Crain's Detroit Business, May 2, 2022, issue by Crain's Detroit Business

THE CONVERSATION: Hospital President Ronnie Hall on nurses leading. PAGE 22

When a business is part of a divorce

Preparation is key to protection. PAGE 8

CRAINSDETROIT.COM I MAY 2, 2022

Completing a transformation As Wright Lassiter exits at Henry Ford Health, MSU partnership presses on with big plans

Archangel Steel owner Christian Sam poses for a portrait at his Ferndale shop holding a handcrafted longsword.

NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

BY DUSTIN WALSH

FORGING AHEAD A fantasy bladesmith works to survive global realities of spiking metal prices, worker shortages | BY DUSTIN WALSH

“The Northman” — a fantasy film about Vikings, witches and revenge adapted from a 12th Century Danish novela — just captured $12.3 million at the box office its first weekend. The film is the latest in a growing culture of fantasy-obsessed art and another business bump for Ferndale artist and entrepreneur Christian Sam and his Archangel Steel weaponry. “They just keep making Viking movies and ‘Star Wars’ and everyone wants that feeling of being in the movies,”

Sam said. “They name their kids after ‘Game of Thrones’ characters. It’s all free advertising for me.” The 51-year-old bladesmith has spent more than three decades crafting medieval swords, knives, lances, daggers, maces, spears, axes and hammers. Bladesmithing is rising in popularity alongside these movies and shows. For Sam, there’s opportunity to move Archangel from a small company

— Christian Sam

See BLADESMITH on Page 18

NEWSPAPER

“EVERYONE WANTS TO BE A BITCOIN BILLIONAIRE AND DO NOTHING WITH THEIR HANDS.”

The departure of Henry Ford Health CEO Wright Lassiter III is hardly surprising — he’s been a rising star in health care nationally for years — but it comes in the middle of several projects that are careerand legacy-defining. The most prominent of the projects is a partnership with Michigan State University with plans for a new research center located south of the health system’s Detroit campus on West Grand Boulevard. It will house researchers and physicians on translational research — specifically looking at cancer, neuroscience, women’s

Wright Lassiter III | BRETT MOUNTAIN FOR CRAIN’S DETROIT BUSINESS

health, imaging and public health. The partnership between the health system and university is beginning to blossom. Most recently, See LASSITER on Page 19

UWM strikes back at brokers not ‘All In’ Lawsuits fly to enforce Ishbia ultimatum BY NICK MANES

Mortgage mogul Mat Ishbia’s “All In” ultimatum to brokers who do business with his company is going to get its day — or days — in court. More than a year ago, Ishbia made independent Ishbia brokers choose between working with his United Wholesale Mortgage LLC or two of its biggest competitors, including Detroit-based Rocket Mortgage. Now, it’s become clear that UWM has put some legal muscle behind the demand — while attracting some lawsuits of its own. UWM, the Pontiac-based wholesale mortgage lender of which Ish-

bia is president and CEO, has filed at least three lawsuits since early February in federal court against mortgage brokers. The lawsuits allege that the brokers violated an addendum to their agreement with UWM, which sought to keep them from working with rival lenders Rocket Mortgage and Fairway Independent Mortgage, if they wished to keep doing business with UWM. The lawsuits seek damages and claim that the alleged breach of contract has damaged UWM’s business in a variety of ways.

WALKING ON

AUTO SHOW

Designer Tracy Reese cements Naturalizer deal PAGE 16

NAIAS plans new look for downtown return PAGE 3

See UWM on Page 17

NEED TO KNOW

CRAIN’S CORPORATE COUNSEL SUMMIT

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` ROCKET EXECS’ PAY FALLS FROM 2020 PEAK THE NEWS: Pay for Rocket Companies Inc. CEO Jay Farner and fellow executives was a little lighter last year than in 2020, when their compensation was bolstered by stock awards and payments tied to the company’s IPO. The board of Rocket Companies (NYSE: RKT) did not include stock awards as part of their compensation in 2021, according to an annual proxy statement. Farner in 2020 made nearly $52 million, which included a one-time nearly $29 million repayment for taxes due on shares of the company he was awarded. In 2021, however, Farner’s total compensation was just more than $1.6 million, consisting of an $800,000 salary and $800,000 bonus. WHY IT MATTERS: In the last few years in general, pay has been good for CEOs. While Farner saw his pay come down last year, his compensation in 2021 stood at about 21 times that of the median employee at his company, according to the proxy statement.

` MOCAD RESCINDS OFFER TO EXECUTIVE DIRECTOR HIRE THE NEWS: The Museum of Contemporary Art is once again searching for a new top leader. The Detroit museum has rescinded the offer it made to Cara Courage, who formerly led the

Tate Exchange in London, for undisclosed reasons. She was to have started part time in mid-February and full time this spring. WHY IT MATTERS: MOCAD has been struggling with leadership lately. The move comes less than three months after MOCAD introduced Courage as its new executive director. That appointment followed an 18-monthlong search launched after the museum’s board fired former leader Elysia Borowy in July 2020.

` BUYER EMERGES TO REDEVELOP BUICK CITY SITE THE NEWS: Ashley Capital is under contract to buy and redevelop 300 acres of the former Buick City complex in Flint, a sprawling industrial site that once served as a symbol of automobile might for the Vehicle City before General Motors abandoned it in bankruptcy. WHY IT MATTERS: If it comes to fruition, the project could be transformational for a city that has struggled eco-

nomically for years, and it would be a significant win for Michigan.

` THE PLATFORM PICKS UP NEW CENTER LAND THE NEWS: Detroit-based developer The Platform LLC has bought a small chunk of land formerly owned by convicted health care fraudster Mashiyat Rashid. An affiliate of Peter Cummings’ company paid the U.S. Marshals Service $685,000 on March 16 for the 0.37 acres at the southwest corner of West Grand Boulevard and Third Street, according to land records posted online. WHY IT MATTERS: The site sits across from The Platform’s The Boulevard mixed-use apartment development, as well as just down the street from the Fisher Building. The land could be a key site for mixed-use development in the future.

In-house lawyers tackle issues from pandemic to back-to-office ` As corporate America has navigated the COVID-19 pandemic for more than two years, in-house counsels have been right in the thick of it. From navigating policies around remote workers and helping with crisis communications to the increased risk of ransomware and cyber attacks, corporate counsel have had their work cut out for them. That work, however, is in their DNA. That was the message out of last week’s Crain’s Corporate Counsel Summit. “Lawyers love crisis,” said Tina Dekker, senior vice president, general counsel and corporate secretary for Meijer Inc. Dekker, who was hired for the job in February, said Meijer’s corporate workforce is beginning to return to their Grand Rapids-area offices on a more regular basis. The pandemic has also given rise to a whole host of other challenges for companies and their in-house lawyers. Other speakers included general counsels Archana Rajendra of Health Alliance Plan, Timothy Lynch of the University of Michigan, Laura Lewis of StockX and Beth Hill of FordDirect.

Correction ` The Greektown casino report on Page 1 of the April 25 issue included an incorrect figure for how much Penn National Gaming intends to invest in the Greektown property, which was provided to Crain’s by an executive. The company has invested $50 million and plans further investments of an unspecified amount. Also incorrect was the number of Hollywood Casino locations. There are 19.

Speakers at the Crain's Corporate Counsel Summit included (from left) general counsels Archana Rajendra of Health Alliance Plan, Timothy Lynch of the University of Michigan, Laura Lewis of StockX and Beth Hill of FordDirect. | BRETT MOUNTAIN FOR CRAIN'S DETROIT BUSINESS

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AUTO SHOW

3 nonprofits cut as beneficiaries of Charity Preview BY SHERRI WELCH

and emerging technology, with plans for new reveals and attendance by 25-30 brands from local to exotic automakers. As for events and activations, organizers are working with the city and the Downtown Detroit Partnership to set up activities and exhibits across Hart Plaza on the riverfront and in the city’s public parks. The event will be more “community driven” and less “media driven” than years past, with an emphasis on access for local residents, Alberts said. At the same time, he still expects a major media turnout for the event, which typically brings 4,000-5,000 reporters and other journalists.

When the Detroit auto show Charity Preview returns this fall for the first time since 2019, three of the charities that have long benefited from the event won’t be on the list. The Detroit Auto Dealers Association, the organizer of the North American International Auto Show, has cut Boys Hope Girls Hope Detroit, Judson Center and March of Dimes Metro Detroit. The cuts come despite a one-time, $9 million grant from the state to DADA to help bring back the auto show this year. DADA on Tuesday announced details of the return of the auto show at and around Huntington Place, with an adjusted format, and the return of the Charity Preview with it. It said six charities will benefit from this year’s preview: ` Boys & Girls Clubs of Southeastern Michigan ` The Children’s Center ` The Children’s Foundation ` Detroit Auto Dealers Association Charitable Foundation Fund, a fund of the Community Foundation for Southeast Michigan ` Detroit PAL ` University of Michigan Health C.S. Mott Children’s Hospital, which was added to the list in 2020. It made no mention of the three charities it cut from previous years. It is also not clear why they were dropped. In a statement forwarded to Crain’s, DADA Executive Director Rod Alberts did not address why the charities were cut or how they were selected. “The DADA has long been committed to supporting a cross-section of children’s charities in the region, raising more than $100 million in the last 25 years alone at our Charity Preview event,” Alberts said.

See AUTO SHOW on Page 20

See PREVIEW on Page 20

The black-tie Charity Preview will return to Huntington Place on Sept. 16.

GOING DOWNTOWN

Auto show organizers plan a return updated for a changed industry BY KURT NAGL

The North American International Auto Show seeks to meld the new and old in its 2022 return. It’s Motor Bella and Motor City Car Crawl meets the traditional convention center setup, NAIAS Executive Director Rod Alberts said. The two concept events hosted last year in Pontiac and Detroit will not continue as standalone shows, Alberts said, but rather, they served as testing grounds for what’s possible in a reimagined indoor/outdoor Detroit auto show, returning to the city Sept. 14-25 for the first time since 2019. “Things have changed so much with the industry. We have to em-

“THE MORE WE CAN MAKE THIS A WALKABLE DOWNTOWN DRAW TO THE CITY, I THINK IT’S SOMETHING THE COMMUNITY NEEDS AND THE RESTAURANTS NEED, AND IT’S A DRIVER OF THE ECONOMY.” — Rod Alberts, executive director, NAIAS

brace all that,” Alberts said in an interview with Crain’s Detroit. “The more we can make this a walkable downtown draw to the city, I think it’s something the community needs and the restaurants need, and it’s a driver of the economy. It’s really the logical thing to do.”

