Crain's Detroit Business, Feb. 28, 2022 issue by Crain's Detroit Business

CONVERSATION: Mobile veterinarian doesn’t have ‘typical origin story’. PAGE 22

Under the hood Loan offers peek inside Gilbert finances. PAGE 4

CRAINSDETROIT.COM I FEBRUARY 28, 2022

FORUM

‘PLUGGING HOLES IN

A SINKING SHIP’

Hospitals everywhere have taken a beating during the COVID pandemic. As it eases, hospitals in some of the most vulnerable parts of Michigan are in danger of financial meltdown. PAGE 8

Hotels roll out red carpet for pets

Detroit sees more homes reoccupied 9,000 addresses in city gain residents over past 2 years

New hospitality for guests’ animal friends BY KIRK PINHO

Hotels have had a rough go of it the last two years. A global pandemic crippling the hospitality industry with government restrictions and individual safety precautions has caused some hotels to offer more accommodations for guests’ pets — dogs in particular. It follows the increasing trend of people traveling with their dogs that started before the pandemic, Travel Weekly and Skift have previously noted. For hotels, it’s a two-pronged ap-

proach. First, observers have said anecdotally, hotels strapped for cash and seeking additional revenue — however little — having been relaxing their pet policies and charging a little more for guests to bring their pets, within reason. Second, hotels are becoming more experiential and one way to up the game is to allow pets and offer special accommodations for them. “We have seen that,” said Claude Molinari, president and CEO of Visit Detroit. “When you’re at 90 percent occupancy, you can set the manner and tone of how you want your guests to

DALE G. YOUNG/SPECIAL TO CRAIN’S DETROIT BUSINESS

HEALTH CARE CRISIS

BY ARIELLE KASS Fitz the corgi gets a welcome at Detroit’s Element Hotel, and his owners get a photo opportunity. | ALEXIS AND WILL GATCH

be, and when you’re at 50 percent occupancy or less, you’ve got to be a little more creative to keep the lights on so you may accept a group or individuals who may be a little more high maintenance or who may cause some disruption. See PETS on Page 21

Over the past two years, thousands of once-vacant Detroit homes have quietly been rehabbed and reoccupied, reducing blight and increasing investment in residential property citywide. Data from the U.S. Postal Service shows that more than 9,000 Detroit residences that were vacant in January 2020 are now inhabited, a startling increase in the number of once-empty homes in the city that now have people living in them.

While the same data shows nearly 4,000 homes that were occupied in January 2020 were vacant in January 2022, the net increase in occupied housing is more than 5,000 residences. The postal service data has some limitations, including the fact that it looks at whole residences, and not individual units. The analysis also cannot account for whether homes were vacant for a few months between residents or for years. Still, the data shows that a robust housing market marked by rising prices, high demand and low supply has driven people to fix up and live in homes that at one point would have been destined for demolition. See VACANT on Page 20

NEWSPAPER

P001_CD_20220228.indd 1

SCIENCE CENTER CONFRONTS CHALLENGES Revenue decline, turnover PAGE 3

2/25/2022 12:39:23 PM

NEED TO KNOW

RETIRING ROYALTY

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` BEAUMONT MAKES MOVES AFTER MERGER THE NEWS: Beaumont Health, now a subsidiary of the merged BHSH Health, promoted Thomas Lanni Jr. to president of the Beaumont hospitals in Troy and Grosse Pointe, effective April 1. He replaces Nancy Susick, who is now the interim president of BHSH and Beaumont Royal Oak hospital. The health system also promoted Terese Farhat to senior vice president and general counsel, effective April 1. Farhat replaces Jane Jordan in the role. Jordan is departing the health system for another job opportunity. WHY IT MATTERS: The moves mark the start of a shakeup of top leadership at the hospital system following the completion of the merger between Beaumont Health and Spectrum Health earlier this month.

WHY IT MATTERS: The organizations will come together to advocate on issues such as education and training, exports and trade and public contracting. They also plan to produce a report on how successful and not successful area corporations have been at supporting Black businesses.

` HIGHER NUMBER OF JOBS IN CANNABIS THE NEWS: The number of jobs in Michigan’s marijuana industry rose 72 percent over the last year to 31,152 as of January, according to a report from Leafly — the third highest in the nation. That’s after pot gold rush state California with 83,607 and Colorado with 38,337. Illinois is close behind Michigan with nearly 29,000 weed industry employees.

` BLACK BUSINESS GROUPS COMBINE EFFORTS THE NEWS: Three Black-owned business groups are coming together to form a new advocacy organization called the Detroit United Front. The Detroit chapter of the National Business League Inc., is coming together with the Detroit Black Chamber of Commerce and Booker T. Washington Trade Association, bringing along a combined 11,000 members based in Detroit.

` ROCKET MORTGAGE SHARES PROFITS THE NEWS: Despite a smaller profit in 2021, Rocket Companies Inc. is returning $2 billion to shareholders. The Detroit-based mortgage giant (NYSE: RKT) reported income of $6.1 billion on revenue of $12.9 billion in 2021, down from net income of $9.4 billion in 2020 on more than $15.7 billion in revenue. Rocket’s board approved the $1.01 per share dividend, worth about $2 billion last week. WHY IT MATTERS: Since going public, Rocket’s stock price has continued to slide on a poor outlook for the mortgage sector. Despite a dip in income, the company remains flush with cash with access to $9.1 billion.

Perkins, Gayle announce retirement from Fox 2 ` The king and queen of local TV news have announced their retirement. Fox 2 news anchors Huel Perkins and Monica Gayle told viewers they would retire next month at the same time after almost 25 years on the air together. Their last day on the station will be March 25. They first appeared together as anchors on Fox 2 in 1997. Perkins started at WJBK in 1989, when the station was still a CBS affiliate. In addition to anchoring news shows, he co-hosted the popular talk show “Let It Rip” for the station. Gayle came to the station from a network news desk in New York City in 1997. Both Gayle and Perkins have won multiple Emmy awards.

` U.S. NEW HOME SALES DECLINE THE NEWS: Sales of new homes retreated in January for the first time in three months, after a flurry of purchases at the end of 2021. Purchases of new single-family homes decreased 4.5 percent to a 801,000 annualized pace following a revised 839,000 in December, government data showed.

WHY IT MATTERS: Money and opportunity. There are now more jobs working with cannabis than there are electricians (20,450) and firefighters (6,570) in the state.

WHY IT MATTERS: These are indicators that a jump in mortgage rates may be starting to restrain demand. It may also mean builders have a chance to chip away at construction backlogs.

Huel Perkins and Monica Gayle announced their retirement from Fox 2. | WJBK-TV

HELP US HONOR EXCEPTIONAL

HR EXECUTIVES AND TEAMS In a special section on June 20, Crain’s will honor Michigan human resources executives and teams working behind the scenes and on the front lines to care for people while supporting their organizations’ strategic objectives. Five categories are available to recognize outstanding achievements.

NOMINATIONS

Visit crainsdetroit.com/excellence-hr today to nominate and learn more.

CLOSE MAR. 11

2 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P002_CD_20220228.indd 2

2/25/2022 2:42:11 PM

AUTO SUPPLIERS

NONPROFITS

Meritor, Tenneco: 2 takeovers with big impact

FINDING THE RIGHT FORMULA

BY KURT NAGL

and forced a shutdown. At that point, there were just 17 employees on staff. It began adding positions back little by little before it reopened for limited operations in July 2020. But lower overall staffing numbers put more responsibility on remaining employees at a time when all industries are facing talent shortages. The center’s program manager for camps, chief development officer, COO and events manager all left for new positions last year. Last week the science center announced it had filled several vacant C-suite positions and added a person to its development team. In lieu of hiring a COO, the center created a chief business officer position to focus on business development/earned revenue, and a chief of staff, director of culture and community position to serve as a

The recent multibillion-dollar takeovers of Meritor Inc. and Tenneco Inc. came about at the same time for different reasons, but both are likely to have a big impact in metro Detroit where the automotive suppliers have a major presence and long history. Meritor’s pending sale to Columbus, Ind.-based Cummins Inc. is a $3.7 billion bet on the electrification of heavy-duty trucks and the role of the Troy-based company’s e-axle in that theoretical future. New York City-based Apollo Global Management Inc.’s purchase of Tenneco Inc., based in Lake Forest, Ill., with thousands of employees in Michigan, is the result of the struggling supplier’s need for a capital infusion and the private equity firm’s bid to cash in on a turnaround. In both cases, some trimming and consolidation is the likely aftermath, followed by the chance for growth and investment depending on the priorities of new leadership and how successfully operations are integrated, according to company executives and industry experts. Automotive companies in Michigan have become more accustomed to such shakeups in recent years as M&A activity remains red hot in an industry rocked by volatility and the race for electric dominance. “I think it’s good for the industry because it allows us to move much faster to get human capital and technology that doesn’t exist today,” said Carla Bailo, president and CEO of the Center for Automotive Research in Ann Arbor. “There’s pain that comes with it, too. There’s growing pains and marriage pains that you have to go through.”

See SCIENCE on Page 18

See TAKEOVERS on Page 19

The Michigan Science Center in Detroit has been challenged by the pandemic, flooding and staffing turnover. | MICHIGAN SCIENCE CENTER

Michigan Science Center pushes back against challenges BY SHERRI WELCH

“WE LEARNED, OVER THE PAST TWO TUMULTUOUS YEARS, THAT BEING ABLE TO PIVOT ON A DIME TO AGGRESSIVELY RESPOND TO THE CHANGING LANDSCAPE IS A TREMENDOUS ADVANTAGE.” — Christian Greer, CEO, Michigan Science Center

Like other nonprofits, the Michigan Science Center has seen significant losses of earned revenue with pandemic closures, but the iconic Detroit attraction has also been dealing with myriad other challenges. Over the past year, the COO, chief development officer, event rentals manager and other employees have left. The lower level, including the theater, flooded last summer during heavy rains. And an insurer has filed a lawsuit to fight payout on the water damage and lost revenue claims. With its operating budget still down more than $1 million from pre-pandemic levels, the center held on in 2021 with support from corporate sponsors and foundations making up more than three-quarters, or 80 percent, of its revenues last year, CEO Christian Greer said.

Despite the setbacks, Greer says he is optimistic the center will turn things around this year as people increasingly return and earned revenue rebounds. “The bar has been set a little bit higher,” with increased responsibilities for the center’s current employees, he said. “It’s tough on our team to try to figure that out, but we’ve got new people coming in with new energy and great ideas.” Greer said the center is turning to a flexible operating framework, rather than a strategic plan, to be opportunistic during the recovery. “It’ll still be a challenge, but, you know, hopefully we’ll do things a little bit differently, get more efficiency out of our team,” Greer said.

Staffing shortages The science center laid off twothirds of its staff in March 2020, a week after COVID-19 hit the region

FINANCE

Mortgage industry faces headwinds, but likely to remain profitable BY NICK MANES AND ARIELLE KASS

Home financing rates are rising, the refinancing boom is seeing its end and the number of new buyers is waning, but there is a bright spot for mortgage lenders: likely continued profitability. A red-hot housing market over the last two years has quickly morphed into a new landscape for housing sector professionals, as rock-bottom interest rates have rapidly risen to levels not seen since before the COVID-19 pandemic began two years ago. Yet even the rapid uptick in interest rates — ahead of likely action by the Federal Reserve, possibly as soon as next month — may not be enough to deter motivated buyers seeking to

amortize a loan over three decades. Still, it’s not just rising rates that are leading to shifting sands for lenders, mortgage writers, buyers and others in the housing sector. Record low inventory, leading to surging home prices, are further complicating matters for would-be buyers, and leading to the further fall-off of the refinancing boom seen in 2020 and into 2021. With borrowing more expensive, applications to refinance mortgages have fallen about 45 percent in the last six months, according to the Mortgage Bankers Association. Mortgage rates have been rising since summer, though they dropped slightly this week. The average for a 30-year loan was 3.89 percent, down from 3.92 percent the previous week, Freddie Mac said

in a statement Thursday. Still, that’s up more than 20 percent just since Christmas,according to Bloomberg. Further increases are expected as the Federal Reserve, trying to curb inflation, hikes its benchmark rate. That’s a daunting prospect for entry-level buyers when affordability is already at its worst since 2018. “You put it all together, and what you’re finding is the new (mortgage) purchase market is off significantly on a year-over-year basis,” said Tim Ross, CEO of Troy-based mortgage banking firm Ross Mortgage Corp. Moreover, the refinance boom that helped the mortgage sector hit historic levels in 2020 is likely to find its cyclical end, as fewer would see benefit. See MORTGAGE on Page 18

Rising rates put pressure on profits Rising mortgage rates, which have increased more than a full percent over the last six months, have lead to a fall-off of the refinancing boom and making new loans more expensive

U.S. 30-yr FRM

U.S. 15-yr FRM

U.S. 5/1 ARM

3.89%

4.0% 3.5

3.14% 3.0 2.98%

2.5 2.0

Jan.

Feb. March April

May June

July

Aug.

Sep.

Oct.

Nov.

Dec.

Jan. Feb.

