Crain's Detroit Business, March 11, 2024

Upgrades are being made to downtown Detroit ahead of the 2024 NFL Draft in April, including median improvements along Washington Boulevard. KIRK PINHO

Downtown gets spotlight ready

The city is pouring in millions as it prepares to shine for the event next month

From purely a curb appeal perspective, it’s been easier preparing downtown Detroit to host the NFL Draft in just a few weeks than it was nearly two decades ago when it hosted Super Bowl XL.  ere hasn’t been a wave of demolitions, ridding the business core of decrepit buildings. Much of downtown’s stockpile of historic skyscrapers and high-rises has been renovated or redeveloped in

Draft sets up city for ‘the next thing,’ says events chief. Page 2

the last 15-plus years, welcoming new o ce workers and residents. ere are now restaurants for every palate, and there are far more shopping options. A Potemkin village, it is not.

See DOWNTOWN on Page 17

The 2006 Super Bowl BLOOMBERG

18 years ago, the Super Bowl cleanup effort set the stage for downtown Detroit

Looking back at downtown Detroit in the run-up to the 2006 Super Bowl, there was no question the cleanup and beautification efforts were big priorities — and a huge challenge.

All you had to do was look around.

Multistory buildings with broken-out windows and tattered curtains apping in the

By | Sherri Welch

wind stood as monuments to decades of decline. e central business district corridors were lled with vacant buildings, and the streets were dark and largely empty in between concerts and sporting events.

ose were huge issues, but they weren’t Detroit’s biggest challenges, leaders said.

See SUPER BOWL on Page 16

Skyrocketing drug costs hits Blue Cross bottom line

In 2023, more Michiganders used health care services and used novel drugs to relieve ailments. at exacted a cost on Blue Cross Blue Shield of Michigan’s bottom line.

e Detroit-based insurer reported a $544 million operating loss on revenue of $36.3 billion for the year due to a $1.4 billion year-over-year increase in claims costs and a $1.8 billion rise in pharmacy costs driven by the rise in high-priced specialty drugs.

end of 2024 after 19 years as CEO.  e company paid out an average of $88 million per day in 2023 for patient care, drugs and benets, compared with $80 million per day in 2022.  CRAINSDETROIT.COM I MARCH 11, 2024

Because BCBSM is a nonpro t mutual, meaning it is a taxable organization, it paid $150 million in federal, state and local taxes last year.

Despite the losses in 2022, BCBSM President and CEO Daniel Loepp, 66, earned $15.8 mil-

HOME PRICES

Housing affordability down 70% in 4 years.

PAGE 3

lion, down from $17 million in 2022. e top executive's compensation included a $12.3 million bonus, down from a $13.9 million bonus in 2022, and a base salary of $1.8 million.

REAL ESTATE

Bankruptcy talks for Joann could mean pain for landlords.

PAGE 4

FOCUS

Bank branches aren’t making a comeback but are evolving. PAGE 8

See BLUE CROSS on Page 15

By | Kirk Pinho

Union Joints opens restaurants in Birmingham

By Jay Davis

A long-delayed restaurant in Birmingham’s Rail District from Clarkston-based Union Joints restaurant group is nally open.

tro but pulled back on the idea because a bistro license would include some seating restrictions.

Catallo and Stevenson did not immediately respond to a Crain’s request for more information.

A previous Crain’s report detailed that Lincoln Yard would have seating for 150 and a large patio with seating for 35.

e opening of Lincoln Yard and Little Yard gives Union Joints 18 restaurants, including the Clarkston Union and Kitchen, Vinsetta Garage in Berkley, Union Rec in Ann Arbor and Union Assembly in downtown Detroit.

Lincoln Yard opened March 4. To-go venture Little Yard operates out of a small section of the space.

Lincoln Yard opened March 4 inside a repurposed school bus garage at 2159 E. Lincoln St. in the area that runs along Eton Street and south of Maple Road. To-go venture Little Yard operates out of a small section of the 5,200-squarefoot space. Both menus feature a wide variety of fare such as salads, Union Joints’ beloved mac and cheese, burgers, wood- red pizzas and plenty of gluten-free, vegetarian and vegan dishes.

e opening comes about seven years after the concept was originally announced. Union Joints, owned by Curt Catallo and his wife, Ann Stevenson, originally planned for Lincoln Yard to operate as a bis-

Lincoln Yard is open 11 a.m. to 9 p.m. Sunday through ursday and 11 a.m. to 11 p.m. Friday and Saturday. Little Yard is open 7 a.m. to 7 p.m. daily.

Lincoln Yard opens a couple of months after Union Joints was hit with a lawsuit over another scrapped project.

e city of Oak Park on Dec. 14 led a lawsuit in Oakland County

Circuit Court against Ate Mile LLC

— the entity a liated with Union Joints that owns the building — after the restaurant group decided not to push through with a plan to open a restaurant in the Albert Kahn-designed building that once transmitted WWJ radio broadcasts.

Oak Park City Manager Erik Tungate in December told Crain’s that the lawsuit was aimed at stabilizing the property. Tungate on March 4 told Crain’s in an email the city is still in a holding pattern awaiting further direction from the court.

Draft sets up city for ‘the next thing,’ says league events chief

By Kurt Nagl

e NFL Draft in downtown Detroit is next month, but city leaders are already looking forward to what comes next.

at is as it should be, said Jon Barker, the NFL executive tasked with orchestrating the April 25-27 event expected to bring more than 300,000 people and $100 million-plus to the city.

“It isn’t just about the three days. It isn’t just about the picks. It is the legacy and what we leave behind,” said Barker, head of live event production and operations for the professional football league. “It’s not just us, it’s the next thing that comes.”

To that end, Visit Detroit President and CEO Claude Molinari said he’s been working on NBA Commissioner Adam Silver about hosting an NBA All-Star game, a major sports event that has eluded the city.

“Adam Silver was in town (March 1), and we ambushed him hard. We’re very deliberate in letting the commissioner know how excited we would be to host the All-Star game,” Molinari said, adding that the tourism bureau is actively engaged with the Detroit Pistons about the prospect of hosting the game as soon as 2028.

e dialogue came March 7 during a Crain’s Detroit Power Breakfast panel at the Westin Book Cadillac Detroit hotel, featuring Barker, Molinari, Downtown De-

troit Partnership CEO Eric Larson and Alexis Wiley, founder and CEO of Moment Strategies, and moderated by Crain’s reporter Jay Davis. e discussion centered on what to expect for this year’s draft, set to be the city’s biggest event in years. Details have trickled out in recent weeks, including the event’s Campus Martius-anchored footprint and main programming, but panelists shed more light March 7.

For the rst time, the NFL will help host multiple viewing parties outside of the core footprint, Barker said. Live feeds will be broadcast on screens at the city’s greater downtown parks as well as locations in Corktown, Greektown and on Columbia Street, Molinari said.

e plan was inspired by the DDP and Visit Detroit seeking to make

sure visitors are involved in the action even if outside the main activation area.

“How do we get the feeds and the ber to the local viewing areas … It’s something we had toyed around with in previous drafts,” Barker said. “I know it’s going to be successful, so I can’t wait to steal the idea.”

e NFL so far has been mum about who will headline the live music during the three days of the draft, which has lured big acts in the past, including Fall Out Boy in Kansas City last year. Barker indicated that performances are planned pre-draft on ursday, as well as at some point on Friday and Saturday night, but he did not disclose the names of performers.

“We are working now on really

highlighting and showcasing local Detroit artists, making sure Detroit is represented on that stage from a music standpoint,” Barker told Crain’s after the panel event.

Asked if the NFL was engaged in discussions with homegrown megastar Eminem — a frequent sight at Lions games at Ford Field last season and Super Bowl headliner in 2022 — Barker declined to con rm or deny.

“It’s not something at this point we are prepared to talk about, but certainly he’s an important part of the city,” Barker said. “All I know is that Marshall (Mathers, the rapper’s given name) is a huge Detroit Lions fan, he loves the game of football, he’s an international global superstar, and I’m sure he’s excited to see who the Lions are going to pick.”

Speaking of the Super Bowl, the NFL exec was asked whether Detroit could again host the league’s most important event. Super Bowl XL at Ford Field in 2006 is an event widely acknowledged as helping put Detroit on an upward trajectory. Barker punted on the question.

“When will Detroit have another Super Bowl? Frankly, that’s in your hands,” he said. “It’s really led by the city. If there’s interest in hosting one of our events, there’s a process you go through.”

Regarding the NFL Draft, Barker said he has had regular engagement with Lions ownership and has sat down multiple times with billionaire real estate mogul Dan

Gilbert, whose Detroit-based Rocket portfolio of companies are deeply involved in next month’s event.

Wiley, co-chair of Detroit’s NFL Draft organizing committee, had a message for small businesses in town: ere is still time to get involved. Around 130 businesses have earned Minority Business Enterprise certi cation with the city and Metro Detroit Black Business Alliance and are working with the NFL Business Connect program on possibilities for participating in the draft. Wiley said city partners, including Kai Bowman, COO of the alliance, have “worked tirelessly to engage” small and minority-owned businesses.

“ e NFL has been so receptive of that,” Wiley said. “Our hope is at the end of this, we’ll be able to say Detroit did this right.”

DDP CEO Larson said the event will bene t Detroit for years to come, especially by continuing to reshape its narrative and establish the city as a destination and place where people and businesses want to spend money.

“We’re telling our story through the Grand Prix, through the draft, through these big events,” Larson said. “ e ability to drive not only a di erent perception but also the realization that Detroit is a place where you want to make an investment.”

Last year’s NFL Draft in Kansas City generated $109 million in direct spending and 312,000 visitors, Barker said.

Lincoln Yard restaurant opened March 4 in Birmingham’s Rail District — about seven years after originally announced. | BETH VALONE

Lincoln Yard staff celebrate the opening of the Birmingham restaurant in a photo posted to social media on March 3. | LINCOLN YARD VIA FACEBOOK

Crain’s reporter Jay Davis (left) moderates a discussion on the upcoming NFL Draft during a Crain’s Power Breakfast event March 7. On the panel are (from left): Jon Barker, senior vice president, global event production and operations for the NFL; Downtown Detroit Partnership CEO Eric Larson; Alexis Wiley, founder and CEO of Moment Strategies; and Visit Detroit President and CEO Claude Molinari. | BRETT MOUNTAIN

Housing affordability down 70% in 4 years

e income needed to a ord purchasing a home in metro Detroit has increased by 70% in the last four years, according to a new report from online brokerage Zillow Group Inc.

While Southeast Michigan remains the most a ordable major metropolitan area in the country, per the Zillow report released recently, the region’s deteriorating housing a ordability is just below the rate seen nationally.

In January 2020, just before the onset of the COVID-19 pandemic, residents in metro Detroit needed to earn around $44,538 to a ord a mortgage on a “typical” home, according to the data. ( e report did not de ne a typical home.) Four years later, however, that number has grown nearly 70% to $75,662.

While an eye-catching increase, the region still lags the declining home affordability seen nationally.

