of the pandemic.

is is just one of the issues to keep tabs on in the coming months.

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

The Grace Lake Corporate Center in Van Buren Township. COSTAR GROUP INC.

The South eld Town Center.| COSTAR

GM, Net ix join forces with Super Bowl advertising in deal

EVs also to be included in some programming

E.J. SCHULTZ | AD AGE

General Motors has found a new way to plug its electric vehicles — and it involves “Squid Game,” “Bridgerton,” “Stranger ings” and other Net ix hits. e automaker has struck a deal with the streaming giant to put its EVs in Net ix programming as part of an agreement that includes a 60-second Super Bowl ad starring Will Ferrell. Neither company released nancial details on the arrangement, but the pact amounts to a major investment by GM to get its EVs into pop culture.

e e ort continues a marketing strategy by GM to portray itself as a maker of EVs for everyone, no matter the income level or lifestyle. e strategy — under the umbrella of a corporate ad campaign called “Everybody In” — included Super Bowl ads in 2021 and 2002. Ferrell rst appeared in the 2021 ad that saw him use Norway (where EVs are plentiful) as a foil to motivate Americans to buy more EVs.

In this year’s ad, called “EVs On Screen,” Ferrell will be shown alongside Net ix show characters. He’ll drive a GMC Sierra Denali EV while being attacked by zombies from

“Army of the Dead” and be kidnapped in a Chevy Blazer EV by a “Squid Game” cast member, for instance. Other shows referenced in the ad are “Bridgerton,” “Stranger ings,” “Queer Eye” and “Love is Blind.”

Logs for both Net ix and GM will appear at the end of the ad with the message, “Let’s give EVs the stage they deserve.”

GM last week released two teasers previewing the spot. e Community is the lead agency with support from McCann Detroit. (McCann is part of GM’s roster of agencies, while

e Community has previously worked with Net ix, including with a campaign that plugged Tanqueray gin and “Bridgerton.”) United Talent Agency brokered the deal between Net ix and GM.

Long-term partnership

Net ix beginning last year committed to including at least one EV in every Net ix-managed production, lm or series, Net ix Chief Marketing O cer Marian Lee said Wednesday during a media brie ng in which she appeared alongside

Noted restauranteur bringing Italian eatery to One Campus Martius

JAY DAVIS

One Campus Martius in downtown Detroit is getting a new restaurant later this year.

Chicago-based restaurant group Fabio Viviani on Wednesday announced plans to open a new, yetto-be-named Italian and Mediterranean restaurant on the ground oor of the o ce building. It will set up in the Bedrock-owned space previously occupied by Calexico Detroit, which closed in January after a little more than six years in business there.

e Fabio Viviani property will operate as a full-service restaurant with a bar, according to a spokesperson. e company website lists a Bar Cicchetti bites & booze location as “coming soon” in Detroit, but it was not con rmed if that is what is going into One Campus Martius.

e opening will bring more than 50 jobs to the area, according to the spokesperson.

e nancial investment was not disclosed. e restaurant group said it plans to release more details later this year.

The company, owned and operated by chef Fabio Viviani, is partnering with Bloomfield Hillsbased Cicero Hospitality Group on the project, according to a news release. Detroit-based Norr Architecture & Engineering Firm has been brought on to handle the buildout of the 4,000-square-foot

Fabio Viviani |

space, the release states.

e nancial investment put into the project was not disclosed. Viviani’s company in 2022 had revenue of nearly $111 million. e Fabio Viviani Hospitality Group operates restaurants in Boston, New York City, Chicago and Memphis, along with locations at O’Hare Airport in Chicago and Los Angeles International Airport.

Viviani in a statement said he and his group are excited to bring a concept to downtown Detroit. e restaurant will join Texas De Brazil in One Campus Martius.

Viviani, who was born in Florence, Italy, began opening restaurants in the U.S. in 2005.

“We are delighted to be joining

GM Global Chief Marketing O cer Deborah Wahl. GM EVs have already appeared in “Love is Blind” and “Queer Eye,” Lee said. Decisions on how EVs are used are left up to showrunners and directors, she said, adding “we don’t dictate storylines.”

Net ix’s EV commitment is not exclusive to GM — it can use EVs from other automakers — but Netix is “really committed to GM vehicles,” Lee said.

“ is is a long-term partnership that we have with GM, there’s no end date in our mind,” she said. “And so we’ll continue to work with GM for as long as they want to work with Net ix.”

Lee portrayed the deal as being part of Net ix’s “broader e orts in the sustainability space,” which include a commitment to cut its emissions in half by 2030. e company has reported that its carbon footprint in 2021 was about 1.5 million metric tons. It is seeking “more sustainable storytelling, which comes to life in two ways, both on-screen and behind the camera,” Lee said.

For GM, the deal helps it “normalize” EVs and highlight the “EV lifestyle in the most binge-worthy content ... which Net ix is a master at,” Wahl said. She added that the Netix arrangement is “one example of how we’re approaching partnerships and relationships di erently,” calling it a “blueprint for the whole entertainment industry.”

SMALL BUSINESS

While EVs still only account for a small fraction of the total automotive marketplace, sales are growing and automakers keep pouring billions of dollars into EV production. GM CEO Mary Barra during an earnings call last week said the company was on track to produce 400,000 EVs in North America from 2022 to mid-2024 using its proprietary Ultium platform, with “volumes increasing signi cantly in the second half of this year.” GM anticipates having a total of nine EV models in the market this year.

Promoting EV ambitions was a popular tactic for automakers in last year’s Super Bowl — Kia, BMW and EV startup Polestar were among the brands touting them. But this year, GM is the only one so far to con rm an electric vehicle Super Bowl ad. Kia is in the game but plans to highlight its gas-powered 2023 Telluride X-Pro. Multiple other brands are staying on the sidelines.

e downtick in Super Bowl investment comes as the auto industry deals with a tougher economy, including higher interest rates. GM this week reported record pre-tax pro ts for 2022 and a 28 percent surge in fourth-quarter revenue, according to Automotive News. But it also announced a two-year, $2 billion cost-cutting plan in part to brace for tougher macroeconomic conditions. e plan does not include layo s, according to the company.

Motor City Match awards

$1.3M

JAY DAVIS

to 32 small businesses

e latest round of Motor City Match cash award winners represent a wide range of industries, including tness, retail, education, grocery and hospitality.

On Wednesday, Motor City Match awarded $1.3 million in cash grants to 32 Detroit-based businesses — 17 new businesses and 15 existing businesses. e 17 new businesses cover 15 Detroit neighborhoods, including Warrendale, North Campau, Chalfonte, the University District and Martin Park.

About 74 percent of the businesses are minority-owned, with 60 percent being women-owned and 68 percent owned by Detroit residents.

have two pennies to rub together when I started this. During the pandemic, I was able to show people what I’m trying to do and show them I’m an ally in the city. e things everybody else wants, I want them, too. is a win for everybody.”

Round 21 represents the second time Motor City Match has awarded more than $1 million in cash grants, up from from $500,000 per quarter, with additional funds coming from American Rescue Plan Act funds. e Motor City Match program is managed by the Detroit Economic Growth Corp.

Detroit Mayor Mike Duggancalled Motor City Match’s impact remarkable.

the evolving culinary scene in the Campus Martius area and look forward to sharing more details shortly,” Viviani said. “We are working on something truly special.”

Bedrock COO Ivy Greaner in the statement said her company looks forward to the Viviani concept opening.

“Chef Fabio Viviani has captivated the hospitality industry with exciting restaurant concepts across the country,” Greaner said. “His new concept joins the highly tra cked Woodward Avenue corridor, adding culinary diversity and destination dining near the Hudson’s development.”

Contact: jason.davis@crain.com

(313) 446-1612; @JayDavis_1981

Neighborhood Grocery LLC, which plans to open a full-serve grocery store at 500 Manistique St. in the city’s Je erson-Chalmers neighborhood, is the big winner in Round 21 of the program, earning an $85,000 grant.

Founder and Detroit resident Raphael Wright said Motor City Match helps show how much talent is in the city.

“We grind. We hustle,” Wright said during the Wednesday event. “I saw the decline in the city. at’s what planted the seed for me to do what I’m doing. It starts with food. If we’re going to lead citizens, we have to feed them.

Neighborhood Grocery got its start as a crowdfunded initiative.

“I don’t come from wealth. I didn’t

“Neighborhoods that have lacked basic services and amenities for years are now seeing a real diversity of high-quality businesses opening along their commercial corridors, within walking distance of many residents,” Duggan said in a news release. “ is program has been a major part of our strategy to strengthen and rebuild our neighborhoods.”

e 17 new businesses shared $965,000 in grants that will aid owners in opening a brick-and-mortar location in Detroit. Another $341,000 went to 15 existing businesses for improvements to their current spaces.

Applications for Round 23 open March 1. More information at motorcitymatch.com.

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

An image from General Motors’ and Net ix’s co-branded Super Bowl ad, “EVs on Screen,” featuring actor and comedian Will Farrell. NETFLIX

Drug pricing program could help hospitals o set costs

ver the past several months and years, the little known federal 340B drug pricing program that allows safety net hospitals to stretch incredibly scarce resources to provide care for more patients in their communities has become a target of criticism. In a quest to maximize pro ts, drug companies have restricted 340B discounts to contract pharmacies and hospitals, reducing the bene t of this valuable federal program that does not involve any state or federal funding.

EDITORIAL

Rent control in Detroit just doesn’t add up

Anascent e ort by some Detroit City Council members to call for lifting Michigan’s ban on rent control needs a dose of reality.

Rent control — government-mandated limits on what rent landlords can charge — was banned in Michigan in 1988 under Democratic Gov. James Blanchard as moves were afoot in Ann Arbor and Detroit to impose it. at happened for good reasons.

Rent control and its cousin, rent stabilization that limits how much rents can increase for existing tenants, became popular in U.S. cities in the 1960s and 1970s, and it distorted housing markets where it was imposed.

As one developer told Crain’s, “Rent control is a New York solution to a Detroit problem.” It’s hard to sum it up any better than that.

New York is the classic case, and the effects of rent control there are still seen now. It created winners and losers in the housing market, strongly favoring existing tenants, and putting golden handcu s on tenants who were renting the right place at the right time.

ose winners can

nd themselves renting a single room in their apartments for more than the total rent paid to the landlord. is is not the sign of a healthy housing market, and nobody would look to New York as a hotbed of housing a ordability.