SOURCE: FREDDIE MAC

FEBRUARY 28, 2022 | CRAIN’S DETROIT BUSINESS | 3

P003_CD_20220228.indd 3

2/25/2022 2:06:24 PM

REAL ESTATE INSIDER

Bedrock loan offers peek under hood of Gilbert’s holdings Let’s nerd out for a little while, shall we? Dan Gilbert’s Bedrock LLC real estate company has snagged the largest-ever commercial mortKirk gage-backed sePINHO curities loan in the city’s history, totaling $430 million, to refinance 14 of the billionaire’s Detroit properties in and around downtown. The previous largest CMBS loan was the $125 million for the former Compuware Corp. headquarters building, now known as One Campus Martius, that Gilbert bought along with what was then Meridian Health for $142 million in 2014. The new seven-year loan, which matures in January 2029, is revealed in a document obtained from the Kroll Bond Rating Agency LLC that says the portfolio has seven office buildings totaling 2.5 million square feet, five parking decks with 5,036 parking spaces and a pair of multifamily properties totaling 53 units. The entire portfolio is about 2.7 million square feet. It’s important to take a step back and consider the following: What is believed to be the largest-ever CMBS loan in city history was issued during a global pandemic during which Detroit and the region’s office stock — the primary anchor of the refinanced portfolio — still remains very much in flux, with companies continuing to allow many of their workers to work from home. That, in turn, impacts revenue from parking decks, the second largest anchor of the portfolio refi. The timing and amount speak to the confidence of the lenders, JPMorgan Chase and Starwood Mortgage Capital. In the office buildings, Gilbert’s Rocket Companies Inc. online mortgage giant accounts for 40.3 percent of base rent with lease expiration in July 2028 while Amrock Inc. — his Detroit-based title and property valuation company — accounts for 17.1 percent with lease expiration in January 2032. The document says that Kro-

4111 Grand River Ave. totaling some 6,500 square feet. I reached out to the broker for additional information. The art has been on the building for several years, although I thought it was unique to Detroit until a trip to Miami in December for the National Association of Real Estate Editors annual conference. One evening, I and other reporters and real estate industry folks walked around the Wynwood neighborhood — picture a hyper-gentrified Eastern Market with thousands of pricey apartments and condos encircled by carefully curated public art. In Wynwood, lo and behold, there was practically the same art on a building there. The Detroit and Miami buildings are just two of something like 80 around the country that have that art on it as part of artist Renda Writer’s World Peace Mural Tour. Detroit’s mural was the seventh created in the series, from July 18-22, 2016. Three of the buildings above — the First National Building, Chase Tower and One Woodward — were among 14 properties Bedrock LLC refinanced with a $430 million CMBS loan, believed to be the largest issued in the city’s history. | COSTAR GROUP INC.

ll views those properties as riskier because the two largest tenants are affiliated with the borrower. Bedrock declined to comment. According to the Kroll document, the office buildings are the First National Building (800,000 square feet), the Qube/Chase Tower (522,700 square feet), Chrysler House (343,500 square feet), 1001 Woodward (319,000 square feet), One Woodward (370,300 square feet), and 1505 Woodward and 1515 Woodward (141,700 square feet combined). The parking decks are the Z Garage (1,351 spaces), Two Detroit Garage (1,106 spaces), 1001 Brush St. (1,309 spaces), 419 Fort St. garage (637 spaces) and 1401 First St. (633 spaces). The multifamily properties are The Assembly and the Vinton Building. The document also gives us a peek under the hood of the various office buildings that we otherwise might not get, including how much rent they generate from key tenants. For example, Rocket accounts for $23.6 million yearly in rent to the buildings, and Amrock accounts for nearly $10 mil-

lion. The Detroit-based Honigman Miller Schwartz and Cohn LLP law firm generates about $3 million in annual rent, while LinkedIn Corp. pays about $2.35 million, the document says. Overall, the portfolio generated $47.2 million in net cash flow in 2019, $54.1 million in 2020 and $55.6 million through the first nine months of 2021, the document says. The $430 million loan will go toward refinancing $331.1 million in debt, paying loan closing costs, fund reserves and return $83.2 million in equity to Bedrock. Southfield-based Bernard Financial Group originated the loan and will be the servicer. Founder and President Dennis Bernard confirmed his company’s involvement and said it demonstrates the strength and belief by national lenders and investors in Detroit’s commercial real estate market, but deferred further comment to Bedrock. The portfolio has an appraised value of $724.3 million, according to the document. Gilbert spent $191.2 mil-

lion acquiring the properties, the document says. The total basis is $656.1 million, the document says, generally meaning that Bedrock has spent some $464.9 million on the properties since buying them.

World peace for sale for $525,000 I mean, if freedom costs a buck-ofive ... The building most recognizable for the art that wraps around it spelling “world peace” in Detroit’s Core City neighborhood across from the Woodbridge neighborhood is for sale for $525,000. That art is the words “world peace” written hundreds of times around the property, which was put on the market last week by Detroit-based O’Connor Real Estate. The Core City property consists of a pair of buildings, first a two-story building with an additional single-story portion at 4003 Grand River Ave. and a two-story building with a single-story retail area and parking at

The Joumana Kayrouz/ Mike Morse sign wars I’m definitely not the first person to spot this, but the building signage for the high-profile Joumana Kayrouz and Mike Morse law firms in Southfield look almost identical. Travel up the Lodge Freeway/M-10 and on the east side you’ll see the Law Office of Joumana Kayrouz PLLC building at 24370 Northwestern Highway and, just a little farther up on the west side, you’ll see the Centrum Office Centre building that houses the Mike Morse Law Firm at 24901 Northwestern Highway with practically the exact same signage. Similar fonts, last name in red, phone numbers on the bottom (although Kayrouz’s appears to be all caps while Morse’s appears to be lowercase). Based on Southfield building permit records, it appears as though the Kayrouz sign was installed about a year ago and the Morse sign was installed in 2013. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

REAL ESTATE

Fairlane Town Center in Dearborn expected to be sold next month BY KIRK PINHO

The Fairlane Town Center shopping mall in Dearborn is about to be sold, according to a New York Citybased company that tracks commercial real estate loans . Commercial mortgage-backed securities loan commentary provided last week by Trepp LLC says the sale of both Fairlane, located at 18900 Michigan Ave., as well as the Shops at Willow Bend in Plano, Texas, are expected to close next month to an unnamed buyer. “If the sale does not close, a back up buyer is ready to sign a contract and move forward with proof of fund provided to receiver and lender,” the commentary reads. Trepp, owned by Daily Mail and General Trust, analyzes data from loan prospectuses, servicers, special servicers and trustees and is widely considered an industry

Fairlane Town Center in Dearborn was built in 1976. It faces an imminent sale to new ownership after its current ownership has defaulted on $886 million in CMBS debt on it and six other malls around the country. | CoStar Group Inc.

leader in CMBS data. Mall management declined comment. A message for an executive for Syracuse, N.Y.-based Spinoso Real Estate Group LLC, which is managing and marketing the properties for lease wasn’t returned. It’s the latest twist for the struggling mall built in 1976; current ownership has fallen behind on its debts. Both Fairlane, which is 1.4 million square feet, and the 600,000-squarefoot Mall at Partridge Creek in Clinton Township are owned by Miami Beach, Fla.-based Starwood Capital Group, which paid what was then Taubman Centers Inc. (now Taubman Co. LLC) $1.4 billion for them and five other malls in 2014. They have fallen into receivership and under new management in the past several months, failing under the weight of a pair of CMBS loans. Fairlane, the Shops at Willow Bend and Stony Point Fashion Park in Rich-

mond, Va., secured a $161 million CMBS loan on which Starwood defaulted, prompting a receivership and new management. The current balance is about $120.7 million, according to Trepp data. The malls were valued at $345.2 million when Starwood bought them; they are now worth $165.8 million as of earlier this month, Trepp says, up from just $89 million in August. Partridge Creek, which also has been struggling for years, secures $725 million in CMBS debt along with three other malls: the Mall at Wellington Green in Wellington, Fla., MacArthur Center in Norfolk, Va., and Northlake Mall in Charlotte, N.C. Starwood owes $681.6 million on that loan. In June, Crain’s reported that those four malls have a combined value of $210.6 million, compared with $1.074 billion when they were bought in 2014. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

4 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P004_CD_20220228.indd 4

2/25/2022 11:38:23 AM

OK, who celebrates fifth? Bank of America does. For the fifth year in a row, Bank of America has shared the success of our company with our employees with a valuable Sharing Success compensation award. To recognize the team’s hard work, this award is over and above regular compensation. And this year, we’re proud to commemorate a first — nearly all these awards are in Bank of America stock.

That means 97% of our employees shared $1 billion worth of Bank of America stock this year, above regular compensation.

“I want to thank my teammates here in Detroit for their continued hard work and dedication. While other banks might make awards like ours every once in a while, I’m proud to work for an organization that has rewarded our employees for five years in a row. Because success is better when it’s shared.” Matt Elliott President, Bank of America Detroit

What would you like the power to do?® Learn more about how we’re investing in our local communities at bankofamerica.com/detroit

COMMENTARY

Let’s double investment in low-income students BY AMBER ARELLANO

EDITORIAL

Compromise possible on tax-cut proposals I t’s not often that Lansing’s legislative sausage-making process deserves praise. But we’re hopeful that the dueling tax-cut proposals now making their way through the state House and Senate will inspire — dare we say it — political compromise that ultimately benefits all Michiganians. Most important, real work is underway to distribute a multibillion-dollar surplus that’s collected in state coffers. It’s vital to get that money flowing as the state emerges from the pandemic with major challenges looming, from education achievement gaps to crumbling infrastructure to rising inflation. As expected, opinions differ over the best way to spend the money. We see some potential benefits in tax cut plans advancing in both houses of the Legislature. On Thursday, two Republican-run Michigan House committees approved a plan to slash the individual income tax, boost tax exemption status for seniors and pour $1.5 billion into under-funded municipal pensions. Senate Republicans, meanwhile, are seeking a much bigger $2.5 billion tax cut that would cut the individual income tax rate would drop from 4.25 percent to 3.9 percent, and the corporate income tax paid by C-corporations would fall from 6 percent to 3.9 percent. Gov. Gretchen Whitmer, for her part, has proposed more modest, yet targeted, tax relief for retirees and low-income families totaling about $700 million annually. She also has proposed boosting Michigan’s Earned Income Tax Credit, restoring the credit for low-income workers to its value prior to Gov. Rick Snyder and Republican lawmakers paring it in 2011. One aspect of the House GOP plan is particularly smart. We’ve long favored the idea of shoring up municipal pension funds to stabi-

lize financially vulnerable cities. The House pension relief plan calls for earmarking the first $900 million for pension systems that are less than 60 percent funded, allowing municipalities to apply for up to $100 million to bring funding closer to 60 percent. That’s a wise long-term use of surplus funds. Businesses that have struggled during the pandemic also deserve tax relief and would get it in both House and Senate GOP plans. The philosophical difference is over who deserves the biggest cut. The Senate voted to slash the corporate income tax for the state’s largest companies from 6 percent to 3.9 percent. The House GOP plan wouldn’t change the corporate income tax rate for C-corporations. All of which means much negotiating lies ahead. We hope the result is a plan that puts some money back in the pockets of businesses and residents while steering some cash toward Michigan’s biggest needs. The surplus is big enough to do both. There is one way lawmakers and the governor could compromise here without slashing the income tax and triggering spending cuts when the surplus dries up (which, as history has proven over and over again, it will). Whitmer’s proposed expansion of the Earned Income Tax Credit for low-income families ($260 million) could be paired with the House Republican plan to double the personal exemption for retirees ($561 million) and the Senate Republican plan to bring back a $500-per-child tax credit for families ($800 million). No one could argue that a $1.6 billion tax cut wouldn’t be real tax relief for workers facing the daily headwinds of inflation. And it could be done without crippling the state’s ability to address its most critical needs.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

GETTY IMAGES/ISTOCKPHOTO

DANIEL SAAD FOR CRAIN’S DETROIT BUSINESS

hen it comes to improving education in Michigan, we have such a long way to go toward creating opportunities for every student that even big steps forward feel like baby steps. It’s true that Gov. Amber Arellano Gretchen Whitmer and is executive lawmakers have worked director of The together to raise overall Education Trust-Midwest, a per-pupil spending in Michigan in recent years, Royal Oakbased education and their bipartisanship commitment to education reform should be celebrated. organization. And we are pleased that Whitmer’s proposed budget makes advances in acknowledging the longstanding funding disparities that have disproportionately impacted economically disadvantaged students and those with greater needs. Yet unfortunately, the fact remains that Michigan has been one of the worst states in the nation for fair and equitable funding as compared to leading education states. That’s why it’s imperative that lawmakers adopt key provisions of Whitmer’s proposed education budget that move the needle toward a more fair and equitable funding system that the Michigan Partnership for Equity and Opportunity coalition and its bipartisan statewide leaders have championed for the last year. The Education Trust-Midwest is a proud backbone organization of the coalition. After all, Michigan has long had one of the most unfair, regressive school funding formulas in the country. And let’s be clear: even with progress that Whitmer is proposing to make in terms of K-12 education investment, the state’s school funding system is far from fair and equitable. Indeed, if we are truly committed to supporting our most underserved students and closing devastating opportunity gaps, we need to be honest about what constitutes fair funding in our state — and we need to make much bigger strides for the students who most need investment. Black and Latino students, in particular, have been the hardest hit by the pandemic learning losses and need investment for their educational recovery in the coming years. First, state leaders should support Whitmer’s proposal to remove budget language that effec-

tively balances the budget on the backs of low-income students by cutting from their funding first when there’s a budget shortfall. Changes include permanently striking this phrase in Sec 31a (14) that requires cutting atrisk funding first before overall cuts. This is critical because, as our organization’s analyses have shown, this unfair budgetary practice has been used in many of the past budget cycles, a tactic that harms students with the greatest needs, stripping them of funding and resources that they need. Second, state leaders should commit to fully funding students who are considered at-risk every year. As it stands now, the budget annually calls for allocating 11.5 percent more per-pupil funding for students considered at-risk. Yet, Michigan rarely gets to that level — and the state’s weighted allocation of 11.5 percent is far below the amount that leading states provide to students with the greatest needs. In fact, as we noted in a report last fall, these students have not received the full funding that the state budget has prescribed in many of the past years, amounting to millions of lost dollars for students with the greatest needs. Currently, the governor’s budget calls for $746.5 million for economically disadvantaged students, which amounts to 11.5 percent of the base per-pupil amount per student, or full funding of that line item. And while we support the governor’s recommendation, we also urge state leaders to go further as we look at ways to transform Michigan’s education funding system to be more equitable. Indeed, Michigan should consider the progress of leading education states by providing at least 100 percent more funding per low-income student. Finally, we urge state leaders to adopt language that would protect at-risk funding — and funding for English learners — from cuts when there is a shortfall in perpetuity. It is often said that how we choose to spend our money reflects our priorities. The same is true of our state budget. Sadly, we in Michigan have not prioritized students with the greatest needs for decades. Now is the time to change that dynamic, not with baby steps but with big strides so that we can truly close opportunity gaps that have hindered success for Black and Latino students, students with disabilities, English learners and children from low-income backgrounds. Let’s start with closing funding gaps so that students with the greatest needs have the funding and opportunities that they deserve to be successful now and in the future. Michigan’s students deserve no less.