Around the U.S. in January

State GOP chair aims to win back donors

By David Eggert

LANSING — Donors who stopped giving money to the Michigan Republican Party can resume writing checks because new leadership has control of bank accounts following court victories and has a plan to win elections in 2024 following losses in 2022, new Chair Pete Hoekstra said.

Hoekstra, who took charge about six weeks ago after the ouster of Kristina Karamo over fundraising and other issues, said he is poised to make progress with contributors who were hesitant even after her departure because she disputed the vote, which prevented him from overseeing the party’s nances.

“ e donors have said, ‘Pete, we’re going to be here to help. When this background noise is gone, we will be there,” he told

Crain’s on March 4. “Well, I think we’re now at the point where the background noise is gone. e state committee voted for me.

e (Republican National Committee) validated it. (Former President Donald) Trump has endorsed me. e congressional delegation has endorsed me.

e state leaders in the Legislature have endorsed me. e courts twice (recently) validated it. Now I can go in a serious way to ask for money.”

On March 1, Hoekstra said, he nally became an authorized signer on the GOP’s nancial accounts.

Donors want to see a plan before giving, he said. ey also want to ensure that the party works with political entities they set up in the last year once Karamo made it clear she did not want help from big contributors, he said.

20202024

Source: Zillow

“ ey didn’t go sit on the sidelines. What they did is they put their money somewhere else because they still have political goals and objectives that they wanted to meet. So some of them have put in place organizations for get out the vote, for communications, messaging and those types of things. Some of them have invested signi cant amounts of money.

See GOP on Page 17

2020, “a household earning $59,000 annually could comfortably a ord the monthly mortgage on a typical U.S. home, spending no more than 30% of its income with a 10% down payment,” according to the report. at gure fell below the U.S. median income of about $66,000, meaning more than half of American households had the nancial means to a ord to buy a home.

Four years later, that gure has accelerated roughly 80% to about $106,500, while the U.S. median

household income stands at $81,000.

“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains,” Orphe Divounguy, a senior economist at Zillow, said in a news release. “Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros.

See HOUSING on Page 15

Franco PR rm now 100% women-owned

By Kurt Nagl

One of the largest public relations rms in Detroit is now fully women-owned after the exit of one longtime executive and the ascent of another.

CEO Tina Kozak took the reins from Dan Ponder as chair and majority owner of the company at the end of last year. Kozak, 44, bought out Ponder’s stock along with company President and COO Tina Benvenuti Sullivan, 50, and Senior Vice President Nikki Little, 39, who are minority owners. e change in ownership means that the rm, which for years has been women-led, is now women-owned, Kozak told Crain’s.

“What I’m excited about is now it’s sort of this future-forward variable to really design some opportunities that are more tangible for the rest of the team when they’re ready to get more involved,” Kozak said during an interview at her Renaissance Center o ce. “We’d like to o er equity opportunities for other employees down the road.”

“We’d like to offer equity opportunities for other employees down the road.”

Tina Kozak, CEO

e change in ownership comes at a time of signi cant growth for the company, an integrated communications agency

Terms of the buyout were not disclosed.

“The key to improving affordability long term is to build more homes,” said Orphe Divounguy, a senior economist at Zillow. | BLOOMBERG

Nick Manes

Michigan Republican Party chair Pete Hoekstra speaks during the Michigan GOP convention on March 2. AP

Joann bankruptcy talks could mean pain for landlords

Another likely retail bankruptcy, another likely blow for landlords in metro Detroit.

Joann Inc. (NYSE: JOAN) is planning to le for Chapter 11 bankruptcy protection perhaps as soon as this week, sources told Bloomberg, which reported that current discussions center around lenders taking over the company in exchange for shedding debt. If the bankruptcy takes place, it’s expected to be a speedy one, Bloomberg reported.

Joann has more than 40 Michigan locations, with 17 of those in metro Detroit. According to Joann’s website, Michigan’s roster of 43 stores trails only California (85), Florida (49), Ohio (49) and Pennsylvania (44). ere are also 43 stores in Texas.

At stake is more than a half-million square feet of retail space in shopping centers around the region.

Most landlords around town have exposure to only one store, but a pair of them have multiple.

Troy-based Stuart Frankel Development Co. is landlord to three Joann locations in Madison Heights, Bloom eld Hills and Rochester Hills.

Jericho, N.Y.-based Kimco Realty (NYSE: KIM) inherited a pair of Joann locations in White Lake Township and Novi shopping centers from RPT Realty when it paid $2 billion for New York City-based RPT in a deal that closed early this year. RPT is the company that had been Farmington Hills-based Ramco-Gershenson Properties Trust.

Emails were sent to representatives for Stuart Frankel Development as well as Kimco seeking comment.

Joann, which sells fabrics and craft supplies, says its stores range

from about 18,000 to 35,000 square feet, although in metro Detroit, it has plenty of locations outside of those boundaries, usually to the higher end, according to data from CoStar Group Inc., a Washington, D.C.-based real estate information service.

e metro Detroit locations, and their landlords and square footages, are:

◗ Chester eld Township at 50809 Waterside Drive. Landlord: PMAT, New Orleans. Size: 25,000 square feet.

◗ Livonia at 13489 Middlebelt Road. Landlord: Verus Development Group, Bloom eld Hills.  Size: 24,400 square feet.

◗ Taylor at 23877 Eureka Road. Landlord: Schottenstein Property Group Inc., Columbus, Ohio. Size: 45,000 square feet.

◗ Allen Park at 23125 Outer Drive.

Landlord: Redico LLC, South eld. Size: 35,000 square feet.

Grosse Pointe at 18850 Mack Ave. Landlord: Van Elsander Capital,

Birmingham. Size: 16,200 square feet.

Madison Heights at 32065 John R Road. Landlord: Stuart Frankel Development Co., Troy. Size: 35,900 square feet.

Bloom eld Hills at 4107 Telegraph Road. Landlord: Stuart Frankel Development Co., Troy. Size: 14,000 square feet.

Rochester Hills at 2105 S. Rochester Road. Landlord: Stuart Frankel Development Co., Troy. Size: 37,500 square feet.

White Lake Township at 9052 Highland Road/M-59. Landlord: Kimco Realty, Jericho, N.Y.  Size: 27,800 square feet.

Pitts eld Township at 2897 Oak Valley Drive. Landlord: Joann. Hudson, Ohio. Size: 25,000 square feet.

Brighton at 8449 W. Grand River Ave. Landlord: Brighton Mall Associates LP, West Bloom eld Township. Size: 36,300 square feet.

Roseville at 20550 E. 13 Mile Road. Landlord: Vault Equity Part-

ners, Bloom eld Hills. Size: 33,900 square feet.  Auburn Hills at 600 Brown Road.

Landlord: e Niki Group, San Diego. Size: 44,000 square feet.

◗ Pitts eld Township at 3737 Carpenter Road. Landlord: Joong Soon Choi, Ann Arbor. Size: 35,000 square feet.

◗ Canton Township at 44740 Ford Road. Landlord: Acadia Realty Trust, Rye, N.Y. Size: 46,300 square feet.

◗ Novi at 43570 West Oaks Drive. Landlord: Kimco Realty, Jericho, N.Y. Size: 43,700 square feet.  Shelby Township at 14367 Hall Road. Landlord: Center Management, Birmingham. Size: 31,900 square feet.

In all, nearly 557,000 square feet of retail real estate in metro Detroit is in jeopardy — with some landlords at risk of losing their property’s largest, and in some cases only, tenant.  One community, Pitts eld Township, technically has two

Joann stores, even though the company lists the locations as Ann Arbor and Ypsilanti.

If Joann stores shutter in the Detroit suburbs, junior-box retailers that have been growing in recent years and other uses needing sizable footprints could ll the voids, said Steven Silverman, senior vice president of investment advisory and brokerage services for Farmington Hills-based Friedman Real Estate.

“ e key question lies in assessing the current demand for retailers such as Harbor Freight, Ross, TJ Maxx, Marshalls, Home Goods, Michaels, ULTA, and DSW, all of which have already been expanding rapidly in recent years,” Silverman said. “Additionally, alternative uses such as pickleball facilities, tness centers, and beverage stores will also be under consideration. Fortunately, the majority of the centers housing local Joann stores are owned by well-capitalized groups, indicating their readiness and ability to secure deals for new tenants.”

Other bankruptcies that have dinged local landlords in recent months include Rite Aid Corp., which put about 3 million square feet of leased retail and distribution space in limbo last fall with its Chapter 11 ling. Michigan has an outsized share of Rite Aid’s retail footprint, with as of late September, 232 locations around Michigan, although that number has been winnowed.

Recently, I’ve spotted shuttered Rite Aid’s on East Je erson in Detroit and at Huron Street and Telegraph Road in Pontiac, for example, and there are surely others.

New York City-based WeWork Inc. also led for bankruptcy last year, on the hook for $5.1 million in unpaid bills to its former Detroit-based landlord e Platform LLC. It’s still unknown how the bankruptcy will impact its other two local locations in Dan Gilbert-owned buildings downtown.

Battery startup Our Next Energy lays off another 3 dozen

Nick Manes and Kurt Nagl

Battery startup Our Next Energy Inc. is again trimming headcount following months of struggles.

Crain’s has learned that the Novi-based company has cut another 37 jobs — 24 of which were located in Michigan — with the majority of the layo s being administrative roles, according to a company statement to Crain’s.

ONE’s current focus is around developing products “that will double the range for electric vehicles and double the energy capacity of conventional utility scale energy storage systems,” the company said in the statement.

“In support of this mission, ONE is reinforcing its commitment to its research & development, engineering, supply chain and manu-

facturing functions,” the statement continues. “To accomplish this, the company is re-aligning resources and reducing overall operating expenses in its non-product related functions. is decision will enable ONE to operate in a more nancially e cient manner and support the company’s ongoing e orts to attract additional strategic and nancial investors.”

Our Next Energy has approximately 240 employees in Michigan following the March 4 cuts.

e company is closing o ces in Boston and California to consolidate engineering work in Michigan, Bloomberg reported, where it’s building battery packs at a $1.6 billion manufacturing plant.

e startup plans to keep and even grow its research and development team in Fremont, Calif., CEO

Paul Humphries told Bloomberg. e additional cuts at the oncehigh- ying unicorn startup — ONE raised $300 million in early 2023 at a valuation of $1.2 billion

— come after the company laid o around one-quarter of its employees in November as part of a “focus on core priorities.”  Just weeks later, ONE undertook

a leadership shakeup, installing board member Humphries — who has a background managing highgrowth companies and nancial turnarounds — as its new CEO, replacing founder Mujeeb Ijaz, who remained at the company as chief technology o cer overseeing product development.

In late January, ONE executives told Crain’s that they had secured enough funding through various investors to have a nancial runway through the end of 2024.

“We were clearly strapped for cash,” Humphries told Crain’s at the time. “ at’s why we went out and revised the business plan and made it su ciently attractive for the existing investors to come in and give us a bridge round that gets us ideally to the end of this year, potentially beyond that.”