Basic supply and demand dictates that if you limit supply of something, that will drive up prices.

And new development in Detroit is hard to

build, and getting harder as interest rates and construction costs rise. Making the nancial math work is challenging now, and rent control would be one more di culty added on top of an already di cult equation.

In Detroit, lack of quality housing stock has sometimes been driven by landlords who buy property on the cheap, then milk it for rent without paying for maintenance or property taxes, then let the property go into foreclosure.

It’s tempting to think that a 1980s proposal that wouldn’t let landlords raise rent unless properties are up to code might help with maintaining that housing stock.

But there are already rules that put code requirements on landlords — they are just often ignored, and the city has historically had lax enforcement of them.

Academics who’ve studied housing issues frequently conclude that trying to control housing costs from the top down makes the problem worse in the long term.

If government wants to try to x the problem of housing a ordability, the best bet is to support e orts to build a ordable housing through subsidies to private developers, and make the path to new construction smoother and less costly.

Rapidly rising rents are a real problem, as are the decline of Detroit’s housing stock and bad actors among landlords. Encouraging private investment in new housing is the long-term solution.

MORE ON WJR

Hospitals throughout our state have the ability through 340B to purchase certain outpatient prescription drugs at discounted prices. ese covered entities include disproportionate share hospitals, critical access hospitals, cancer hospitals, children’s hospitals and sole community hospitals. is list clearly demonstrates the 340B program benets those hospitals that care for our communities’ most vulnerable residents.

Recently, the Wall Street Journal published a story critical of the savings that 340B generates for health systems across the country, including in Michigan. e fact is, without these savings, di cult decisions will be made by hospitals that will impact service lines and the availability of health care in your community. ese savings also contribute to the nearly $4.2 billion in community bene ts that Michigan hospitals and health systems invested in their communities to help people of all ages get healthy and maintain wellness both in and out of the hospital in scal year 2020.

Insurance costs for employer-provided insurance in Michigan are among the lowest in the U.S., according to the RAND Hospital Price Transparency Study; 340B savings allow health systems to provide a full continuum of care while reducing the overall cost of care for patients. If pharmaceutical companies are successful in undermining the program, we will see the impacts on multiple levels ranging from reduced access to higher insurance premiums.

e value of the 340B program to hospitals

Ohas increased over the last year by assisting covered entities in maintaining access to comprehensive health services as they face skyrocketing increases to drug prices and the impacts of in ation on sta ng, supplies and equipment. e use of contract labor has increased dramatically due to sta ng shortages that predate the pandemic and impact both clinical and nonclinical positions vital for operating hospitals 24/7 year-round. In two years, the statewide cost for just contract labor has increased by nearly $1 billion annually for hospitals.

Hospitals operate on slim to nonexistent margins and lack the ability to react to these price pressures to the same degree as other business sectors. is is due to health care reimbursement rates either being set by government payers or negotiated well in advance with private insurers. To make matters worse, the growth in drug prices is unsustainable, as a report from Kaufman Hall showed hospitals’ drug expense per adjusted discharge increased by 40.6 percent compared to pre-pandemic levels, the largest growth of any measured expense metric.

Michigan has some of the best state-level 340B protections in our country that prioritize access to care for vulnerable patients. e program is funded through drug company discounts and not taxpayer dollars. Reducing the availability of 340B simply means even higher pro ts for drug companies. As the Michigan Legislature begins a new session, it is important to remember that for three decades, the 340B drug pricing program has received bipartisan support and helped hospitals from Detroit to the Upper Peninsula.

In all, 340B maintains access to care, protects the viability of hospitals and reduces the cost of care for patients and ultimately businesses. It provides lifesaving prescription drugs for those in need who may not be able to a ord them. Any act to undermine the program will have dire consequences to the physical and economic health of our communities.

GETTY IMAGES/ISTOCKPHOTO

BASIC SUPPLY AND DEMAND DICTATES THAT IF YOU LIMIT SUPPLY OF SOMETHING, THAT WILL DRIVE UP PRICES.

` Crain’s Managing Editor Michael Lee talks about the week’s stories every Monday morning at 6:15 a.m. on WJR 760 AM’s Paul W. Smith Show.

BRIAN PETERS

Brian Peters is CEO of the Michigan Health & Hospital Association

MICHIGAN HAS SOME OF THE BEST STATELEVEL 340B PROTECTIONS IN OUR COUNTRY THAT PRIORITIZE ACCESS TO CARE FOR VULNERABLE PATIENTS.

GETTY IMAGES/ISTOCKPHOTO

NONPROFITS

Lighthouse plans $20M expansion that would triple shelter’s beds

SHERRI WELCH Fusco, Sha er & Pappas Inc. is the architect on the project.

Emergency shelter, food and assistance provider Lighthouse is planning a $20 million expansion of its Pontiac campus.

As proposed, the plan will include updates to its headquarters building and an existing emergency shelter, along with the construction of two new sites. A new, three-story building will increase shelter capacity to 150 noncongregate shelter units, roughly tripling the current number of beds Lighthouse can provide.

e increased shelter capacity will enable Lighthouse to move homeless people living in emergency shelter rooms at local hotels to the campus, increase its ability to respond to emergency shelter demand in Oakland County, and provide additional emergency food provision and supportive services on campus, Lighthouse President and CEO Ryan Hertz said.

A new dining building will provide meals for families in the shelter and space for volunteers from local congregations to prepare them, while a new cafe and indoor-outdoor spaces will provide opportunities for sta , volunteers and clients to interact.

A new co-working space will allow about 25 sta members based in Lathrup Village o ces to work from the main campus, as needed.

“We’re trying to knit together a lot of the agship activities of South Oakland Shelter and Lighthouse and maximize interaction between sta , volunteers and people being served,” Hertz said.

“We don’t need a lot of space for hallways with closed, locked o ces. ... What we do want is to use our space for interaction and connection. e campus plan is really in the spirit of that.”

e campus — bounded by Woodward Avenue to the west, Cottage Street to the north and Center Street to the east — includes Lighthouse-owned buildings, single-family homes and duplexes that are zoned di erently, Hertz said.

Other parts of the central campus plan include:

` e addition of a “social supermarket” or grocery store-like food pantry. at will be paired with housing and utility assistance, nancial coaching, income support and bene t-application assistance through a Center for Working Families model.

` An indoor-outdoor community meeting space with an upper-level outdoor terrace connected by stairs to a ground-level, outdoor seating area, a commercial kitchen for events, food prep classes and future space for entrepreneurs, along with a cafe for sta , volunteers and clients to socialize and work.

` A new economic opportunity center with supportive services to help keep newly housed clients in their homes.

Lighthouse plans to fund the project through a mix of tax credit nancing, public funding from the county and state and donations and grants, Hertz said.

Lighthouse is seeking to rezone the majority of the campus west of Hovey Street to local business/residential mixed-use and the parcels east of Hovey to residential o ce. e Pontiac Planning Commission unanimously recommended approval of the rezoning requests on Wednesday night. ose requests are expected to go before the full council later this month, said Mark Yandrick, planning manager for the city of Pontiac.

Contingent on zoning request approvals, Lighthouse must then submit a formal site plan for the project to the planning commission, he said.

In a related move, Lighthouse listed its Lathrup Village o ce at 18505 W. 12 Mile Road for sale for $825,000.

Most of the South Oakland Shelter sta continued working from the SOS Lathrup Village o ces after the Lighthouse and SOS merger in 2019

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

Hertz

A $20 million plan in development for the Lighthouse campus will bring new buildings, expanded shelter capacity and a “social supermarket” along with new gathering spaces for clients, sta and volunteers. | LIGHTHOUSE

NONPROFITS

IN THE MONEY

Over $100 million has been earmarked for Michigan nonpro ts. Here's how to get in on the next round.

GARRETT’S SPACE

$4 million to spur plan to create campus for young adults facing mental health issues. PAGE 9

BY` SHERRI WELCH

In the year since earmarks made a comeback, Michigan nonprofits have commanded well over $100 million for projects and programs in communities around the state.

at number, culled from $24 billion in federal earmarks by the Council of Michigan Foundations, does not include the funding hospitals, health systems and universities have attracted or the hundreds of millions more appropriated to support public projects in the state.

Well-known nonpro ts in the state like the Motown Museum and Michigan State University attracted millions of dollars in congressionally designated funds in the scal 2023 federal omnibus bill passed in late December, but so, too, did small nonprofits like Garrett’s Space, an $800,000 nonpro t, with $4 million to create its rst home and Sanctum House, a small nonpro t in Royal Oak which secured $1.4 million to acquire a new site to serve women survivors of human tra cking.

e return of congressional designated funding represents an opportunity for nonpro ts, regardless of size, leaders in Michigan’s nonpro t sector said — as long as they set themselves up for contention.

Getting an earmark

Nonpro ts that want to qualify for congressional designated funding will face a complicated process. Here's a guide for making it happen:

` Build relationships with elected o cials: Talk to your representatives. Invite Michigan’s two Senators and congressional leaders in your district to attend a board meeting or event or tour a facility to learn more about the organization, its work and the project looking for funding.

` Understand the application process: The Senate and House have di erent timelines, even among some of the elected o cials, so nonpro ts need to make sure they

know the speci cs for legislators they are approaching.

` Show your value: To qualify for an earmark, nonpro ts need to ll out an application and submit at least two letters of community support for a project to demonstrate need.

` Engage outside voices: Use this as an opportunity to speak to the needs of new constituents, especially Black, Indigenous and People of Color, who are often underrepresented.

` Make recommendations: Keep tabs on other projects and groups that would be a good t for an earmark. Teaming up can make the process easier.

Motown Museum is moving forward with the nal phase of its expansion with a $10 million federal earmark. MTOTOWN

“YOU HAVE TO CULTIVATE A RELATIONSHIP WITH YOUR ELECTED OFFICIAL BEFORE MAKING THE APPLICATION. THEY HAVE TO KNOW ABOUT YOU.”

—Kelley Kuhn, president, Michigan Nonpro t Association

Earmark spurs growth for nonpro t helping young adults

Garrett’s Space gets $4M for residential center focusing on mental health issues

SHERRI WELCH

A $4 million earmark that a small suicide prevention nonpro t secured in the most recent round of state funding is helping catapult its plan for a Washtenaw County campus to provide support for young adults facing mental health challenges.

e funding, included in the most recent round of earmarks made for scal 2023, will put Garrett’s Space more than halfway to its $8 million goal to fund the project.