The show will not be the same as attendees remember because organizers have determined they must keep pace with rapid change in Detroit and the automotive industry, Alberts said. On the automobile side, the show will focus on electric vehicles

INFRASTRUCTURE

Ford-backed Cavnue seeks to rewire I-94 for self-driving cars BY NICK MANES

Interstate 94 between Detroit and Ann Arbor could in the coming few years become the first major artery in Michigan designed for autonomous vehicles zipping up and down the road. Washington, D.C.-based Cavnue LLC, which is focused on designing roads for the future, was tapped by state officials in August 2020 to develop a “first-of-its-kind connected and autonomous vehicle (CAV) corridor” in Southeast Michigan. Since that time, Cavnue has explored the feasibility of developing various CAV corridors, and in con-

A rendering of a Cavnue autonomous shuttle. | CAVNUE

junction with the Michigan Department of Transportation identified an approximately 25-mile segment of I-94 for its first deployment of infrastructure to support autonomous vehicles. While autonomous vehicles do already operate in limited capacity in Michigan — think companies like May Mobility out of Ann Arbor — Cavnue’s development plan revolves around creating a dedicated lane with the necessary infrastructure in place. Moving forward, Cavnue and MDOT will develop a broader plan for the stretch of interstate, which will include traffic studies, environmental

analysis, road design and operational planning, as well as public engagement and outreach, according to a statement from Cavnue. To support the work — as well as Duvall other projects the 18-month-old company is exploring, according to Cavnue CEO Tyler Duvall — the company has closed on a Series A funding round of venture capital that totals $130 million. See CAVNUE on Page 21 MAY 2, 2022 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

Legal battle renewed over Carhartt heiress’s trust loans The heiress to the Carhartt Inc. fortune has pumped serious money into Detroit commercial real estate the last few years. But now a new Kirk lawsuit filed in PINHO Wayne County Probate Court is claiming that one of the investments the former trustee of the Gretchen C. Valade Irrevocable Living Trust made in a stalled Detroit hotel redevelopment was not on the up and up. That’s just one of the allegations in a new lawsuit, which says that without Valade’s knowledge, Grosse Pointe Farms attorney David Sutherland took millions from the fund, which was to benefit her former business partner, Thomas Robinson, and charitable endeavors after life insurance benefits were paid. Among the things current trustee, Southfield-based Plante Moran Trust, is suing Sutherland over is trust money he is alleged to have given to the Temple Hotel and Residences project in the form of a loan. The hotel project is located west of the Masonic Temple and north of Cass Technical High School. The lawsuit does not challenge Valade’s personal investment in the project, which is being spearheaded by Detroit developer and restaurateur Christos Moisides. Instead, it is questioning what is described as “millions” given to the development, via a loan from the trust fund that Sutherland oversaw until August 2020. In some instances, the complaint says, Sutherland had the trust take out loans at market-rate interest rates so he could lend to himself and businesses in which he had a stake money at below-market rates. None of those were reviewed by an independent co-trustee, the complaint alleges. James Sullivan, an attorney for Sutherland, said “the allegations of wrongdoing against David are completely false” but declined further comment, citing pending litigation. Through a spokesperson, Valade declined comment, as did her attorneys at Detroit-based Honigman LLP, also citing pending litigation. Moisides, for his part, said: “I am not a party to the lawsuit and have no comment on the litigation. The Temple Hotel and Residence development is an extremely important project to me, and I am currently working with Gretchen Valade’s management team and my own investment group to buy out Mrs. Valade’s interests. My new group and I are eager to bring this impressive project to completion.” The case had been brought to Wayne County Circuit Court in March 2021 but was dismissed in September because Sutherland’s attorneys successfully argued that it was filed in the wrong court. “The duty of loyalty that is owed to the trust and trust beneficiaries appear to be disregarded by what he allegedly did here,” said Jennifer Cupples, a Birmingham-based associate attorney for Altior Law specializing in trust issues. “He should have had an independent co-trustee determine that what he was doing was not in violation of his duties or the trust.” 4 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

The Temple Hotel and Residences project in Detroit has been stalled. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

She cautioned that she had only reviewed the complaint, not the loan documents or the trust — which she said apparently requires the review and approval of an independent co-trustee related to actions of the trustee that appear to be a conflict of interest. “Him doing any of these alleged significant financial transactions under the guise of trustee of the trust is questionable, especially without the prior approval of an independent

THE TEMPLE HOTEL PROJECT, WHICH IS A REDEVELOPMENT OF THE FORMER STANDARD ACCIDENT INSURANCE CO. BUILDING, HAS BEEN IN THE WORKS FOR YEARS BUT FELL ON HARD TIMES DURING THE PANDEMIC AFTER STARTING CONSTRUCTION. co-trustee,” Cupples said. Valade, who is in her 90s, is the granddaughter of Carhartt founder Hamilton Carhartt. Her son, Mark, is chairman and CEO, while she is chairman emeritus, according to the company’s website.

The details The complaint, filed in April, alleges that Sutherland treated “the trust as his own personal piggy bank,” lending himself $7.7 million and lend-

ing a business of which he was a 50 percent owner more than $7.6 million. In addition, the complaint claims, he wrote checks to his own businesses from the trust and that he made the trust take out loans at market-rate interest rates to lend to himself and affiliates at below-market interest rates. For example, Sutherland took out a loan that was limited to $5 million but he borrowed “millions of dollars” more than that, according to the complaint, which says he charged himself an interest rate of just 0.75 percent. However, the complaint says, he “made no efforts” to collect interest or principal due on the loan — which was not disclosed until after he was removed as trustee in August 2020. The complaint says Sutherland also made a similar loan to a business of which he was a 50 percent member, although which business is not revealed. The money is “millions of dollars” more than the $5 million limitation set forth in the trust, according to the complaint. That loan had an interest rate of just 0.96 percent and matured Sept. 1, 2020, the complaint says. Similarly, according to the lawsuit, Sutherland “made no efforts” to collect principal or interest owed and did not disclose the loan until after he was removed as trustee. The defendants in the complaint are Sutherland; the Law Offices of David P. Sutherland PLC in Grosse Pointe Farms; oil production company Tuscola Energy Inc., registered to Jeff Adler in Bay City; BP Pizza LLC, registered to Tracey Collins in Grosse Pointe Farms (Sutherland is listed as an authorized agent in business fil-

ings); DTS Pizza Napoli LLC, registered to Sutherland in St. Clair Shores; Palms Land Co. LLC, registered to Sutherland in Grosse Pointe Farms; and Wakefield, Sutherland & Lubera PLC, registered to Robert Lubera in Grosse Pointe Farms (Sutherland is listed as a member or manager in business filings). The complaint also says that Sutherland “caused the trust to lend millions of dollars” — which was not documented and had no established interest rate — to an entity called Temple Group Holdings LLC, which is managed and partially owned by another entity, Temple Group Management LLC, which he manages and has a financial interest in. The trust is a loan guarantor but does not have an equity stake in the development, according to the complaint. The lawsuit says Sutherland didn’t collect any interest or principal, and that the loan is in default and has not been repaid. “The trust did not have sufficient cash to make any of these various loans, so Sutherland caused the trust to borrow the funds he lent out. These borrowings were made from various financial institutions at market interest rates,” the lawsuit reads. “The trust lent the funds to Sutherland and his entities at no or extremely low interest rates while paying substantially higher interest rates on the funds he caused it to borrow. These borrowings by the trust were used either to fund the loans to himself and his related entities, or to provide liquidity while avoiding collecting interest and principal on the loans from Sutherland and his related entities, or both.”

A stalled project The Temple Hotel project, which is a redevelopment of the former Standard Accident Insurance Co. building, has been in the works for years but fell on hard times during the pandemic after starting construction. Construction at the $75 million hotel at 640 Temple St. halted for three months as a result of Gov. Gretchen Whitmer’s executive order pausing all nonessential commercial building, prompting cost overruns that require an additional layer of financing. It has not yet resumed. Designed by rock star Lenny Kravitz’s New York City-based Kravitz Design, the hotel is to have 101 rooms and 64 apartments. Los Angeles-based sbe had been the hospitality group behind the hotel, but it was since purchased by France-based Accor SA, which merged with London-based developer Ennismore. The Temple Hotel will be part of the Morgans Originals brand, which has a location forthcoming in San Antonio, as well. Birmingham-based McIntosh Poris Associates is the architectural firm on the project, while the Detroit office of Grand Rapids-based Rockford Construction is the general contractor/project manager. Detroit-based Kraemer Design Group is the historic consultant on the project. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

Making a difference one card at a time Bank of America will become the first U.S.-based bank to transition all of our credit and debit plastic cards to at least 80% recycled plastic beginning in 2023 — an innovation that we expect will reduce single-use plastic by more than 235 tons per year. Not bad for a card that weighs only 0.18 ounces. So, with recycled plastic in your wallet and a digital wallet on your phone, you’re joining a movement to protect our planet. “We’re working alongside our clients and partners here in Detroit to help shape the low-carbon, clean energy future we all want. As our clients reduce greenhouse gas emissions, we offer innovative ideas, our talented team and financing to help them meet their net-zero goals.”