Kirk Pinho

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New MSU president deserves a clean break

The long-running leadership drama at Michigan State University came to a late-night climax March 3 with the board voting to leave the future of two of its members in the hands of Gov. Gretchen Whitmer.

She’ll now decide whether to remove trustees Rema Vassar and Dennis Denno from the eight-member board.

e optics of conducting the votes at 11 p.m. on a Sunday night were unusual, to say the least. But the timing in the end was understandable, getting dirty laundry aired and o the board’s hands just hours before new MSU President Kevin Guskiewicz was due to take o ce.

It may be too much to hope, but perhaps this transition will nally be the clean break the university has needed to move forward.

As for whether Vassar and Denno should be removed by the governor, we hope Whitmer weighs the decision carefully.

e bar for misfeasance should be high to merit removal from o ce. Governing boards and councils are going to squabble, and it shouldn’t be easy for one politician to remove another from an elected seat.

At the same time, the misdeeds cited by law rm Miller & Chevalier in its investigative report are ugly, including the leaking of con dential university information in the pursuit of vendettas against administrators and accepting private jet travel and

COMMENTARY

event tickets from donors with business before the university.

Whatever decision the governor reaches, the university will be best served if it is reached quickly. e information needed to make the choice is clearly laid out and not really in dispute.

With the two trustees stripped of most of their duties already, it may be best to appoint two fresh faces for those seats, if

only to have a fully functioning board.

It’s at this point we renew our call to change the way trustees are selected. e state Constitution mandates that trustees of MSU, the University of Michigan and Wayne State University are elected in partisan, statewide contests. e boards of Michigan’s other 12 public universities are appointed by the governor with the consent of the Senate — which is as it also

should be for the state’s three largest institutions, where too often unnecessary drama has roiled the boardrooms.

We’re not con dent that removal alone, however, will x the seemingly endless board con ict at MSU that has been at turns vicious and juvenile, and tarnished the name of one of Michigan’s most important institutions. Changing that culture isn't going to happen by simply replacing two trustees.

Michigan State has seen far more than its fair share of turmoil. e numerous presidents the university has chewed through over the past six years were done in by the remnants of previous con icts and controversies and a long pattern of meddling by board members.

New President Guskiewicz deserves as clean of a slate as the university can give him. His track record running the University of North Carolina, a member of that state’s fabled Research Triangle, o ers great hope for improving coordination with the business community and Michigan’s other major research universities. We’re optimistic about the kind of leader he can be, one who will make MSU’s tens of thousands of students, alumni and boosters proud.

We hope for a period of calm waters for Guskiewicz, the board and MSU’s other leaders in order to build the stability that the MSU sorely needs.

Rent control at mobile home parks is misguided

Lawmakers in Michigan are considering bills that would impose rent control on mobile home operators. Five bills before the Senate create many new regulations, including restrictions on owners of manufactured housing communities. Instead of determining their rental rates independently, they would have to submit any rent increases above the in ation rate to a state board for approval.

486 through 490 give a state board power to control every aspect of a manufactured housing community, including its construction, layout and business practices. It also prohibits construction workers from building or repairing mobile home parks without rst meeting state qualications and training. is would be regardless of whether they are already are licensed to perform this work.

Controlling prices is the wrong way to get a ordable housing. Supporters of rent control want to make it easier for low-income families to a ord rent. e best way to achieve that goal is through competitive markets. Markets, not state rules, are what allow people get better products at lower prices.

ere is already a lot of market intervention that substitutes political priorities for the priorities of customers.

Manufactured housing parks already have to receive a license from the state and are subject to state regulation. All housing is subject to state rules about safe construction, inspections and practices like the requirement to have a surety bond.

e legislation would add another layer on top of existing regulation. Senate bills

All of these requirements are in addition to the requirement that rent increases above in ation be pre-approved. ere are also bills in the House that would create other and di erent regulations of manufactured housing communities.

It’s understandable that people want to make sure that trailer park owners treat their customers well. e better approach, however, is competition. When the customer is king, people pro t by nding ways to give customers what they want better and cheaper. e prices of computer software, toys, clothing and cellphone services are all lower than they were in 2000 — not because of government price limits but through competition. Bad landlords create pro t opportunities for better landlords.

Competition coordinates the resources of society to get people what they want efciently and e ectively. It is not from the benevolence of the butcher that we expect our dinner, as the old lesson from economics demonstrates. Nor is it from state regulation. Making it harder or less lucrative to compete with bad landlords makes it more di cult for people to get better options. It also limits the competitive pressure that can force bad landlords to be better to the people who rent from them.

is is seen in reviews of the economic e ects of rent control policies like the one Michigan’s Senate is considering. A 2024 review of the literature concluded, “Rent controls appear to be quite e ective in terms of slowing the growth of rents paid

for dwellings subject to control. However, this policy also leads to a wide range of adverse e ects a ecting the whole society.”

ese include decreased mobility, lower wages, and fewer options for the people looking for low-income housing.

Rent controls will hurt even the people who would pay lower rent. Owners are less likely to o er improvements to units and have more incentive to let them wear out. e people renting in manufactured housing communities may not feel like kings. But there are people trying to make an honest buck by giving them good deals. e bills in the Michigan Senate would make it harder to build new market-rate housing for low-income families. at’s not what lawmakers ought to want to do.

James M. Hohman is the director of scal policy at the Mackinac Center for Public Policy.

Michigan lawmakers are considering bills that would impose rent control on mobile home operators. BLOOMBERG

On his rst day as the 22nd president of Michigan State University, Kevin M. Guskiewicz spoke to hundreds of guests who attended the investiture of the 2024 class of endowed chairs and professors and MSU Foundation professors. | DERRICK TURNER/MICHIGAN STATE UNIVERSITY

Matt Elliott President, Bank of America Detroit

BANKING AND FINANCE

Bank branches aren’t making a comeback — but are evolving

By Anna Fifelski

Brick-and-mortar bank branches are still on the decline, but some big names in the banking industry are investing in quality over quantity.

e renewed interest in brickand-mortar locations may be due to an interest in meeting customers where they are. For several large banks, that’s not Michigan.

In early February, PNC Financial Services Group Inc. announced it will spend about $1 billion to open new branches and renovate existing ones through 2028.

A spokesperson for PNC told Crain’s that Detroit will receive one new branch and, while the company could not share numbers on the number of renovations in the state, some PNC branches in Michigan will be getting a facelift.

JPMorgan Chase & Co., the largest bank in the U.S., also announced plans to open more than 500 new branches and hire 3,500 workers over the next three years.

ough spokespeople from the New York-based bank could not share information on whether new branches will open in Michigan.

inking within the industry is evolving on what physical branches will mean for banks in the future.

Michael Tierney, president and CEO of Community Bankers of Michigan, said consumers may be migrated back to physical locations because of cybersecurity concerns.

“ e amount of fraud that’s been committed on business and individual accounts has never been higher, and a lot of it has to do with everything being done electronically,” Tierney said. “With physical locations (people) could … put a hold on their accounts that says ‘Don’t let anybody take any money out of my account unless you see me physically in the branch.’ It’s not going to go back to what it used to be in the ’70s or the ’60s, but I can see people becoming much more wary of electronic transactions and doing more things where they know that they’ve got a secure interaction with their nancial institution.”

Kristin Korzekwa, the managing director of Deloitte Consulting LLP and retail banking practice leader, thinks the brick-andmortar locations allow banks to get creative in the ways they try to meet their customers.

“A lot of banks are thinking about the role of the branch as be-

ing a place where they can provide nancial advice … so what that might mean is that they might need more seated space for bankers to sit down and have those types of conversations with customers,” Korzekwa said. “If you think about a bank potentially wanting to improve overall community engagement and how they’re able to engage with their customers, you might see them bringing in co ee bars or having a cafe format.”

Whether introducing a new local co ee shop or providing peace of mind to their customers, physical locations have always been a signi cant factor in a bank’s success. And they still matter for newly formed banks.

According to a report by the Federal Reserve from September

2023, de novo branches, or branches opened by a newly formed bank, have outpaced established bank expansions in deposit growth. e median de novo branch reaches $50 million in deposits within two years of entry, whereas established banks experience more moderate growth.

In a November 2023 survey of people 18-23, New York-based market research company Insider Intelligence found that Gen Z customers are most likely to consider distance to ATMs and physical branches when choosing a new bank. According to the survey, 42.4% of U.S. Gen Z banking consumers would consider their proximity to ATMs as a factor before choosing a new bank, while 28.8% would consider their distance to a branch.

“Physical location is still really important when a customer chooses a bank or where they want to move their account to,” Tierney said. “It does also cement your image in the community when people are driving around and they see your branches, they see your brand and that reinforces it and they know they can go there if they need to. And then on the business side, they’re not banking with you unless you have a local branch because businesses have cash needs. ey just have so many di erent ways that they utilize their nancial institution that they’re going to want a physical presence.”

Banks in Michigan closed 345 branches from 2020 to 2023, according to an analysis by online lender LendingTree.

“The largest banks in the state by market share, so the six largest banks — that’s JP Morgan Chase, Huntington, Comerica, Bank of America, PNC and Fifth Third — they have closed 27% of their branches in the state of Michigan since 2018,” Tierney said.

includes 98 branch locations located inside Meijer Inc. stores across the state.

Despite the news of new branches across the country, banks aren’t expanding. Instead, they’re relocating branches to the hottest markets, Korzekwa said.

“On a net basis, there is still a trend towards an overall reduction of branches. So what you might see is a bank opening 100 new branches in speci c growth areas or in order to improve their alignment with their overall customer engagement strategy, but they may then close 150 branches in lower growth markets,” Korzekwa said. is is a strategy which applies to banks large and small and is why Michigan continues to see bank closures.

Tierney said the out-migration of larger banks is largely due to the slow population and econom-

“On a net basis, there is still a trend towards an overall reduction of branches.”

Kristin Korzekwa, managing director, Deloitte Consulting LLP

Much of the decline in the number of branches in Michigan resulted from the 2021 merger between Huntington Bancshares Inc. and the former TCF Financial Corp., a deal that led to the closing of 197 o ces that were in close proximity to other branches. at

ic growth in Michigan compared to other states. However, the vacant buildings open opportunities for community banks to move in.

“We could really use another 10 to 15 banks in Michigan, especially if we want to spur our economic growth relative to other states,” Tierney said.

PNC plans to open a new branch in Detroit. BLOOMBERG

Rocket and UWM staff down by a third in 3 years

By Nick Manes

As 2020 drew to a close and the home lending sector was heating up amid some of the lowest interest rates in history, metro Detroit’s two largest mortgage companies employed a collective 31,500 people. ree years later, with the industry in the doldrums, that gure is down by approximately one-third, according to securities lings.

Still, Rocket Companies Inc. — the Detroit-based publicly traded umbrella company for billionaire Dan Gilbert’s suite of consumer nance businesses, including Rocket Mortgage — and United Wholesale Mortgage in Pontiac remain among the larger employers in the region, particularly for non-automotive and non-health care-related businesses.

But as interest rates steadily rose throughout much of 2022 and 2023, the local companies — along with many others in the sector — have lower headcounts from the peak of the lending cycle. Rocket and UWM were down to a combined 21,400 people as of the end of 2023.