As planned, the campus will combine peer support groups led by licensed social workers with the natural environment, recreation, the arts and exercise to provide support for people 18-28 facing anxiety, depression and other mental health issues. It will o er both day programs and three- to fourweek residential stays, adding another layer of support beyond therapy.

e plan is the vision of Julie Halpert, a journalist who’s written for the New York Times, Wall Street Journal and other media outlets, and her husband Scott, former in-house counsel for Masco Corp.

ey founded the nonpro t in their son Garrett’s memory after losing him to suicide at the age of just 23 in 2017.

“Our son was really struggling toward the end of his life. He needed more than weekly or bi-weekly therapy,” Julie Halpert said.

Like many people these days, he was feeling isolated, alone and demoralized and didn’t want to go through the stigmatizing experience of going to the emergency room, which is not designed to help people long term, his parents said.

Garrett’s Space Residential Center will be “the type of place he would have liked to have gone,” with a nonmedical, retreat-like atmosphere and peer support, Julie Halpert said.

erapy isn’t enough for young adults going through mental health challenges, Scott Halpert said.

“ ey need to see other young people going through similar challenges as they. at allows them to put their own challenges in perspective.”

A vital cause

Suicide was the third leading cause of death among individuals between the ages of 15-24 in 2020, the National Institute of Mental Health said, citing a Centers for Disease Control and Prevention report.

e Halperts didn’t want to wait to help other young adults like their son while they worked toward the vision for a residential center. In 2021, Garrett’s Space began hosting free, virtual, peer support groups, each led by a facilitator and licensed clinical social worker, to let young adults su ering from anxiety and depression know they are not alone. Recently, it’s begun shifting some of the virtual programs to in-person activities and gatherings held at Washtenaw County restaurants and other public places.

With increased donations and a handful of grants, Garrett’s Place’s budget grew to about $250,000 in 2021 and over $800,000 last year, President and CEO Scott Halpert said.

e suicide-prevention nonpro t has only one full-time licensed clinical social worker and one part-time sta member, in addition to Halpert

who works full time without pay and his wife, acting COO, who spends about a third of her working hours focused on the nonpro t.

Contracted facilitators and licensed social workers also help with the peer support groups, and a yoga instructor is present at every meeting to help teach clients breathing and movement exercises.

Twenty- ve young adults are logging on to attend one of three weekly meetings, Scott Halpert said. Another 40 have attended the peer support groups since 2021.

Getting the word out

While launching the peer support groups, the Halperts began reaching out to help spread the word about their plans for the residential center and holistic wellness campus.

“We’d never done any fundraising (or) worked in nonpro ts,” Julie Halpert said. “We just jumped in.”

e Halperts said they were fortunate to know a lot of people in the mental health space and nonpro t sector. Julie Halpert had also covered mental health issues extensively in her reporting work and had many contacts at the University of Michigan where she’s served as a regular lecturer on environmental and science writing for 20 years. ey attracted experts and colleagues to the nonpro t’s board and advisory group, and list of

supporters along with family and friends — theirs and their son’s.

“Garrett was just the most incredible person,” his mom said, with friends his own age, parents of his friends and others of all ages.

In 2019, Garrett’s Space attracted the attention of Kacee Must, founder of Citizen Yoga Studio, who hosts an annual yoga event for about 1,000 people at the University of Michigan’s Big House. She invited the nonpro t to be the bene ciary for the event that year and again in 2022, Julie Halpert said.

“ at really jump-started things for us.”

People attending both yoga events have followed it up with volunteering their time and skills and donations, she said.

e couple’s connections at the UM Department of Musical eatre, especially professor Mark Madama, helped them connect with Broadway performers, who — with yoga and pilates instructors, people touched by suicide and politicians — have supported the 24-hour virtual fundraiser Garrett’s Space has hosted the past three years, Julie Halpert said.

She also spent most of the past two summers emailing hundreds of publicists she found on IMDbPro (the Internet Movie Database), a web-based database of information on television shows, movies and entertainment professionals.

Scott Halpert said it took some effort to read through the lists of areas a project could t into for funding. “But we realized our project t right in with some of what they were funding.”

He talked with many community organizations, eventually securing 19 letters of support for the center, from organizations including Washtenaw County Community Mental Health, Michigan State Housing Development Authority, Ann Arbor Mayor Christopher Taylor, the National Alliance on Mental Illness Washtenaw County and mental health leaders at the University of Michigan and Eastern Michigan University.

“ at was instrumental in showing not only what we are doing is important, but that we are a credible organization,” Scott Halpert said.

e earmark will fund 14,000 square feet of new construction to build a residential center to house 1520 people for short-term stays and a separate creativity studio, Scott Halpert said.

Garrett’s Space is under contract to purchase the site for that construction — 75 acres at 3900 N. Dixboro Road. e property, which includes a sprawling, 5,155-square-foot house the nonpro t plans to use for programming, is listed for $4.8 million.

e purchase is contingent on securing rezoning of the property to medical services and special use from its current residential and agricultural zoning in the coming months, Halpert said.

Garrett’s Space is paying cash for part of the house and nancing the rest with the seller, he said.

In addition to the residential center and peer support groups, Garrett’s Space will o er programs focused on healthy behaviors and wellness, including meditation, yoga, art and music.

“I sent a blurb about our organization, and I asked if their client would be a part of this,” sending a short video in support of our work, she said.

ose appeals have attracted many videos of support for their work from high-pro le people and celebrities, including:

` Actress Rosie O’Donnell

` Andy Lassner, executive producer of e Ellen DeGeneres Show, who said he has su ered from depression all of his life, according to testimonial on the Garrett’s Space website.

` Maryland Congressman Jamie Raskin, who lost his son to suicide.

` Jo Ellen Pellman, an actress who starred in the Net ix show, “ e Prom.”

` David Axelrod, senior political commentator for CNN and chief strategist for President Barack Obama

` Congresswoman Debbie Dingell

` Sen. Gary Peters

` Sen. Debbie Stabenow

“People saw famous people being touched by our mission” and came forward to support Garrett’s Space, Julie Halpert said.

Building relationships

It was through the relationships it had built that the edgling nonpro t was able to secure an earmark.

An emailed letter to the nonpro t from Dingell’s o ce invited it to propose an earmark in a funded area.

e campus will include walking trails, a creek, basketball and pickle ball courts, gardens, hammocks and therapeutic animals. Inside, the house will feature a large communal kitchen, private spaces for re ection, gathering, yoga/exercise and other activities.

Boston-based Mass Design Group is serving as project architect.

Garrett’s Space plans to move its administrative o ces to the house and begin initial day programming including support groups, meditation and yoga there as soon as it takes possession, Scott Halpert said.

It will operate on a fee-for-service model based on a sliding scale, seeking insurance reimbursement, grants and donations to fund the program, Scott Halpert said.

e goal is to make Garrett’s Space Residential Center and a programming a model that can be replicated across the country, Julie Halpert said.

People in the current peer support groups and wellness programs have credited them with saving their lives, she said, whether through direct support for themselves or through helping others.

“We want young adults to realize that so many people are struggling... (and that) others have struggled and gotten better.”

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

Garrett’s Space is under contract to buy a 5,000-square-foot house on 75 acres in Superior Township as the rst step in developing a residential center and holistically focused wellness campus for young adults facing mental health challenges. | BRANDT REAL ESTATE

Julie and Scott Halpert

Garrett Halpert

EARMARKS

From Page 8

“You have to cultivate a relationship with your elected official before making the application. They have to know about you,” said Kelley Kuhn, president of the Michigan Nonprofit Association.

Third-party organizations like the Council of Michigan Foundations and Michigan Association of United Ways are also advocating on behalf of important projects happening in the community.

The shifting political landscape could impact how long earmarks are here to stay or the amount of congressionally designated funding available from year to year, leaders acknowledged.

“Our advice from our council in D.C. is this process is active and current, so those who might have priorities need to act pretty quickly,” Kyle Caldwell, president and CEO of the Council of Michigan Foundations, said.

“From our standpoint, educating the nonprofits on current state of play is important given that the deadline for requests is coming pretty quickly.”

Return of earmarks

Legislators resurrected the congressionally directed spending in 2021, a decade after earmarks were eliminated, and awarded the first round in fiscal 2022 with $9 billion in earmarks included in a March 2022 omnibus bill. The second round totaling $15 billion was appropriated in late December as part of a $1.7 trillion federal spending bill for fiscal 2023.

The bill for this year contained more than 7,200 earmarks, up from 4,962 in the last spending package, according to information in The New York Times.

The “community project funding,” as the grants are now called, can only go to nonprofits and government entities. It isn’t designed to provide operating support or sustainable funding for nonprofit and public efforts in the state but rather for supporting specific projects or initiatives that benefit communities.

Nonprofits thinking about pursuing an earmark need to make sure they understand how their project could fit into funded areas, the process, and the finite nature of the funding, Kuhn said.

“You need to be prepared that (funding) is not going to be ongoing,” she said.

It’s also important for nonprofits seeking earmarks to think about how an appropriation could complement other funding and really evaluate if an earmark is the right opportunity for your organization, Kuhn said.

Building relationships

Small and mid-size nonpro ts have the same opportunities that larger, better-known institutions have, leaders said.

Regardless of whether nonpro ts are pursuing a grant, contract or earmark, it always starts with that relationship building, Kuhn said. Meet with elected o cials, talk about your organization, the work it’s doing and needs in the community, she said.

Invite Michigan’s two senators and

congressional leaders in your district to attend a board meeting or event or tour a facility to learn more about the organization, its work and the project looking for funding, said Regina Bell, CMF’s director of government relations and public policy.

“It’s being able to...share that work happening in the community and how community members are beneting from that work,” she said.

“While there may be disagreement about whether earmarks are here to stay, the idea is you need to start building relationships with congressional leaders now.”

e process for pursuing an earmark in the next round has already begun, Kuhn said.

“So you either are building o of existing relationships you have with elected o cials or you’re moving quickly to establish those relationships.”

e Senate and House have di erent timelines, even among some of the elected o cials, leaders said. So nonpro ts need to make sure they know the speci cs for legislators they are approaching.

With the return of earmarks, at least two letters of community support for a project are required for earmark proposals to demonstrate need.