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COMMENTARY

Bankruptcy film director: Your town could be next

GETTY IMAGES/ISTOCKPHOTO

COMMENTARY

Is political rancor keeping companies away?

common theme is emerging when business leaders gather to talk about economic development in Michigan, and it’s not the knowledge economy or the talent gap or shovel-readiness or any other buzzwords of the moment. All those things matter, of course. But something else keeps bubbling up: the corrosive state of Lansing politics. More specifically, concern over Michigan’s inability to advance a common agenda, even on matters as politically agnostic as attracting investment and stemming population loss. Michigan’s reputation for partisan rancor — from rural school boards to the floor of the state Senate — is getting noticed nationally and even abroad, according to folks whose job is to market our fair mitten to outsiders. “The political divide is a thing,” Maureen Donohue Krauss, president and CEO of the Detroit Regional Partnership, said during a panel I moderated this week for the Michigan Chamber of Commerce. Donohue Krauss travels all over the MICHIGAN’S world to convince REPUTATION companies to locate in Southeast MichiFOR PARTISAN gan, and “they do ask RANCOR IS about the political divide. … It makes a GETTING difference where NOTICED companies choose to she said. NATIONALLY AND invest,” Michigan isn’t the EVEN ABROAD. only state roiled by the same divisiveness that’s defining national politics, to be sure. The difference is we have more to lose than most. The talent gap is real: A Detroit Regional Chamber report in April revealed the state is falling behind in educational attainment, a key marker for attracting and retaining a diverse workforce. College enrollment is dropping, and too many of those who enroll

Kelley

ROOT

Executive Editor aren’t getting degrees. Michigan is losing high-tech projects to southern states. There have been some flashes of bipartisanship in the state Legislature, driven largely by the shock over Ford’s massive EV investment in Tennessee and Kentucky. A December package signed by Gov. Gretchen Whitmer pumped $1 billion into a multitiered economic development strategy designed to keep Michigan competitive for big projects. But the kumbaya moments are few and far between. And the availability of a huge new pot of money means more fighting over how to spend it. So what could help? Increasingly, talk is turning to rolling back term limits. Some high-profile players in the economic development space say Michigan’s strict term limits law, now 30 years old, is getting in the way of meaningful government by forcing lawmakers to focus more on campaigning than solving the state’s problems. The legislative churn generated by term limits has created “a vacuum filled by bureaucrats and lobbyists,” said Marty Fittante, CEO of InvestUP, during the Chamber panel.

hen Philadelphia filmmaker Sam Katz set out to produce a documentary about Detroit’s historic bankruptcy some seven years ago, he figured he’d sell it to one of the streaming video giants like Netflix or Hulu and move on. But as he got deeper into the story about why Detroit filed for bankruptcy on July 18, 2013, the former municipal finance adviser realized there was a more important story to tell to a narrower audience of decision-makers: Your town could be next. That’s one of the key takeaways in “Gradually, Then Suddenly: The Bankruptcy of Detroit,” a documentary about Detroit’s decades-long spiral into the largest municipal bankruptcy in U.S. history. The film’s title is taken from a line in Ernest Hemingway’s novel “The Sun Also Rises,” in which one character asks another how he went bankrupt. “Two ways,” the other character replied. “Gradually, then suddenly.” That is certainly the story of Detroit’s fiscal implosion. Gradually, over six decades, Detroit lost people, commerce, tax base and political power. And then suddenly, a Republican governor, Rick Snyder, used extraordinary government powers to take over the nation’s largest Black city and install a veteran bankruptcy attorney, Kevyn Orr, who called the assignment “the Olympics of restructuring.” The film lays bare what everyone in Detroit who was paying attention during the bankruptcy in 2013-14 already knows: Michigan’s largest city was awash in $18 billion in debt, had been insolvent for years and could not pay for basic services, much less long-term obligations to retirees. “This is what it looks like when you’ve run out of fiscal road,” said Katz, who previously spent 27 years in municipal finance as CEO of Public Financial Management in Philadelphia (now called PFM Group). “And if you don’t own an art museum or an asset that has great potential for leverage, you’re up the creek without a paddle.”

LIVENGOOD

That museum he referenced is the Detroit Institute of Arts, where the documentary premiered Wednesday night to kick off the Freep Film Festival. As most would expect, the DIA is the center of focus in the film because the museum’s vast and internationally renowned art collection was owned by the city of Detroit prior to the Chapter 9 filing. That made the DIA the target of creditors ranging from a slain police officer’s widow to a municipal bond insurer based in Bermuda that wanted what was owed. In virtually every other city in America that’s saddled with underfunded pensions and other debt (think: Chicago, Los Angeles, Baltimore), there is no museum stocked with the masterpieces of Van Gogh, Matisse, Monet or Rivera that is owned by THE BANKRUPTCY the city. In other words, the DOCUMENTARY art — and to a lesser LOOKS CLOSELY AT extent the Detroit water and sewer sys- HOW DETROIT tem — was Detroit’s MANAGED TO GET paddle in that proOUT OF verbial creek. The bankruptcy BANKRUPTCY documentary looks closely at how De- COURT IN LESS troit managed to get THAT 17 MONTHS out of bankruptcy court in less that 17 BY LEVERAGING months by leveragTHE DIA. ing the DIA to produce the “grand bargain” — the $816 million lifeline from philanthropic foundations, corporate donors and Michigan taxpayers that was used to greatly reduce cuts in pensions. See LIVENGOOD on Page 7

See ROOT on Page 7

MORE ON WJR ` Crain’s Executive Editor Kelley Root and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.

The Detroit Institute of Arts was a target of creditors during Detroit’s bankruptcy. | DETROIT INSTITUTE OF ARTS

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

Chad

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

LIVENGOOD

From Page 6

The grand bargain was the linchpin to Detroit avoiding a protracted battle in the U.S. Supreme Court over whether pension benefits can be impaired in bankruptcy (Detroit’s bankruptcy judge, Stephen Rhodes, concluded they can because pensions are a contract and contracts get broken in bankruptcy court every day). The film cost $2 million to produce and was underwritten in part by some of the foundations that backed the grand bargain, Katz said. Katz co-produced and co-directed the film with Detroit filmmaker James McGovern, owner of JCM Film and Music. Other producers on the project included former Detroit

Free Press reporters Chastity Pratt and Nathan Bomey, who was the principal screenwriter. (Full disclosure: I am in the film recounting an epic race to the Ingham County courthouse by attorneys for the city’s pension funds who tried unsuccessfully to block Orr’s bankruptcy filing.) A series of free screenings of “Gradually, Then Suddenly” are planned across Southeast Michigan over the next week, including 7:30 p.m. May 4 at the Michigan Theater in Ann Arbor and 7 p.m. May 5 at Bernard Auditorium at Wayne State University. After that, Katz is planning to take the film to civic organizations, chambers of commerce, lawmakers in other states and graduate schools of law, public policy, urban affairs and journalism to get the documen-

tary of Detroit’s fiscal demise in front of current and future decision-makers. Katz thinks it’s that narrower audience that needs to know how municipal bankruptcy — which isn’t even allowed in most states — may be the best path forward to keeping other cities from collapsing under the financial weight of government debt. “This case proved that municipal bankruptcies are political — you can’t think about terminating the enterprise and selling off all of the assets,” Katz said. “And you can’t have an outcome that favors institutional investors over individuals. And I think that was eye-opening (in Detroit).” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

Detroit’s downtown skyline. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

ROOT

From Page 6

Panelist Jared Fleisher, vice president of government affairs and economic development for Rock Central, is almost evangelical on the topic. He told the Chamber gathering that Michigan needs a “bottom-up moderate revolution” to break through extremes on both sides of the aisle. “There is a lot of virtue in having the humility to listen to the other side,” he said. A bipartisan group called Voters for Transparency and Term Limits is proposing a constitutional amendment that would allow legislators to serve up to 12 years in either chamber. Michigan’s current term limits restrict residents to serving three two-year terms in the House and two four-year terms in the Senate. It’s not clear if the changes, which are nuanced and difficult to distill into a sound bite, will resonate with voters. Or if they could even make a dent in the deeply entrenched distrust that defines Lansing right now. But the Chamber panelists agreed: Michigan’s “brand” is at stake. “We have to own our story, and tell it,” Donohue Krauss said. The question is, what will it be?

INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS

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CRAIN’S AWARDS

40 Under 40 nominations close May 20 There’s still time to nominate an outstanding business leader under 40. But mark your calendar: Nominations close May 20. We’re looking for the overachievers who have started (and sold) companies, reached the C-suite and made nonprofits stronger while giving back to the community and mentoring others. To submit a nomination, visit crainsdetroit.com/nominate. Candidates will be invited to complete a more in-depth application by Friday, May 27. Winners will be featured in a special section of the Sept. 12 issue of Crain’s Detroit Business and recognized at our annual Celebration of Crain’s 40 Under 40 event in November. Questions? Contact Special Projects Editor Amy Bragg: abragg@ crain.com.

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A SPLIT DECISION

With divorce always a possibility, how can businesses protect their interests? `BY JAY DAVIS Some see marriage just like a business

agreement between two parties. So what happens when one spouse is a business owner and that union goes sour? Protecting that venture becomes a part of the separation process, no matter how much stock a couple puts into the “til death do us part” doctrine. Before the wedding, discussions of a prenuptial agreement must be had, no matter how difficult a conversation, said Rejeana Heinrich, director of the Stevens Center for Family Business at Saginaw Valley State University. Heinrich cited an instance involving the owners of a prominent family business that saw one party demand a prenup be signed or the marrying party would be stripped of any ownership stake, offending the bride-tobe.

8 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

“PRENUPTIAL AGREEMENTS CAN BE VIEWED AS INSURANCE...” — Rejeana Heinrich, director, Stevens Center for Family Business at Saginaw Valley State University

“She was highly offended, but the night before the wedding she signed the prenup,” Heinrich said. “As married life went on for the newlyweds, things went awry very early on, and the couple was seeking a contentious divorce within about a year. The emotional impact on everyone involved was very hard. Without a prenup in place, the impact on the family business could have been devastating.” Owners of businesses large and small have a responsibility to protect that asset, particularly if there are partners or co-owners involved. Those spouses also have the right to determine how they can benefit from the business in case of divorce. Successfully navigating the process can mean the difference between a business continuing and thriving or eventually folding.

How did we get here? Surveys estimate business owners are more likely than others to see their marriages end in divorce, for a variety of reasons. One major factor is the business, particularly at the outset, can be all-consuming, according to Bodman Law member Kelly Burnell. That leaves the spouse to handle all other aspects of the marriage, including caring for children and running the household. That becomes factored in during a divorce, as well. A spouse may not be directly involved with getting a business off the ground, or have a role at all, but home life becomes a variable, according to Heinrich. See DIVORCE on Page 9

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“Contributions are all of value in marital relations,” said Burnell, who counsels business owners in a variety of areas including estate planning, succession and divorce. “Caring for children, not having to pay for day care so a spouse can focus on the company. If there is a prenup in place, that also comes into play and can lock a spouse out. If that spouse isn’t working to care for that family so their partner can grow a business, you see some property consideration terms come into play. “In the event of a divorce, an exspouse can come in to take on ownership, but they need the skillset to hire the right people to make sure the business can continue. That spouse is usually looking to keep money coming in to support their lifestyle.” That lifestyle may be adversely impacted, as a divorce can negatively affect the value of a business, according to Burnell, lowering the price in any possible sale. “In the valuation of a company, there are different methodologies used. You compare sales of different companies. There’s an analysis done to see what’s the best approach for the company to come up with market value before we look to apply some discounts,” Burnell said. “Ownership interest is a factor. Is it a voting or nonvoting group? A minority owner may not have as much say or drive the company’s value. “Family businesses, though, there’s not as much of a market out there. You can’t sell a 5-10 percent share to anyone and expect them to pay top value. That person couldn’t come in and make decisions or drive revenue.”