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

NONPROFITS

Forgotten Harvest plots out how to use MacKenzie Scott gift BY SHERRI WELCH

Forgotten Harvest plans to use millions of the $25 million gift it received from MacKenzie Scott last year to strengthen the emergency food distribution system in Southeast Michigan. The Oak Park-based food rescue is developing plans for a $5 million fund that will make grants over the next three to four years to small pantries, soup kitchens and other groups to strengthen their infrastructure and ability to distribute emergency food to their communities. At the same time, it’s considering a plan to operate with partners “client choice” or grocery-store-like pantries with extended hours and paid staff supplementing volunteers. The goal is improving access to emergency food assistance and providing other supportive services, such as Mayes health care. As envisioned, those sites would consolidate smaller providers at a single “super site” location in each community and pay longstanding volunteers to run them. A pilot pantry operated by Forgotten Harvest, with partners, could open in roughly a year, CEO Kirk Mayes said. If successful in increasing access for those needing food assistance, it could feed a longer vision to open 10-15 of the consolidated sites. “Part of (the pilot site) is ... testing it out, actualizing it and asking ourselves the question, ‘Does this make sense as a better way?’” Mayes said. “Short of that, we know that we want to improve access ... (and) the time and space.” Limited access to emergency food was an issue before COVID-19, but the pandemic has made it even worse. The frailty of the network of pantries, soup kitchens and churches that have traditionally distributed emergency food surfaced as volunteers — many older and at increased risk for the virus — had to pull back during the pandemic. Forgotten Harvest and Gleaners Community Food Bank of Southeastern Michigan added mobile pantries and pop-up food distribution sites to help. As the pandemic winds down, plenty of challenges remain. “We really want to help put dollars... into expanding the capacity of our existing pantries so we can improve the service to people through access and through improved hours of operation basically — and probably other aspects as well — once we discover some of the other capacity needs of our pantry partners.” A committee of community, nonprofit and philanthropic leaders, chaired by Forgotten Harvest board member Brenda Jones, will identify what those grants could support. Mayes expects the application process for grants from the $5 million Agency Enablement fund to open this summer.

Letting clients choose Even as it makes plans to move millions to pantries already operating in the community, Forgotten Harvest is developing plans to launch a large pilot client choice pantry in its Oak Park building.

Hiring paid employees will enable the new sites to operate for longer hours, providing “consistency, quality of service and improving in some ways, just the level of respect, dignity and care that goes into this body of work,” he said. Improving access to food assistance for working families is a key objective in a new three-year strategic plan Forgotten Harvest finalized last fall. That includes ensuring the right mix of food for people in need, a footprint for food distribution that minimizes gaps in service and longer operating hours, Mayes said. With the opening of its new $17 million headquarters, Forgotten Har-

vest will be vacating its Oak Park building. Forgotten Harvest is still going through due diligence on the costs of renovations and repairs needed for the Oak Park pilot site, in conversation with potential partners. “Overall, when we think about the impact that we’re going to be making over the next few years and the investment we’ve already made into (our new) facility, a lot of this is really geared towards, again, looking at this concept of how do we address food security in the most effective way,” Mayes said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Agency staff and volunteers get food ready for distribution at a Forgotten Harvest site. | FORGOTTEN HARVEST

THE INSIDE STORY

FROM THE DEALMAKERS THEMSELVES.

MARCH 3 | 1-2PM

FREE WEBCAST

PROGRAM AND SPEAKERS A really big deal: Behind the scenes of the Beaumont Health-Spectrum Health merger

TINA FREESE DECKER President and CEO BHSH System

JULIE FREAM

Board Chair BHSH System Former Beaumont Health Board Chair

Buying a business during a pandemic

PAUL GLANTZ

Co-Founder and Chairman Emagine Entertainment

RYAN LAFONTAINE CEO LaFontaine Automotive Group

ROBERT ROTH

Board Member BHSH System Former Spectrum Health Board Chair

2022 deal-making forecast

RAJESH KOTHARI Founder and Managing Director Cascade Partners

EVONNE XU

Partner Dinsmore & Shohl

P007_CD_20220228.indd 7

2/25/2022 12:40:50 PM

COMMENTARY: Stabilize finances of midsize hospitals before it’s too late. PAGE 11

HEALTH CARE CRISIS

COMMENTARY: More psych beds, staff needed for ‘broken and fragmented system.’ PAGE 12

t’s th Ame of th cost paid the face Th spot with ular ing c B trad proa our vide crisi H pay cies dem cash and trick — p sour M valu tied pati that on p

M Amy Poore (left) and Leslie Cebrero work their way down the hall on a patient floor at Hillsdale Hospital. | DALE G. YOUNG/SPECIAL TO CRAIN’S DETROIT BUSINESS

STUCK IN THE MIDDLE Battered by COVID, Michigan’s midsized hospitals head for financial crunch | BY DUSTIN WALSH

illsdale Hospital recorded “tweener” hospital — a mid-size hos- tals in the category, like Hillsdale or three consecutive years of pital with more than 26 inpatient Memorial Healthcare in Owosso or losses prior to the pandemic. beds but fewer than 200 at least five North Ottawa Community Hospital Record federal spending to stymie miles from another hospital. These in Grand Haven. More than 130 rural hospitals have losses caused by government-led hospitals fall in a reimbursement elective-surgery shutdowns reversed gray area. Tweener hospitals are inel- shuttered since 2010 nationwide, the course for the 96-bed hospital in igible for cost-plus-one-percent re- more than 75 percent considered Southwest Michigan. imbursement for all Medicare and tweeners, creating a escalating gap in care for rural America, according The hospital, led by CEO J.J. to the National Rural Health AsHodshire, used the government funds to expand services in an “IF THERE IS NO MARGIN, THERE sociation. The closure of those attempt to raise margins. But it’s IS NO MISSION. MOST RURAL hospitals led rural residents to a gambit. With federal funds dryhave to drive an average of 30 additional miles for health care, acing up and other relief measures HOSPITALS ARE PLUGGING HOLES cording to the report. expiring, Hillsdale Hospital and ON A SINKING SHIP.” Unless the reimbursement other rural hospitals like it face an uncertain financial future as — J.J. Hodshire, CEO, Hillsdale Hospital model changes, experts fear the growing rural hospital closure the state’s health care industry continues to be paramount. will strike hard in Michigan, hos“If there is no margin, there is no Medicaid services like smaller criti- pitals like Hillsdale may shutter and mission,” Hodshire said. “Most rural cal access hospitals but are too small irreparable holes will be torn in the hospitals are plugging holes in a themselves to leverage the reim- economic fabric of rural counties. sinking ship. One-fifth of the U.S. bursement negotiating power of a “If this trend continues, you’re gopopulation is on that boat. If we don’t large health system. ing to see a whole different outcome redesign and rebuild rural health There are 32 such hospitals in for our communities,” Hodshire said. care, we’re sunk.” Michigan, mostly rural, but only a Hillsdale is categorized as a handful of truly independent hospiSee HOSPITALS on Page 14

Michigan’s midsize vital hospitals

1. UP Health System - Portage 2 2. Dickinson County Healthcare System 3. MyMichigan Medical Center - Sault 4. MyMichigan Medical Center Alpena 5. Munson Healthcare Otsego Memorial Hospital 6. Munson Healthcare Grayling Hospital 7. Munson Healthcare Manistee Hospital 8. Spectrum Health Ludington Hospital 9. Munson Healthcare Cadillac Hospital 10. MyMichigan Medical Center West Branch 11. Ascension St. Joseph Hospital 12. MyMichigan Medical Center Clare 13. Spectrum Health Big Rapids Hospital 14. McLaren Central Michigan 15. MyMichigan Medical Center Alma 16. Sparrow Carson Hospital 17. Spectrum Health United Hospital 18. North Ottawa Community Hospital 19. Spectrum Health Zeeland Community Hospital 20. Bronson South Haven Hospital 21. Spectrum Health Lakeland Watervliet Hospital 22. Three Rivers Hospital 23. Sturgis Hospital 24. ProMedica Coldwater Regional Hospital 25. Oaklawn Hospital 26. Hillsdale Hospital

F g s l s “ h p

5 6 7

8 13 18

19 20 21

15 17 16

29 25 22

24 26

27. ProMedica Charles and Virgina Hickman Hospital 28. ProMedica Monroe Regional Hospital 29. St. Joseph Mercy Livingston 30. Memorial Healthcare Hospital 31. McLaren Lapeer Region 32. Ascension River District Hospital SOURCE: MICHIGAN HEALTH AND HOSPITAL ASSOCIATION

8 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P008_P014_CD_20220228.indd 8

A r B t o f t t p T p a a m

2/25/2022 9:46:03 AM

T a a u p t a h o o n

s COMMENTARY

Stop rewarding volume over value in health care I

t’s no shock to anyone reading this that there is an affordability crisis in American health care. And while much of the focus is rightly centered on the cost of services, how those services are paid for also is a factor that influences the pocketbook pressures consumers face every day. The COVID pandemic continues to spotlight the heroic efforts of those within our health care system — particularly those on the front lines of delivering care. But it also has confirmed that our traditional fee-for-service payment approach is antiquated and doesn’t serve our population well, especially for providers when they are managing a global crisis. Historically, insurers like Blue Cross pay physicians, hospitals and pharmacies per unit of service. During the pandemic, services that brought steady cash flow to providers, like office visits and elective procedures, slowed to a trickle. Revenues dropped significantly — precisely when health system resources were desperately needed. Moving to transform payment to a value-based system — with payments tied to quality, cost effectiveness and patient experience — offers a solution that should diminish negative effects on providers during the next dramatic

Todd Van Tol (left) is executive vice president for health care value at Blue Cross Blue Shield of Michigan. Dr. James Grant is senior vice president and chief medical officer of BCBSM. shift in health care. Throughout the pandemic, health care providers navigated uncharted challenges, while determining how to safely care for their patient populations. For example, incorporating telehealth enabled physicians to monitor and care for patients who were isolating at home, but many practices did not have the resources to ramp up those services. In response, to help our members and their providers, Blue Cross Blue Shield of Michigan advanced $687 million in payments to hospitals and physicians to help maintain cash flow while their fee-for-service, episode-based services slowed or tempo-

rarily closed. But imagine if payment was tied to the quality of care provided and outcomes achieved, rather than volume? If your primary care physician was paid not for every office visit or procedure but for the overall management of your health? If they had more time to spend with you, to prevent conditions from worsening and prevent the need for costly procedures and hospital stays? That’s the value-based model. The antiquated fee-for-service payment model prioritizes volume over value. This model put everyone, espe-

cially physicians and hospitals, at severe financial risk during the COVID pandemic. Value-based reimbursement approaches are not new to Blue Cross. We have been collaborating with providers for over 15 years to reward high quality, affordable care by tying a percentage of payment to specific quality, safety and outcomes goals and the capabilities that produce them. In 2019, we launched Blueprint for Affordability, a program in which Blue Cross and providers share accountability for patient care quality and cost effectiveness. In this arrangement, providers agree to be paid according to how well patient outcomes are managed. Models like Blueprint for Affordability progress further into the value-based payment spectrum by tying payment to how well a care system manages the care of the patients they share. These models enable health care professionals to be paid when they collaborate with each other to coordinate quality, affordable patient care, deliver preventive services, and avert avoidable hospitalizations and complications. Value-based payment models can give providers a reliable income stream to aid them in successfully managing the health of their patient population.

Conversely, the outdated fee-for-service model has failed to keep health care costs in check, discouraged care coordination, rewarded redundancy, and put health care providers at financial risk during an extreme public health challenge. Value-based models are advancing in both commercial and government plans. The Centers for Medicare and Medicaid Services’ goal is for every Medicare beneficiary to be in a care relationship with accountability for quality and total cost of care by 2030. The U.S. health care industry is transitioning to value-based payment models. We’ve made progress here in Michigan, but we must do more. As reported by Deloitte, in 2020, only 36 percent of physicians drew compensation from value-based payments. Evolving the focus of payment toward value benefits all stakeholders by aligning incentives with good outcomes. It encourages a better patient experience. It incentivizes innovative efforts to keep patients healthy, prevent re-admissions, avoid unnecessary tests, and reduce complications. It makes health care more affordable for everyone. These are objectives desired by everyone who pays for health care, and those who provide it.

sponsored by:

FEBRUARY 28, 2022 | CRAIN’S DETROIT BUSINESS | 13

BUSINESS

P008_P014_CD_20220228.indd 13

2/25/2022 9:47:23 AM

HOSPITALS

From Page 8

“Production assembly lines will close and supply chains will be impacted dramatically. No factory wants to be in a town without health care. We’re talking about loss of livelihood, loss of life.”

Taking a slice of my pie The trouble with tweeners began in the mid-1980s when Congress voted to reform the Medicare payment model from cost-based reimbursement, which pays hospitals the costs of services, to an inpatient prospective payment system, which pays a flat rate based on the diagnosis. Under that system, Congress set reimbursement for diagnosis and treatment of Medicare patients without accounting for cost of services or length of patient stay. The model hit tweener hospitals hard because they typically see an older population, usually on Medicare, that is sicker and requires longer hospital stays to recover. More than 70 percent of Hillsdale Hospital’s inpatients are on Medicare, for instance. Big health systems typically have a larger instance of patients with private insurance that helps recoup losses from Medicare patients. In 1997, Congress saved many tweener hospitals when it passed the Balanced Budget Act, which created special provisions for some rural hospitals for a more cost-based reimbursement model. But most of those provisions were wiped out after the passage of the Affordable Care Act, colloquially known as Obamacare, in 2010. The plan was for Medicaid expansion to cover the shortfall, but the U.S. Supreme Court in 2012 ruled that mandatory Medicaid expansion for states was unconstitutional, blowing a hole in the funding model. In 2016, Becker’s Hospital Review identified 20 percent of the nation’s rural hospitals — about 673 hospitals — were vulnerable to closure. To avoid shuttering, rural tweener hospitals across the country began cutting services. Obstetrics was the fastest to be cut, according to the National Rural Health Association. Between 2010 and 2014, 7.2 percent of 306 hospitals reviewed by the association closed their obstetrics units, leaving pregnant women in rural communities to seek out alternative care. The rise of outpatient care has also crippled rural hospitals already wounded from smaller reimbursement, said Brian Peters, CEO of the Michigan Health and Hospital Association. “Outpatient care creates less revenue than inpatient care,” Peters said. “Large tertiary hospitals have a very robust mix of inpatient and outpatient care. That’s on top of all the transplant, heart surgery and orthopedic services that supplements the losses they see in outpatient care. Smaller hospitals don’t have that luxury, so more outpatient care in their portfolio creates more losses.” Outpatient care has grown from less than 30 percent of hospital revenue nationally in 1996 to at least 50 percent today, according to advisory firm Deloitte. Outpatient services now account for 75 percent to 80 percent of revenue for tweener War Memorial Hospital in Sault Ste. Marie, for instance.

Hillsdale Hospital CEO, J.J. Hodshire is proud of its new hyperbaric chambers used for oxygen therapy for advanced wound care, part of a push to expand profitable services. | PHOTOS BY DALE G. YOUNG/SPECIAL TO CRAIN’S DETROIT BUSINESS

Stephanie Lockwood adjusts the sheets and pillows on Hillsdale Hospital’s new state-of-the-art MRI machine.

Increasingly, providing health care services is less profitable and for large health systems, that’s not a major problem. Large systems like Beaumont, Spectrum and Henry Ford are able to generate massive returns on investments. The money coming in the door is invested and the returns pay down any potential losses. Beaumont, for instance, ended 2020 with $3.49 billion in cash and investments, translating to the system being able to operate for 307.3 days without receiving a single cent of reimbursement. “These systems have a rainy day fund and a mechanism to make it through any troubles,” Peters said. “Smaller independent hospitals don’t have that at their disposal, so if something like surgical volume drops, they can be in a difficult spot just making payroll.”