Garrett’s Space, a small nonpro t providing support groups for young adults with mental health challenges, went much further. It secured 19 letters of support for the holistic campus it’s planning in Washtenaw County, which helped it attract a $4 million earmark.

There are small but mighty orga -

nizations making big impact, Kuhn said. They might command a larger earmark. Other mid-sized and larger nonprofits also making an impact might command smaller earmarks.

Grandmont Rosedale, a small community development nonprofit in Detroit was awarded a $2.5 million earmark for construction of a mixed-use development that will include affordable senior housing. And Presbyterian Villages of Michigan, a larger nonprofit with a presence in several areas of the state, was awarded a $140,000 earmark to establish a medical suite and provide telehealth services.

It’s not about the amounts or budget sizes, Kuhn said. “It’s about purpose and mission and drive and need and community.”

The process

Leaders stressed the time is now for nonprofits looking to get their projects in contention for the next round of earmarks.

By summer, the organizations have to build the relationships, understand the application process, submit an earmark proposal and letters of support to get an earmark on an elected official’s radar and hopefully, their recommendation list, Kuhn said. The House and the Senate will review the application at that point if the recommendation is made.

Bell advises nonprofits to engage voices that sometimes go unheard as they seek support for earmark funding.

“There’s a huge opportunity... around how BIPOC-led organizations and organizations that serve (those) communities can really think about this as an opportunity (for) elevating and supporting work that’s happening in the community,” Bell said.

The earmark process is highly competitive, and different legisla -

tors have different formats to support their ideas, said Nancy Lindman, director of public policy and partnerships for the Michigan Association of United Ways.

“It’s important to understand what your member of Congress is entertaining in terms of earmarks and then (to figure) out is there a body of work that could really pay off for our community,” she said.

Third-party support

United Ways have their ear to the ground on emerging work and are in a good position to know what is going on in a community that might be a good investment, Lindman said. ey are already talking with congressional members about the importance of many things to the nonpro t sector, like the child tax credit

ber for 2023, United Way for Southwest Michigan said.

At the same time, other United Ways are nominating projects from other nonprofits, serving as a recommendation of community need.

“If there is a body of work United Way feels is appropriate for an earmark, we’re just making our members of Congress aware of them” Lindman said.

The Council of Michigan Foundations is also playing a role in helping bring earmarks to support community projects in the state.

It teamed up with the Michigan Nonprofit Association and Michigan Association of United Ways to co-host a recent webinar to talk about what the process looks like and how to inform congressional leaders on community needs, Caldwell said.

and the earned income credit.

“Earmarks are just another opportunity for us to get the work done in the community,” she said.

One example here in Michigan: St. Joseph-based United Way of Southwest Michigan, as fiduciary for the Be Healthy Berrien initiative and coalition, secured a $912,000 earmark for the expansion of an eight-mile-long extension to the existing 17-mile trail network, called the Indiana-Michigan River Valley Trail.

More than two dozen United Way affiliates across the country secured $23 million in earmarks in the omnibus bill passed in Decem -

e Grand Haven-based association is encouraging its members — as well as operating nonpro ts — to reach out to legislators’ in-district sta and talk about community projects and the bene ts they could bring.

“This is not unlike other key areas where we are trying to educate key members of Congress,” Bell said.

“It’s being able to elevate and build that relationship, to share that work happening in community and how community members are benefiting from that work.”

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

St. Joseph-based United Way of Southwest Michigan, as duciary for the Be Healthy Berrien initiative and coalition, secured a $912,000 earmark for the expansion of an eight-mile-long extension to the existing 17-mile trail network, called the Indiana-Michigan River Valley Trail. | UNITED WAY OF SOUTHWEST MICHIGAN

Belll Caldwell

“IT’S IMPORTANT TO UNDERSTAND WHAT YOUR MEMBER OF CONGRESS IS ENTERTAINING IN TERMS OF EARMARKS AND THEN (TO FIGURE) OUT IS THERE A BODY OF WORK THAT COULD REALLY PAY OFF FOR OUR COMMUNITY.”

— Nancy Lindman, director of public policy and partnerships, Michigan Association of United Ways

Deal reached for renovations at Huntington Place

Plan also includes building an attached hotel on the former Joe Louis Arena site

BY KURT NAGL

e board overseeing Huntington Place in downtown Detroit and the developer of the former Joe Louis Arena site have struck a deal to make renovations at the convention center and build a hotel attached to it.

e ve-member board of the Detroit Regional Convention Facility Authority voted unanimously Tuesday to enter into an agreement with Sterling Group that paves the way for the redevelopment project along the Detroit River, said Claude Molinari, board chairman and president and CEO of Visit Detroit.

“We had a (memorandum of understanding) in place, and today we memorialized that by turning it into an o cial agreement,” Molinari told Crain’s. “Now we’re going to move forward with the development stages of outlining plans together so that we can improve the convention center’s west side.”

Molinari said the legally binding agreement solidi es previously oated plans for the convention authority to extend Second Street to the Detroit River and for Sterling Group to build a hotel of 600-800 rooms connected to Huntington Place.

“It’s a bit of a trade of land because a certain part of the Joe Louis Arena site is needed to expand the convention center, and part of the convention center site is needed for the Joe Louis Arena site to be appropriately used,” Molinari said.

Crain’s requested a copy of the deal terms between the convention authority and developer. Sterling Group did not immediately respond to a re-

quest for comment.

Molinari said he is hopeful the agreement is a step toward more redevelopment at Huntington Place, including a new 30,000-square-foot ballroom in the southwest corner of the venue, which would take over storage and meeting space and require expansion. Additional parking is also envisioned.

“It’s a clear and bold statement that we mean business when it comes to

Customer service provider Concentrix laying o 286 in metro Detroit

BY KURT NAGL

Customer services provider Concentrix Corp. is laying o 286 employees at two sites in metro Detroit as the result of a reduction of client business.

e company, owned by Fremont, Calif.-based Synnex Corp., is cutting 161 employees in Farmington Hills at 34115 W. 12 Mile Road and 125 employees in Auburn Hills at 2021 Executive Hills Drive, according to two WARN notices led with the state.

e client program in Auburn Hills will close March 4, while the program in Farmington Hills will expire March 31, according to letters.

Concentrix did not name the clients.

“Our rst priority has been to share this news with our sta and provide the support they need during this transition,” company spokeswoman Rowan Robinson said in an emailed statement. “ is was a result of a change in business requirements for the client and we are encouraging our team to apply for other positions within Concentrix.”

Concentrix provides customer experience services to a host of sectors,

including technology and consumer electronics; retail, travel and ecommerce; banking, nancial services and insurance; health care; communications and media; automotive; and energy and public sector, according to its website.

Services include “chatting…with customers, answering their questions through automated channels and engaging them with digital marketing,” the website said.

It’s unclear how many people the company will continue to employ in Michigan after the cuts. Crain’s inquired for more details.

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

meetings, convention centers and sporting events,” Molinari said of the deal. “We also think that it’s an indication to the entire industry of meetings, conventions and events that Detroit is a real player. e success of drawing events in the last two years has reinforced that we need to continue to build.”

e convention authority’s side of the deal would be nanced through $299 million in new bonding, as al-

lowed with new state legislation that also lets the authority enter public-private arrangements and lifts a $279 million spending cap.

Molinari declined to give a timetable for the project or an estimated cost but said the authority would possibly seek additional loans after using the bonds. e rst step, though, is meeting with banks.

“ e banks have been very receptive to working with us, and now we’re

going through the process of putting together the nal plans so we can make this happen,” he said.

e riverfront deal’s step forward comes as hotel development and renovation takes o in Detroit, which is set to host the NFL Draft in 2024 and the NCAA men’s basketball Final Four in 2027, with sights set on NBA and NHL All-Star games and other big events.

A major barrier to landing such events has been lack of hotel space, which city and state leaders are addressing more urgently, Molinari said.

“We have committed to the NCAA with regard to the Final Four that we would have additional hotel rooms built in the city of Detroit, and this is an a rmative answer … Yes, we will have the hotel facilities on site to host these events,” he said.

e redevelopment would also unlock a part of the riverfront not easily accessible for visitors at Huntington Place and those west of it, while also allowing the venue to make much-needed improvements to its loading docks, Molinari said.

While the new ballroom and other renovations are not set in stone, Molinari said the business case is obvious, and the convention authority board seems to agree.

“ e current ballroom is heavily used and has to turn away business quite often because we’re already booked,” he said.

— Crain’s senior reporters Kirk Pinho and David Eggert contributed to this report

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

An aerial view of Huntington Place. | HUNTINGTON PLACE

JOBS

Concentrix expects client programs to wind down in metro Detroit next month. | CONCENTRIX VIA FACEBOOK

Limits on housing director’s role ‘unprecedented’ situation

Amy Hovey, who began job in January after delay, to be walled o against con icts of interest

e newly installed leader of Michigan’s housing agency is walled o from working on one of the core mechanisms used for a ordable rental housing due to concerns about con icts of interest.

e dynamic makes for an “unprecedented” situation, housing experts say, but are quick to note that the sta that’s already in place at the Michigan State Housing Development Authority means that it should largely be business as usual at the agency that administers the state’s various housing initiatives.

ose initiatives are taking on a larger role as policymakers in Lansing increasingly make the develop-

ment of more housing a top priority around the state.

Amy Hovey, the new executive director of MSHDA, brings a lengthy resume that includes years of housing development experience. In an interview with Crain’s last week, Hovey said that the policies that have been enacted to ensure that neither she nor her family bene t from the programs o ered by the agency — particularly one federal tax credit program from which she’s rewalled from working on — will not dampen MSHDA’s ability to provide

housing incentives.

“I get people’s concerns,” Hovey said, noting that it’s only one program in which she’s unable to have direct involvement, and MSHDA sta can address granular issues that may come up. “If folks do have issues with it, we’ve got an open door. We’re going to be as transparent as we possibly can. We want to alleviate people’s concerns.”

Hovey o cially took the helm of MSHDA last month, more than a year after having been named to the job. e delay stemmed from Hovey’s husband and father-in-law having worked on housing development programs that used federal funding administered by MSHDA.

O cials from the state agency say

PEOPLE ON THE MOVE

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

ADVERTISING / PR / MARKETING

Truscott Rossman

Truscott Rossman welcomes account executive, Kylie Rydjord. A recent Central Michigan University graduate and Multicultural Advancement Scholar with a passion for serving underrepresented communities, Kylie proved herself as a skilled, insightful and well-grounded member of our team while working as an intern in 2022. Kylie brings a fresh perspective to TR’s digital and corporate communications teams serving clients statewide. For opportunities at TR, visit www.truscottrossman.com.