Have paperwork in order Documentation is vital for any possible divorce proceedings related to a business, Burnell said. Details of business ownership is always top of mind for her clients, along with ensuring proper documentation is in place. “This is a sensitive subject for shareholders when they find out one of their partners is getting divorced,” said Burnell, who has been at the Detroit law firm for more than 11 years. “They may not know if a prenuptial agreement is in place because that’s something that stays between the spouses. They’ll want to know if there’s anything in legal documentation that covers divorce.” Co-owners and partners on the outside will look to ensure the right legal protections are in place, as an ex-spouse who retains or is awarded some ownership in the business could want to make changes in the business. Depending on the structure of a business, each shareholder could take a vote to limit the new stakeholder’s decision-making ability, as that power could depend on how much of a stake the divorcing party has in the business, according to Burnell. “If that person has no prenuptial or buy/sell agreement, the other shareholders may look to restructure some governance on the ownership side,” she said.

In agreement A comprehensive buy/sell agreement, which provides an overview of what happens to the business in the

Bodman PLC member Kelly Burnell, who counsels business owners in a number of areas including divorce, says having the necessary documentation in place can make a world of difference while going through the process. | BODMAN PLC

BUSINESSES AND BREAKUPS Tips for business owners on how to navigate the divorce process: Seek counsel: State laws vary and there are a variety of factors that will be considered during a divorce settlement, including the industry and business type, its legal structure, partner’s or spouse’s role in the company, when specific assets were acquired and children. Have your docs in a row: Having a prenuptial agreement in place is the best way to protect a business in a divorce. A prenup can put the business in the category of a separate piece of property that cannot be touched in a divorce. A postnuptial agreement contains the same information as a prenup, but isn’t as strong as a prenup and isn’t recognized in every state. However, as one’s financial situation evolves with family, businesses or other factors, a postnup allows a couple to mutually determine how income, debts, assets and any property would be divided in the future.

event of the divorce of an owner, is the most important document that owner can have, Burnell said. The agreement allows the business owner involved in a divorce to lay out ahead of time what will happen and how the value of the owner’s or spouse’s share of the business will be determined. That cuts through many of the difficulties associated with possibly selling a business and allows the business owner to avoid issues that may otherwise come to the forefront after the divorce. A controlling stake in the business is usually the last thing an ex-spouse wants, though. “Some people have buy/sell agreements that cover death but not divorce,” Burnell said. “What I’ve generally seen is that the spouses in a lot of cases don’t want company ownership or control. They want the cash flow. They want the distributions that come from the business if it’s successful. Typically that becomes a big part of the negotiation on the property settlement side because the spouse has been living off the wealth that comes with company ownership. “It gets a bit nuanced. Cash going into your pocket vs. what’s coming in from a company aren’t the same. That’s a highly negotiated area. The buy/sell agreement is an overlay and protection for the company that says that spouse will never be a partner. On the operations side, they have no control, but that’s not what they want.” Another document is seen as crucial to a business’ legal toolbox to ensure continuity, financial stability and continued success.

Property matters: When protecting assets, it’s important to understand the difference between separate and marital property. Separate property generally includes property owned before the marriage, inheritance received by one spouse only and gifts received by one spouse from an outside party. Separate property, like a business owned before the wedding, can become marital property if not protected and strictly managed. Once property is mixed — like income in a joint bank account, or something titled in both spouses’ names — it is likely to be considered marital property. Any and all other property, income and assets acquired during the marriage by either spouse will be considered marital property. This includes everything from bank accounts and retirement plans, to stock options, bonuses, commissions and mutual funds. In many jurisdictions, if separately owned property rises in value over the course of the marriage, the increase can also be considered marital property. SOURCE: BODMAN PLC

Despite the emotional overtones of a prenup, drafting the document should be considered just as important as a buy/sell agreement, according to Heinrich. She believes a prenup is just as important for a business owner as insurance. “A well-run business would not be without fire insurance or other well-considered measures as part of their overall risk management strategy,” said Heinrich, adding that just 5 percent of couples enter into prenups. “Prenuptial agreements can be viewed as insurance for the business owners’ emotional and personal health, as well as for protecting financial assets.” Burnell added: “With a prenup, everything that’s tied into the business becomes separate property and cannot be used in a divorce. By having that up front, it can alleviate a lot of the nuances that come through in divorce proceedings, and concerns business owners have so their interests aren’t exposed in a settlement.” Postnuptial agreements are also an option. Those contracts are created by already-married couples to outline the ownership of financial assets in the event of a divorce. In any case, Burnell cautioned that each party should have independent council. “There are a lot of questions that come up,” she said. “How has the business coming in played a role in the marital relationship? It becomes a bit more difficult to negotiate. Couples will usually say things are good if they’re looking at a postnup, but it’s still a good thing to look at.” No matter how amicable a breakup, divorce will always bring about some level of discord. Certain factors, though, can ensure each party leaves feeling like they

“WHAT I’VE GENERALLY SEEN IS THAT THE SPOUSES IN A LOT OF CASES DON’T WANT COMPANY OWNERSHIP OR CONTROL. THEY WANT THE CASH FLOW.” — Kelly Burnell, member, Bodman Law

got what they wanted, Burnell said. “There are some situations you can see that play out a little better,” she said. “You see some situations that both parties are on the same page, they come through with payment terms, especially if there’s a prenup in place. Most often, though, you see some level of strain. “When children are involved, that’s when things can get really messy. You get fights over property, alimony, spousal support. Those become big sticking points, especially if the spouse who’s not the breadwinner made the decision to stay home and raise the family, which is very important. They need to be able to support themselves, though.” They aren’t the norm, but Heinrich believes pre- and postnuptial agreements should become a part of all businesses’ policies for ownership. “That puts the prenup into the framework of, ‘It’s not personal — it’s just business,’” Heinrich said. “And something that’s required to be done, whether the parties involved like it or not.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

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The increase in metro Detroit home prices is among the highest they’ve been in decades, according to data from a national housing index. The S&P Case-Shiller Home Price Index, which tracks sales prices for homes sold in a month as compared to their last sale, showed prices in the region were up 14.6 percent in February as compared to the year before. Craig Lazzara, the managing director for S&P Dow Jones Indices, said that’s in the top decile of growth for Detroit over 30 years of tracking. Nationally, prices are up 19.8 percent, also among the highest increases on record. “By the standards that Detroit has historically done, it’s doing extremely well,” Lazzara said. “The rate of change has accelerated in Detroit.” The median increase in the area is 5.1 percent, Lazzara said; nationally, it’s 4.7 percent. Metro Detroit’s highest year-over-year increase was last summer, when prices were 16.1 percent

higher than they had been the year before. “It’s wild,” said Carol Trowell, a real estate broker with DuPont and Associates in the city. “I don’t even know what to say about this market. It’s kind of mind-blowing.” Trowell said homes that were selling for $75,000 a year ago were likely going for $115,000 or more now. It’s made it harder to find affordable housing, especially for people who aren’t already owners. “It’s a double-edged sword: It’s good for the seller, but hell for the buyer,” she said. “Home ownership is becoming out of reach, especially for people of color.” Randy Repicky, the manager of the market research department for Real Estate One, said prices are rising fastest on the higher end. Homes that are priced at up to $150,000 are seeing a 5 percent increase in the price per square foot, he said, while those that are selling for more than $500,000 are seeing a 12 percent price-per-squarefoot jump.

“The upper-end stuff is increasing faster,” he said. “Inventory is so low, there aren’t many quality homes for buyers to choose from.” And Repicky said as more homes sell on the higher end than the lower end, it pulls prices up. Still, Lazzara said the huge increases can’t last. The last six months, he said, was a “period of extraordinary growth” as more people looked to move. He suggested low interest rates, coupled with the ability to work remotely and people’s changing conceptions of what they needed in a home related to the pandemic, led more people to look at their options. Now, interest rates are rising and some people have less flexibility in their jobs. He expects demand to ease. “None of the rates of change that we’ve seen are sustainable in the long run,” he said. “You take away the things that are extraordinary, you’ll get back to things that are more ordinary.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

FINANCE

Flagstar, New York Community Bank extend proposed merger agreement BY NICK MANES

Despite stalled regulatory approval after more than one year, executives at Troy-based Flagstar Bancorp. and the acquiring New York Community Bank are holding out hope and extending their agreement on a proposed $2.6 billion merger. The banks announced last week that executives at each had agreed to extend the proposed merger agreement to Oct. 31 with the hope that banking regulators give their blessing. It’s typical for M&A deals to have a one-year window in which to close the deal from the time it’s announced. The necessary approvals to complete the deal now lie with the Federal Re-

serve Board and the Office of the Comptroller of the Currency. Tom Cangemi, chairman, president and CEO of NYCB, said Wednesday morning that both parties are prepared for the agreement to take effect, and that the deal is still viable despite changed financial conditions from a year ago. “Both sides are ready to go,” Cangemi said during an earnings call with analysts. “And importantly, the deal still meets all of our financial metrics despite the change in interest rates and in the mortgage business.” The reasons stated to extend the merger agreement ring true to Peter Winter, a managing director in equity research at Wedbush Securities, a Los

Angeles-based financial services firm. “I think both companies really need one another,” Winter told Crain’s on Wednesday afternoon, noting that the proposed deal will diversify each bank’s business and was extended to generate significant profits should it close. Cangemi told analysts that the extension to October is “a reasonable timeframe.” Winter said the deal as proposed “does check all the boxes” in that there’s no plan to close branches and would make NYCB more competitive in the New York market, as opposed to pushing out competitors. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

POLITICS

All-female lobbying firm has a new name — with a history BY CHAD LIVENGOOD

An all-female Lansing lobbying firm is renaming the 33-year-old business after the first woman elected to the Michigan Legislature in 1920, the first year women could legally vote. Starting May 2, the lobbying and law firm known as RWC Advocacy will be called McCall Hamilton after Eva McCall Hamilton, an early 20th century women's suffrage movement leader in Grand Rapids who served one term in the Michigan Senate after she helped women win the right to join men at the ballot box. The firm's sole owner Melissa Reitz and her team of lobbyists had been contemplating a name change since Reitz got married and changed her last name from Cupp, which was the C in RWC. The R and W were the initials of the last names of two former partners, Peter Ruddell and Betsy Weihl. Ruddell left the firm in 2018 to become a partner at Honigman LLP and Weihl recently retired. “Our team just felt like it didn’t really represent our firm anymore, and so we went on a hunt for something that did represent us," Reitz told Crain's. RWC Advocacy was founded in 1989 by longtime Lansing power brokers Rick and Raj Wiener as Wiener Associates PLC. The firm changed its name in 2011 after the Wieners retired.