Join or die All of these issues mean tweener hospitals have been left with few choices for survival. Of the 32 tween-

er hospitals in the state, 27 have merged with larger health systems to pool resources and reduce overhead costs. Joining a large system allows tweener hospitals to enjoy the overall systems negotiating power and cash flow. War Memorial Hospital operated as an independent tweener hospital for more than 100 years before merging with Midland-based MyMichigan Health in December 2021. CEO David Jahn said the hospital simply couldn’t sustain the costs of providing health care any longer. “It’s been a struggle for years,” Jahn said. “We need to serve our community, but we need the financial resources that are needed to do so and we just don’t have them. We were operating day-to-day, week-to-week and month-to-month. We were down to one family doctor and one general surgeon. Then add in the nursing shortage. We just weren’t going to make it.” Jahn also said with dwindling finances, recruitment became even more difficult, compounding the re-

imbursement issue. “We can only afford one or two physicians in a specialty, so that left them on call pretty much 24/7,” Jahn said. “Work-life balance is a real issue in rural hospitals, and that makes recruitment even tougher. They get no relief here. They can get more money and more time off in larger urban areas.” War Memorial merged with Mid-Michigan Health, now known as MyMichigan Health and affiliated with Ann Arbor’s Michigan Medicine, to fill in the financial holes and offer more comprehensive health care services, Jahn said. “From a clinical perspective, we’ll be able to have their resources at our fingertips, instead of having to develop them on our own,” Jahn said. “All of a sudden we have a whole system worth of specialties we can rely on and use their administrative processes and supplier contracts. We can now redirect our focus on patient care and less on administrative burden.” Peters said linking up with a larger system doesn’t eliminate the reimbursement challenges at rural tweener hospitals but it does alleviate some pressures. It’s possible all remaining independent hospitals will have to join larger systems to remain viable, but even then, the risk of closure still exists. “The volume-based approach to reimbursement has always been a problem and that doesn’t go away,” Peters said.

Resistance through investment Hillsdale Hospital is taking a divergent approach for survival, not by cutting services or joining a new system, but by investing heavily in new services. The hospital opened a pain management clinic in February 2021, dedicating an entire floor to the clinic and an advanced wound care and hy-

perbaric medicine clinic in January. “A lot of my colleagues believe the only way to survive is to cut (services),” Hodshire said. “That’s a vicious cycle. Once you send a patient to a larger system, you lose them forever. I want to invest, to keep our patients here. My goal is to keep as many patients here as I can.” To maintain services, Hillsdale is splitting the salary of full-time specialty physicians, such as urologists, with other independent hospitals in the area, like Oaklawn Hospital in Marshall. It has also inked contracts with local prisons to provide health care services. “We have to look at alternative ways to get additional revenue,” Hodshire said. “The rural health model needs to change, but I can’t count on the government to give us a surplus.” Still, the clock is ticking on Hillsdale and the other tweeners. Hillsdale is turning around a 2 percent margin on its $70 million in patient revenue, but that’s largely because Congress has continued a moratorium on Medicare sequestration throughout the pandemic. Starting in 2013, Medicare payments were cut 2 percent as required by the Budget Control Act in an effort to save $1.2 trillion. Congress suspended that cut in 2020 and extended it last year. Sequestration will return to 1 percent at the end of May and back to 2 percent by July, effectively wiping out any margin Hillsdale is currently enjoying. “We do all of this for the community benefit, but if sequestration comes back, we’re going to hurt,” Hodshire said. “We are living on a razor’s edge every day. Every decision I make has a major consequence if I get it wrong. We’re facing down the most difficult time of operations in our history.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

14 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P008_P014_CD_20220228.indd 14

2/25/2022 9:47:37 AM

PEOPLE

Shank has ‘never been more optimistic’ about DEI in finance BY NICK MANES

Celebrating Black History Month: This profile is part of a series of conversations with Detroit-area Black entrepreneurs and business leaders about how they got their start. Visit crainsdetroit.com for more throughout the month of February.

Suzanne Shank began her career in civil engineering, but quickly decided to shift gears and head into finance instead. Now, the Detroit-based president and CEO of Wall Street investment bank Siebert Williams Shank & Co. LLC is celebrating 25 years of the firm, which she’s led since its founding. ` Tell me about the growth of the firm, now 25 years old? The firm has grown dramatically, through either acquisitions or mergers, and just building our brand on Wall Street. Such that we are now among the most active managers of investment grade corporate debt and equity. And we count 74 of the Fortune 100 among our clients. We have participated in over 1,000 corporate debt and equity offerings over the last five years and we have participated in over $2 trillion in municipal transactions. ` Given some of those data points in your career, what stands out as among your proudest accomplishments? We lead with performance and ideas, but I would say we have navigated down markets very well. You know, when I started in the business, we had Black Monday. The next big crisis I saw as president and CEO was the financial crisis, the Great Recession. We actually grew dramatically during that time frame … doubling the size of the firm, because

make the world a better place, and we’ve made substantial contributions from that. And then we also formed the Clear Vision Impact Fund … We just had a second closing round, so we’ve now raised $140 million. Really trying to deploy capital with other minority and women owned companies that could grow at scale, and where they have better access to capital. That funding comes from eight Blue Chip companies (including Microsoft Corp., Apple Inc. and eBay Inc.). Suzanne Shank

many of the bulge bracket firms with who we were competing were laying people off because they were deeply entrenched in the mortgage crisis. We didn’t have that. So, we took advantage of that opportunity to hire talent from many (firms) you would recognize. And we really grew the firm, and in the municipal sector hit the top 10 for the very first time of lead manager of municipal bond offerings nationally. And that was a milestone. The first time a minority-owned firm had done so. ` How has being a minority-owned entity benefited the firm? Through mergers and acquisitions, we

FINANCE

Ann Arbor fintech Plinqit raises $5 million VC round A bank-backed financial technology company has raised a fresh $5 million Series A funding round to further its expansion around personal finance. Ann Arbor-based Plinqit, which has now raised just less than $10 million, acts as a savings platform focused on the millennial demographic, helping “financial institutions connect with this important demographic in a meaningful, relevant way — bringing together digital customers, FIs, and savings in one beautiful place,” according to a news release. “Financial wellness is crucial for all of us in financial services,” Kathleen Craig, founder and CEO of Plinqit, said in the release. “We created Plinqit to help builders create solutions that truly help people in a way that is engaging and rewarding. It was critical for us that it was technology that they would want to use — and they are.” The Series A funding was led by Fintop Capital and Jam Fintop out of Nashville and New York, respectively. Current investors Invest Detroit Ventures and Michigan Rise also participated in the round. “At Fintop, we are committed to in-

` What does that look like? 2020 and 2021 were record years for the firm and we were able to formalize our giving through the formation of a foundation, so that we could target education initiatives, poverty initiatives, and things that we find very important to

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

ENTREPRENEURSHIP Plinqit was launched by Bank Michigan in an effort “to foster deeper relationships with existing customers and attract new ones.”

BY NICK MANES

are now the top (minority-owned) firm in the corporate, bond and equity space. That just gives me a lot of pride, that we’re firing on a number of different cylinders in terms of our, you know, performance and rankings. I think what that means for us is, because of our success, we look at opportunities to give back to the communities that we serve.

` What are you seeing as far as impact from those initiatives? I think it’s to grow more diverseowned businesses, particularly in underserved communities, which will drive employment and just help those communities overall … in terms of their diverse hiring and job training, career development. And we’re doing that not only by providing the (Clear Vision) debt fund — because we didn’t want to take equity from other minority owners, but it’s also providing them, hopefully, procurement opportunities with the blue chip companies (that have invested in the fund), or others with whom we can connect them depending on the scope of products and services that they provide.

` If you had to offer a few words of advice to the financial industry as it continues to make diversity, equity and inclusion a key part of business, what would it be? I have to tell you, I’ve never have been more optimistic about DEI than I am today. I’ve been a huge proponent. Over 55 percent of our staff is diverse, which is rare on Wall Street. And you could hardly discuss it for many, many years. It was almost viewed as a limiting factor, as opposed to an advantage. What I’m seeing now is that corporations have made, not only big announcements about how to engage, but they are definitely leaning in. And it’s gonna take time, it doesn’t happen overnight. But, you know, we are seeing very encouraging data. My best advice to other entrepreneurs is, everyone is doing this. Take advantage of this moment. There are so many different types of capital available to grow at scale. If we don’t get a seat at the table, we can’t really provide any real benefit to clients. We’re not looking for just a check. We want to expand our clients’ investor base.

vesting in the next generation of fintechs that are transforming the way financial institutions and their customers manage and interact with money — and that’s exactly what Plinqit is doing,” John Philpott, general partner at Fintop Capital, said. “They have a proven product that is creating substantial value for our industry. With this partnership, our goal is to further support their mission and help drive even stronger growth.” Plinqit was launched by Bank Michigan out of Brooklyn in Jackson County in 2019, according to a news release. The app was launched by the bank in an effort “to foster deeper relationships with existing customers and attract new ones,” according to a news release at the time. “By expanding its digital offerings to provide a solution that helps its customers build savings, Bank Michigan is helping break the cycle of living paycheck-to-paycheck.” Bank Michigan’s assets have grown from about $106 million at the time the app was launched to nearly $130 million as of September, according to a regulatory filing. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

Ann Arbor startup Yottled seeks to be the back office for small businesses Company targets clients who primarily sell their time BY NICK MANES

With a background running a small landscaping company, an emerging venture by entrepreneur Trevor Hough seeks to be the one-stop shop for a host of functions that small, service-based business owners need to do every day. Hough — previously a product manager at Ann Arbor cybersecurity company Duo Security, now owned by Cisco Systems — founded Yottled LLC in 2020 and seeks to make the company the “Shopify for services,” referring to the Canadian e-commerce company for business owners. The Ann Arbor-based Yottled targets clients in a variety of sectors where the owners “don’t necessarily sell a product, they’re primarily selling their time,” Hough said. Think of fitness and yoga studios, landscapers and janitorial companies. Those types of businesses can spend more than 20 hours per week on functions such as invoicing and scheduling, often done manually, according to Hough. “Our objective and our goal is to help provide them with the back office where we can help consolidate and manage everything for them from payment processing, automated scheduling, marketing,” Hough told Crain’s in an interview. “So the primary thing that we’re focused on is the simplicity and ease of use for small businesses,” Hough said. “So they don’t have to worry about

“SO THE PRIMARY THING THAT WE’RE FOCUSED ON IS THE SIMPLICITY AND EASE OF USE FOR SMALL BUSINESSES. SO THEY DON’T HAVE TO WORRY ABOUT ANY OF THE HARD TECHNOLOGY ASPECTS. ” — Trevor Hough

any of the hard technology aspects. They can just come on and get everything they need all in one place, so they can focus on what they actually want to do, which is delighting their customers and earning more business.” As the company seeks to grow its business, Hough said Yottled has recently closed on $1.55 million in seed venture capital funding. The investment was led by Houston VC firm Mercury Fund, and included participation from M25 Ventures, Invest Detroit Ventures and Red Cedar Ventures. Mercury Fund has sought to target investment toward service-focused technology for small and medium-size businesses, said Adrian Fortino, the fund’s Ann Arbor-based managing director, making Yottled a perfect fit. “We saw a lot of companies taking a vertical approach such as focusing on just yoga/workout or contractor businesses,” Fortino wrote to Crain’s in a text message. “Yottled was the first company who effectively tackled the market with a horizontal strategy. The

combination of that strategy with two best-in-class product founders in Trevor and (co-founder) Will (Guedes) made the decision to lead this round very clear.” The investment capital will help Yottled focus on engineering, Hough said. The founder declined to provide an annual revenue figure, but said the software costs users $200 per month plus $10 per employee, and added that the company has a “few thousand” businesses using the platform. The goal, Hough said, is to make the Yottled software as simple as possible, which makes new customer acquisition a far easier task. That focus comes from Hough’s time at Duo Security, and what the entrepreneur learned from the founders of that company, Dug Song and Jon Oberheide. “Our main point of value — and I tap on what I learned from Dug and Jon at Duo Security — is simplicity and ease of use rules all,” Hough said. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

FEBRUARY 28, 2022 | CRAIN’S DETROIT BUSINESS | 15

P015_CD_20220228.indd 15

2/25/2022 9:49:30 AM

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

ENGINEERING / DESIGN

HEALTHCARE / INSURANCE

NONPROFITS

Hubbell, Roth & Clark, Inc.

Lockton Companies

Orchards Children’s Services

Hubbell, Roth & Clark, Inc. (HRC) is pleased to announce the appointment of Thomas Maxwell, PE, to the HRC Board of Directors effective January 1, 2022. Mr. Maxwell, Vice President, will strengthen and improve the capacity of the Board with his diverse background in the water and wastewater sector, specifically with his vast expertise in heavy construction of large multidiscipline projects. He has over 35 years of experience providing highly regarded infrastructure design and management.

Lockton Companies has hired Rob Vogelei as Vice President in Michigan. Vogelei will partner with clients to design and manage comprehensive benefits plans. He brings nearly 20 years of experience, most recently as Partner with Cambridge Benefits Consulting/NFP. Outside of work, he has worked with charitable organizations such as Homes for Autism and The Michigan Autism Alliance. He resides in Clarkston with his wife and four children.

Dr. Tana Bridge is a professor of Social Work at Eastern Michigan University. Her advanced studies include a Master of Bridge Social Work from the University of Michigan and a Doctorate in Philosophy in Evaluation and Research from Wayne State University. She has a 25-year track record of excellence in teaching, mentorship and service. Emily Snow is the Regional Vice President at Enterprise Holdings overseeing the Snow Southeast Michigan market since 2020. After graduating from the University of Maryland, majoring in Spanish and International Business, she joined Enterprise as a Management Trainee in the New York market in 2005. She also served in leadership roles in Florida and the Corporate office. Dr. Bridge & Emily joined the board in January.

FINANCIAL SERVICES

Hilco Global Hilco Global is pleased to announce the addition of Rob Wilson to the advisory solutions team. Mr. Wilson will serve as a Senior Director at Hilco Performance Solutions in the metropolitan Detroit area, based in Madison Heights, MI. Mr. Wilson will leverage his considerable experience to help Hilco Global continue to grow their client advisory services for both Hilco Performance Solutions and Getzler Henrich in addition to supporting Hilco Commercial Industrial in this key midwestern market.