While UWM, which appears to

be back on the upswing of hiring, maintains its sta reductions have been the result of natural attrition, Rocket has engaged in several rounds of sta buyouts.

All told, U.S. mortgage originations fell from more than $4.4 trillion in 2021 to just over $1.6 trillion last year, according to the Mortgage Bankers Association trade group.

At Rocket Companies, which includes Rocket Mortgage as its agship company, total employment has declined nearly 40% from the end of 2020 to the end of 2023. A

regulatory ling recently shows the company’s headcount at approximately 14,700 employees.

e ling does not break out a speci c number of employees in Detroit, but as of last July Rocket had about 10,735 employees working in its corporate headquarters city, according to Crain’s data. Rocket also has employees in Charlotte, N.C., Cleveland and the Phoenix area.

e company’s overall employment did grow by about 2,000 people from the end of 2020 to the end of 2021, according to lings with

the U.S. Securities and Exchange Commission.

“In 2023, the housing and mortgage industry continued to face challenging conditions,” Rocket Companies spokesman Aaron Emerson wrote in a statement to Crain’s. “In order to right-size our business to t the current market, we o ered a voluntary career transition program to select groups within the organization, providing signi cant cash incentives, extended healthcare and other support to those who chose to participate.”

Likewise, headcount at rival lender UWM headed by billionaire CEO Mat Ishbia peaked in the boom year of 2021 at around 8,000 employees, having ticked up slightly from the previous year. By the end of 2022, ranks at the company had fallen to around 6,000. A regulatory ling from the company recently shows that UWM ended last year with about 6,700 employees.

“We amped up our hiring e orts in 2023 to ensure we’re operationally prepared for any market shift,” UWM spokesperson Nicole Roberts wrote in a statement to Crain’s. “Unlike other lenders who have

done buyouts and/or layo s, and will be caught scrambling to hire to meet volume demands, we have instead invested in our people and trained them up so they’re ready to hit the ground running when rates inevitably drop.”

Both Rocket and UWM reported full-year 2023 earnings in recent weeks, with both companies reporting their rst annual losses as public companies. Earnings reports show both companies cut expenses related to salaries last year.

UWM CEO Ishbia has said his company is likely to continue growing but would be unlikely to get back to the peak numbers seen around 2021.

Meanwhile, Rocket’s new CEO, tech industry veteran Varun Krishna, has touted that the company is working to deploy increased automation throughout the business.

“We believe AI will shape the future of the home buying industry and Rocket is leading the way. Technology is the answer to better client experiences and capacity management in our industry,” Krishna said during an earnings call.

At

Both Rocket Companies Inc. and United Wholesale Mortgage have cut their number of employees since the mortgage industry peaked in 2021. FILE PHOTOS

Helping Michigan Businesses Thrive.

Flagstar

gets $1 billion lifeline

By Nick Manes

Amid a continuing stock slide, the troubled parent of Flagstar Bank has received a $1 billion lifeline from some leading names in nance, and shaken up its executive ranks for a second time.

New York Community Bancorp. on March 6 announced that a group of investors, led by former U.S. Treasury Secretary Steven Mnuchin, would inject $1 billion into the Long Islandbased nancial institution that owns the Flagstar brand, formerly headquartered in Troy.

As part of the deal announced March 6, the bank also announced that Joseph Otting will assume the role of CEO. Otting, a former bank executive and comptroller of the currency under former President Donald Trump, takes the reins from Alessandro DiNello.

DiNello will return to his slot as nonexecutive chair of the bank’s board.

“We welcome the approach that Liberty and its partners took in its evaluation of the Bank and look forward to incorporating their insights going forward,” DiNello said in a statement announcing the deal. e investment and mix of investors makes for “a positive endorsement of the turnaround that is underway and allows us to execute on our strategy from a position of strength,” DiNello added. “We enter this next chapter with a strong balance sheet and liquidity position supported by a diversi ed and retail focused deposit base. Our new leadership team, with the support of the reconstituted Board, will continue to take the actions that are necessary to improve

earnings, pro tability and drive enhanced value for shareholders.”

DiNello was previously CEO of Flagstar and moved into the CEO role at NYCB Feb. 29 amid ongoing stock declines and the bank announcing “material weakness in internal controls, as well as a $2.4 billion hit to previously released earnings as the bank wrote down the value of its assets.

e new investor group consists of Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital, Reverence Capital Partners, Citadel Securities, as well institutional investors and “certain members” of NYCB’s management, according to a news release.

“We decided to make this investment because we believe Sandro, alongside new management, has taken the appropriate actions to stabilize the Company and to position NYCB to become a best-in-class $100+ billion national bank with a diversi ed and de-risked business model that supports long term pro tability,” Mnuchin said in the release.

e release said that Liberty will invest $450 million, Hudson Bay $250 million and Reverence $200 million as part of the transaction.

Crain’s hires assistant managing editor

Crain’s Detroit Business has hired an assistant managing editor to join its editorial leadership team.

By Crain’s Detroit Business Amy Barczy

Amy Barczy comes to Crain’s from Blue Cross Blue Shield of Michigan where she most recently served as an editor and communications project manager. Prior to Blue Cross, Barczy worked at MLive where she covered Michigan’s emerging cannabis industry and, before that, Grand Rapids city hall and public a airs.

Barczy has also worked as a reporter at newspapers in Ann Arbor, Port Huron and Holland, covering a variety of topics including education, economic development and health care. At Crain’s, she will supervise reporters and help direct coverage in commercial real estate, technology and nance, health care, and cannabis.

“Amy is a seasoned journalist who knows how to identify and present stories that resonate with readers and grow digital audience,” Crain’s Executive Editor Mickey Ciokajlo said. “I am thrilled to have her join our editorial leadership team in Detroit.”

Amy and her husband, Jason, live in Grosse Pointe with their two children.

Yeo

Celebrated chef Maxcel Hardy unexpectedly dies at 40

By Jay Davis

Award-winning Detroit chef Maxcel Hardy died unexpectedly late March 4, a family spokesperson told Crain’s on March 5. He was 40 years old.

The Detroit native died sometime before 11 p.m. on March 4, spokesperson David Rudolph said. Rudolph had worked with Hardy since 2017.

No other details were disclosed and a cause of death was not immediately known. Hardy’s family is requesting privacy. Hardy’s mother lives in Florida and he has other family in the Bahamas, according to Rudolph.

“It’s very unexpected. I just saw (Hardy)...,” Rudolph said. “We were talking about the next phases of (planned seafood restaurant) What’s Crackin’ on Livernois. As always, things get pushed back but the intent was to open before the (2024 NFL Draft).”

Hardy was well-known in the local food scene for his Caribbeanin uenced dishes. He was also a community activist who spearheaded e orts to ght hunger.

Hardy returned to the city to open River Bistro in 2017 in Rosedale Park in northwest Detroit. It closed a year later. e next year, Hardy opened Coop Detroit inside Midtown food hall Detroit

Shipping Co. Hardy also owned and ran a burgers and pizza carryout restaurant called Jed’s Detroit at 1648 E. Seven Mile Road.

In 2019, the New York Times honored Hardy as one of “16 Black Chefs Changing Food in America.” He was also recognized by Hour Detroit as restaurateur of the year in 2021.

Hardy also collaborated with other local chefs and created dishes at pop-ups and special events, including a recent WDET fundraiser at the former Berry Gordy mansion in the Boston Edison neighborhood. Hardy was among more than a dozen Black chefs who gathered last month for the Black Excellence Culinary Symphony 2024 at Table No. 2 in Greektown to raise money

for and support young culinarians.  Sarah Welch, a partner and executive chef at Marrow in Detroit, remembered Hardy on March 5.

“It’s hard when you hear about young chefs passing because it seems to be happening a lot. You never know what someone’s work/ life balance is,” she said. “Once you decide to open a restaurant you’re not a chef anymore, you’re a gurehead for people to pick at. (Hardy) did so much for the community, too. You can’t easily replace a chef and business owner. His passing is going to impact a lot of people.”

House of Pure Vin owner Regina Gaines said she was devastated by the news of Hardy’s death. Gaines, who collaborated with Hardy on a series of private dinners, said the

two were developing a concept to put House of Pure Vin products inside Detroit Metropolitan Airport.

“When he came back home, he brought global media attention to the city. He brought a level of validation to me and my business,” Gaines said. “He’s somebody I admired because you could see his dedication and hard work. He was an advocate for our city. Max was just a good guy. He frequented a lot of small businesses and neighborhood spots whether it was ne dining or casual dining. Max worked really hard to make opportunities for a lot of people. It’s important for Detroit, a city that’s 75%-80% Black, to support our own, especially when they’re delivering. Max’s shoes will never be lled.”

Marrow owner Ping Ho said she knew of Hardy’s work. Hardy’s death, at just 40 years old, surprised Ho. She said hospitality is an industry that can take a lot out of anyone.

“Not just mentally. It’s physically taxing, too,” Ho said. “It’s a job where, traditionally, a lot of late nights happen.

“I think it’s commonly known that substance abuse happens and mental health issues are more prevalent in this industry because of the grueling nature of it,” she said, not commenting directly on Hardy’s circumstances. “ e culture surrounding restaurants, from the job

requirements to a lot of other things, can be tough to navigate.”

Other tributes poured in on social media.

“As a graduate of the high school culinary arts program known as ProStart, Chef Max also shared his expertise with the next generation, often serving as a judge at Michigan’s statewide ProStart culinary arts and restaurant management competition,” the Detroit Restaurant & Lodging Association said in a post on X.

Hardy spent time as a personal chef in Miami and New York, cooking for athletes and celebrities.

“He worked with some highpro le people. He built up his name, honed his craft and came home,” Rudolph said.

Rudolph said Hardy should be remembered for his work in the Detroit community. e two, along with other chefs, established the Too Many Cooks in the Kitchen for Good initiative to feed the homeless during the COVID-19 pandemic.

“I have a collection of his food artistry but what I remember most is what (Hardy) did for other people,” Rudolph said. “He was always uplifting others, particularly other Black chefs. He extended himself even at times it wasn’t convenient for him. He rarely told anybody ‘no’.” Hardy is survived by his mother and two children.

Detroit chef Maxcel Hardy was also known for his work in the community. DAVID RUDOLPH

Auto, aerospace supplier lays off 80 in Livonia

Quality Metalcraft, a supplier of metal parts to the automotive and aerospace industries, laid o 80 employees at a plant in Livonia.

e layo s were e ective Feb. 16 and are inde nite, according to a WARN notice led with the state.

ey are the result of the “unexpected reduction in production volumes from customers.”

Most of the impacted employees at the 12001 Farmington Road plant are production operators. At least some of them are represented by United Auto Workers Local 174.

Neither the company nor the union returned messages seeking comment.

Quality Metalcraft, whose sister company is Experi-Metal Inc., op-

erates a pair of production and assembly plants in Livonia and an aerospace and prototype plant in Sterling Heights, according to its website. e company can deliver component orders from small bracketry to body in white, its website said.