The team at the newly renamed Lansing lobbying firm of McCall Hamilton (from left): Deb Cook, Emily Henderson, Abby Burnell, owner Melissa Reitz, Kim Vitale and Christin Nohner. | MCCALL HAMILTON

Eva McCall Hamilton spent a decade in the 1910s advocating for the right to vote, working on failed statewide referendum campaigns in 1912 and 1913, and then the successful 1918 statewide ballot initiative, which also gave women the right to run for elected office, according to the Greater Grand Rapids Women's History Council.

The right to vote for women was enshrined in the U.S. Constitution in 1920 after the all-male Michigan Legislature ratified the 19th Amendment in June 1919. Hamilton won a twoyear term in the Senate as a Republican. “It was very momentous that she was elected in 1920,” Reitz said.

During her two years in the Senate, Hamilton championed issues affecting the welfare of women and child, pushed for giving teachers pay raises and worked to reduce barriers to farmers selling fresh produce in Grand Rapids, leading to the eventual establishment of the city's first farmers retail markets, according to

the Library of Michigan. “As we dug into her history and her bio and learning all of the things she was involved in, it just really spoke to us," Reitz said. "And we found so many similarities to the things we do now.” Those parallels include the lobbying firm's representation of the Michigan Council for Maternal and Child Health and the American Academy of Pediatrics, which wants to increase access to healthy foods in schools, Reitz said. Hamilton, an educator, chaired the Senate's Industrial School and Normal School committees, which governed trade schools and some of Michigan's early public colleges. She also served on the Senate's Banks and Corporations, Insurance and Taxation committees, according to the Greater Grand Rapids Women's History Council. Christin Nohner, a senior government affairs consultant at RWC Advocacy, came up with the idea to use the first female senator's original and married names for the lobbying firm's new name, Reitz said. Hamilton lost re-election to the Senate in 1922. She was the only woman to represent Grand Rapids or Kent County in the Senate for nearly a century until the 2018 election of Winnie Brinks, a Democrat who previously represented Grand Rapids in the Michigan House of Representatives. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood SPONSORED CONTENT

models. And both options focus on delivering high quality, personalized, cost-effective patient care for our members.”

Increasingly in the health care marketplace, physicians, health systems and health plans are talking about “value-based” and “risk-based” payment models. What do these terms truly mean?

With Blue Cross’ new joint venture, called Honest Medical of Michigan, physician organizations that decide to enter full financial-accountability Medicare agreements can, if they choose, work with Honest Medical of Michigan to make the changes needed to be successful in these models.

In simple terms, paying for “value” means that physicians, physician groups and health systems accept financial accountability for patient care quality, cost effectiveness and patient experience. Physicians agree to be paid by health plans according to how successfully patient outcomes and total costs of care are managed. This is a departure from the traditional “fee-for-service” approach to payment, where physicians are compensated for every service a patient experiences – regardless of the outcome or quality. Value-based models are evolving and include varying levels of accountability. For example, Blue Cross Blue Shield of Michigan’s Blueprint for Affordability program ties payment to how well providers manage the care of the Blue Cross patients they serve. Launched in 2020, this program already applies its new payment approach to nearly 40 percent of the insurer’s membership. Across the U.S., value-based models are including higher levels of financial accountability for physician groups that choose to participate. This means physicians who successfully manage the health, quality, and cost of care for their patients will have the opportunity to earn a higher share of the savings generated through improved outcomes. But physicians who do not meet those goals will forfeit greater financial incentives and will be responsible for losses incurred.

This is critically important, because Medicare populations typically have more chronic conditions or multiple health issues that require a higher level of coordination and management. Honest Medical of Michigan will assess each practice’s capabilities and then tailor their support accordingly.

For physician organizations, this shift can require significant resources to invest in care management and coordination, analytics, home and virtual care, and other practice capabilities. This can be particularly challenging for independent practices that do not have the capital or staffing resources of system-backed practices. “The ability of physician groups to participate in Blueprint is important to the long-term success of our program,” said Todd Van Tol, executive vice president for Health Care Value at BCBSM. “That’s why we are engaging in partnerships with organizations that can support doctors in making the changes necessary to succeed in these models.

Last summer we invested in a management service organization that works with doctors, particularly specialists, on their operations and business functions, giving them more time to focus on patient care and increasing their success in value-based care.” “Recently, we announced a joint venture with Nashville-based Honest Medical Group,” Van Tol said. “This partnership will offer primary care physicians comprehensive support in transforming their practice operations to succeed in shared accountability Medicare contracts. Both options align with the ongoing evolution of our member-focused, value-based care and payment

“The new partnership will transform the way care is delivered for a physician organization’s whole Medicare patient panel, permitting physicians to use Honest Medical of Michigan for all its Traditional Medicare and Medicare Advantage members,” Van Tol said. “This approach helps our members to receive appropriate, high-quality, personalized health care that is affordable, while supporting the physician community in the transition to value based care.” For more information, visit ValuePartnerships.com and BlueprintForAffordability.com.

MAY 2, 2022 | CRAIN’S DETROIT BUSINESS | 11

REAL ESTATE

Archdiocese real estate arm transfers properties to parishes Archdiocese of Detroit property transfers GROSSE POINTE WOODS

BY KIRK PINHO

GROSSE POINTE PARK DETROIT DEARBORN

RIVERVIEW HURON TOWNSHIP

WOODHAVEN

FLAT ROCK In March, the real estate arm of the Archdiocese of Detroit began transferring properties to individual parishes. Documented in a series of deeds, 20 properties are in Detroit, one in Flat Rock, and in Grosse Pointe Shores and one in Woodhaven.

KIRK PINHO/CRAIN’S DETROIT BUSINESS

Some have argued that Mooney Real Estate Holdings LLC — the ArchThe real estate arm of the Archdio- diocese of Detroit’s real estate arm — cese of Detroit in March transferred was set up to shield its assets from seiabout two dozen church properties to zure in lawsuits related to the systemic individual parishes, primarily in De- sexual abuse of children by priests. The Archdiocese of Detroit has pretroit, as part of a process that began viously contended that the shifting of about four years ago. The transfers to the parishes — 20 its real estate assets had nothing to do in Detroit, one in Flat Rock, one in with protecting its real estate from Grosse Pointe Shores and one in sexual abuse litigation, but instead Woodhaven — are documented in a has said that the church leadership had advocated for that change for series of deeds dated March 1. No money appears to have traded more than a century. Mooney Real Estate was created in hands as part of the transfers. Holly Fournier, associate director of 2018. On its website, the archdiocese communications for the Archdiocese says that Mooney was created to hold of Detroit, said in an email that 209 title to about 900 pieces of real estate parishes have been incorporated so as a first step toward incorporating infar and “just a handful” remain “to be dividual parishes. The second step was to create individual parishes and incorporated in the near future.” “Prior to this effort, the Archdio- then transfer the real estate to them. A review of state business filings cese of Detroit existed as a civil form of ‘corporation sole,’ in which proper- shows more than 150 entities registered in July tied “...THE GOODS OF A PARISH BELONG TO THE to the Archdioof Detroit. PARISH ITSELF, AND NOT TO THE BISHOP.” cese The archdio— Holly Fournier, associate director of cese had about communications, Archdiocese of Detroit $48.2 million in revenue in the ty was titled in the name of the local most recent fiscal year, which ended bishop,” Fournier wrote. “This was June 30, and $34.7 million in expensproblematic because it gave the false es, according to its audited financial impression that the bishop (in our statement. Revenue was $52.1 million case, Archbishop Vigneron) owned all the previous fiscal year, while expensthe parish property in his diocese. But es were $60 million. Its total assets grew from $262.4 according to canon law (church law) and church teaching, the goods of a million in the fiscal year that ended parish belong to the parish itself, and June 30, 2020, to $303.1 million last not to the bishop. The separate incor- fiscal year. poration of parishes is the civil law structure that most accurately reflects Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB this reality.”

CRAIN’S DETROIT BUSINESS

23 parcels — mostly in Detroit — shifted to individual churches

Old St Mary’s Catholic Church, right, in Detroit’s Greektown neighborhood is one of the churches transferred by the Archdiocese of Detroit’s Mooney Real Estate Holdings LLC to the parish.