INSURANCE / BROKERAGE

Kapnick Insurance Group

Kapnick Insurance welcomes Lindsay Lumpford as a Client Executive within their business insurance division. She will also work with personal insurance clients, focused on home, auto, and personal umbrella. “Lindsay brings with her a new set of skills and knowledge,” says Keith Tubergen, Vice President and Practice Leader at Kapnick. “Her experience in the eld and excitement to help her clients makes her a great t here at Kapnick.”

Beztak

Beztak is pleased to announce the promotion of Jodie Blakemore to President of Accounting, Tax & Strategic Services. Through her leadership in her 12 years at Beztak, she has overseen rapid growth in management, complex software roll outs and much more. In this new role, Jodie will be responsible directly for the accounting, audit, risk management and tax departments.

they have implemented multiple ways to guard against those potential conicts of interest

First, neither Hovey nor her husband or father-in-law, “will have any rights or be able to act as a general partner” on MSHDA properties that have funding from the U.S. Department of Housing and Urban Development.

e Hovey family has an interest in 10 MSHDA properties, or about 2 percent of the overall agency portfolio, according to MSHDA spokesperson Katie Bach. Hovey’s family interests in HUD properties “have been transferred to an independent third party, so previous concerns about potential con icts have been resolved,” Bach told Crain’s earlier this month.

Additionally, Hovey will be walled o from working on the 9 percent Low-Income Housing Tax Credit program that MSHDA administers.

While not MSHDA’s largest overall program, the 9 percent LIHTC serves as a tax credit for about 9 percent of the construction or rehabilitation costs of an a ordable housing project and is one of the most common mechanisms for a ordable rental housing. On average, 50 percent of the total nancing for 9 percent LIHTC projects comes from equity derived from the credit, according to the National Housing Conference, and “many states have used the 9 percent LIHTC as their primary tool to facilitate the production and rehabilitation of a ordable rental housing.”

has plenty of sta in place to run the program, so the concern is mostly around the unknown of how everything works in practice.

“It’s not a fear that LIHTC is not in good hands,” Forrest said. “But what are the boundaries? We have to understand that.”

Kirsten Elliott, the vice president and COO of Community Housing Network, a Troy-based a ordable housing developer, said she has no concerns about the program going forward. Elliott, who noted she’s known Hovey for years, said the sta that’s in place will be more than capable of running the program, ensuring that the executive director can take a hands-o approach. Instead, Hovey will able to focus on larger issues related to housing, Elliott said.

—Kirsten Elliott, vice president and COO, Community Housing Network

“With Amy at the helm, because she brings such a wealth of experience, she’ll be able to help the organization move forward and get more resources,” Elliott told Crain’s.

For her part, that’s exactly the goal, said Hovey, who noted that much of her work in the director job will be around implementing Michigan’s rst statewide housing plan and acting on Gov. Gretchen Whitmer’s stated goal of creating or preserving 75,000 housing units around the state.

ARCHITECTURE

DLZ

Eric Beaulieu, AIA has been promoted to Vice President. Over his 24-year career, Mr. Beaulieu has focused primarily on public sector projects including federal, state, and local government agencies. Project types include postal, transit, aviation, public safety, educational, justice, recreational, and industrial projects. Mr. Beaulieu leads DLZ’s architectural design practice in Michigan, which includes architecture, mechanical engineering, landscape architecture and construction management.

NONPROFIT

Gesher Human Services

Jim Willis has been named Executive Vice President and Chief Operating Of cer at Gesher Human Services. Willis has been with the nonpro t agency for 26 years and was promoted from his former position of VP of Vocational Rehabilitation and Workforce Development. He will now oversee business operations of the South eld-based organization, which enhances the lives of job seekers, seniors, people with disabilities and those living with serious mental illnesses in metro Detroit.

Beztak is proud to welcome Jonathan Wood as our Executive VP of Finance. Jon joins the organization with an accomplished nance and development career intermediating real estate capital. He is an expert in the capital markets with extensive experience developing properties throughout the midwest and southeast. Jon graduated from the Eli Broad College of Business at MSU.

Last year, MSHDA awarded $24.2 million in 9 percent LIHTC credits for more than 1,100 a ordable housing units, according to data from the agency. By comparison, the agency’s direct lending to developers totaled about $259 million and included nearly 2,000 units.

Still, it’s “unprecedented” having a director of a state agency who is unable to work directly on the program, said Luke Forrest, executive director of the Community Economic Development Association of Michigan, a Lansing-based trade group that works with more than 200 local economic development groups around the state, many with a focus on a ordable housing.

Forrest acknowledged that MSHDA

DEALS & DETAILS

` CONTRACTS

` Circadian Risk Inc., Ann Arbor, a security risk assessment rm, has an agreement for ASIS International, Alexandria, Va., a membership organization for security management professionals, to use its Physical Asset Protection Standard platform in its risk analysis portfolio. Website: circadianrisk.com

` EXPANSIONS

` StockX, Detroit, a reselling e-commerce platform for sneakers, handbags and other luxury goods, opened a new authentication center in Mexico City, Mexico. is is the 14th authentication center in StockX’s net-

e timing of getting such work done is critical, given some of the current market challenges in housing, Hovey told Crain’s.

“What I really want to focus on is building some collaboration with other state agencies, as well as with other industries in the eld,” Hovey said.

“Because we can’t do this by ourselves. I just can’t emphasize that enough: We’ve got to be more creative about how we get housing funded,” she said. “And I think we all have to work together on that ... I think housing is quickly moving from a crisis to an emergency, so people are willing to come to the table and participate in getting it done.”

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

work. Website: stockx.com

` Range USA, Cincinnati, operator of indoor gun ranges, opened a location at 12780 Reeck Road in Southgate. e new store employs, on average, 25-30 part-time and full-time employees. is is the fourth Range USA store to open in Michigan and the 40th for the chain. Website: RangeUSA.com

` MERGERS & ACQUISITIONS

` Galco Industrial Electronics Inc., Madison Heights, an industrial equipment supplier, acquired Zesco Inc., Brecksville, Ohio, a specialist in industrial automation. Website: Galco.com

Hovey

“WITH AMY AT THE HELM, BECAUSE SHE BRINGS SUCH A WEALTH OF EXPERIENCE, SHE’LL BE ABLE TO HELP THE ORGANIZATION MOVE FORWARD AND GET MORE RESOURCES.”

REAL ESTATE

Man who ‘never wanted to

a castle’ relists home for $2.5M

For an asking price of $2.5 million, you, too, can have a moat — and a castle to go with it.

Back on the market Wednesday, the 6,100-square-foot mansion sits on more than 6 acres in Oakland Township, east of Adams Road and between Dutton and Silverbell roads. e marketing for the property leans heavily into the home’s medieval vibe — despite that it was built in 1990.

“King’s & Queens, are you looking to live an extraordinary life of adventure free from peasants,” reads the listing. “Say less! is Medieval castle on 6+ acres surrounded by a wrought iron fence and two gated towers is the perfect private palace.”

e home’s current owner, Brent Gatecli , told Crain’s that he “never wanted to own a castle,” but came into possession of the property when he accepted it as collateral for a loan that didn’t work out. It cost $10 million to build.

Now, Gatecli — who is 65 and largely retired having sold a mechanical contracting company in Lake Orion — said he is “the proud owner of a castle, but I don’t want to own it too long.”

All told, the property features a moat, waterfall, drawbridge and portcullis, according to the listing.

e house has 26 rooms and ve replaces. It also boasts secret rooms, hidden doors, hidden passageways, a hidden staircase, a Tudor style pub and “a few more surprises,” according to the listing.

Gatecli , who said the property’s

moat doesn’t count toward the lake life he wishes to live, has made several mechanical upgrades to the house, including six new furnaces and air conditioning units, a boiler, as well as an updated and certi ed elevator.

As for cosmetic upgrades, such as updating the kitchen or bathrooms, he said he’d likely leave that for a new owner so it can be done to their liking.

Utilities for the “very well constructed and manufactured” home have been in the monthly range of $400-$600, Gatecli said, adding that he has “never spent a night in it.”

Dylan Tent, the listing agent for the property who is with the Northville o ce of Signature Sotheby’s International Realty, got engaged at the castle.

Alas, the home cannot be used as an Airbnb or other short-term rental per the homeowners association rules.

Gatecli said there have been offers to buy the mansion since he came to own it in 2016, but nothing that’s ever come together.

While acknowledging the likely small pool of would-be buyers, Tent said he’s received signi cant interest from those who attend Renaissance fairs, and the property has been picked up by viral social media sites such as Zillow Gone Wild.

“I’ve had more interest — in terms of showings — than any property I’ve ever listed,” Tent said.

REAL ESTATE

The Grand Army of the Republic Building at 1942 Grand River Ave. at Cass Avenue has been sold to Joe Barbat for an undisclosed price. | CRAIN’S DETROIT BUSINESS

Grand Army of the Republic Building sells to ‘Houze’ developer Barbat

KIRK PINHO

e Grand Army of the Republic Building downtown has sold to Joe Barbat.

Colloquially known as the GAR Building, the castle-esque ve-story property at 1942 Grand River Ave. at Cass Avenue is expected to be converted from its current o ce and event space use into purely event space with a new steakhouse on the ground oor replacing the old Parks & Rec Diner and Republic Tavern restaurants, according to a press release.

e purchase price for the property, which had been owned by Tom Carleton, David Carleton and Sean Emery, was not disclosed. e local o ces of Colliers International Inc. brokered the sale, which closed on Tuesday. It had been on the market since June 2021.

“Situated in the heart of the District Detroit and Grand Circus Park, the GAR Building has been an icon since opening in the late 1800s,” Barbat, who is chairman and CEO of West Bloom eld Township-based Barbat Holdings, said in the press release. “We plan to allocate space for a public memorial room that will display many artifacts that have been left behind to ensure that the building’s historic character is preserved and highlighted. Our team is honored to add this historic landmark to our portfolio of properties.”

e GAR Building was built starting in 1899 and ending in 1901 e ectively as a “a hangout for the city’s Civil War veterans,” according to Historic Detroit, which tracks Detroit buildings and architecture.