Quality Metalcraft was acquired in 2015 by Boston-based private equity rm Watermill Group LLC for an undisclosed sum. At the time, it had 350 employees across four locations. e company was founded in 1964 and had been family-owned prior to the PE buyout. e supplier carved out a niche as a producer of prototype and low-volume parts for programs including the Chevrolet Volt and Cadillac CT-S coupe underbodies and the Chevrolet Camaro ZL-1 hood.

Michigan mulls state-owned lower-cost insulin brand

Lawmakers in Lansing began considering bills recently that would allow the state to partner with a private manufacturer to produce and distribute low-cost generic insulin.

e state House Health Policy Committee heard testimony from the backers of two bills that would require the Michigan Strategic Fund to create an insulin production program and o er $150 million to help develop a manufacturing facility.

Backers of the bipartisan bills say a public-private partnership could produce and sell generic insulin that costs far less than what consumers pay today.

Rep. Curtis VanderWall, a Republican from Ludington, estimates a state-owned insulin brand would cost as low as $50 for a month’s supply — a fraction of the nearly $650 a month one witness at a recent legislative hearing said she has paid out of pocket to control her diabetes.

e price for a generic insulin produced through a public-private partnership could eventually go down to $35 a month, VanderWall said.

“It’s no secret: Insulin prices have been too high for far too long. We’ve all heard about the horror stories of people who can’t a ord their insulin, so they end up either selling personal belongings or, worse yet, try to ration it, skipping doses and causing long-term problems,” VanderWall told colleagues on the Health Policy Committee. “ e demand of insulin is high, and we’ve been trying for years to nd a workable cost-effective solution to lowering prices. We owe it to our people to provide stability.”

e two bills “would put Michigan on the cutting edge of health care solutions in the nation and revolutionize the insulin market” by creating a framework for the state to contract with a generic insulin producer for a production facility, VanderWall said. A state partnership to produce insulin would lower prices without arti cial price controls, which e orts at both the state and federal levels have sought to impose through caps on out-of-pocket costs for consumers.

“ e key part of this legislation is that the state of Michigan will own the drug label, making it automatically available to people on both public and private insurance without the added cost of being involved with the pharmacy bene-

t manager,” he said. “In fact, pharmacy bene t managers won’t be allowed to restrict access to this drug at all. No markup, no rebates, no games, just a ordable quality.”

VanderWall’s House Bill 4890 would direct the Michigan Strategic Fund to issue a request for proposals for a producer to develop and open a production facility in the state to make and distribute a U.S. Food and Drug Administration-approved insulin. e Michigan Strategic Fund could o er a grant of up to $150 million to support creating a production facility in the state.

H.B. 4890 and a companion bill, H.B. 5519 that’s sponsored by Rep. Jennifer Conlin, a Democrat from Washtenaw County, also would establish annual reporting re-

quirements to the governor and state Legislature.

e bills would put into state law an idea that Gov. Gretchen Whitmer rst pitched in an October 2022 executive order and that she later included in a budget proposal for the 2024 scal year. e idea never made it into the nal state budget, leading lawmakers who back the concept to propose legislation last summer.

In her original executive order directing state agencies to examine potential solutions to the high costs for insulin, the governor cited how prices have increased 600% over the last decade.

Blue Cross Blue Shield of Michigan, the Michigan Association of Health Plans, the Michigan Manufacturers Association, the Michigan State Medical Society, and the American Diabetes Association indicated support for the bills, according to Rep. Julie Rogers, a Democrat from Kalamazoo who chairs the House Health Policy Committee. Representatives from the pharmaceutical industry have indicated opposition, Rogers said.

Among the lawmakers who voiced support at a recent committee hearing was Rep. Carol Glanville, a Democrat from Walker.

“I love the concept of this,” Glanville said. “I think in terms of innovation as you talk about what we can bring as new solutions to health care, it’s a great, great concept.”

VanderWall, a conservative Republican who ordinarily advocates for free markets and opposes government involvement in private markets, does not view a state-owned facility operated with a private-sector partner as competing with the pharmaceutical industry. He views the legislation as “an opportunity as a state to

provide a life-saving drug that we’re seeing” that has become “very expensive,” resulting in a “huge burden” for people who need it to manage their diabetes.

“If we want to say it’s in competition, certainly, I guess you could look at it that way,” he said.

Support for the bills also came from a nonpro t generic drug manufacturer that’s backed by philanthropy and investments from major health systems, including partners from Michigan.

Civica Rx has several generic drugs in the development pipeline and plans to sell generic insulin for no more than $30 per vial of insulin and $55 for a box of ve insulin pens.

“Our intent with this pricing strategy is both to o er low priced insulin directly to consumers but also to create competition in the marketplace that will lead other insulin manufacturers to lower their prices,” Allan Coukell, public policy leader at Civica Rx, told lawmakers.

A manufacturer outside of the U.S. produces “raw” insulin for Civica Rx that goes into pens and vials produced at a facility in Petersburg, Va., but “we would very much like to bring that part of the manufacturing process back to the U.S., and if Civica were the private sector contractor selected … we would be able to do so,” Coukell said.

“We have assessed the current U.S. landscape and there is a need for more insulin manufacturing capacity in the U.S.,” he said.

When Civica Rx formed ve years ago, its early investors included Blue Cross Blue Shield of Michigan and 17 other Blues plans across the country, plus health systems Corewell Health and Trinity Health.

Mark Sanchez

The state House Health Policy Committee heard testimony from the backers of two bills that would require the Michigan Strategic Fund to create an insulin production program and offer $150 million to help develop a manufacturing facility. | BLOOMBERG

Kurt Nagl

Quality Metalcraft operates a pair of production and assembly plants in Livonia and an aerospace and prototype plant in Sterling Heights.

QUALITY METALCRAFT

Detroit People’s Food Co-op nears opening

By Jay Davis

e May 1 scheduled opening of Detroit People’s Food Co-op is a decade in the making.

“I’m excited. I’m excited for Detroiters,” Food Co-op board President Lanay Gilbert-Williams said of the new community-owned and -run grocery. “ ere have been countless, countless people who’ve been involved in creating this co-op for over a decade: from the Detroit Black Community Food Sovereignty Network who envisioned the co-op, to the initial steering committee member/owners who volunteer to be on all of the committees, the board members.”

e Food Co-op opens this spring in a 15,000-square-foot groundoor space at 8324 Woodward Ave. in Detroit’s North End section. It will operate out of the Detroit Food Commons, a venture from real estate development rm Develop Detroit and the nonpro t DBCFSN.

e project’s price tag is $22 million, according to the DBCFSN website. e groups last year earned a $100,000 Motor City Match cash grant to help get it o the ground and the membership group has invested about $1.5 million into the store.

e grocery store is owned by the more than 2,200 members who paid a one-time $200 fee to join, according to Gilbert-Williams. Membership is open to anyone in Michigan who is at least 21 years old (because DPFC will sell beer and wine), not just Black Detroit residents. e store itself will be open to the public.

Gilbert-Williams said the store will have about 30 employees.

Gilbert-Williams, who has been involved with the project for about seven years, said the Detroit People’s Food Co-op will have far-reaching e ects on future generations.

“I’m excited for the young people in Detroit who will have the oppor-

adults in their community have come together to create a solution to something as vital as bringing food into the community. at’s exciting. We need to see it.”

e food co-op also helps address concerns about Detroit as a food desert — an urban area where it’s challenging to access a ordable, fresh and high-quality food. It will sell meat, frozen foods and fresh fruits and vegetables. e store will also have a deli with some dine-in seating and a refrigerated foods section. e co-op is hosting vendor fairs for local merchants to stock the store, Gilbert-Williams said.

e Detroit People’s Food Co-op is the anchor tenant at the Detroit Food Commons, a 30,000-squarefoot development that will also include four fully licensed incubator kitchens available for rent, a 3,900-square-foot event space, a 4,000-square-foot event space with room for 250 and 15 outdoor vendor booths. e building will also host administrative o ces for the Detroit Black Community Food Sovereignty Network.

Malik Yakini, executive director of the network and a co-op board member, said establishing Detroit People’s Food Co-op is about more than o ering fresh food in an area that lacks many options.

“ e Detroit Black Community Food Sovereignty Network is an anti-capitalist organization. We think capitalism is a terrible system for the planet and for human beings. It creates vast inequities,” Yakini said. “And so for us, moving people toward thinking about a co-op economy, it’s a step toward breaking the monopoly. In fact, frankly, I think it’s the only chance that Black people have to thrive collectively within this society is by doing it cooperatively.”

ere are a couple of other Blackowned grocery stores in Detroit— Neighborhood Grocery in Je erson-Chalmers on the east side and Linwood Fresh Market in nearby Dexter-Linwood.

“I’m excited for the young people in Detroit who will have the opportunity to learn about the co-op business model.”

Lanay Gilbert-Williams, board president, Detroit People’s Food Co-op

tunity to learn about the co-op business model,” she said. “It’s not something that Detroiters are exposed to. So I’m excited about the thought that young people will know that this is another way that you can create a business in your city. You don’t have to have a million dollars, you don’t have to do it all by yourself.

“I know we have that ‘pull yourself up from the bootstraps’ mentality. When I speak to young people, they’re excited about the idea that ...

that resonated, too.”

Detroit People’s Food Co-op and Detroit Food Commons are vital projects, Oren Brandvain, Develop Detroit director of community investment and Detroit Food Commons project lead, said in an email.

“Develop Detroit is honored to have co-led the development of the Detroit Food Commons building, which, through (the Detroit Black Community Food Sovereignty Network’s) stewardship, will address multiple pressing issues Detroiters face such as food access and security, community empowerment, and neighborhood livability,” Brandvain said. “ e Detroit Food Commons project builds on Develop Detroit’s

$65 million investment in the North End neighborhood, where we remain committed to using the power of real estate to unlock quality affordable housing and greater access to opportunities for Detroiters.”

Gilbert-Williams is looking forward to those possibilities, too.

“I’m excited for all of the people who have put work into it,” she said. “ ere are some who came in, did a lot of the heavy lifting who may no longer live in the city or in the state to be here to see how it’s come along. And I’m beyond excited that, again, our young people will know that this happened regardless of how it goes. It’s a legacy that we’re building.”

Yakini said adding members to the co-op’s ownership group didn’t require a hard sell.

“... one of the things we really stressed is that Detroit is a majority Black city, but almost all the grocery stores are owned by other people,” Yakini said. “We said that we need to create a food economy where other groups are not coming in just extracting the resources from our account.