MERGERS & ACQUISITIONS

Kar’s, Sanders owner hungry for growth after acquisition BY KURT NAGL

The new private equity owner of Second Nature Brands is looking to grow by gobbling up more snack makers and turning the company’s locally beloved brands into national snack food staples. Following the acquisition by London-based CapVest Partners LLP, which closed last Monday, the company’s focus is ramping up production and expanding into new markets and in current markets, Second Nature CEO Vic Mehren said in Mehren an interview with Crain’s Detroit. “Without question, the investment is specifically to enable our growth,” Mehren said of the purchase. “It’s a tailwind category. People have been snacking more and more over the past decade or so.” The growth goes for each of the company’s three brands: Kar’s, known for its Sweet ‘N Salty Mix; Sanders, maker of Bumpy Cake and Sea Salt Caramels; and Second Nature, the newest brand, focused on 12 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

healthy, premium snacks. Establishing Second Nature as its corporate nameplate last year signaled the importance of the fast-growing healthy snacking segment, but decadent chocolate has strong staying power, Mehren said. That’s evidenced by Sanders’ sales rising 21.5 percent in the past year compared with 7.7 percent growth in the overall chocolate category. “What’s interesting is that even as the healthy side of snacking is growing, that doesn’t come at the expense of the more indulgent side,” he said. “Sanders has been the fastest-growing brand within our entire portfolio. It is one of the fastest-growing chocolate brands in the country.” Bringing Bumpy Cake and snack mix to more markets was a priority under previous owner Palladium Equity Partners LLC, which bought the company in 2017, bringing an end to its family-owned status since 1933. The company was founded by Sue Kar, who sold home-roasted peanuts outside Tiger Stadium in Detroit. It was eventually sold to the Nicolay family in the 1960s and moved to Madison Heights in 2004. In 2018, Palladium acquired Sanders owner Morley Candy, with the aim of making it “America’s confectioner” by ramping up its presence in

The company’s brands include Kar’s and Second Nature, the newest brand, focused on healthy, premium snacks. | SECOND NATURE BRANDS

grocery and retail stores. The latest private equity takeover will give the company more capital to achieve that, Mehren said. Kar’s-branded trail mix is still the bulk of sales for the company, which had around $200 million in revenue last year. However, Mehren said snacks such Wholesome Medley — the top seller in the Second Nature line — are gaining ground. Its keto offering has also become a top five

seller, he said. Mehren declined to offer revenue figures or sales percentages. He said the company isn’t looking to position any one product as its flagship. “The good news is all of our brands are growing at a similar rate because they’re all well-positioned,” Mehren said. “We kind of look after them with the right level of investment and growth strategies.” That said, the company has been

especially aggressive growing the indulgent side of the business because Sanders is in fewer markets than the company’s snack mix. Mehren said the company has made great strides getting its chocolate treats into more retail locations. Its caramels can now be found in airports and grocery stores around the country, and its Bumpy Cake is available at wholesale clubs such as Costco. “We’re getting into more stores nationally beyond just Michigan and the Midwest,” Mehren said. The company plans to invest in its Madison Heights and Clinton Township facilities to ramp up production, Mehren said. The company’s 364 employees in metro Detroit are being told their jobs are secure amid the ownership change. The company will remain based in Madison Heights as CapVest seeks additional acquisitions, though not necessarily just local. “So, we started as Kar’s Nuts, then we added in 2018 the Sanders business, and now we’ll look with our new investment partners to bring on new brands and businesses to the portfolio,” Mehren said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

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SUPPORTING A MODEL FOR FAMILY-CENTERED CARE

The McBrien sisters honored their parents’ memory with a $3M gift to support pediatric neuroscience at Beaumont, Royal Oak. When the McBrien sisters – Marcia, Melissa, Victoria and Dianne – decided to honor their parents’ memory, they knew the gift would be kid-focused. That was the easy part. Both Florence and Richard McBrien were lifelong teachers, committed to improving the lives of children in whatever ways they could.

Richard and Florence McBrien

But the health care aspect of their $3 million gift, which ultimately supported the 20,000-square-foot Florence and Richard McBrien Pediatric Neuroscience Center at Beaumont, Royal Oak, came from an even more personal experience. Raising five children, the McBrien parents were bound to spend a lot of time in doctors’ offices. In addition, two of the McBrien children had uncommon eye problems that required extra time and care. Through all these experiences, the McBriens valued the kind of family-centered approach that is at the core of Beaumont’s mission/identity. “The best care does engage the entire family, and that is something Beaumont strives for,” said Dr. Melissa McBrien, chief of Otolaryngology at Beaumont,

approved by the National Association of Epilepsy Centers.

Royal Oak. “It’s important to us. We hope to see this center used as a model for that kind of care.”

“The development of the Florence & Richard McBrien Pediatric Neuroscience Center, the installation of the MEG Device (Magnetoencephalography imaging) and the ability to offer laser ablation technology managed by dedicated epilepsy surgeons allows Beaumont to be a full care facility and a regional destination adult and pediatric epilepsy program,” said Daniel Arndt, MD, Section Chief, Pediatric Neurology, and Director, Pediatric Epilepsy and Clinical Neurophysiology, Beaumont Royal Oak.

The gift from the McBrien family, along with $1.5 million from Beaumont, provides expanded space for multidisciplinary care at the center. The larger space allowed for an expansion of patient exam rooms from nine to 25. In addition, there is now a large waiting area, consult rooms and a collaborative workspace for staff. Several patient families were involved in the design and layout of the center including the child-friendly décor with a fish and animal theme. “For kids, you have to take a different perspective to make the experience less scary. This approach helps the parents, too, when the experience is better,” McBrien said. “The new space is not intimidating to children and it’s a great area for collaboration. Families and physicians are productive working in this environment.”

The McBrien sisters encourage health care causes to be top of mind to potential donors. From left to right: Marcia McBrien, Victoria McBrien, Melissa McBrien and Dianne McBrien.

The center treats headaches, neuromuscular disorders, movement disorders and sleep disorders, among other conditions. The

center is also home to a Level 4 pediatric epilepsy center, one of only 44 pediatricspecific epilepsy centers in the country

When asked why others should consider giving to Beaumont, McBrien noted that health care impacts everybody. “Our parents always modeled giving back to the community,” McBrien said. “We wanted something that would be meaningful in their memory. Stronger and healthier communities are good for us all.” Learn more about how you can make an impact at Beaumont.org.

MAY 2, 2022 | CRAIN’S DETROIT BUSINESS | 15

ENTREPRENEURSHIP

Detroit native teams with Naturalizer to benefit entrepreneurs BY JAY DAVIS

A Detroit native who’s spent more than two decades making her name in the fashion industry is collaborating with a national retailer on a collection with a philanthropic element. Tracy Reese and her Hope for Flowers collection will be featured by clothing and accessories retailers Naturalizer and Anthropologie. The collection features nine styles of shoes, including flat sandals, sport sandals, kitten heels and espadrilles in a variety of colors and patterns. Items in the limited, single-run collection range in price from $110-$148 and are available on Naturalizer's and Anthropologie's websites and in select Anthropologie stores . The collection, according to Reese, is designed to convey the optimism, color and prints that have become synonymous with her offerings. “I’m excited to collaborate with Naturalizer on this collection,” said Reese, a previous Crain's Notable Women in Design honoree who launched Hope for Flowers in 2018. “Naturalizer is a company that’s also committed to responsible design and production. ... The whole collection is meant to be joyful, feminine and also really comfortable.” Reese and Naturalizer have worked together before. The 58-year-old designer starred in the brand’s “Today We Will” campaign and they partnered with the College of Creative

Fashion designer and Detroit native Tracy Reese this spring is collaborating with Naturalizer for a line of shoes as part of her Hope for Flowers collection. | CODED AGENCY

Studies in Detroit on a shoe design program that will award scholarships to three students. Reese, whose designs have been worn by former First Lady Michelle Obama, sits on CCS's Fashion Design Advisory board. The winning design will be featured in a Hope for Flowers nationwide marketing campaign. The Naturalizer collaboration will also benefit the Nest Artisan Guild’s Makers United program, which provides free resources and access to small, artisanal businesses across the U.S. A portion of sales from the Hope for Flowers collection will benefit Nest through Naturalizer directly via an undisclosed, one-time donation from the company. A donation option for customers is also available at checkout. Reese, who serves on the Nest board of trustees, helped bring the Makers United program to Detroit in 2020. Naturalizer Vice President of Design Angelique Joseph commended Reese, who left Detroit to enroll in the Parsons School of Design in New York in 1982 and previously served as head of the women’s division for Perry Ellis, for her efforts inside the fashion industry. “Tracy Reese brings not only her endless talent and passion to our highly-anticipated capsule collection, but also a deep commitment to being a positive force in the fashion industry and in her hometown of Detroit,” Joseph said in a statement. “Her core values and her mission align with our

‘Today We Will’ campaign, which supports women making a difference through mindful actions and positive social change.” The Hope for Flowers label produces responsibly-designed collections for women featuring dresses and sportswear. The company earlier this year started manufacturing out of its Detroit location on Woodward Avenue,said Reese, who established her first clothing line in 1998 in New York. Naturalizer uses responsibly-sourced leather, eco-conscious packaging with all of its shoe boxes using 80 percent recycled paper and soy-based ink. The Hope for Flowers collection features insole boards made from recycled molded plastic, recycled linings and select fabric made from sustainable yarns. Reese, who at her Detroit location offers art education classes for youths and adults, is excited about the collaboration for a variety of reasons. “Obviously, it’s great exposure for the brand. I think people who might not know it exists will learn about the brand and our mission in terms of responsible design,” Reese said. “We’re not just a clothing brand. We’ve got a mission in Detroit. Our intention is to share what we’ve learned about sustainability and enhancing communities, and learning through the creative process.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

NONPROFITS

Nonprofit developing housing for teens aging out of foster care Methodist Children’s Home Society plans campus in northwest Detroit as transitional housing BY SHERRI WELCH

Methodist Children’s Home Society is developing a transitional living campus in northwest Detroit for youth aging out of its foster care programs. The move is in response to the lack of support in the state for teens coming out of foster care, the agency said. The Redford Township-based nonprofit, which recently changed its name to MCHS Family of Services, purchased the four-acre, former Salvation Army Denby Center site last year for an undisclosed amount. It plans to invest $4 million-$5 million to update the 1931 buildings on the campus, just south of Eight Mile and east of Lahser, Chief Advancement Officer Carolyn Watson said. In a bid to help fill traditional supports typically provided by parents and give the teens a boost as they move to adult independence, the campus will provide expanded housing, job skills training, life skills, financial literacy and workforce development partnerships to build viable and stable outcomes — services MCHS also provides on its main campus. “We have had independent living programs for some time now. We know outcomes deserve to be much better for these youth who are aging out of foster care,” Watson said. Michigan has provided few resources and training for teens aging out of foster care, Watson said. That’s evidenced by a 2018 report from the Annie E. Casey Foundation that found: ` 5 percent of youth aging out of foster 16 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

of foster care programs but still need support, Watson said. The first cottage is set to open this summer. During its long history, MCHS has built up a $96 million endowment, Watson said. CEO Kevin Roach said in 2020 it made a strategic decision not to take distributions from its endowment to ensure it will be able to serve children and families for another 100 years. MCHS is raising funds to finance the new campus and expanded services, Watson said.