As the years wore on and the war’s veterans began to die o , the building, constructed on land deeded to the city by former Michigan Gov. Lewis Cass, became sporadically used, Historic Detroit says.

“One of the things that was important to the seller was nding a buyer who would be a good steward of the real estate and take the same pride of ownership and same care and commitment to the building as they have,” Benji Rosenzweig, one of the two Colliers brokers working on the sale along with Ben Hubert, said. “We really believe we found that in the Barbat Holdings.”

Barbat’s other Detroit real estate investments include the former Briggs Hotel, 114 W. Adams Ave., which is now the Briggs Houze with 117 units; the former Gabriel Richard Building, 305 Michigan Ave., which is now the 112-unit Gabriel Houze; the former Philip J. Neudeck Building, 415 Cli ord St., which is now the Philip Houze and has 90 units; and the Regis Houze in the New Center

area, formerly the annex of the St. Regis Hotel on West Grand Boulevard. He put three of those buildings up for sale in the summer. He also previously owned the Je ersonian Houze building at 9000 E. Je erson Ave.; that high-rise was ultimately taken back by lender Fannie Mae following a legal battle that included other former owner Arie Leibovitz. His apartment buildings are referred to as “Houze” properties instead of “House” because of a website domain name availability issue several years ago.

Barbat, the founder of Wireless Toyz, began investing in Detroit real estate in 2014, assembling properties and largely turning them into multifamily housing.

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

To place your listing, contact Suzanne

313-446-0455

Administrative

Crain’s Detroit & Grand Rapids Business is looking for a detail-oriented, collaborative, and entrepreneurial administrative assistant. This candidate will provide day-to-day administrative support and development of both internal and external presentations and business analysis. Must be able to work on a variety of projects simultaneously, adhere to multiple deadlines and manage expectations of multiple stakeholders across all departments. Position will be based out of the Detroit of ce.

the closed diner — for years.

own

NICK MANES

|

SIGNATURE

The 6,100-square-foot mansion in Oakland Township comes complete with a moat for that medieval vibe. | SIGNATURE SOTHEBY’S/REALCOMP

BIRMINGHAM

From Page 3

ose retailers include clothiers Faherty, Everve, Johnny Was and State & Liberty, and jeweler Brilliant Earth. Ciura’s rm also helped bring Crate & Barrel o shoot CB2 to a prominent corner of downtown Birmingham, with an opening set for Feb. 16.

Ciura, who was vice president of the Detroit Economic Growth Corp. in 2004 before starting CC Consulting in 2005, called her relationship with the city and shopping district a good one. Ultimately, she and the city organization couldn’t come to an agreement on terms of a new contract, Downtown Newsmagazine reported.

Previous deals with retail recruitment rms paid about $75,000 a year, according to Sheppard-Decius.

e city and Shopping District organization will take requests for proposal for the new program; there is no set start date for the new initiative, Sheppard-Decius said.

e proposal has been discussed despite downtown Birmingham being close to capacity. e downtown is currently at 96 percent occupancy for retail and 89 percent for o ce space, according to Shep-

DESIGNERS

From Page 3

e event and mentorships wouldn’t have been possible, he said, without Detroit native and designer Tori Nichel, who is founder and chief creative o cer of online retailer Maison Black. She coordinated the mentorships after learning about BGCSM’s fashion industry club at Detroit Homecoming a couple of years ago.

When Wilson introduced the fashion industry club and youth in it did a mini fashion show, Nichel said she was “blown away.”

But more than anything, what real-

pard-Decius. e area saw 17 new businesses open in 2022, including restaurants Zana and Sweetgreen and Cosmo Salon Studio.

“Our occupancy rates are above national standards,” Sheppard-Decius said. “ e move would be to bring more, di erent businesses into the downtown.”

Sheppard-Decius said she could not disclose the average rental rates for retail space in downtown Bir-

ly drew her in was the club’s model of giving youth real experience partnering with real people and business entities in the industries they want to eventually have a career in one day.

“I am all about that true lived experience and being hands-on,” Nichel said. “I think it’s incredible they o er that in their programs.”

A women’s apparel designer and retailer who’s lived in New York for 25 years, Nichel knows many people in the business, which enabled her to help pair ve veteran designers who are Black men with ve male youth designers from Detroit.

“We have seen in the last six months (that) the program has boosted all ve young men’s con -

mingham, as those gures are under analysis.

India Shepherd moved her consignment shop, Rotate Boutique, to downtown Birmingham after three years in Bloom eld Hills. Shepherd, whose business is in a ground oor space at 361 E. Maple Road, said visibility and walkability drew her to Birmingham. e Detroit native also looked at spaces in Royal Oak.

“ e process of working with the city during the transition was smooth,” Shepherd said. “Working to bring more retail into the downtown sounds like a good idea. I think there could be more options for apparel in the area. ere’s a lot of furniture stores, so more retail would add to the mix, even though there aren’t a lot of vacancies.”

Ciura, with 25 years experience in retail and business development, called the new initiative a solid idea.

“It sounds like (Birmingham Shopping District) is trying to establish an appealing program for Realtors and retailers, and that’s awesome,” Ciura said. “ ere aren’t many vacancies, though, and brokers make money lling space, so I’m not sure incentives are the issue.”

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

dence, both in their work and how they show up as a personal brand,” she said.

“I think in seeing their looks presented alongside some industry designers mainstage where you will have a fashion audience...will be game-changing in where they take their next steps.”

e New York event will mark the second time youth in BGCSM’s fashion industry club have collaborated with a New York designer, Wilson said, following an earlier collaboration with luxury shoe designer Ruthie Davis.

Kids who’ve taken part in the industry club — which number about 200 so far — have also worked with Moosejaw and Ponyride incubator

tenant and local designer Deviate Fashion, Wilson said.

e 12-week program teaches youth the ins and outs of the fashion, from cutting and sewing to production, merchandising, marketing and launching their own brands.

e six-month, virtual program with the designers as mentors included master classes taught by other industry designers in sketching, on blending ne arts with designing (like Shawn Woodward), concepts and presentation, Nichel said. It launched as one of the rst e orts of the Maison Black Foundation.

“We are looking to continue to grow and scale this program,” she said. “ is is our inaugural cohort,

and this will be the rst of many to come.”

Other participants include youth designers Carlos Pearson with his “Elegance” brand; Trent Garcon with his self-titled brand “Trent Garcon,” Robert Robinson with his ‘Arman’ brand; and Langston Howard with his brand “ e Top.”

Mentors in the program include: Shawn Pean with “June 79,” Marcus omas with “Marcus Alexander,” Dyuna Morgan with “Levi’s’,” Omar Jermaine, with “Wraith” and Isaiah Hemmingway, with “Isaiah Hemmingway.”

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

Downtown Birmingham has healthy occupancy rates for its retail and o ce spaces, according to a city o cial.

Rotate Boutique owner India Shepherd in 2022 moved her high-end consignment shop from Bloom eld Hills to Birmingham. Shepherd said the downtown could use more apparel shops. INDIA SHEPHERD VIA INSTAGRAM

Downtown Birmingham’s occupancy rate for retail is 98 percent but city o cials are looking into implementing an incentive-based program for Realtors to help bring more retailers to the area. | JAY DAVIS/CRAIN’S DETROIT BUSINESS

HOMEBUILDING

From Page 1

year to still tangled, albeit improving, supply chains, and the mismatched reality that the cost to build a home and what most buyers can a ord are two very di erent numbers.

“We may go into a recession,” Darian Neubecker, the COO of Bloomeld Hills-based Robertson Homes, said of the current state of the macro economy.

But while Neubecker told Crain’s that the company’s business was down last year somewhere between one-third and one-half year over year, his outlook remains generally positive given that down cycles are nothing new for the industry.

“ e reality is, we’ve been in a recession in homebuilding for the better part of a year,” he said.

Metro Detroit lags

While data show that homebuilding activity in Southeast Michigan has fallen to a more-than-a-decade low — absent the pandemic-related shutdown in spring 2020 — there is still activity.

Per the HBA of Southeastern Michigan, Oakland and Macomb counties make up the bulk of the homebuilding permits in the region, accounting for just more than three-quarters of the activity.

e suburbs of Macomb, Shelby, Lyon, Canton and Independence townships were the top municipalities for new home construction, according to the HBA of Southeastern Michigan data.

But the decline being experienced in metro Detroit is not necessarily reective of the situation around the state, said Bob Filka, CEO of the statewide HBA, based in Lansing.

Builders in parts of West Michigan, such as near Grand Rapids, in Ottawa County and around Traverse City, remain quite busy, Filka said.

Indeed, while permits in Southeast Michigan were down more than 25 percent from 2021 to 2022, statewide that gure fell by just 10.4 percent.

Builders are “pivoting,” Filka said. Some are negotiating with lenders to buy down mortgage rates for buyers, and others are looking more toward building rental housing vs. single-family homes.

Ultimately, people need housing even though macroeconomic conditions make adding homes di cult, according to Filka.

“We’re kind of in this weird situation where demand is dampened, but the need is still high,” he said.

e HBA chapter in Southeast Michigan projects that builders could see some relief later this year, forecasting that the region will see a slight uptick with permit numbers jumping back to pre-pandemic levels.

TRUCKING

From Page 3

As stimulus dollars and changing consumer habits drove up demand for goods during the pandemic, spot freight rates nearly doubled. Now, there’s a glut of carriers on the market, and those spot rates have fallen. Even contract pricing — traditionally more stable — is seeing more volatility than usual.

Jim Burg, president and CEO of James Burg Trucking Company in Warren, said that during the pandemic, many new carriers believed higher-than-usual freight rates would o set the cost of business.

A sense of optimism

While there’s general agreement that challenges remain, homebuilders interviewed for this report expressed a sense of cautious optimism.

One of the nation’s major ratings agencies does not share that same sunny outlook.

“Fitch Ratings expects the housing market to weaken further in 2023 as a ordability issues, softening economic environment and low consumer con dence are likely to continue to erode demand,” Fitch’s 2023 outlook report released in December said.

“Housing a ordability will remain challenging, particularly for rsttime or entry-level buyers, as mortgage rates and home prices remain elevated. Fitch expects the U.S. economy to enter a mild recession in mid2023,” the report said. “ is, combined with a weakening employment market, will likely further erode consumer con dence, which is a key factor in home buying decisions.”

Still, builders insist opportunity is out there.