“So that kind of framing, I think resonated with a lot of people and won people over early. I think people are resonating more with the idea of Black people having ownership and a non-extractive economy. And the co-op idea might have been kind of new to people, but I think

The Detroit People’s Food Co-op will operate out of a 15,000-square-foot ground- oor space inside the Detroit Food Commons on Woodward Avenue in Detroit’s North End. At left: board President Lanay Gilbert-Williams (left) and Malik Yakini, executive director of the Detroit Black Community Food Sovereignty Network and co-op board member, inside the grocery store that is still under construction. PHOTOS BY JAY DAVIS

German manufacturer Orafol is working to build out a new 112,000-square-foot factory just off Lapeer Road in Orion Township. | ORAFOL

German auto supplier undergoes $100M expansion in Oakland County

By Kurt Nagl

German manufacturer Orafol is nearing completion of the rst phase of a $100 million expansion in Oakland County spurred by moving production from Europe.

e company, which makes wraps and decals for cars and other industries, is working to build out a new 112,000-square-foot factory along Lapeer Road in Orion Township and planning to reconstruct and

PEOPLE ON THE MOVE

To

ARCHITECTURE

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contact Debora Stein at 917.226.5470 / dstein@crain.com

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expand its nearby o ce building.

e move is expected to create more than 50 jobs, adding to Orafol Americas’ headcount of 400 in Michigan, said Richard Genrich, managing director for the company’s Orion Township plant. e growth is the result of more business from Ford Motor Co., General Motors Co., Stellantis NV and other automakers, as well as supporting parent company Orafol Group’s business in other segments, in-

cluding outdoor signage and graphics.

Adding production in the Detroit suburb is also a strategic play to hedge against supply chain disruptions for the German company, which acquired Kay Automotive Graphics in 2019. e deal gave Orafol a foothold as a tier-one supplier in the automotive industry, and now the company’s expansion of the campus on Kay Industrial Drive will allow it to move some production from Europe.

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promoted Greg Kacvinsky PE, to its rst-ever chief administrative of cer, responsible for risk management, contract review, loss prevention, staff training and mentoring, budgeting, and business planning for corporate initiatives. His new role also oversees Marketing, HR, and Safety teams. Joining the architecture, engineering and planning rm in 2011, he was elected to partner in 2015 and most recently provided leadership as director of risk management.

To place your listing, contact Debora Stein / dstein@crain.com

FOOD

National Food Group nationalfoodgroup.com

“We’re moving production from Germany just to mitigate risk in the supply chain and currency exchange and other variables,” Genrich told Crain’s. “We’ll be able to increase capacity for the automotive market and be able to do a lot of things now that we weren’t able to do prior.”

e company’s adhesive products for cars include sill and bumper protectors, racing stripes, decals, wraps and window tints, while nonauto applications can be found in road and construction signs and industrial tapes.

“We’re moving production from Germany just to mitigate risk in the supply chain...”

Richard Genrich, managing director for the Orion Township plant

Tara Aldea, AAP, CTP, CRCR, First Vice President, Senior Treasury Sales Of cer III, brings 27 years of banking and treasury management experience to develop existing and attract new relationships in SE Michigan. With a focus on relationship development, Aldea will help mid-sized and corporate customers and non-pro ts achieve their nancial goals.

Tamara Flake, Vice President, Government Banking Sales Of cer, a 25-year veteran of the nancial industry, brings extensive experience in government banking with a foundation in service and creative troubleshooting solutions. Flake will focus on product development for public unit and municipal customers in SE Michigan. An advocate for her clients, she is highly responsive and transparent.

HUMAN RESOURCES

HRPro

LAW

Honigman LLP

HRPro, one of the nation’s premier HR Consulting and Administration rms based in Royal Oak, Michigan, has appointed Teresa Edwards as its President. Kristopher Powell, CEO, announced Teresa’s promotion, expressing con dence in both her leadership and dedication. Powell praised Teresa’s multitiered expertise in fostering a great culture, exceptional interpersonal skills, and outstanding technical talent. To learn more about HRPro, please visit www.hrpro.com

Honigman LLP welcomes David J. Axelson to its Corporate Department as a partner in the rm’s Finance Practice Group. Based in Detroit, Axelson specializes in acquisition nancings, leveraged buyouts, recapitalizations, cash- ow and asset-based credit facilities, and debt restructurings. He works with private equity sponsors, portfolio companies, and corporate borrowers in a broad range of nance transactions.

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e factory expansion in Orion Township will support production of vinyl and polyester products for each industry served by the company, Genrich said. About $80 million will be invested in the new plant, which will house two high-level coating lines and run with three shifts. Production is expected to begin in the spring.

e second phase of the project calls for a $20 million reconstruction of the company’s o ce building at 57 Kay Industrial Drive and the addition of a second story. at is still in the early stages, with site plan approval expected to be considered next month.

Novi-based Cunningham-Limp Development Co. is handling the design and development for both phases of the project. Nearby in Auburn Hills, Cunningham-Limp is also leading construction on a 48,000-square-foot expansion of TI Fluid Systems’ headquarters in Auburn Hills and a 78,000-squarefoot EV battery testing lab by TuvSud.

Genrich said the expansion is a big deal for Orafol, allowing the company to skip shipping delays and supply chain snarls by locating manufacturing closer to customers, while also creating jobs locally.

“When Orafol acquired this company in 2019, that was one of the things they had in mind,” he said.

Flake

Aldea

FRANCO

From Page 3

with a wide range of clients from global auto supplier Forvia to the Salvation Army. It achieved $4.9 million in net sales last year, up 30% year over year. Kozak said she aims for 20% revenue growth this year.

e CEO attributes that growth to branching out from the traditional public relations function.

“I de nitely think it is a shift to being more integrated communications partners to clients,” she said. “We were very deliberate, in the early days of social media even, in working hard at integrating communications, getting outside of our PR-only roots and earned media focus.”

Franco employs 31 people, up roughly half a dozen from ve years ago. By revenue, Franco is a top 20

PR rm in the Midwest, according to PR database O’Dwyer’s. It is the second largest, behind Grand Rapids-based Lambert, which also has an o ce in Detroit.

Franco was started in 1964 by Anthony Franco. In 1985, Ponder came on as CFO before leading a buyout of the rm in 1993, when Franco retired.

For Kozak, who joined Franco in 2007 after leaving automotive supplier Metaldyne, taking over the rm is the culmination of a plan set in motion a decade ago when she was promoted to president in 2014 and to CEO in 2021. Kozak was also a 2019 Crain’s 40 under 40 honoree.

“At that point, it was not a foregone conclusion that 10 years later I would buy the business, but it was kind of set in motion,” she said.

Ponder will stay on as a consultant through 2025. He had stepped back from daily operations a cou-

ple of years ago but still handled nances and cash ow management up until the buyout.

Kozak said she aims to have Franco become a certi ed minority business enterprise through the Michigan Minority Supplier Development Council this year, which could open new business prospects. Also on the list of priorities is establishing equity opportunities for employees.

Functionally, not much changes under new ownership because Kozak, Sullivan and Little have been leading for a while. But Kozak said she aims to use the shift to lift up the team.

“We are really focused on people and emotional intelligence beyond the skill set,” she said. “Clients don’t hire us because we write the best press release. ey hire us and they keep us because of the people. My philosophy is investing rst into our team.”

HOUSING

From Page 3

Mortgage

easing down has helped some, but the key to improving affordability long-term is to build more homes.”

While a handful of metro areas included in the Zillow report, such as Pittsburgh, Memphis and Cleveland, do provide greater affordability — less income needed to afford a mortgage in the current environment — all of those metro areas are considerably smaller than the Detroit region.

As of January, a typical mortgage payment in metro Detroit with a 10% down payment was around $1,500 per month, and average buyers need around six years to save for that equity, per the Zillow figures. By comparison, in the U.S. at large, a typical monthly payment is nearly $2,200 and requires more than eight years of saving.

Typical metro Detroit homes are valued at about $236,000 on the Zillow Home Value Index, about twothirds less than a typical home in the broader country.

Lower-cost regions such as Southeast Michigan and other Midwest and Rust Belt areas have been playing catch-up to the broader country in terms of home prices in recent years. Metro Detroit, for instance, spent three months atop the monthly S&P CoreLogic

Case-Shiller Indices, which tracks home prices in the 20 largest metro regions of the U.S., and other areas such as Cleveland and Chicago have been at or near the top of the index in the last year.

Metro Detroit was usurped in December by two large Southern California markets — Los Angeles and San Diego — for the fastest-rising home values in the country.

While housing affordability is clearly on the decline, it’s hardly deterring some buyers, at least on the national level.

Mortgage data firm Intercontinental Exchange Inc. reported March 4 that first-time homebuyers made up the highest share of mortgage purchase volume in roughly a decade.

“While it remains a tough market for prospective purchasers, our eMBS agency securities database revealed that rst-time homebuyers actually made up 55% of all

“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains.”

Orphe Divounguy, a senior economist at Zillow, in a news release

agency purchase mortgages last year,” ICE Vice President Andy Walden said in a statement. “ at’s the highest share in the 10 years we’ve been tracking the metric.”

GLP-1 drugs such as Ozempic and Wegovy used to treat Type-2 diabetes and for weight loss, cost the insurer $350 million more in 2023 than in 2022, it said in a press release. e RSV vaccine, introduced to the public in the fall, boosted BCBSM spending in 2023 by $27 million, Joe Radtka, vice president and chief risk o cer, said in a conference call with reporters.

e Blues collected $21.9 billion in premiums and administrative revenue and paid out $17.8 billion in bene ts and services, more than $2 billion more than in 2022.

“ e health care economy, in Michigan and nationally, is experiencing an extreme wave of cost pressures brought on by surging utilization and skyrocketing demand for high-cost pharmaceuticals,” Loepp said in a press release. “Despite these extraordinary pressures, Blue Cross retained our membership, managed a positive nancial margin, and continued our dedicated e orts to promote a ordable health coverage for our members in 2023.”

e Blues were indeed kept out of the red by a strong performance of the company’s investment portfolio, which generated $757

million in income last year, up from the $74 million loss the year before.

ose investment gains allowed BCBSM to report total net income of $100 million, resulting in a margin of 0.2% on the year.

ough a small net income, it’s in sharp contrast to its $777 million loss in 2022.

BCBSM added to its total membership in 2022, adding about 19,000 new members to bring its total to more than 5.2 million.

e insurer did lose about 21,000 Medicaid members due to the state’s redetermination process following the end of the COVID-19 national emergency.

e state’s Medicaid population grew by approximately 700,000 during the pandemic thanks to the federal Families First Coronavirus Response Act,

signed by President Donald Trump on March 18, 2020, which required states to continue enrollment of Medicaid bene ciaries for as long as the government declared the COVID-19 pandemic a public health emergency. Tax dollars have been funding insurance for the increase of Medicaid members unchecked for three years.

However, the feds rolled back that stipulation as part of the 2023 budget bill signed by President Joe Biden late last year. In April, states were instructed to begin to re-establish their redetermination process, which assesses whether an individual receiving Medicaid bene ts continues to be eligible.

e state has since shed tens of thousands from Medicaid since last July, impacting insurers.

CEO Tina Kozak (center) bought out Dan Ponder as majority owner of Franco and is now sharing ownership with President and COO Tina Benvenuti Sullivan (right) and Senior Vice President Nikki Little (left). FRANCO

SUPER BOWL

From Page 1

Outpacing them was the need to bring suburbanites back into the city by creating new experiences, and enough parking spaces and seats in area restaurants and bars to accommodate them and visitors over a two- to three-day period.