Expanding the mission Methodist Children’s Home Society is planning a new Detroit campus at 20775 Pembroke, the four-acre, former Salvation Army Denby Center site. | FRONT PAGE PROPERTIES

care in Michigan got room and board assistance, vs. 19 percent nationally. ` 3 percent were provided with employment programs/vocational training, vs. 23 percent nationally. ` 1 percent received educational financial assistance compared to 23 percent nationally. ` MCHS is giving those youth “the keys to move into a successful adult life with stable income, a skilled trade they can carry on and the resources to properly save money, spend money, hold a job — all of those essential needs that teens otherwise would learn from parents,” Watson said.

A new campus The new Detroit campus will build

on housing MCHS currently provides to nine teens on its main Redford campus, along with other independent living programs, including interview- and job-readiness training, application assistance, financial literacy and life skills training on things like cooking, cleaning and laundry and educational supports to complete high school or move on to college. MCHS is also teaming up with an undisclosed skilled training group to provide skilled trades apprenticeships to youth aging out of its foster care programs, Watson said. Renovations have already begun on the first of three ranch-style cottages on the new, Detroit campus to convert it into transitional living for a dozen youth ages 16-19 who are moving out

Named Crain’s Best-Managed Nonprofit in 2020, MCHS opened its doors in 1917 amid the Spanish Flu to provide a home for children orphaned when their parents succumbed to the illness or to WWI. It served as a children’s home for its first 100 years, providing a safe haven for children in foster care and children looking to be adopted through referrals from the Michigan Department of Health and Human Services. Over the years, it added community-based foster care, adoption and independent living programs, as well. It set out to broadly expand its services to adults and seniors, as well as children, in 2019 after noting gaps in services to others in the community were a main factor in children being forced to go into foster care. Through acquisitions and expansion, MCHS now has five additional locations beyond its main campus, including the new site in Detroit.

It’s more than doubled the number of programs it’s offering to a total of 10 and tripled the number of people it is serving to 3,000 each year. In the summer of 2019, it opened a satellite location at Durfee Innovation Society in central Detroit to provide child abuse prevention and family preservation services and acquired Community Social Service of Wayne County creating one of the largest foster care providers in the region and ensuring CSS substance abuse, transitional living and parenting programs for young mothers and foster grandparent and senior companion programs, among others, would continue. MCHS, which is operating on a $14 million budget this year, also opened a trauma-informed, K-8 charter school on its main campus for children in its foster care residential treatment program and the surrounding community in 2020 and last year acquired the Fowler Center, an outdoor, year-round camp in Mayville, northeast of Flint, for children and adults with disabilities. “With our expansion beyond children and families, our goal is to support the community (by filling) any gaps in resources. That begins from infancy through adulthood,” Watson said. “What we want to do is create systemic change to support families from generation to generation so they do have the proper resources and supports and children don’t have to enter the system.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

UWM

From Page 1

Neither Rocket nor Fairway are known to be party to any lawsuits tied to the initiative by UWM. UWM — a publicly traded company (NYSE: UWMC) — is also being countersued by one of those brokers, and has been named as a defendant in a pending antitrust complaint by a Florida mortgage broker, filed last April in federal court. The latter case also names Ishbia personally as a defendant. Both Ishbia and the company he runs have sought to have the case dismissed. That request remains pending before a judge. A United Wholesale Mortgage spokesperson said the “All-In” ultimatum has been successful and claimed the lawsuits are without merit. “The few lawsuits that have been filed against UWM in response to our All In addendum are nothing more than a litigious distraction from a simple case of contract law,” UWM spokesperson Nicole Roberts wrote in an email to Crain’s earlier this month. “About 11,000 (broker) clients chose to partner with UWM. Our business continues to thrive with partners who are aligned with the All-In initiative and what it stands for. Without question, this has been a huge win for the broker community and UWM.” For their part, executives at Detroit-based Rocket Mortgage continue to claim victory, saying the company’s broker platform known as Rocket Pro TPO continues to grow. “2021 was our best year ever, with closed loan volume nearly 20 (percent) higher than in 2020 — and the momentum is only growing,” Austin Niemiec, executive vice president of Rocket Pro TPO, said in an emailed statement to Crain’s in April. “In the last quarter alone, hundreds of brokers who initially signed UWM’s ultimatum have made the decision to come back and work with Rocket Pro TPO.” Fairway Mortgage, through a spokesperson, declined to comment.

United Wholesale Mortgage LLC, based in Pontiac, is the nation’s largest wholesale mortgage lender. | CRAIN’S DETROIT BUSINESS

as the largest mortgage lender in the country, with $351 billion in closed loan volume and 7.9 percent of total market share, while UWM ranked No. 3 with $226.5 billion in closed loans and 5.1 percent of the total market share, according to data from industry trade publication Inside Mortgage Finance. Within just the wholesale channel, however, UWM is No. 1 with 32.4 percent of the market, while Rocket is second with 16.2 percent, according to the IMF data. Ann Arbor-based Home Point Financial is the third-largest wholesale lender. Since the UWM addendum took effect last year, officials at UWM and Rocket have touted internal figures to attempt to demonstrate that brokers have chosen to do business with their company to the detriment of the other. Mortgage industry sources say they’re not surprised that UWM is cracking down on brokers it deems to have violated contracts. The years 2020 and 2021 were among the strongest in history for the home lending industry as prices were high and interest rates were low. This year is a different land‘A different market’ scape, said Guy Cecala, the execuThe ultimatum from Ishbia came tive chair of Inside Mortgage Fidown in March 2021 and decreed nance. “This is a very different market,” that those independent brokers seeking to do business with his com- Cecala said, noting that interest pany must cease doing business rates have moved up significantly since the start of the year, “EVERYBODY’S LOOKING AT WAYS TO and the refinance boom has all but come to a halt. SQUEEZE MORE MORTGAGE “Things are slowing down, no question. And ORIGINATIONS OUT OF THE everybody’s looking at MARKETPLACE.” ways to squeeze more mortgage originations — Guy Cecala, executive chair, out of the marketplace Inside Mortgage Finance right now,” he said. “I with Fairway Mortgage in Wisconsin think it’s clear that’s what United as well as Rocket Mortgage, UWM’s Wholesale is doing in terms of crackmain rival and the mortgage lending ing down on people.” The brokers that are suing echo arm of Dan Gilbert’s Detroit-based each other’s message that UWM’s Rocket Companies Inc. The two competitors, Ishbia has ultimatum hurt their businesses, claimed, had been “hurting” the and therefore their clients. Rocket, wholesale channel of the mortgage they say, tends to offer more comsector, where UWM is the largest petitive pricing on loans and generplayer. ally works with borrowers with lowRocket, UWM’s main rival region- er credit scores than UWM. In the immediate aftermath of the ally and within the industry, is the largest retail lender, meaning con- decree from Ishbia last year, UMW sumers work directly with the com- and rival Rocket Mortgage were pany to receive loans, as opposed to quick to claim victory, with both a broker. Rocket has for years had a sides saying they were the preferred growing presence in the wholesale route for brokers going forward. Ishbia told Crain’s at the time that space. At the end of 2021, Rocket stood he never expected all the brokers to

stick with his company. “I knew we weren’t going to have 100 percent support on it. I made the choice. Rocket didn’t get to choose. Fairway didn’t get to choose,” Ishbia said. “I made the choice for the best thing for the brokers and for the consumers and for the long-term viability of the channel. And it’s gone overwhelmingly positive would be my perspective.”

Lawsuits pile up UWM in early February filed a lawsuit in federal court in Detroit alleging that the mortgage broker America’s Moneyline Inc., headquartered in Aliso Viejo, Calif., southeast of Los Angeles, violated the ultimatum. America’s Moneyline has since countersued and alleges that UWM executives said the addendum would not be enforced, and therefore “there’s no breach of contract” by AML, according to Jeffrey Morganroth, managing partner of Birmingham-based Morganroth & Morganroth PLLC, who’s representing the California broker. The countersuit by AML also alleges that United Wholesale engaged in fraud and misrepresentation. Morganroth has a long history of representing Rocket Mortgage and other affiliated companies under the control of billionaire Detroit businessman Gilbert. Morganroth told Crain’s that his past work on behalf of Gilbert and his affiliated companies has nothing to do with his work in this case against UWM, and that he was asked to work on the matter by AML’s corporate counsel, another Michigan attorney. UWM has also filed similar lawsuits against at least two other companies, also in California, according to a review of federal court records. Executives at the two brokerages — Kevin Rhatigan of Kevron Investments Inc., which does business as Westlake Mortgage Group, and Chuck Bachelor of Mid-Valley Funding — declined to comment, citing the advice of attorneys. Linda McCoy, board president of the National Association of Mortgage Brokers trade association, said the sudden emergence of UWM’s “All-In” initiative threw into upheaval the business models for many brokerage firms. “NAMB is aware of the lawsuits and has been told by many loan officers across the nation that they were

suddenly forced to make decisions around their future business models which created some unforeseen challenges,” McCoy said in an emailed statement to Crain’s. “NAMB supports all lenders and will continue to monitor this legal matter on behalf of its members and the overall marketplace.” The lawsuit against America’s Moneyline claims the broker submitted at least 560 mortgage loans to UWM’s competing lenders to the tune of about $2.8 million. Kevron Investments, meanwhile, submitted 22 loans and Mid-Valley Funding submitted at least 62 loans, according to court filings. UWM seeks $110,000 and $310,000 in relief from the two companies, respectively, according to the complaints. In court filings, UWM claims its business has been “damaged … in various ways.” The brokerage firms being sued by UWM were able “to reap the benefits of UWM’s investments in and services provided to it as a Broker Partner, including UWM’s propriety technology, without complying with the Agreement’s requirements, and more importantly, by intentionally and directly undermining the entire purpose of the All-In (initiative).” AML, in its counter complaint, contends that UWM executives “made false, malicious and willful misrepresentations” to the brokerage, according to the court documents. The broker contends that for months they were told that they could continue doing business with the lenders of their choice. “UWM’s Complaint is an example of UWM’s billionaire owner, Ishbia, seeking to gain unfair advantage over UWM’s competition and increase UWM’s market share, and hence improve Ishbia’s personal financial position, by putting fear and apprehension into the hearts of in-

dependent mortgage brokers like AML,” the AML complaint reads.