For starters, the anticipated slower pace of interest rate hikes this year, and likely eventual decline, gives builders hope that some buyers who have been priced out will come back.

Also, many builders said that by focusing on niche areas of the market they’re able to make it through.

Dan Lynch, owner of Novi-based Lynch Custom Homes, builds only about ve homes per year, almost entirely in upscale Birmingham. He barely pays attention to homebuilding statistics, he told Crain’s outside one of his under-construction homes.

“I’m kind of sheltered as a builder, compared to those statistics,” Lynch said. “Whether the economy is good or bad, we’re still getting CEOs and athletes coming into Michigan. ose are the people that we’re marketing to.”

Robertson Homes’ Neubecker said his company has tried to focus some on senior living communities, which tend to weather down economic climates.

Meanwhile, In nity Homes in Novi tries to focus on marketing to rsttime homebuyers as much as possible and selling houses in the $200,000$300,000 range in some instances, according to CEO Rino Soave.

While builders say delivering product in that price point is challenging, Soave said he tries to be aggressive on land purchases and focuses on suburbs not seeing as much development, pointing to projects the company is developing in cities including Wayne and Romulus.

While noting that supply chains remain strained in some cases, Soave said the goal is simply soldier through.

“Every time there’s a problem, you just try to navigate through it,” he said.

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

“People just said, ‘It doesn’t matter what the price of equipment is, it doesn’t matter what my driver costs are, it doesn’t matter what fuel is, because I’m just getting so much money that I can get into this market and grow into this market,’” Burg said. “Rates went up, then things (stabilized) and then retreated, because now we’re back to services or experiences. We’re not sitting in our houses anymore; we want to do stu . So we’re going to restaurants, we’re going to hotels … and truckload volumes are dropping.”

Burg said the driver shortage was already a problem, with longtimers retiring and fewer young people joining the profession.

Ashley Kordish, CEO of Ralph Moyle Inc. in Mattawan, near Kalamazoo, said the existing driver shortage was exacerbated as workers left their companies to go into solo business on the spot market.

“It’s classic supply and demand,” she said. “ ere’s a lot more (independent) drivers and not enough freight. Usually, when we start seeing the market go down, that’s when you will sometimes see some of those owner-operators going under.”

John Elliott, CEO of Load One Transportation and Logistics in Taylor and chair of the national Truckload Carriers Association, said he wouldn’t yet call this a trucking recession, but rather a normalization of the market after COVID.

“ e tough part there is the costs went up so dramatically for equipment, labor, insurance and fuel, that … we’re not going to be able to

charge those (pre-COVID) prices ever again,” he said.

How trucking companies are making it work

Burg, Elliott and Kordish agree it’s possible to stay in the trucking business and even thrive in this economy with the right combination of strategy and luck.

Kordish’s company, Ralph Moyle, has a eet of about 78 trucks that do local, short-haul and regional trips, primarily in the grocery segment. Her business has been steady.

“Whether you’re doing contract rates or spot market rates makes a huge di erence to how you’re doing these days in the trucking world,” Kordish said, noting about 89 percent of Ralph Moyle’s business is on the contract market, and most of those bids came in “pretty close to the same” as in previous years.

“We de nitely did see that there’s a lot more competition right now for (spot) freight,” she said. “… But luckily, it’s only 11 percent of our business. It hasn’t hurt us as much as it might somebody that’s running a lot more,” she said.

Given the high cost of overhead and the driver shortage, Kordish said “a lot of things have to go right” to make it work. Even so, she believes her company will be just ne in 2023.

“ ere’s still a lot of demand for products out there, and as long as there’s demand for products, there’s usually demand for trucking. I think what we’re seeing now is it’s dropping a little bit, but it’s dropping back to normal levels.”

Burg said how well a trucking company is doing right now also depends on what type of freight it hauls. His company primarily hauls

steel for the automotive industry, which is still trying to align production with demand, so there’s a need for automotive supply and equipment haulers.

He also said companies’ solvency today depends on whether they set aside cash reserves before the pandemic to hedge against recession.

“During the Great Recession, I thought I was going to lose the company, because the automotive industry was being clobbered,” he said. “We survived that, barely, and I said that I would never allow the company to be in that position again. In 2018, I went to my lender and said, ‘I want to do a restructure, and I want to bring enough cash out of the restructure to sit on the sidelines.’ … So I was planning for a recession. I just didn’t know the recession was going to be the pandemic.”

Elliott’s company, Load One, was deeply impacted by the rst few months of the pandemic. Its eet of 600 trucks mostly operates on the spot market hauling standard dry freight such as automotive and airline parts, as well as equipment for sporting events and concerts — all of which were shut down.

Now that manufacturing and live entertainment have resumed, his company is doing better — especially since it specializes in time-critical, expedited loads.

“We’ve continued to grow our market share in that,” he said. “Our industry as a whole has slowed down somewhat, but we’ve invested in more salespeople and technology and marketing, and we’ve been able to buck the trend and stay OK. But across the industry, that’s not what people are seeing for the most part in the spot market.”

Elliott thinks it will be a tough rst half of the year for the industry, but he’s optimistic things will look better by Q3.

Burg’s outlook is similar, since his segment of the industry is still humming along. But he said much depends on whether car sales continue at their current volume, fuel and insurance costs stabilize, and the driver and mechanic shortage eases.

Contact: rachel.watson@crain.com (989) 533-9685; @RachelWatson86

Robertson Homes is building the Townes at Pullman Parc project just east of downtown Detroit. | KIRK PINHO FOR CRAIN’S DETROIT BUSINESS

Trucks wait on Interstate 75 during backups at the Ambassador Bridge in Detroit in 2022. | BLOOMBERG

“THERE’S STILL A LOT OF DEMAND FOR PRODUCTS OUT THERE, AND AS LONG AS THERE’S DEMAND FOR PRODUCTS, THERE’S USUALLY DEMAND FOR TRUCKING. ”

—Ashley Kordish, CEO, Ralph Moyle Inc.

at endowment will help fund the perpetual care of the 27.5-mile Joe Louis Greenway that will connect the Detroit Riverfront with 23 neighborhoods in Detroit, Hamtramck, Highland Park and Dearborn and the 5.5-mile Detroit Riverwalk, with some parts under construction and other existing and developing public parks along its span.

e conservancy has raised more than $200 million over the past 20 years to revitalize the Detroit Riverfront, an investment that’s generated more than $2 billion in public and private investment. Nearly 90 percent of the east riverfront is complete, and several parks are in development, including: the Southwest Greenway set to open in May; the Uniroyal Promenade, set to complete the east riverfront when it opens this coming fall; and the Ralph C. Wilson, Jr. Centennial Park expected to open next year.

e Detroit Riverfront Conservancy and Joe Louis Greenway Partnership came together to jointly raise the funds because even though it’s two projects and the two nonpro ts will remain separate organizations, “they intersect literally and guratively and have many of the same key stakeholders,” said Jack Entertainment Chair Matt Cullen, who is chairman of the Detroit Riverfront Conservancy.

“As opposed to having two separate campaigns...we really felt like if we came together in a uni ed campaign and went and shared with people what we could accomplish together with their support, that we will be more successful in the fundraising and in the implementation. And I think that’s proving to be the case,” Cullen said.

Before combining their cases for support, the Detroit Riverfront Conservancy was in the midst of a $175 million campaign to complete the

FORD

From Page 1

Ford, however, is keeping its cards close to the vest. e automaker has not con rmed the scope of the project or what sites it is considering.

“…We haven’t described or conrmed speci c sites — plural — that are or aren’t being considered. Or even the states in which they’re located,” Ford spokesman T.R. Reid said in an email to Crain’s.

Michigan is competing “aggressively” for the project, said Quentin Messer, CEO of the Michigan Economic Development Corp.

“Michigan is always talking to Ford and any of our large employers,” Messer told Crain’s. “We talk in general about making sure that Michigan remains a competitive environment for opportunity.”

Messer said he is uncertain about timing for an announcement on the plant and he is unsure what other sites are being considered.

“ ere’s a lot of competition for this opportunity, both across the U.S. and also our friends in Canada and also in Mexico,” he said. “So we are aggressively competing and out-hustling and out-competing, and we’ll see what happens.”

It bene ts Ford to keep its decision-making a mystery, but not taxpayers, said James Hohman, director of scal policy at the Mackinac Center

Detroit Riverwalk. e Joe Louis Greenway Partnership, a nonpro t established by the city last summer, was raising funds toward the estimated $240 million cost to complete construction of the greenway. e rst

span of the greenway opened last fall. With the joint $350 million goal, $200 million will go to nish the Joe Louis Greenway, Cullen said. About $50 million will go to complete construction of the Detroit Riverwalk,

and $100 million will go to create a permanent endowment to maintain both.

“What this really does...is it will allow the riverfront to be sustainable going forward because the total operating costs will be taken care of now by endowment by the city of Detroit support and by annual fundraising. So it will be sustainable going forward as will the Joe Louis Greenway,” Cullen said.

e Uni ed Greenway Partnership has already raised a signi cant chunk of its target through public funding.

e state made a $100 million grant to the Joe Louis Greenway. e county and city each made $20 million commitments, and the city is expected to come in with additional funding toward construction of the greenway, Cullen said.

e partnership is looking to raise another $60 million from public sources and will seek the remaining $150 million from philanthropy, he said.

for Public Policy.

Even if the automaker has internally already settled on a site, it will wait to get the best deal before committing. Moreover, Hohman said, conducting deals in private lessens the chance of public blowback.

“I think a lot of these major companies that have a factory to sell are afraid of that kind of blowback, so they’re hosting their competitions in secret, and that’s an inappropriate way to do business,” he said.

In turn, the perceived threat of losing the project compels the MEDC to go to the table with the biggest incentives package it can o er to secure the investment.

“We will use every available tool that we have in our toolbox, and I think it would be imprudent to talk speci cs,” Messer said.

Similarly, it serves the MEDC to not divulge how many hundreds of millions of dollars in tax incentives it might be o ering, should a competing state decide to one-up. It’s a highstakes game of blind poker, of sorts.

“We don’t want to tip our hand to the competition,” Messer said.

As Michigan vies for the battery plant, a “megasite” in Marshall is readying for its moment.

e 1,900-acre site, some 10 miles east of Battle Creek, is the state’s marquee property for a “transformational” project. It is one of three being actively prepared for development — along with a site in Mundy Township outside

of Flint and Eagle Township near Lansing — and it is the furthest along in the process.