INSURANCE / BROKERAGE

Hylant Hylant recently announced the promotion of Jack Miller to the position of Market President of its Detroit office. He will focus on increasing Hylant’s growth and brand recognition in Metro Detroit and surrounding areas. Miller formerly was a successful sales executive for Hylant, which is one of the largest privately held insurance brokerages in the United States.

COMPANIES ON THE MOVE

ANNIVERSARIES / MILESTONES

Brieden Consulting Group Grosse Pointe, MI 313-447-0900 www.briedencg.com Brieden Consulting Group is celebrating NINE years in business as an emerging leader in the healthcare industry and a trusted partner in the Metro Detroit area. It has been their trademark from the beginning to provide clients with tailored benefit plans and attention to detail - all made possible by their unmatched industry experience and dedicated employees. BCG thanks everyone for their continued support and guidance over the years and encourages you to visit www.briedencg.com to learn more!

NEW GIG? Preserve your career change for years to come.

Plaques • Crystal keepsakes Frames • Other Promotional Items

Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

SHARE YOUR COMPANY’S JOURNEY

Feature your latest milestones, launches, partnerships, awards and more in Crain’s

NONPROFITS

Autism Alliance of Michigan FINANCIAL SERVICES

Stifel Nicolaus Howard Margolis, AIF®, CTFA has joined Stifel’s Southfield office as Senior Vice President/Investments and Portfolio Manager – Solutions Program. A financial advisor since 1987, he helps his clients pursue their financial goals by building customized, agile plans designed to help them grow, manage, and protect their wealth. He is a Michigan State University graduate and holds the Accredited Investment Fiduciary® and Certified Trust and Fiduciary Advisor designations. Visit: howard. margolis@stifel.com.

David Meador retires as vice chairman and chief administrative officer of DTE Energy this March. He oversaw DTE’s I.T., procurement, fleet, facilities, corporate communications, government, corporate & public affairs, and philanthropic giving. He joined DTE Energy in 1997 as vice president and controller. Meador will continue as an executive committee member of the Detroit Economic Growth Corporation and as chair of the Board of Trustees for the Autism Alliance of Michigan, which he co-founded.

16 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

ADVERTISING SECTION

To place your listing, visit www.detroitbusiness.com/companymoves or contact Debora Stein at 917.226.5470 / dstein@crain.com

C O N TAC T

PEOPLE ON THE MOVE

Advertising Section

For more information, contact Debora Stein at dstein@crain.com or submit directly to

CRAINSDETROIT.COM/COMPANYMOVES

MERGERS & ACQUISITIONS

Jax Kar Wash expanding with Birmingham private equity stake BY KIRK PINHO

A Birmingham-based private equity firm is taking an ownership stake in Southfield-based Jax Kar Wash to fuel the company’s expansion, Crain’s has learned. Jason Milen, CEO and third-generation owner of the 69-year-old company, said TRP Capital Partners planned to close on its equity stake on Monday, but declined to specify the ownership percentages of the two firms after the deal finalizes. “The Milens continue to look forward to serving our community,” he said. But a source familiar with the matter said TRP Capital is taking an unspecified majority ownership position, and that the deal includes $40 million to $45 million for the car wash real estate, which would be sold to an unspecified real estate investment trust. The total deal value is not known. An email sent to David Mitchell, CEO of TRP Capital Partners, was not answered. There are nine Jax Kar Wash locations in Oakland and Macomb counties, and the business employs about 320 full- and part-time employees, Milen said. All nine locations are owned by Jax, although he declined to discuss the future ownership of those properties. He did say that TRP Capital’s investment will help fund an expansion that includes one known new location — a new ground-up construction car wash at 11 Mile and Greenfield roads in Oak Park — but declined to say how many new locations overall are planned. They would be a mix of new construction and acquisition and conversion of other car washes into new Jax locations. He said there were “some (letters of intent)” on other locations but de-

CRAIN’S AWARDS

Crain’s seeks to recognize transformative HR leaders Over the past two years, human resources leaders and departments have navigated unprecedented change and uncharted challenges in the workplace. Crain’s seeks to recognize the HR leaders and teams that have met the moment with gusto and made a difference for their people and their business. Nominations for our annual Excellence in HR Awards are now open in the following categories: ` Overall Excellence / HR Team of the Year ` Managing Change ` Employee Experience ` Diversity and Inclusion ` Finding and Growing Talent Winners will be featured in a June 20 special section of Crain’s Detroit Business. For complete eligibility criteria or to submit a nomination, go to crainsdetroit.com/nominate. The deadline is March 11. Questions? Contact Special Projects Editor Amy Bragg: abragg@ crain.com.

clined to specify where. Jason Milen said he is continuing as CEO of the company after the TRP deal and that his father, Bruce, the second generation of ownership, will continue as a consultant. Jack Milen, Bruce Milen’s father, opened the first Jax Kar Wash in 1953 at 6 Mile and Meyers in Detroit, according to the company’s history posted on its website, growing at one point to 11 locations. In 1998, Jack Milen sold the company to Saugus, Mass.-based Wash Depot Holdings Inc., which sought to build a national car wash chain but

Jax Kar Wash in Southfield. | MICHAEL

failed and filed for Chapter 11 bankruptcy protection in October 2001 with more than $132 million in debt. Under Wash Depot ownership, service suffered and the company’s reputation suffered a black eye, Crain’s reported in 2002. The Milens were able to buy back Jax. The International Carwash Association says it’s about a $15 billion industry in North America and that there are some 62,700 car washes in the U.S.

LEE/CRAIN’S DETROIT BUSINESS

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

Advertising Section

CLASSIFIEDS

To place your listing, contact Suzanne Janik at 313-446-0455 or sjanik@crain.com

MARKET PLACE REQUEST FOR BIDS Requests for Proposals are being accepted for: Career Center Services 2022 Response Due: March 7, 2022

Issued: February 7, 2022

TAA / RESEA Services 2022 Response Due: March 7, 2022

Issued: February 7, 2022

WIOA Year-Round Youth Services 2022 Response Due: March 28, 2022 Issued: February 18, 2022 The Mayor’s Workforce Development Board (MWDB) is directly responsible and accountable to the State of Michigan, Labor and Economic Opportunity-Workforce Development (LEO-WD) for the planning and oversight of talent development programs in the City of Detroit. Designated by the MWDB, Detroit Employment Solutions Corporation (DESC) serves as the fiscal and administrative entity that provides workforce services to job seekers and employers. DESC’s primary funding streams include Workforce Innovation and Opportunity Act (WIOA), Temporary Assistance to Needy Families (TANF) that funds Michigan’s PATH (Partnership. Accountability. Training. Hope.) employment program, Food Assistance Employment and Training (FAE&T), Wagner-Peyser Employment Services (ES), and other public and private funding. The Corporation enters into contracts with qualified entities to provide workforce development programs and services to job seekers and employers. American Rescue Plan Act (ARPA) and Center for Disease Control Foundation (CDC) funding may support contracts resulting from competitive bid process. DESC is seeking proposals from qualified individuals, organizations and/or firms.

Bid package for this RFP is available for download at this DESC website: https://www.descmiworks.com/opportunities/rfps-and-rfqs/. Mayor’s Workforce Development Board Cynthia J. Pasky, Co-Chairperson David E. Meador, Co-Chairperson

Detroit Employment Solutions Corporation Board Calvin Sharp, Chairperson Detroit Employment Solutions Corporation Terri Weems, President

An equal opportunity employer/program. Supported by the State of Michigan, Labor and Economic Development, Workforce Development (LEO/WD). Auxiliary aids and services available upon request to individuals with disabilities. 1-800-285-WORK. TTY: 711.

JOB FRONT POSITION AVAILABLE

Embedded Software Engineer,

Flex-N-Gate Advanced Product Development, LLC, Allen Park, MI. Devlop real-time embedded software & sys architecture. Req. Master’s deg or foreign equiv deg in Electrical Engg, Comp Sci or rel. field + 2 yrs rel. work exp. Any suitable comb. of exp of ed, training, or exp is acceptable. Travel up to 5% req. To apply, please email resume to: MITCresumes@flexngate.com and reference: MI0007

SUBMIT YOUR AD TODAY

POSITION AVAILABLE

Manager, Data & Analytics Technology (Mult Pos),

PricewaterhouseCoopers Advisory Services LLC, Detroit, MI. Assist clnts uncover enterprise insight & drive business rslts thru smarter data anlytcs. Req. Bach’s deg or foreign equiv. in Comp Sci, Info Mgmt, Engg, or rel. + 5 yrs post-bach’s progrssv rel work exp; OR a Master’s deg or foreign equiv. in Comp Sci, Info Mgmt, Engg, or rel. + 3 yrs rel. work exp. Travel up to 80% req. Apply by mail, referencing Job Code MI3267, Attn: HR SSC/Talent Management, 4040 W. Boy Scout Blvd, Tampa, FL 33607.

REQUEST FOR BIDS

The Detroit-Wayne Joint Building Authority the owner and manager of the two-tower 745,000 square foot Coleman A. Young Municipal Center (CAYMC) located at 2 Woodward Avenue, Detroit, Michigan 48226. Anticipates issuing a series of RFPs for various building services and supplies. If you are interested in receiving an RFP, please send your request to commissioners@dwjba.com please include the Service or Supply RFP you would like to receive. Professional Services: • Property Management • Architectural and Engineering (mechanical, civil, structural, space planning, landscape, ADA, etc.) • Legal • Insurance • Accounting and Finance • Public Relations Building Standard Services: • Security Guard Service • Janitorial Service • Landscaping/Snow Removal • Pest Control • Plumbing • Electrical • Carpentry

Maintenance Services: • Painting • Glass/Glazing • Roofing • Carpet and Tile • Window Treatment • Asbestos Abatement • Marble Maintenance • Moving/Relocation Supplies: • Janitorial Supplies • Office Supplies • Miscellaneous Supplies (tools, ladders, PPE, etc.) • Signage/Graphics • Keys and Locks • AHU Filters • Lighting Supplies

www.crainsdetroit.com/classifieds

POSITION AVAILABLE

RETIREMENT SYSTEM OF THE CITY OF DETROIT 500 Woodward Ave, Suite 3000 Detroit, Michigan 48226 Job Title: Deputy Chief Investment Officer (Salary commensurate with experience)

Description: Reporting directly to the Chief Investment Officer (“CIO”), the Deputy Chief Investment Officer (“Deputy CIO”) is responsible for managing and evaluating the Fixed Income and Alternative Investment Programs in accordance with the Investment Policy Statement and applicable federal and state laws and regulations. The Deputy CIO is also responsible for the monitoring and due diligence of the Equity and Real Estate portfolios and providing the Investment Committee, Executive Director and Board expert investment advice and recommendations regarding all investment matters. Refer to the website at www.rscd.org for the full job description. If you are interested in this career opportunity, submit a cover letter and resume to jobs@rscd.org. POSITION AVAILABLE

RETIREMENT SYSTEM OF THE CITY OF DETROIT

500 Woodward Ave, Suite 3000 Detroit, Michigan 48226 Job Title: Financial Analyst 2 Salary Range $56,529 - $75,870

Description: The position requires a working knowledge of an institutional investment management platform and its various operational related requirements to support the Investment Office in achieving its investment and strategic goals. The Financial Analyst 2 will report to the Chief Investment Officer (“CIO”) and work closely with other senior investment/accounting professionals across the organization to develop key initiatives, establish priorities, create project management plans, and supervise the progress in achieving these goals. The candidate must be able to coordinate activities with internal and external resources as required. Additionally, the candidate will be involved in the ongoing monitoring and due diligence of the investment portfolios. Refer to the website at www.rscd.org for the full job description. If you are interested in this career opportunity, submit a cover letter and resume to jobs@rscd.org. FEBRUARY MAY 24, 28, 2021 2022 | CRAIN’S DETROIT BUSINESS | 17

P017_CD_20220228.indd 17

2/25/2022 2:46:43 PM

MORTGAGE

From Page 3

In 2020 and 2021, refinancing deals made up 64 percent and 57 percent, respectively, of total mortgage originations, according to data from the Mortgage Bankers Association. That figure is projected to fall to 33 percent this year and 27 percent next year, according to the MBA.

A time of change To put the rising rates into perspective, mortgage broker Michael Fick, president and CEO of Superior Home Lending LLC in Farmington Hills, said he began pricing out a loan for a potential client in early December. At the time, rates were below 3 percent, and have since jumped a full percent. That means it would cost the buyer around $150 more each month in a mortgage payment. “That’s big,” Fick said, noting that it might cause some buyers to switch from a conventional mortgage to an FHA loan, which typically comes with a lower down payment. A gauge of U.S. home loan applications fell last week to its lowest level since the end of 2019, indicating higher mortgage rates are becoming a greater headwind for the housing market. The Mortgage Bankers Association’s index slumped 13.1 percent in the week ended Feb. 18 to 466.4, the Washington-based group said Wednesday. But given demand for housing, some aren’t so sure that an uptick in interest rates will be the defining factor that deters would-be buyers who would need new mortgage loans. Interest rates still remain at rela-

SCIENCE

From Page 3

liaison between the staff and the CEO, ensuring everyone is connected and projects are running smoothly, Greer said. It also hired a new director of corporate and foundation relations last week and announced the November hire of a new chief development officer, after hiring a new program manager for camps and bringing on a contract events manager who has booked six or more facility rentals heading into 2022, he said. The new hires fill some of the gaps left by staff departures, putting people in place to enhance earned revenue, lead fundraising efforts and support operations and bring the center back up to 32 employees, about half full time. Greer said he plans to hire another six or seven employees to fill vacancies in individual giving, membership and events and operations, among other areas. That will bring it to nearly 40 employees, down from about 50 before COVID. “It’s been tough...looking around to try to get folks that...want to move and bring their talents,” he said.

Events and admissions The center’s earned revenue from admissions, store sales and event rentals continued to take a hit last year with fewer visitors amid the ongoing pandemic. The science center was also forced to close for several months after heavy rains last summer led to flooding from what it said were sewer backups. While its IMAX theater — a signif-

tive historic lows, according to the Federal Home Loan Mortgage Corp., commonly known as Freddie Mac, a publicly traded, government-sponsored enterprise. “There’s an increase in monthly obligation to be sure,” Ross said. “(But) because these rates are historically low — what we would call ‘cheap money’ — I don’t see the rate holding many people out of the market.” To that end, Carol Trowell, a real estate broker with DuPont & Associates in Detroit, said the reason buyers remain active as inventory stays low is clear: “The interest rates, the interest rates, the interest rates.” “Who would have expected interest rates like what we have now?” she asked. “It’s crazy.” Additionally, the relatively low interest rates mean potential buyers can get more home than they might have otherwise. It’s keeping them in the market before rates go up. And Darralyn Bowers, a broker with Bowers Realty & Investments in Southfield, said her buyers are also looking to take advantage of low rates before they rise more. “This is the time to buy as much house as you can,” she said. “It’s a window of opportunity.”