Leaders who took part in the Super Bowl preparation in 2006 now look back on those e orts as a tipping point to bringing people back downtown and set the stage for two decades of growth in the city.

at renewed sense of pride, leaders said, will be on full display to the world as the city prepares to welcome an estimated 300,000 or more people in April for the NFL Draft.

With NFL Draft, “we are starting from a really strong base,” said Eric Larson, CEO of the Downtown Detroit Partnership and in 2006, a member of its board.

During Super Bowl prep, the focus was on making sure people came here, had a great experience and considered coming back and recognized that Detroit was still relevant.

Today, the city “not only has been proven to be relevant, but we now have an opportunity to … tell a story,” Larson said.

Cleaning up downtown

e perception the world would have of Detroit as the Super Bowl descended was a huge concern to Susan Sherer as she took on oversight of e orts to get the city ready as executive director of the Detroit Super Bowl XL Host Committee.

For help, she reached out to Kate Beebe, then the CEO of the Greater Detroit Partnership which merged with Detroit Downtown Inc. in 2005 to create what is now the Downtown Detroit Partnership.

When cleanup began in the downtown area in the run-up to the Super Bowl, there weren’t three businesses in a row that had been improved and were occupied, Beebe said. She and her team walked through the streets, identifying where to focus.

A lot of money went into the effort, too. Projects known as the Lower Woodward Improvement Program garnered more than $100 million in investment from the state, city and foundations for improvements in the area from Ford Field down through Washington, Broadway and Woodward to the Detroit River.

e investments accelerated streetscape improvements, spurred DTE Energy Co. to get the lights and electricity working and the Detroit Water and Sewerage Department to ensure all of the re hydrants on those streets were working, she said.

ey also provided $12 million in matching funds to encourage business and building owners to do façade improvements.

at was the carrot. For those not willing to make improvements, there was also a stick.

A dedicated judge and court heard accelerated blight violation hearings for 140 buildings the city agged for code violations in the 18 months before the Super Bowl.

In all, about 100 façades in and around Woodward saw improvements, Crain’s reported in 2022.

Roger Penske, chairman of the Super Bowl host committee, contributed “a signi cant amount” for other needed cleanup and beautication e orts, Sherer said.

“We knew there would be a lot of hard work because it was Detroit’s opportunity to shine and we wanted to make sure we did everything we could to ensure a smooth, safe and positive experience for all of the visitors to our city,” Penske said in an emailed statement.

“I am proud of how all the local entities came together and produced an amazing event in Detroit.”

ere wasn’t enough time or resources to get the city’s 10-12 towering, empty “dinosaur” buildings renovated before game, so buildings like the then-empty Book Cadillac Hotel were covered in mylar wraps with football players and other images to hide the blight, Beebe said.

e American Institute of Architects helped fund and create a contest for its architectural and design rm members to choose winning window displays for empty buildings along Woodward. ere were also e orts to get tenants into vacant spaces, leaders said, something that’s also happening now against a very di erent backdrop, led by Bedrock Detroit, as the city prepares for the draft.

Beyond the window dressing, Sherer, now owner of Columbus-based Education Projects, was concerned about the city’s empty

streets. “I lived downtown and walked those streets, and I knew that this would be big trouble for us.”

Visitors coming to Detroit for the Super Bowl were “used to having these really rich experiences with shopping and restaurants and lots of access to entertainment in that kind of capacity. And we just didn’t have that in downtown Detroit,” Sherer said.

She brie y considered hiring hundreds of actors to come and look lively and excited during the Super Bowl. But she dismissed the idea, opting for the real thing instead: changing Detroiters’ perceptions about their city and creating experiences that would bring them downtown.

Having lived in Capitol Park when the buses stopped there, “I knew a game in the city would be hard on Detroit if we did not create an experience that did not exist yet,” she said.

But creating that experiential capacity took some convincing of Penske and other host committee board members, she said.

Penske initially thought there was plenty for people to do in the city, Sherer said. But he changed his mind after she invited him and other board members to join Beebe and her team for a van ride to the downtown area and a walking tour once there.

“After walking the central business district, most came to believe that the opportunity for hosting a Super Bowl, without intervention, could be further damaging to the Detroit reputation,” Sherer said.

“It’s de nitely not like that now. It’s a thriving city, and I think people enjoy going downtown. ey’re having all kinds of experiences, from theater to sports to just even going down there for dinner… you see people walking dogs and riding bikes … It’s a fantastic experience downtown now.”

Part of the reason the private sector needed to lean in as heavily as it did on Penske and the private sector in 2006 is because local government really wasn’t in a position to provide support, Larson said.

“Fast forward. We have an incredibly strong mayor and county executive that have recognized the importance of this event, and have really been in a position that they could help support in a way that wasn’t possible in 2006. And that’s been very healthy.”

Penske agreed to sponsor the Motor City Winter Blast, a downtown winter festival held at Campus Martius, she said. e event debuted in 2005, a year ahead of the Super Bowl, and was held downtown until 2022 when it moved to Royal Oak due to funding challenges.

Closer to the 2006 Super Bowl, bars and restaurants popped up in vacant buildings along Woodward, Sherer said, giving patrons a destination.  Leaders worked with hotels, restaurants, taxi and limo drivers to encourage high levels of hospitality for all customers, visitor or not. ey signed up 9,000 volunteers to stand on street corners and help direct visitors on the day of the game. And they had a minority business referral program to ensure small, Detroit-based businesses could be included in some of the economic impact activity around the Super Bowl.

Detroit today

Downtown Detroit is a lively place these days, thanks to those e orts and some large developments that came online in the runup to Super Bowl XL. Ford Field opened in 2002, and the Detroit Symphony Orchestra opened e Max M. and Marjorie S. Fisher Music Center in 2003.

A stream of other developments followed in the years after the big game, including:

2007: Reopening of the Detroit Institute of Arts after a six-year, $158 million renovation.

◗ 2008: Reopening of the 31-story Book-Cadillac as the Westin Book Cadillac Detroit following a $200 million restoration.

◗ 2017: Detroit Red Wings move to their new home, Little Caesars Arena.

2023: Completion of the east leg of the Detroit Riverwalk, following $300 million investment, 20 years after e orts began.

Launch of 29-mile Joe Louis Greenway that will connect 23 neighborhoods in Detroit, Hamtramck, Highland Park and Dearborn to the Detroit riverfront and Detroit Riverwalk.

Back before the Super Bowl, Sherer took the People Mover downtown to work and saw the same six people on it every morning.

As they were with the Super Bowl, leaders are again focused on the people who will be watching — an estimated 54 million — and the more than 300,000 people expected to come to Detroit for the NFL Draft next month, Larson said.

ey are working with the Michigan Economic Development Corp., to ensure that some of the bigger opportunities in our economy in areas like technology and innovation are lifted up as part of telling Detroit’s story.

“We’re not just trying to make sure (people) have a great time. We are really trying to make sure we’re relevant in the conversation, whether it’s you thinking about planning a trip…starting a business…(or) moving here, and I think that’s a really healthy transition,” he said.

e Super Bowl is the NFL’s big dance, Larson said, but with the NFL Draft, all 32 football teams are competing, not just two. Given that Detroit is within driving distance of six NFL teams, he predicts Detroit will see large numbers of fans from many if not all 32 teams coming  here and setting up dedicated tailgate sites at di erent bars and locations.

“I personally believe ... we will exceed the level of participants locally and we will exceed the level of economics with this draft than we did it in 2006” with the Super Bowl, Larson said.

Estimates for the Super Bowl impact ranged from $302 million-$389 million. A more skeptical 2006 study by Anderson Economic Group pegged the impact at closer to $49 million.

Local organizers have told Crain’s they expect the draft in Detroit to exceed the $109 million in direct spending in Kansas City during the 2023 draft.

“To me, Detroit is a di erent city than it was when we hosted Super Bowl XL. ere is a di erent energy downtown and the vibrant business district is a part of that,” Penske said.

“We have more experience in hosting big events in the city — from annual events like the Detroit Grand Prix and the Rocket Mortgage Classic to the Final Four, which will return in 2027. Each event brings its own challenges and opportunities. e bottom line is, big events like the NFL Draft are great for Detroit and I am looking forward to seeing the city continue to shine.”

Buildings along Woodward Avenue in downtown Detroit are gutted in preparation for lofts in 2004. Revitalizing downtown and removing blight had long been priorities, but they were constant themes as the city prepared to host the 2006 Super Bowl. | AP

Leaders who took part in the Super Bowl preparation in 2006 now look back on those efforts as a tipping point to bringing people back downtown. DOWNTOWN DETROIT PARTNERSHIP

But still, with an upcoming blitz consisting of several hundred thousand people over just a few days April 25-27, you want to make a good impression.

“When you are inviting the world to your city, your state, your country, your house — you try your best to make these kinds of improvements, and that’s what you’re seeing now,” said Kevin Johnson, president and CEO of the Detroit Economic Growth Corp., which sta s various city economic development organizations like the Downtown Development Authority, Brown eld Redevelopment Authority and Economic Development Corp.

Millions are being spent on various upgrades in and around downtown, plus elsewhere around the city. A precise dollar gure is not known, but at least $5.7 million is coming from the DDA through its normal tax capture.  at includes:

Replacing brick pavers on Woodward Avenue sidewalks between Park Avenue and State Street. DDA cost: $1.7 million.

Providing 50% matching grants for parking lot owners up to $15,000 to beautify the properties with things like planters, trash can murals and benches. DDA cost: $900,000.

Installing new paving, lighting and landscaping in the Washington Boulevard median as part of a previously approved redesign plan. DDA cost: $1.3 million.

◗ Creating way nding signage in the area between the Fisher Service Drive to the north, Fifth Street to the west, St. Antoine to the east and the Detroit RiverWalk to the south. DDA cost: $500,000.

◗ Repairing and updating some 1,000 light poles in the area described above, as well as creating place-based lighting in certain downtown areas. DDA cost: $1.3 million.

In addition, the Downtown Detroit Partnership says that there are about 46 vacant storefronts in and around the area where the Draft will be held. ose are being

GOP

From Page 3

ey want to make sure that we’re going to work with these organizations and that we’re not going to try to re-create them or to try to control them or to freeze them out of the process. at is something that we are working on as well, putting in the plans to work with these outside organizations.”

e 70-year-old Hoekstra, a former nine-term congressman and U.S. ambassador to the Netherlands, faces a daunting rebuild just eight months before the election — which will feature the presidential race, a U.S. Senate seat opening with Democrat Debbie Stabenow’s retirement, two open competitive U.S. House districts and a battle for control of the Democratic-led Michigan House.

e Michigan Republican Party,

spruced up with things like window clings and wraps, Eric Larson, president and CEO of the DDP, told Crain’s last month.  ere will also be some more in-your-face changes the next few weeks, as well, including on well-traveled roads. For instance, eastbound I-94 heading into downtown between Central and Cecil avenues will be getting seven 10-foot-tall letters spelling out “DETROIT,” and another ve “Welcome to Detroit” signs will be installed, as well. ose signs will be at I-75 and Eight Mile Road; I-96 and Telegraph Road; I-94 and Moross Road; South eld Road at Eight Mile; and South eld at Ford Road, according to the Detroit Free Press, which reported those signs are costing the city $400,000 in a contract with Detroit-based Fairmount Sign Co. e broader e orts have not

he said, essentially has “no money.” It also has what he said is an unknown amount of debt, estimating it may range between $750,000 and $1.25 million without him knowing what might be owed on credit cards and to vendors.