In the past two months, site preparation has picked up rapidly at the swath of farmland near I-69 and I-94 in Calhoun County.

Two companies are interested in the site, said Jim Durian, CEO of the Marshall Area Economic Development Alliance, which controls the megasite. He declined to name them, but o cials have said they are targeting automobile, battery and semiconductor manufacturing.

Durian said he thinks the megasite is “closer now than it has ever been” to landing a project.

“We just have to wait it out,” he said. “It could be a matter of weeks. It could be longer. I don’t know. It’s just hard to tell with these projects.”

e Marshall development alliance triggered a purchase option last month for 667 acres from Indiana-based Ceres Farms LLC and a pair of residential property owners, according to a City Council document.

O cials from the city of Marshall and Marshall Township signed o on transferring the land to the control of the economic development agency, marking another step toward development, Durian said. Triggering the purchase option was the result of feedback received from companies visiting the site.

If Ford does choose Michigan, it could theoretically put the plant

“It just wouldn’t have been possible without the three,” Cullen said.

Coming together through the partnership “allowed us to approach funders at the government and in philanthropy with a cohesive vision of collaboration and a total outcome here,” he said.

Jointly pursuing funding for two of Detroit’s centerpiece projects — one that will stretch into neighboring cities — ties back to everything that the city, the Detroit Regional CEO Group, Detroit City Council and others have been trying to do all these years to bring a transformational outcome to the entire Detroit community, he said.

“ is is the project that I think is going do that,” Cullen said.

While collaborating on fundraising, the two nonpro ts will each have distinct operational roles.

e Detroit Riverfront Conservancy will continue to operate, secure, sta , program and maintain its green spaces, including Cullen Plaza, the Detroit Riverwalk, Robert C. Valade Park, Mt. Elliott Park, Gabriel Richard Park, Dequindre Cut, Southwest Greenway, and Ralph C. Wilson, Jr. Centennial Park.

e Joe Louis Greenway Partnership will coordinate with the city to support the operations, maintenance, programming, community engagement and volunteer opportunities for the greenway.

For its part, the city will lead the planning, design, construction and operations of the Joe Louis Greenway and work with the Joe Louis Greenway Partnership to operate and maintain the greenway.

“Between our beautiful riverfront and the new Joe Louis Greenway, we are creating a world-class recreational asset for all Detroiters,” said Detroit Mayor Mike Duggan, in a release. “ is new partnership will help keep it beautiful for generations to come.”

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

somewhere other than a megasite, similar to Gotion Inc.’s $2.4 billion plant in the Big Rapids area, which caught many in the economic development community o guard.

As with the Gotion plant, Ford’s plant with CATL — the largest EV battery maker in the world — has stirred political tension.

Virginia Gov. Glenn Youngkin said last month that he removed his state from consideration for the factory because it would serve as a “Trojan horse” for China into the U.S., helping the Far East bolster its EV battery dominance and spread its in uence.

Critics have accused the Republican of putting his political ambitions ahead of new jobs. Others have said Virginia was never a realistic option for Ford given its assembly plants are not near Virginia.

Asked her reaction to Youngkin’s decision to halt talks, Michigan Gov. Gretchen Whitmer, a Democrat, said: “I could say a whole lot of things about what I suspect is going on with my colleague from Virginia. But I will refrain. All I can say is that Ford is a great American, iconic company — a great Michigan, iconic company. ere are states across the country that are competing for investment from Ford, as are we. You can never assume that they’re going to grow here. We’ve got to compete. at’s why the work

we’ve done has been so important.”

Whitmer will soon sign legislation to add $150 million into an incentives fund the state set up more than a year ago in the wake of Ford’s 2021 decision to put EV and battery plants in Tennessee and Kentucky.

It remains unclear what business relationship Ford and CATL would have in the new battery plant, whether it would be a joint venture, technology licensing agreement or some other type of structure.

Ford announced in July that it entered a nonbinding memorandum of understanding outlining “global strategic cooperation” with CATL to jointly explore new business opportunities worldwide to cover battery supply in North America, Europe and China, according to a news release.

“ e elevated global strategic cooperation aims to open up new opportunities for both companies to create a sustainable business and promote EVs, contributing to global carbon neutrality goals,” it said.

— Crain’s Detroit Business reporter David Eggert contributed to this report.

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

A rendering showing the Joe Louis Greenway at the Alpine and West eld crossing. | JOE LOUIS GREENWAY

Cullen Plaza is along the east riverfront. | DETROIT RIVERFRONT CONSERVANCY

“WE DON’T WANT TO TIP OUR HAND TO THE COMPETITION.”

—Quentin Messer, CEO, Michigan Economic Development Corp.

Maureen Donohue Krauss on state’s ght to protect manufacturing prowess

In 30 years of economic development work, Maureen Donohue Krauss, president and CEO of the Detroit Regional Partnership, said she has never seen such a rapid pace of activity. Of the organization’s 200 or so projects in the pipeline, about 70 percent are related to manufacturing and mobility. Ford Motor Co.’s massive investment in Kentucky and Tennessee lit a re under Michigan economic developers, who have since banded together to better position the state to capture the tens of billions of dollars being spent by automotive companies on the electric vehicle transition. But to say Michigan is losing the race for the automotive future, Krauss argues, is at out false. The following conversation has been condensed and lightly edited for clarity.

` How did you start in economic development?

I went to Albion College and the University of Michigan and have a master’s degree from UM in public policy. I was literally a college intern in economic development at the predecessor to Ann Arbor Spark. So I started this career as an intern and spent most of it in di erent locations.

` Where else did you work before the Detroit Regional Partnership?

I’ve worked in most of the metro Detroit regions — Macomb, St. Clair and Oakland counties. I was in Oakland County the longest. I was the head of economic development and community a airs, a larger 100-person department. So much of the work was around international work, and international work is really regional. When we talk about bringing international companies here, they need to know about regional pipelines of supply chain, of talent. Economies are regional. That really had my mindset that regional is something that I’m very passionate about.

I went to Indianapolis for three years, sort of jump-starting their regional e ort that had been dormant. I commuted the whole time from Detroit. It’s only 4 hours and 23 minutes. I’d come back here Friday and leave Sunday night or Monday morning. And you know you can do a lot of work in the car on the phone.

` How many projects are you currently trying to land?

We have between 180 and 200 projects in our pipeline. Some ip very quickly — two months and we have an announcement. Some take two years. It’s really across the board … We had a project in this week that is potentially 1,200 jobs.

RUMBLINGS

` Given the economic worries of late, has investment and interest slowed?

In 30 years, I've never seen this (high) activity level.

` Why, do you think?

There is that sort of onshoring activity, reshoring, that we're seeing. There is really an acknowledgement of our talent. We have a really strong talent story to tell and it's exciting to tell it. We all need more talent. So how do we make sure talent has the right skills, the right opportunities to upskill and is meeting the needs of the business community? It's harder to do when you don't have all the assets. And I'm not picking on any place I've been in particular, but some people don't have this pipeline of talent, you know, this group of the second-largest amount of engineers in the country. They don't have an experienced manufacturing labor force. They don't have a supply chain.

` How does your group work with the Michigan Economic Development Corp. and all the other local agencies?

That is really the foundation of this, having a trust relationship with those partners because we deal with so much highly con dential information, and we all have individual pieces of knowledge of the whole picture. Our region has worked as an 11-county region, so the city (of Detroit) and the 11 counties around it, for quite a few years. If you go back historically, there has been regional economic development in this area for probably my whole career, 30 years. I think this area has always understood that whole regional concept. It’s people who know to use Detroit as our calling card, but talking about our combined

BY | KURT NAGL

Donohue Krauss, president and CEO, Detroit Regional Partnership

impactful. With the (Michigan Economic Development Corp.), we really are hand and glove. It’s probably 50/50 whether a lead comes to them or a lead comes to us. But they’re our rst call because we

Administration) grant was a perfect example of what happens when

What was that grant?

The EDA grant is for the Global Epicenter of Mobility. It’s $52 million, plus we had to have a 23 percent match we threw in there. It was only one of 21 in the country. They had over 500 applicants, and ours was one of the largest ones. Because the auto industry is not just an important important industry in this country, and we really lead in this mobility space. We need to keep that. We are

What turns o businesses when it

requirement, zoning requirement or incentive going to be here when we've nally signed the dotted line? So that uncertainty can happen at the local and the state level. Let's say a company is making a 20-year investment. It's a huge to change every couple of years after they've made an investment. Our talent still wins us deals because they're skilled and experienced, which a lot of these

UM plans dorm on Central Campus and nearby private land

THE UNIVERSITY OF MICHIGAN is looking to create more student housing on its Ann Arbor campus, including adding privately owned properties. At a planned Feb. 16 meeting, university o cials will share plans regarding development on its Central Campus that will happen in the coming years. e development is targeted for the property adjacent to the former Fingerle Lumber property, which UM purchased in 2018. Most of the former Fingerle site, along the west side of Fifth Avenue between East Madison and Hill streets, will be the new location of the Michigan Marching Band practice eld. But much of the land near South Division Street north of the UM Sports Coliseum is privately owned for now. e university said it would contact landowners soon, and several of those properties have al-

ready been acquired by Ron Weiser, a local real estate investor and UM regent.

Weiser’s intent is to transfer ownership of those properties, at cost, to the university, it said in a statement. Pres-

ident Santa J. Ono said the development of more Central Campus housing is vital to meeting the needs of students who are increasingly seeking a ordable, on-campus housing options. “We are grateful for Regent

Weiser’s ongoing assistance in acquiring these properties,” Ono said in the statement. “Property acquisition is occurring at this time to allow for the smooth transition of current residents and begin site preparation in anticipation of construction.” Also at the Feb. 16 meeting, architects with Robert A.M. Stern Architects will share design concepts for an approved addition of a 2,300-bed housing and dining complex to be built on what is currently Elbel Field on the southwest side of campus. e UM Board of Regents approved on Dec. 8 a $6.5 million initial planning contract with the rm. UM says it can currently house 11,353 students in university housing. at includes 8,960 undergraduates and 2,393 graduate students. Among the undergraduates living on campus, 76 percent are rst-year students.

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The University of Michigan can currently house 11,353 students in university housing. That includes 8,960 undergraduates and 2,393 graduate students. | UM

Maureen