Impact for lenders Southeast Michigan has become a hub for non-bank mortgage originators, as companies including Detroit-based Rocket Mortgage and United Wholesale Mortgage in Pontiac have become among the largest players in the space. Their stock performances, however, have been lackluster as investors have taken issue with the cyclical nature of the business. icant draw for patrons — remained shuttered as of last week, the center has reopened more than 90 percent of its spaces after remediation, Greer said. Another improvement: Attendance has risen partially due to the return of school groups and families coming on weekends. Attendance doubled from January 2021 to 2022, Greer said, without providing specific numbers. “And we expect to see that trend continue as patterns of daily life return to normal.” Greer is also optimistic several programs and initiatives will help spur paying visitors and facility rentals, including: ` The IMAX documentary, “Volcanoes: The Fires of Creation” in its Toyota Engineering 4D Theater. ` Early learning programs in development with Lego. ` The Math Alive! exhibit that brings to life the real math behind video games, sports, fashion, music and robotics through interactive and experiences. ` A summer day-camp for teenagers focused on data as a 21st century job skill in development with the University of Michigan. Greer said he’s projecting a $4.6 million budget this year, up from $3.3 million last year and $4.2 million in 2019. He declined any comment on how the center ended last year financially, following its reported operating loss of just over $96,000 in 2020. The center’s increased budget this year reflects rising compensation costs for employees, increased costs of supplies and services and increased heating, ventilation and air conditioning and sanitization costs

Farn

GETTY IMAGES/ISTOCKPHOTO

Indeed, on Tuesday, analyst Mihir Bhatia with Bank of America, penned a note downgrading the stock of Rocket Mortgage parent company Rocket Companies Inc. (NYSE: RKT), which was trading at record lows, and maintaining a generally unfavorable perspective on Ann Arbor-based Home Point Capital Inc. (NASDAQ: HMPT). “We remain cautious on mortgage originators given the challenging rate backdrop,” Bhatia wrote in the note. Of Rocket specifically, the analyst wrote: “While we admire (Rocket’s) best-in-class technology platform and its strong retail franchise, which

As it looks to come back from the pandemic, the center is focused on continuing to innovate. | MICHIGAN SCIENCE CENTER

in the wake of COVID, he said. A $200,000 permanent, general operating grant each year from the Ralph C. Wilson Jr. Foundation made as part of a $100 million commitment to create permanent endowment for arts organizations is helping to offset those COVID-related operating increases, Greer said. Amid the revenue and staffing challenges, the Philadelphia Indemnity Insurance Co. filed suit in U.S. Eastern District Court in October,

we think offers better margin protection than peers, near-term results will be impacted by the hostile market backdrop. And while (Rocket) continues to build its non-mortgage businesses, including the recent Truebill acquisition, near-term results will be driven by the mortgage business where (Rocket) has a particularly strong refinance franchise.” Rocket and Home Point reported earnings Thursday, both seeing a sharp drop-off in profits in 2021 though still making money, with Rocket especially remaining highly profitable by any measure other than Wall Street’s.

fighting the science center’s insurance claims tied to water damage on its lower level following heavy rains in June and July last year. PIIC is arguing that the center’s claims for reimbursement for water damages and associated loss of revenue are not covered and is asking the court to rule if the claims, which “greatly exceed $75,000” are covered. “MiSci did maintain insurance coverage for the back up incidents, but unfortunately, MiSci’s insurer is contesting its coverage in court with MiSci and other Detroit-area cultural institutions,” the science center said in an emailed statement.

Rocket reported a 35 percent drop in net income in 2021 from 2020, earning $6.1 billion on revenue of $12.9 billion in 2021. Despite the company remaining flush with cash, its stock price has continued to slide on a poor outlook for the mortgage sector. Since its IPO, shares of Rocket Companies are down more than 53 percent to $11.56 as of close of trading Thursday, marking its lowest stock price so far. “Heading into 2022, we see tremendous opportunity,” Rocket CEO Jay Farner said Thursday. “With robust purchase and cash-out refinance demand, we view the chal-

“MiSci hopes to reach an amicable resolution but is confident in its legal positions and will not further comment on pending litigation,” the center said.

A flexible framework As it looks to come back from the pandemic, the center is focused on continuing to innovate, Greer said, as it has done over the past two years with programs like the Ford Autonomous Vehicle Exhibit and AMES room with forced, physical perspectives in 2020, the new, permanent “Earth. Wind. Weather.” exhibit that

18 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P018_P019_CD_20220228.indd 18

2/25/2022 2:35:51 PM

leng risin tuni “Th inve off. pan bran like H note leng on i low the con cult “W for t on a buil bus H cent from reve U qua D Wal mor con E lowe gage outs ed t

ope year low the In nue pac and A proa “I get con Obv star thin In the the “ext wor thin noti wor “W mul pivo spo a tre we fram plan H der whe wha and wha port “I thin our “I pen a sl selv we

drop 020, e of

ning has ook PO, are 1.56 ark-

treCEO rorefihal-

ican its ther the

the d on aid, ears noMES pecnent that

Farner

Newman

lenging market conditions, like a rising rate environment, as an opportunity to shine. “This is the time when we see our investments in our platform truly pay off. We don’t believe any other company has invested in technology, in brand, in people, in partnerships, like we have.” Home Point CEO Willie Newman noted Thursday that the most challenging part of the mortgage cycle is on its way as housing supply remains low and interest rates rise. He said the company is positioning itself to continue to profit in the more difficult environment. “We strategically built the business for this type of cycle,” Newman said on an investor call. “We continue to build on the strengths of our flexible business model.” Home Point reported a 72.6 percent decrease in net income in 2021 from 2020, earning $166.3 million on revenue of $961.5 million for the year. UWM will report its 2021 and quarterly performance Tuesday. Despite general displeasure from Wall Street, there is a bright spot for mortgage lenders: the likelihood of continued profits. Even amid rising interest rates and lower production volumes, the Mortgage Bankers Association projects outstanding mortgage debt is expected to grow from just less than $11.6 opened at the science center last year and telepresence robots that allowed people near and far to explore the center’s galleries virtually. In its bid to increase earned revenue, it will also look to create more packaged experiences for field trips and event rentals, he said. And it will keep its operating approach “flexible.” “In 2020, we had funds in the budget to help get support through a consultant to create a strategic plan. Obviously, when the pandemic started, that was one of the first things that was cut,” Greer said. In lieu of a strategic plan to guide the center years out, he presented the science center’s board with an “extremely agile and flexible” framework with more general ideas of things the center should try, he said, noting the framework has been working. “We learned, over the past two tumultuous years, that being able to pivot on a dime to aggressively respond to the changing landscape is a tremendous advantage. This is why we are working from a strategic framework rather than a strategic plan,” Greer said. He didn’t share specific goals under the framework but said that where a strategic plan describes what the organization is going to do and when, a framework outlines what it might do or can do when opportunities present themselves. “In other words, we try to avoid thinking that in this ‘new normal,’ our plans will hold up,” Greer said. “Instead, we focus on the indispensable value of planning...create a slate of creative options for ourselves, (and) as the future unfolds, we activate the preferred options.

trillion this year, to more than $13.7 trillion by 2024. Workforce impact Meanwhile, some of the home mortgage lenders that have spent much of the last two years hiring now might have to spend the coming months laying off workers. The number of people working as brokers for mortgages and other kinds of loans, a proxy for total home lending employment, has surged more than 50 percent to around 130,000 since late 2019, according to the U.S. Bureau of Labor Statistics. That’s right around the highest level since early 2006, just before the financial crisis. While some employees can be shunted from handling refinancings into other parts of the mortgage business, such as making loans for home purchases, layoffs in the industry are inevitable, said Jeff DerGurahian, chief capital markets officer at LoanDepot Inc., one of the largest lenders to consumers outside of the banking sector in the U.S. “With rates moving higher, capacity is going to be adjusted across the entire industry,” DerGurahian said. Some lenders have already begun to cut back. Home Point Capital laid off nearly 10 percent of its workforce mid2021, but reported Thursday that it added 500 in the fourth quarter and has no plans for additional cuts. Better.com, an online mortgage lender, fired around 900 workers in December during an infamous video conference call. — Crain’s Detroit Business Senior Reporter Dustin Walsh and Bloomberg contributed to this report. Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes This method allows us to innovate regardless of the circumstances. We believe that we have perfected this technique over the past two years and it has been very effective for us.” Thomas Stephens, a retired General Motors Co. executive who chairs the science center's board, could not be reached for comment. A strategic plan, traditionally a best practice for nonprofits, signals a high level of board engagement and leadership and provides a way to hold a nonprofit accountable to its goals and mission, said Gerry Lindman, who has taught nonprofit management at Lawrence Technological University and Michigan State University and currently is teaching nonprofit leadership as a visiting professor at MSU. “Strategic planning is one of the most intensive board-level activities where (board members) deliberate on the current and future situations for the organization and develop a multi-year plan.” Those long-term plans provide direction and are especially important during times of crisis and transition, he said. They enable organizations to check back against strategic objectives to see how they are doing. “That builds in accountability and direction and leadership for the organization,” Lindman said. But these are unprecedented times, he said, with nonprofits trying to figure out the new normal and increased need for innovation. “The pandemic is unprecedented in what it’s done. We need to figure out a way to come out of it,” Lindman said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Automotive companies in Michigan like Tenneco have become more accustomed to shakeups in recent years as M&A activity remains red hot in an industry rocked by volatility and the race for electric dominance. | TENNECO

TAKEOVERS

From Page 3

Meritor deal Meritor will serve as the foundation for Cummins’ ambitious goals for electrification, Amy Davis, vice president of Cummins and president of its new power segment, told Crain’s in an interview. Meritor told its 10,000 employees, including 800 at its Troy headquarters, that business would continue as usual until the end of the year, when the acquisition is expected to close. Once under Cummins’ control, the company will be cut up, as it has multiple times over the decades. Its legacy components business will be integrated into Cummins’ components segment, headed by Mahesh Narang, while its e-axle will be put under Cummins’ New Power Business segment, overseen by Davis. “Our strategy at Cummins has been to put together the portfolio that makes us a system integrator of a full electrified powertrain, whether it be battery electric or fuel cell electric, and a components supplier,” Davis said. “So, we want to be both.” Cummins, known for powerful diesel engines, has invested $1 billion in electrification over the past few years and expects to incur another $1.3 billion in losses related to electric sales and R&D before 2027, the company said during an analyst event this week. It remains to be seen how exactly the takeover will impact Meritor’s 500,000-square-foot base in Troy, which houses executive offices, administrative functions, its Global Technical Center and testing labs. “We absolutely see SG&A (selling, general and administrative) synergies across the two businesses so that the combined business will be smaller than the two as they are today — but how, which combination thereof, it’s too early,” Davis said. “We haven’t even fully set out on that work yet.” Meritor declined to make executives available to interview. “While this transaction will provide enhanced opportunities for most employees, Cummins expects there will be some synergies and will communicate this openly and transparently with relevant employees and stakeholders when that time arises,” Meritor President and CEO Chris Villavarayan said in a letter to employees obtained by Crain’s. Meritor has “not discussed or made any decisions on Troy headquarters,” according to a document it filed with the Securities and

Davis

Exchange Commission after Tuesday’s announcement. The acquisition “will not affect the vast majority of employees” but there will be “some overlapping functions

and positions.” Davis said it has not been decided what will happen to Meritor executives. The supplier has roots tracing back over a century, but its automotive headquarters in Troy was established in 1975. The company became Meritor in 1997 when Rockwell International spun off its auto business. In 2000, it became ArvinMeritor after a merger with Arvin Industries, only to revert to the Meritor moniker after divesting its light vehicle business in 2011. The supplier has regained strength since being crippled by the Great Recession, although the COVID-19 pandemic also dealt financial blows. The company also appears to be recovering from recent volatility in truck production, posting $113 million in adjusted earnings in the first quarter of fiscal year 2022 on sales of $984 million, an 11 percent yearover-year increase on both counts. Meritor (NYSE: MTOR) stock shot up 45 percent after the acquisition announcement to $35.72 as markets closed Thursday. “I don’t want to say easily predicted, but you’re seeing really good companies coming together out of necessity for capital to invest in new technology,” said Steven Wybo, senior restructuring and management consultant at Birmingham-based Riveron. “One plus one equals three when you put good companies together.” A product of multiple M&A and investment deals, Cummins’ growing electrification footprint is spread around North America. Davis said she recognizes the benefits of potentially establishing Cummins’ electric business base in metro Detroit. “I am very open to considering Troy just because of the sheer amount of vehicle innovation that happens there, and the talent available,” she said.