“I couldn’t tell you whether that’s in the ballpark or not,” he said when asked how much is owed. “All I know is it’s more than what I’d like.”

Hoekstra also expressed concern that, based on records he received March 1, a “good portion” of a $263,000 transfer to the party from a joint fundraising committee a liated with the National Republican Congressional Committee “has been spent — and we would say has been spent, we don’t know whether it was inappropriate, but we do know that it was contrary to the kind of arrangements you’d normally make with a campaign committee. You

been without controversy. A series of murals painted downtown on privately owned buildings as part of a pre-Draft beauti cation e ort called “Be the Change” have drawn criticism. A $215,000 contract for the work through a group called Street Art for Mankind did not receive the requisite City Council approval, and no Detroit artists had been involved in its planning, the Detroit Free Press reported. e issue remains ongoing because the City Council rejected the contract once it retroactively appeared before it for a vote in January.

On the private sector side, groups like Dan Gilbert’s Bedrock LLC are installing new retailers and restaurants, bringing perhaps a dozen or so in the weeks leading up to the Draft, Crain’s reported last month. Bedrock controls much of the NFL Draft footprint

usually don’t use that money to pay operating expenses for the party. And it appears that’s maybe what the money was spent for. We’ve got to do some audit work and that kind of stu to see exactly what happened.” at situation, he said, is an example of why donors have been hesitant.

“ ey’ve been told for a year,

‘We don’t want your money.’ It’s kind of like, ‘Pete, we’ll start thinking about writing checks as soon as we know you’re in charge of the accounts. Until that time, we’re not going to write checks into the Republican Party because we saw what they did with the NRCC money,’” he said, saying it is supposed to help elect House Republicans and not cover other expenses.

He said he anticipates dropping a Karamo-initiated lawsuit against the Michigan Republican Party Trust and Comerica Bank. e

extra touch of icing on the cake, but nothing substantial.”

All of that pales in comparison to the years of work done to spi up the central business district leading up to the Super Bowl, when north of $150 million was spent, the former head of the DEGC, George Jackson, told Crain’s in 2011. at work included more than 100 building facade improvements, ramped-up code enforcement e orts and demolition of decaying buildings, including some that still raise hackles in the historic preservation community.

“You had a level of corporate investment over that period of time, from maybe the time the Super Bowl left until today. at level of corporate investment, from Bedrock to the Ilitches, other corporate entities that have come back into the downtown corridor ... You started to see physical improvements, more commercial activations of spaces,” Johnson said.

through its vast array of real estate holdings downtown.  It’s likely that work on the improvements will continue bumping right into the Draft, although major projects will be completed well in advance, said Claude Molinari, president and CEO of Visit Detroit and chairman of the Detroit Regional Convention Facility Authority board that oversees Huntington Place. “If anybody ever came to the night before the auto show, they think the show is never going to open the next day,” Molinari said. “And then, 8 a.m., bang, everything is in place. I think that we’ll probably be doing some last minute things, but whatever it’ll be, it’ll be super cial. Maybe a little

“We’re fortunate that we don’t have to mask anything. We don’t have to put lipstick on a pig,” Johnson continued. “We’re already in great shape and we’re making investments. ( e Draft) was an accelerant, no doubt about it, but we’re in a really positive position to show the world even more than what you saw over the playo weekend in Detroit, and that is a vibrant, and viable and beautiful city with a downtown that’s got a life and energy associated with it.”

Johnson and Molinari both described the steps to beautify

“We’re fortunate that we don’t have to mask anything. We don’t have to put lipstick on a pig.”

Kevin Johnson, president and CEO, Detroit Economic Growth Corp.

downtown in advance of the Draft more than just one-o measures to impress out-of-town visitors for just a few days, they said.  ey will be felt “well beyond the Draft,” Molinari said.  “ ere will be bene ts for the residents and future visitors,” Molinari said.

trust, which includes all living former party chairs and others, controls a limited liability company that owns the GOP headquarters in Lansing, which Karamo did not use and wanted to explore selling because the party owes at least $520,000 to the bank for a 2022 election-year loan.

“I don’t want to be suing Comerica, a bank that we’ve had a relationship with people tell me for more than 20 years. I don’t want to be in a lawsuit with them. And I don’t want to be in a lawsuit with the trustees of the Michigan Republican Party building in Lansing,” Hoekstra said, saying GOP general counsel Mike Bishop will move to dismiss the complaint.

Former chairs who are trustees include some major past donors like real estate developers Ron Weiser and Bobby Schostak and billionaire Betsy DeVos, the former U.S. education secretary.

“All three parties — the Michi-

gan Republican Party, Bobby Schostak and that group, and Comerica — we all have the same goal in mind,” Hoekstra said. “Let’s get back to a positive business relationship where the GOP is back in the headquarters and where we’ve got a normal business relationship with Comerica.”

Asked if there is any money to hire sta , Hoekstra said it has basically been a volunteer e ort to date, thanking Oakland County Republican Party Chair Vance Patrick and others for their assistance.

“We now expect money to start owing in,” he said, saying future spending will go toward voter turnout, election integrity and voter persuasion. “I am Dutch. I’m not really going to start incurring expenses to any great extent (until) the money comes in. If the money doesn’t come in, we’re not going to incur the debt. We’re in a hole. I’m going to stop digging.”

One of the murals painted on privately owned buildings in downtown Detroit as a part a pre-NFL Draft beauti cation effort called “Be the Change.” KIRK PINHO

Analyst explains why Chinese carmakers are rapidly rising

It’s been said that Silicon Valley is outpacing the Motor City when it comes to developing the software-de ned vehicle of the future. If that’s the case, then China is running laps around the competition. That’s the view of Tu Le, 49, founder of consultant Sino Auto Insights. Le grew up in metro Detroit and took his rst automotive job at General Motors Co.’s Orion Assembly before moving to the West Coast and eventually the Far East. He returned from Beijing a year-and-a-half ago with a warning that the Detroit 3 and auto industry writ large are nally starting to acknowledge publicly: the Chinese carmakers are coming to eat their lunch.

Are you from metro Detroit?

I grew up in Pontiac. I was born in Vietnam and came here when I was like a year old. I’m technically an immigrant, but I’m American.

You moved back to the U.S. from Beijing just recently?

August of ’22. In January 2020, my wife, kids and I came back to the U.S. for what we thought was three weeks. It turned into three-and-a-half months, but we got one-way tickets back to China and didn’t leave for two-and-a-half years because of COVID. My boys are 10 and 12, and we were always looking at moving back when they got out of grade school, and this seemed like the right time. I saw a huge opportunity to grow the business because I knew the EV wave was going to come this way. And having lived and worked in Asia, we can see around corners, I think. I’ve been ringing this bell like Paul Revere for the last ve years.

What sort of work did you do in China?

So while I was in China, I worked at Ford in Shanghai for about a year. And then living in Beijing, the German OEMs are all there, and so I did a lot of freelance consulting for some strategic agencies that did a lot of work for the Germans.

ey were super arrogant about Tesla. ey were super arrogant about these Chinese EVs, and I just knew that tidal wave was coming.

Do you think BYD and other Chinese automakers are going to ood the U.S. market with cars by importing through Mexico? It is a real possibility. What made it even more so is Tesla announced that they’re going to build a factory in Mexico, and what normally happens is when there’s a big OEM or a big factory that’s being built, suppliers normally scramble to come support them. And so with Tesla entering, there’s probably a decent amount of overlap, at least in China with Shanghai Giga (Tesla’s EV plant in China) and the Chinese EV makers, from a supply chain standpoint. And so it would make total sense, outside of the entering North America part of it, to have Mexico as the supply base.

CrainsDetroit.com

President and CEO KC Crain

Group publisher Jim Kirk, (312) 397-5503 or jkirk@crain.com

Executive editor Mickey Ciokajlo, (313) 446-0319 or mickey.ciokajlo@crain.com

Managing editor Michael Lee, (313) 446-1630 or malee@crain.com

Director of audience and engagement Elizabeth Couch, (313) 446-0419 or elizabeth.couch@crain.com

Director of visual media Stephanie Swearngin

Creative director Thomas J. Linden, tlinden@crain.com

Audience engagement editor Matthew Pollock

Assistant managing editor Beth Reeber Valone

Assistant managing editor Amy Barczy

By | Kurt Nagl

Tu Le is the founder of automotive consultancy Sino Auto Insights.

“I’m pulling my hair out with how much red tape there is, how slow things move here and how complicated people want to make it.”

What pressure does that put on the Detroit 3?

I think it’s important to also know that over 90% of all vehicles sold in China are under about $45,000, so they live in the mass market, OK. You might hear about Nio, you might hear about Li Auto, you might hear about these premium brands, but most of the cars are less than $50,000. at’s where BYD dominates. In automotive, the name of the game is scale. It should be in the back of your head that until GM, Ford, Stellantis get to, let’s say, 60,000 to 100,000 units a month, they can’t be pro table. And they’re never going to be pro table without using Chinese batteries through 2030.

What are some of the differences in the business culture between Silicon Valley, Beijing and here in Detroit?

Yeah, so we’re working with some startups right now, and I’m pulling my hair out with how much red tape there is, how slow things move here and how complicated people want to make it. EV is now table stakes. Software is likely the thing that’s going to really trip everybody up. We need to move faster, we need to take higher risks. Silicon Valley is super-fast, risk-embracing. China is even faster, ultra-competitive.

Is it too late in the race for traditional automakers to make up ground?

ey need to move faster, and they need to bring in people with a lot more experience … I don’t think at this point in time they’re making drastic enough changes.

What do you make of the argument that the Chinese pose unfair competition? Did the (Chinese) government subsidize the EV, the battery, the chip sector in 2009? Yes. ere’s no secrets there. It was OK when GM sold 4 million cars in China.

No one’s complaining about that. But now that they’re losing share in China by the double-digit percentage points … and now the Chinese want to come to Europe and the United States. Should there be concern, should there be an analysis of what’s going to happen potentially if Chinese EVs enter the U.S. market? Of course. Yes. But it wasn’t like these automakers were struggling in China and now the Chinese want to ravage these other regions.

ey were lazy because they made so much money in China. And no one could have predicted this. So, yes, the Chinese sector has been subsidized, but what do we call the In ation Reduction Act?

But we shouldn’t even worry about the Chinese EV makers because if Tesla comes out with that Model 2 for $25,000, the Chinese EV makers aren’t going to even need to be here for a lot of these guys to get gutted. Say what you will about Elon (Musk). If there was a Model 2 that had similar features to the Model 3, Americans would buy it in the millions. Say what you will about him, but Elon said of the top 10 car companies in the future, nine of them will likely be Chinese.

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