Tenneco deal Tenneco’s deal to go private marks the end of a long public run for the auto parts supplier that climaxed with the $5.4 billion acquisition of Southfield-based Federal-Mogul

and hit a low point shortly after when board and investor divisions doomed a plan to split the company in two. Second time’s the charm for Apollo, which unsuccessfully bid $4.3 billion for Tenneco’s power train unit two years ago. The deal this time around includes $1.6 billion in equity, with an enterprise value of $7.1 billion. Tenneco has around 3,500 employees in Michigan, spread throughout Southfield, Plymouth Township, Ann Arbor, Lansing, Grass Lake, Marshall, Litchfield, Greenville and Sparta, the company confirmed. Apollo on Wednesday said it agreed to pay Tenneco shareholders $20 per share, for a 100 percent premium over Tenneco’s closing stock price of $9.98 as of Feb. 22. “To me, that’s a value play,” Wybo said. “A big sponsor like Apollo looks at an opportunity like Tenneco, which in their mind is undervalued. It’s been trading low for some time, seems like they’ve always been in this flux. PE firms jump into opportunities when they believe that there is going to be a better day.” Amid cost-cutting measures, Tenneco scrapped plans in 2020 to consolidate employees to a new building in Northville Township. The supplier has had plenty of financial ups and downs over the decades and has struggled under the debt load from its Federal-Mogul purchase. In the fourth quarter of 2021, Tenneco took a net loss of $35 million, tanking 120 percent from the same point last year, while revenue was down 6 percent year over year. Its roughly $5 billion in long-term debt remained virtually unchanged from a year ago. “Tenneco has been struggling for years with their portfolio of products,” CAR’s Bailo said. “They’ve been trying to invest in new technologies, but their balance sheet is getting more and more negative.” Tenneco said the Apollo acquisition will allow it to “execute our global strategy in the evolving mobility landscape.” Like with Meritor, Tenneco’s message is business as usual until the deal closes in the second half of this year. “This transaction is about creating an even stronger business that we expect will result in exciting career development opportunities for many team members,” Tenneco said in an SEC filing. Tenneco and Apollo declined requests for comment beyond the news release about the acquisition. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

FEBRUARY 28, 2022 | CRAIN’S DETROIT BUSINESS | 19

P018_P019_CD_20220228.indd 19

2/25/2022 2:36:03 PM

VACANT

From Page 1

“To see re-occupancy at that scale is definitely not something that I’ve seen before,” said Alex Alsup, the senior director of housing stability at Rocket Community Fund, who researched the postal service data. “This is a different magnitude. And certainly, it seems to be concentrated in new geographies than what we’ve seen over the last 10 years.” People had long been fixing up empty houses in neighborhoods like Bagley and Morningside, Alsup said — and they continue to — but they are now moving into areas that haven’t historically seen much investment. The newly occupied properties aren’t in any one part of the city; they go from Boynton in the city’s southwest side to Brightmoor in the northwest; and from Regent Park through Cornerstone Village on Detroit’s east side. The number of newly occupied residences in the city center is more sparse than other parts of Detroit, but there is no singular part of town where the homes are focused. The Detroit Land Bank Authority’s analysis of postal service data from a slightly different time frame — homes that were empty in February 2020 and occupied in December 2021 — shows that agency is responsible for more than a third of about 8,000 residences that the postal service shows as having been reoccupied then. The interest in land bank homes was growing before the start of the coronavirus pandemic — 2,185 homes were sold in 2019, a 50 percent increase over the 1,455 that sold in 2018 — but the numbers spiked even higher in recent years. The land bank sold 3,127 properties in 2020, more than any other year, and 2,984 properties in 2021. The sales prices for homes sold at auction is up 24 percent from the 2020 fiscal year to an average of $7,262, and those sold through the land bank’s Own It Now program have risen nearly 97 percent over the same period, with a current average sales price of $2,812. Homes sold through the Rehabbed & Ready program now go for an average of $152,800, a 23 percent increase from before the pandemic. Rob Linn, the land bank’s inventory director, said the trend of people buying vacant properties to fix up or live in has been a “really wonderful change.” Most of the vacant homes that were on the market at the beginning of the pandemic just vanished, he said. “It’s a remarkable decline,” Linn said. “People are voting with their feet.”

More money, more time Why the spike in both residents and sales? The tight housing market has a role in the trend, but so does the pandemic, experts at the Center for Community Progress said. Janell O’Keefe, the senior program officer of Michigan initiatives, said she thought people had more time on their hands and more money in their pockets, with stimulus programs that sought to keep the economy from cratering as the coronavirus surged. That made it easier to work on a home, even as prices spiked for lumber and other supplies. And the ability to work remotely, coupled with people’s shifting needs from their living spaces, may have made people more interested in buying or renting a house in the city, said Payton Heins, the center’s director of Michigan initiatives. “There are a lot of things that are happening to contribute to the uptick

A home on Cheyenne Street shown on Google Maps in June 2019 as an abandoned structure and in April 2021 as a fixed up occupied house. | PHOTOS BY GOOGLE MAPS VIA ALEX ALSUP

Nicole Wyse, the associate director of the community development division in Detroit’s Housing and Revitalization Department, said the city has home repair loans and grants among other tools to ensure residents have the funds necessary to keep up and stay in their homes. In recent years, the amount of money available for lead remediation and other repairs has gone up significantly. Keeping Detroit residents from being displaced is “something we take pretty seriously,” Wyse said. “We want to see those neighborhoods restored,” she said. “Hopefully, our resources are there to help them do that.”

‘People are seeing hope’

An abandoned home on Gallagher Street in August 2019 is now a renovated and occupied home.

Decrepit in June 2019, this Kentucky Street home was renovated and occupied by March 2021.

in sales,” she said. “It’s significant, but it’s consistent with other things that are happening around the country at this time.” Some people may have moved into the city after being priced out of the suburbs, said Esmat Ishag-Osman, the lead research associate for the Detroit bureau of the Citizens Research Council of Michigan. Others who have access to capital might have been drawn to the relatively affordable for-sale homes with the knowledge that they can make money on their investment. Developers and others say the math works now with rising home values in a way it simply didn’t before. “Now that they’re seeing homes appraising, if they’re sitting on it, they’re renovating it,” said Gustaf Andreasen, a Realtor with Nika & Co. Real Estate. “Even the vacant houses have increased in value.” Low housing inventory makes it much harder to find a home, Andreasen said — even a vacant one. And since prices are only rising, he said those who have contemplated fixing up a house have been jumping in, before it’s too late. Jon Zemke has rehabilitated about 10 houses in the past two years. Zemke, the managing partner of Zemke Lukowski Properties, said in many cases, it’s more cost effective to fix up even a dilapidated house than it is to build new, in part because zoning regulations have changed over the years, and new construction often requires more than one lot. That’s even the case when what’s for sale is “bottom of the barrel stuff,” as he said is now often happening. In part, that’s because sweat equity can make up for a lot of the costs. “There’s a lot of physical value in

them; there’s bricks, wood, windows, floors worth tens of thousands of dollars. It’s all there,” Zemke said. “It’s not easy, but it’s possible to bring one of these shells back to life.” For those looking for high-quality housing who aren’t afraid to roll up their sleeves, it’s a “no-brainer,” said Alex Pereira, a developer with Secure Realty. He’s fixed up two properties in two years, one a 15-unit apartment building and the other, a two-family condo building. Improvements beget improvements, he said, and one neighbor’s efforts down the block make it more reasonable to put $100,000 into a project and know there will be returns.

‘It changes lives’ In the past, O’Keefe said, high turnover in the city happened as people milked run-down properties for their last dollars. But this is different. Through years of blight and disinvestment, people who stayed in Detroit’s neighborhoods contended with devaluation, saw homes on their streets torn down and suffered the psychological effects of having their built environment ripped apart, said Chase Cantrell, executive director at Building Community Value. “To literally see the fabric of neighborhoods stripped away ... there’s a real weight to the loss of it,” he said. Detroit’s majority Black residents have dealt with the long after-effects of the Great Recession for years, as the city went from majority homeowners to majority renters. So to see market values going up in neighborhoods across the city is refreshing, Cantrell said. While it’s not yet clear who is liv-

ing in the newly occupied residences, he said the influx into neighborhoods is promising for those who are already there. “To me, the impact is immeasurable and it completely changed the neighborhood,” said Tammy Daniels, the land bank’s interim executive director. “It changes neighborhoods, it changes lives.” Still, there are some concerns about the pace of the work, including whether everyone is following city rules by pulling permits for construction or applying for certificates of compliance before renters move in. Alsup’s analysis shows that’s not always the case, and Ishag-Osman echoed the concern, saying it seemed some of the rehabilitation work was happening “under the table,” without permits being pulled. The influx of new residents is “the free market at work,” said Donna Givens Davidson, the president and CEO of the Eastside Community Network. But Davidson said she worries that Black ownership is being replaced by white ownership and she questions whether city government has done enough to ensure displacement doesn’t happen, particularly given the fact that many of the vacancies stem from tax foreclosures and other government actions. She said she’d like to see “some imagination” in coming up with a plan that will ensure those who were in the city before are the ones who benefit. “I believe it’s incumbent on the city to come up with a strategy,” she said. “There’s a lot of room for a lot of people and I’m not mad that people want to live in Detroit, but what you’re seeing is gentrification.”

Any time blight is removed, and homes are reoccupied, it’s a positive in the city, said Edward Lynch, the senior program manager for equity, engagement and research at Detroit Future City. Lynch said he was surprised by how widely the work was happening and thought without knowledge about who was living in the residences, it was too early to draw many conclusions about the long-term effects on the city. That includes population numbers. While the city has disputed Census data that shows Detroit’s population fell, there’s not yet information on whether people occupying the once-vacant houses were moving from elsewhere in the city or from outside of it. But Lynch confirmed the trend, as did others, saying that there are fewer vacant units in Detroit than there were at the pandemic’s start. “It’s absolutely correct; I’m seeing that everywhere,” said Mac Farr, executive director of the Villages Community Development Corp. “My hunch is it’s going to be going on for at least the next couple of years.” Alsup’s analysis shows that the pace of improvements has slowed, though it is continuing and homes are still being reoccupied. There are many positives, Farr said, including a reduction in blight and crime and a re-creation of neighborhoods that were often emptied. On his own street, in Pingree Park, eight vacant houses are now down to three. “This is literally everything community development specialists have been talking about for years,” he said. “The market’s already taking care of it.” The improvements change the perception of Detroit’s neighborhoods said Linn and Daniels, with the land bank. “People are proud to live in Detroit, people are moving in. It’s exciting,” Daniels said. “It’s impacting literally every corner of the city. People need to be shouting it from the highest mountain.” Alsup said the continued improvements represent a “striking change in confidence” for the future of Detroit’s neighborhoods. What’s important is what happens next, he said — who benefits from the change, and what the city does to support both new and existing residents. Many questions about the future and who lives in the newly occupied homes remain unanswered, said Cantrell, with Building Community Value. But with change happening at “a scale no one anticipated,” he’s glad to see market values rising in neighborhoods and people moving back in. “For years, we’ve been demolishing, and the psychological impact of demolition is extreme,” Cantrell said. “People are seeing hope, and that’s good.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

20 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P020_CD_20220228.indd 20

2/25/2022 12:36:26 PM

ECONOMIC DEVELOPMENT

Customer service firm Majorel to open Detroit office BY ANNALISE FRANK

IT and customer services company Majorel will open an office in downtown Detroit within months. Mayor Mike Duggan and City Council President Mary Sheffield announced the incoming downtown tenant in a news conference Thursday. Majorel is a Luxembourg-based, 70,000-employee corporation with a North American headquarters in Arizona. It expects to employ 200 people in Detroit to start and grow to 500 within a year. The company is not yet disclosing in what building it's locating, the release said, but it's looking around Campus Martius Park for a space of 30,000 to 50,000 square feet and expects to choose one within months. Majorel has not been offered any tax incentives as of now, according to officials. The jobs in the Detroit office will start at $17 an hour, including customer service and human resources work. Majorel has an agreement to work with city employment-matching program Detroit at Work, which will funnel Detroiters' applications to the company for its

Detroit's recovery." It's a tech firm, not an automotive plant or warehouse, like Amazon.com Inc., Stellantis, Lear Corp. and other companies that have announced new Detroit facilities in recent years. Once Majorel narrowed its search to four areas, it ran some tests to help decide, said Gus Gikas, Majorel's vice president of operations “WE ARE ALREADY WORKING WITH in North America. MORE THAN EIGHT COMMUNITY One was running in those cities PARTNERS TO GET DETROITERS READY.” ads to gauge interest. — Nicole Sherard-Freeman, group executive Gikas said the of jobs, economy and Detroit at Work company was "so impressed" with "We are already working with talent in metro Detroit that it made more than eight community part- offers to some of the candidates. Gikas declined to name the other ners to get Detroiters ready," said Nicole Sherard-Freeman, group ex- three finalist cities. He also deecutive of jobs, economy and De- clined to disclose how much Matroit at Work. "In the coming weeks jorel is investing in its new office. "As we continue to see investyou can expect to see job fairs at neighborhood Detroit at Work ca- ment in Detroit, it is of vital importance that we Detroiters are includreer centers." Duggan on Thursday called Ma- ed," Sheffield said. "Detroiters jorel's decision to choose Detroit deserve quality employment that over 49 other U.S. cities — the non- will enhance their qualifications profit Detroit Regional Partnership and work experience. With employrecruited the company starting a ers such as Majorel choosing Deyear ago — a "major step forward in troit as their desired location it furconsideration first — before residents from other cities, but after the job fair. Detroit at Work has done this priority hiring strategy with Stellantis and other companies, as well. It's a main tenet of city efforts to link economic and workforce development on the front end while a company is coming in.

ther implies what we already know to be true: That Detroit is home to some of the hardest-working people in this country." The decision by Majorel to lease downtown represents a bright spot in an otherwise dim office market in metro Detroit that has seen companies large and small give big chunks of space up for sublease, shrink office footprints or otherwise remain on the fence about their future space needs given the upheaval the global pandemic has caused in employee trends. Nearly two years in to the pandemic, many continue to spend the majority or all of their work week at desks at home, while others have adopted a more hybrid schedule, splitting time between the office and home. And how the broader office market evolves and adapts to that new reality on a big-picture scale remains anyone’s guess. There have only been a pair of office leases of 30,000 square feet or more signed in downtown Detroit in the last six months, according to CoStar Group Inc., a Washington, D.C.based real estate information service. First, Ally Financial Inc. took three

PETS

Everyone’s best friend With many people now working from home for months or even years on end, the pandemic has caused

again falling to 137,603 January to June last year. In part, at least, that’s attributed to a lower number of animal intakes, which fell by nearly 25 percent from 2019 to 2021. And a greater percentage of sheltered animals were adopted during that time period, rising from 53 percent to 58 percent. It’s not known precisely how many hotels have started opening their doors to travelers’ four-legged best friends, although data from a 2018 survey by the American Hotel & Lodging Association and STR shows that luxury (44 percent), upscale (41 percent) and midprice (42 percent) hotels were less likely than cheaper options like econo-

Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

Putting puppy on a pedestal For Jon Coutts and James Van Dyke, this is all par for the course.

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

Michael Lax’s dog Rey enjoys his stay in the Element Detroit at the Metropolitan in downtown Detroit.| MICHAEL LAX

some to adopt four-legged friends. In May, the American Society for the Prevention of Cruelty to Animals, or ASPCA, released poll results indicating that some 23 million American households — approximately one in every five — got a cat or dog since the onset of the COVID-19 pandemic and that 90 percent of households that got dogs and 85 percent that got cats weren’t considering surrendering their new pets in the near future. Yet a national database on animal shelters shows a marked decline in adoptions, falling from 172,687 from January to June of 2019 to 148,988 during that same period in 2020, and

—Crain's Detroit Business Senior Reporter Kirk Pinho contributed to this report.

Coutts is managing director of the Aloft Detroit at the David Whitney and the Element Detroit at the Metropolitan, both of which were developed by Detroit-based The Roxbury Group, where Van Dyke is executive vice president. Both men said their two hotels have always been dog friendly up to 50 pounds and the Element offers things like stays catered specifically to pet owners that include what’s branded as a V.I.Pup welcome, city tours to dog-friendly locations, dog beds, bandannas and dog treats all without an additional pet fee. Coutts said overall there has been about a 20 percent increase in the number of rooms booked with guests who bring their dogs, although that number is still comparatively small to the overall number of guests, representing perhaps about 5 percent of the total reservations. “Our brands are designed to promote a dog-friendly travel,” Coutts said, “but during the pandemic, we’ve seen more people traveling with dogs than they did before the pandemic.” Likewise, Josh Griffin, marketing manager for the new Daxton Hotel in downtown Birmingham, said the hotel and its 151 rooms have been dog friendly since it opened in April. He estimated that there has been a 5 to 10 percent increase since then in the number of guests booking rooms with their pets, which requires a flat $150 fee for the length of the stay, no matter how long. “So many more travelers are bringing their dogs along with them or some are even bringing other pets,” Griffin said. But in the case of the Daxton and other hotels, it’s best to check in advance whether Fido — or another non-human companion — is allowed before you show up to the front desk.

From Page 1

“If a dog is barking and you have to relocate other rooms because of complaints, that can cause some negative interactions, so you have to be discerning about what you’re going to do.” Even though we are nearly two years into the pandemic and vaccines and booster shots are widely available for those who want one, hotels still have not recovered. Occupancy rates in metro Detroit are just 46.9 percent as of Feb. 5, down from 58.2 percent the week of Feb. 8, 2020, although an improvement over the 40.6 percent occupancy rate the week of Feb. 6, 2021, according to Tennessee-based STR Inc., which tracks hotel data across the country. Average daily rates, or ADR, sits at $92.98, much higher than the $74.60 posted a year ago although not back to the $98.30 in February 2020. And RevPAR — industry shorthand for revenue per available room, a key financial metric — remains sharply lower than prepandemic levels. It’s currently $43.60, compared to $57.16 in February 2020, although substantially better than the $30.28 reported by STR in early February 2021. “At the start of the pandemic, anyone and everyone was just looking for different revenue generators and hotels that historically did not allow pets saw that as an opportunity,” said Brandon Leversee, a Royal Oak-based vice president for hospitality research company HVS. “Those historical hotels that didn’t necessarily have a pet-friendly attitude were a lot of those branded hotels, highway properties, full-service hotels in downtown areas. A lot of hotels that didn’t allow pets before saw this as a good opportunity to add revenue and it sort of became a pretty good revenue source.”

additional floors, or another approximately 77,000 square feet, in its Ally Detroit Center skyscraper owned by Dan Gilbert at 500 Woodward Ave.. Second, Detroit-based construction giant The Walbridge Group renewed its roughly 51,000-squarefoot lease for its headquarters at One Kennedy Square, owned by Southfield-based Redico LLC, this fall after mulling a move to the suburbs. Factoring in the suburbs, there have been an additional four 30,000-square-foot-plus office leases in the last half-year, according to CoStar data: Proctor Financial is taking approximately 75,000 square feet at 700 Tower Dr. In Troy; electric vehicle company Canoo is taking nearly 48,000 square feet at 2000 E. Taylor Rd. In Auburn Hills; an unknown tenant is taking about 41,000 square feet at 5875 New King Ct. in Troy; and Pipetek Infrastructure Services LLC is taking 32,100 square feet at 15155 Fogg St. in Plymouth.

my (66 percent) and budget (95 percent) to offer accommodations for pets. Overall, according to historical AHLA/STR survey data, the trend has been toward making room for Fido: In 2004, 51 percent of all hotels surveyed allowed dogs, while by 2018, 56 percent did, with some variation in other years ranging from 50 percent (2006) to 61 percent (2012).

FEBRUARY 28, 2022 | CRAIN’S DETROIT BUSINESS | 21

P021_CD_20220228.indd 21

2/25/2022 1:52:30 PM

THE CONVERSATION

Detroit mobile veterinarian doesn’t have ‘typical origin story’ Detroit veterinarian Marcy McKeithen has seen it all when it comes to pet care: corporate clinics, emergency rooms, mom-and-pop practices. But now? She’d rather just go to your home. McKeithen’s Motor City Vet Care offers mobile veterinary services like annual exams, vaccinations, nutrition and in-home euthanasia and hospice care in Detroit and nearby cities. She started taking clients at her own practice in the fall. McKeithen spoke with Crain’s about how she got into veterinary medicine, what it’s like getting to know dogs and cats (and their owners) where they live and how COVID-19 has impacted the industry. | BY ANNALISE FRANK ` Can you tell me how you decided to get into the vet field? So, I don’t have the typical origin story. A lot of my colleagues who went to vet school knew they wanted to be a vet at 2 and 3 and 4 and 5 years old and worked in clinics all their lives. Being from Detroit, I was kind of groomed to be an engineer. We were grateful that our grandfather brought our family up from Mississippi because of Ford (Motor Co.) ... so a lot of my friends that were good at math and science, we were kind of forced into the engineering route because it was booming when we were coming up in school. I tried to make it work. I really did. But it just wasn’t what I wanted to do. ... I hadn’t had any pets as a child. I lived with my mom. But my dad’s side of the family, they always had pets ... because I had never lived with a pet I wasn’t really able to access my true love (for pets). Because I didn’t have pets I’d never been to a veterinarian. Especially had never been to a Black veterinarian. It wasn’t something I had seen modeled for me. That was kind of weird, to want to be something you had never seen. But now I can’t imagine what else I would be. ` It was something you wanted to be but hadn’t really seen — how did you take inspiration to do that? Yeah, it was a difficult path, because I was always the only one ... it was very much a road less traveled. When I was going to college, there were only 28 vet schools in the U.S. I knew I was going to a (Historically Black College or University) because I was in marching band. I knew I had to have an HBCU experience ... I ended up at Florida A&M University. Then I went on to get into the University of Florida and get my doctorate. ` What was the process for deciding to go mobile, and at what point in your career? I have worked in many cities, in many places — I even worked for a stint living

in Spain with my husband. But I never laid roots, because I was trying to get back home to Detroit. Once I finally was able to get home ... I wanted to start a practice. I had worked for corporate, I worked for some small mom-and-pop practices, I worked for emergency, I worked for the shelter. And I knew that, because I had seen what I had seen, ownership was the next step for me. When I started looking at buildings, it really dawned on me that I just wasn’t happy with having one building. Where can my senior citizens bring (their pets) and is it going to be handicap accessible? I wanted to take into consideration everybody I wanted to serve. I didn’t want my east-siders to be coming to the west side, I didn’t want the west-siders to be scared of downtown, I wanted to serve so many people. That’s when I knew I had to go mobile. ` Can you talk a bit about the veterinary industry in Detroit? Detroit is home to the oldest veterinary hospital in the U.S., Patterson Dog and Cat Hospital. That being said, for the size of our city ... we do not have a lot of veterinary clinics. There are lots of vet clinics outside of Detroit city limits. That is why I was so particular about where I wanted to build my practice. Our city is quite large and I wanted to be able to touch everybody equally and safely and for people to feel comfortable, because there are not a lot of veterinary hospitals. We may be down to 10 brick-and-mortar practices, and that is unheard of for a big city. ` You may be the only veterinary practice in Detroit owned by a Black woman, right? We don’t have numbers; our profession is very slow or just not really good at documenting ownership and the number of practices and the number of pets in households. We just don’t have those numbers. So I’m hesitant to say that, but it is highly possible. In Michigan, you have to be a

READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION

veterinarian to own a practice. And there are not a lot of Black veterinarians in this area at all. ` Did you want to say any more about what that singularity means to you? Certainly. It definitely makes you have confidence, because wherever I am, I’m the only one. Sometimes it can be discouraging ... especially in vet school, it was a very big culture shift for me, being from Detroit and then going to a historically Black university. That is when I had to make a decision to say, ‘OK, how are you going to survive? What’s going to be your coping mechanism?’ Our profession is not only extraordinarily white, but we are extraordinarily, gobsmackingly behind on diversity, equity and inclusion. Our National Association for Black Veterinarians is only 2 years old. Michigan’s veterinary medical association, they just established a DEI committee this year. So we are so far behind. It feels like a void of Black veterinarians, but we’ve been in the field, we are here, we are out there and we do exist. ` What’s something you’ve enjoyed about starting your own business? Being a house call vet has allowed me to develop relationships with clients that would not have been developed otherwise. It’s already a certain level of rapport that you get when someone lets you in their home. Then they’re letting you see their most prized possession, which

often is their pet. It’s a very different type of relationship, one that I’ve never experienced and one that I don’t know how ever to live without. Especially with COVID, it has changed how everything looks. Most veterinary hospitals are curbside, and they have to be for safety reasons. But just being able to have these exams done safely in these people’s homes, I think people just kind of miss interaction with people. Entrepreneurship has been difficult, but I love that I have the flexibility to schedule around my family’s needs. ` What’s it been like in the industry during the pandemic? (During the shutdowns), we were essential. At this time I was ... working in a corporate practice. So it was a very stressful situation. When we saw the amount of pet growth, people getting new pets for companionship, and people at home paying more attention to their previously owned pets, so the demand was so high ... then we had the logistical hiccup of being curbside. A lot of veterinarians had to stop taking new clients because they were so overwhelmed. Just working in a pandemic was stressful. A lot of reckoning, I think, happened in veterinary medicine in this time because we not only dealt with pet care issues but we also dealt with a lot of racial issues in our society ... We also got a glimpse into how amazingly non-diverse our field was. So it was a lot going on in our profession.

In recent years, Meador has been one of the public faces of the energy company’s corporate initiatives and an influential voice in public policy

Jason Davis, small and emerging businesses. (313) 446-1612 or Jason.davis@crain.com Annalise Frank, city of Detroit. (313) 446-0416 or afrank@crain.com Arielle Kass, residential real estate, (313) 446-6774 or arielle.kass@crain.com Nick Manes, finance and technology. (313) 446-1626 or nmanes@crain.com Kurt Nagl, manufacturing. (313) 446-0337 or knagl@crain.com Kirk Pinho, senior reporter, real estate. (313) 446-0412 or kpinho@crain.com Dustin Walsh, senior reporter, health care. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com MEMBERSHIPS

CLASSIC $169/yr. (Can/Mex: $210, International: $340), ENHANCED $399/yr. (Can/Mex: $499, International: $799), PREMIER $1,299/yr. (Can/Mex/International: $1,299). To become a member visit www.crainsdetroit.com/ membership or call (877) 824-9374 Group and Corporate Membership Sales Deb Harper, (313) 446-1623 or dharper@crain.com ADVERTISING/MARKETING

Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Director of Events and Program Content Kristin Bull, (313) 446-1608 or kbull@crain.com Events Director Samantha Flowers Senior Account Executives Maria Marcantonio, John Petty Advertising Sales Lindsey Apostol, Ainsley Burgess, Sharon Mulroy Content Marketing Specialist Allie Jacobs People on the Move Manager Debora Stein, (917) 226-5470, dstein@crain.com Marketing Manager Lynn Zott, lzott@crain.com or (313) 446-6762 Senior Art Director Sylvia Kolaski Media Services Manager Nicole Spell (212) 210-0230 or nspell@crain.com Classified Sales and Sales Support Suzanne Janik Single copy purchases, publication information, or membership inquiries: (877) 824-9374 or customerservice@crainsdetroit.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com Crain’s Detroit Business is published by Crain Communications Inc.

DTE’s Dave Meador retiring after 25 years at Detroit utility

Dave Meador

REPORTERS

CUSTOMER SERVICE

Detroit veterinarian Marcy McKeithen, founder, Motor City Vet Care.

RUMBLINGS

DTE ENERGY CO. VICE CHAIRMAN Dave Meador plans to retire in March after two decades in the C-suites of the Detroit-based utility giant. Meador, who also serves as DTE’s chief administrative officer, has been a top executive at the energy company since 2001, when he began a 12year stint as chief financial officer before taking a seat on the DTE board in 2013. He joined DTE in 1997 as a vice president and controller after 14 years at Chrysler Corp. in various accounting and financial management roles for the automaker.

crainsdetroit.com

Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Jim Kirk, (312) 397-5503 or jkirk@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Executive Editor Kelley Root, (313) 446-0319 or kelley.root@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Digital Editor for Audience Elizabeth Couch, (313) 446-0419 or elizabeth.couch@crain.com Creative Director Thomas J. Linden, tlinden@crain.com Digital Portfolio Manager Tim Simpson, (313) 446-6788 or tsimpson@crain.com Assistant Managing Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Assistant Managing Editor Lauren Abdel-Razzaq, (313) 446-5800 or lauren.razzaq@crain.com Senior Editor Chad Livengood, (313) 446-1654 or clivengood@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Associate Creative Director Karen Freese Zane, kfreese@crain.com Art Director Kayla Byler, kayla.byler@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766

initiatives intersecting with economic issues. He has served on the boards of the Michigan Economic Development Corp., the Detroit Economic Growth Corp. and the Detroit Regional Partnership, which he was heavily involved in building in 2018. Meador has been co-chair of Detroit Mayor Mike Duggan’s workforce development board. In that role, he helped Duggan start the Grow Detroit’s Young Talent summer work program for city youth, raised money for the revitalization

of the Randolph and Breithaupt career and technical education high schools in Detroit and successfully lobbied lawmakers to eliminate driver responsibility fees that resulted in Detroiters being unable to obtain driver’s licenses necessary to be employable. Meador also co-founded the Autism Alliance of Michigan and helped the organization lobby for a major change in state insurance law that required health insurers to cover evidence-based therapies for children on the autism spectrum.

Chairman Keith E. Crain Vice Chairman Mary Kay Crain CEO KC Crain Senior Executive Vice President Chris Crain Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except no issues on 1/3/22, 7/4/22, 11/21/22 nor 12/26/22, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2022 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

22 | CRAIN’S DETROIT BUSINESS | FEBRUARY 28, 2022

P022_CD_20220228.indd 22

2/25/2022 11:17:31 AM

THE ANNUAL LUNCHEON IS BACK!

BE IN THE ROOM WHERE NEWS HAPPENS. NEWSMAKER

OF THE YEAR

THURSDAY, March 24 MGM GRAND DETROIT | 11AM-1PM

2021 NEWSMAKER OF THE YEAR KEYNOTE Wright Lassiter III

The top 10 Michigan figures who made news and headlines in 2021 will be recognized at our dynamic, high-powered luncheon where decision-makers connect, celebrate and make new headlines.

President and CEO Henry Ford Health System

KC Crain

CEO, Crain Communications Publisher, Crain's Detroit Business

ALSO FEATURED: Q&A with other 2021 Newsmakers in attendance.

Newsmaker full 2.28.indd 1

SUPPORTING SPONSORS

2/22/22 1:45 PM

T:10"

AT&T Business Fiber

A business with so much bandwidth it transfers enormous files for fun. AT&T Business Fiber now with Hyper-Gig speeds. Fast internet with the security and reliability you need to make large file transfers a breeze. Learn more at att.com/businessfast or call 1.844.740.FAST

Limited availability in select areas. Reliability based on network availability.

T:14"

Business