A ‘serious’ complaint While the cases that UWM has brought in recent months play out, a Florida brokerage firm claimed in court documents filed a year ago that UWM is attempting to create a “monopoly” in the wholesale channel. The O’Kavage Group LLC, a St. Augustine, Fla.-based brokerage, filed a class action lawsuit in a federal court in Florida last April, which names UWM and Ishbia as defendants. Stephen Calkins, a professor of law at the Wayne State University Law School with a focus on antitrust matters, said the O’Kavage Group lawsuit amounts to “a serious antitrust complaint” that cites a number of relevant statutes, but also said it’s unclear how likely the case might be to prevail. The lawsuit states: “There exists a dangerous probability that UWM will monopolize the wholesale mortgage market.” Robert Goodman, an attorney with the Parrish & Goodman Law Firm PLLC in Florida, which is representing the O’Kavage Group, said there are potentially 3,000 class members within the lawsuit. UWM says that any claims of a potential monopoly are bogus. “Each broker has the same freedom as (the O’Kavage Group) to accept or decline the (addendum) and to select the lender or lenders it preferred — be it UWM, Rocket, Fairway, or any of the other 70+ wholesale mortgage lenders in the market,” reads the lender’s motion to dismiss the class action lawsuit, filed last summer. “Likewise, every broker contracting with UWM can exit the Broker Agreement at any time.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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BLADESMITH

correct, so prices for some buyers might not come down for a month or two. So there’s not a lot of price relief for people like this medieval weapons maker.”

From Page 1

operating in the cramped corner of an auto repair shop to an artist-led, curated collective with more complicated, and more expensive, weaponry. But supply chain woes, labor shortages and the perils of operating a small business in 2022 may be more difficult to overcome than all the villains from Midgard, Middle Earth or Meereen.

Metal collective

Primal handicraft, business realities John Verhoff, executive producer of the popular reality competition show “Forged in Fire” on The History Channel, said as the world has become increasingly digital and complicated, people are seeking out “what’s real,” leading to increased interest in bladed weapons. “Forged in Fire” pits four master bladesmiths against each other in a timed series of challenges to create a weapon that is judged on its strength, sharpness and quality. The show has produced nine seasons since 2015. “This is a world where you can have real control over elements such as fire and metal,” Verhoff said. “With your own brute force, using hand tools or machinery, and starting with raw materials whether it’s a bar of steel or lump of steel and create something that’s totally new and totally yours. People identify with that. It’s primal because it’s a very physical, visceral experience.” At the Archangel Steel shop behind Urbanrest Brewing Co. in Ferndale, Sam moves effortlessly, dodging work benches littered with belt grinders, steel shavings and half-finished blades. Sharp edges are everywhere. But he’s got 20 dull blades that need honing. “We need to finish this order soon,” Sam said to his green-haired, tattooed understudy Frankie Gorncy. Sam is preparing for this month’s Motor City Comic Con in Novi. It’s Archangel Steel’s first time selling its work at the event and with only a few weeks to go, Sam is frenetic. Online orders, a growing sales tool for Archangel, and prepping for the August start of the Michigan Renaissance Festival in Holly — which accounted for $147,000 of last year’s revenue — has left Sam stressed. That visceral, primal experience Verhoff talked about remains a mostly digital fantasy though for most as Sam struggles to find workers willing to shave down blade edges and stitch leather sheaths. “The fun of all this is ruined on me,” Sam said as Gorncy growls lyr-

Archangel Steel owner Christian Sam uses a machine to sharpen a dagger in his Ferndale workshop. | PHOTOS BY NIC ANTAYA/SPECIAL TO CRAIN’S DETROIT BUSINESS

Frankie Gorncy of Roseville works on a piece of steel at Archangel Steel in Ferndale.

lines or McDonald’s on wages anymore. He attributes the lack of available workers to government stimulus during the pandemic and a noted shift from manual labor to service jobs. “I can’t sell and do all the work anymore,” Sam said. “I need people. But no one wants to work. Everyone wants to be a Bitcoin billionaire and do nothing with their hands. Right now, we just can’t afford the top people with the right skills that get $40 an hour. That’s aerospace pay.” It’s not like it was 35 years ago, Sam said. A reformed Dungeons and Dragons nerd, he learned the art of blacksmithing metal after his mother took him to the Renaissance Fair as a teenager. Smelting in his dad’s garage brought in an income. He started a pool business and a con“RIGHT NOW, WE JUST CAN’T AFFORD struction business when the demand for THE TOP PEOPLE WITH THE RIGHT swords and axes fell SKILLS THAT GET $40 AN HOUR. out of favor through the years, but he nevTHAT’S AEROSPACE PAY.” er stopped making — Christian Sam, owner, Archangel Steel weapons. “I was making ics to “Shadow of the Reaper” over $1,800 a week at 18 years old,” Sam the hum of the grinder. said. “I went to college and got an “He sings while he grinds,” Sam (associate’s degree) in modeling (3D snorted. “But he’s grinding, so I computer-aided design) but I never couldn’t give a shit.” made more money than I could Sam employs five workers ... “if making swords.” they show up,” he said. Archangel is To supplement a lack of workers, befallen by the same labor issues or at least ones he can afford, Sam that have plagued small business reinvested in his business with the across the nation since the start of $90,000 purchase of a Haas VF-3 the pandemic. CNC machine. The machining mill, Sam can’t compete with factory most common in auto parts supplier 18 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

plants, allows Sam to carve out complicated weapons like a spike war hammer with nine sharp points on each side — and use his CAD degree. “The hammer is the highest level of difficulty,” Sam said. “This machine replaces the labor that I need and gives me room to create things I could never do by hand.”

from the Renaissance Festival, Sam has to be careful in pricing. A miscalculation on steel today could put Archangel in the red tomorrow. Customers like Sam, who place small orders of material compared to manufacturers, often feel the most pain from pricing spikes, said Michael Barnett, president and COO of Wixom-based steel supplier and distributor Grand Steel Products Inc. Even though prices are coming down. The price of hot-rolled steel coil exploded to more than $2,200 per short ton last fall, but had fallen to $1,456 per short ton on April 27. Barnett expects those prices to continue to drop as the global commodities prices settle. “The price of steel has gone up significantly since the beginning of the pandemic; it went crazy and then regulated at the end of last year, but then Russia and Ukraine happened and threw everything on its head,” Barnett said. “But distributors selling to end users don’t correct prices as fast as the market. It’s not a one-to-one

Far beyond driven But there are greater economics at play. Labor shortages are only part of a compounding problem for Archangel Steel. The prices of raw materials since the start of the pandemic have pierced Sam’s margins at a time when demand is climbing. Sam doesn’t forge or melt down scrap steel. Instead he takes sheets of steel and carbon steel, cuts them into a shape and grinds and polishes until a high-quality blade is born. A few years ago, Sam could secure 17 sheets of steel for $1,500. Last week, he was quoted at $8,000 for those same sheets and $20,000 for the same amount from another supplier. With the bulk of sales coming

A version of the Doomgiver axe, which is 43 inches in length and includes a wooden handle and prism-shaped steel pommel embellishment. This nine-pound weapon costs $955.

Sam doesn’t forge steel anymore, hasn’t in years, because it’s too time consuming even with the high steel prices. While Sam curses the current price of steel, he’s raising his prices by about $100 per weapon in a tactical move that’s beyond rising input costs. “Right now it’s just tough to keep up,” Sam said. “I hate the rate race, man. I raised prices to slow down some people from buying. It’s not a bad problem but it’s exhausting.” Sam’s work is increasingly more complex. Upgraded equipment permits intricate engravings and personalization that he said is wanted among customers. But it’s his artistry he’d like to return to, he said, waxing about his dream of leading an art collective. Sam idolizes Design Toscano, a garden and home sculpture supplier that once distributed magazines filled with garden gargoyles by individual artists. “I love to teach and I want the people who work for me to feel that joy, of the creative experience,” Sam said. “This is a craft, but it’s also an art. In the 16th century I’d have my own castle. This work used to be important and I think it still can be.” “In a perfect world, I’d have a group of five artists, all contributing their own works to this creative endeavor,” he said. “But I just don’t think that will ever happen.” Instead, Sam returned to the shop to check on the CNC machine’s progress. Another spiked war hammer. Its handle will be wrapped in leather and stored among the growing pile of swords and axes for the Renaissance Festival to be sold to fans dressed as everything from the King in the North to a court jester. People looking to escape their own reality through his — the determined bladesmith. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

LASSITER

From Page 1

MSU approved faculty appointments for 115 researchers at Henry Ford. But it’s the groundbreaking of a $150 million joint research institute in the next 15 months and simultaneous creation of a four-year medical school in the city that is the linchpin to the partnership. Henry Ford physicians and nurses will act as faculty in the program that will house upward of 25 students in human medicine and another 50 in osteopathic medicine and represent the first major medical school expansion in Detroit in more than 100 years. Lassiter noted the importance of a new medical school and improved care in the nation’s most segregated city when the two organizations signed the deal in 2020. “The COVID-19 pandemic and the ongoing injustices and recent protests in cities across our nation have amplified the importance of and urgency for innovation and discovery

that radically improves the health of all of the communities we serve,” he said in a statement. But now Lassiter’s right hand and President and COO of Henry Ford Health Bob Riney will lead those efforts. Riney, a longtime executive at the health system, will serve as interim CEO upon Lassiter’s departure on Aug. 1. Henry Ford Health declined to make Riney available for an interview. Norm Beauchamp, executive vice president of MSU Health Sciences, told Crain’s while Lassiter was instrumental in the partnership, the projects will carry on. “In order to get where we got, the entire leadership at Henry Ford and MSU had to see the value,” Beauchamp told Crain’s. “What follows in the wake of Wright leaving is the next person in the organization, Bob Riney, takes over. Bob is equally passionate about this because he was involved in the discussions. We’re going to miss Wright but we’re excited this will be part of his legacy.” The 400-square-foot research in-

stitute and medical school in Detroit will mimic MSU’s venture with Spectrum in Grand Rapids. The pair built a $250 million innovation park more than a decade ago that has attracted significant investment in the region. Last year, pharmaceutical manufacturer Perrigo Co. broke ground on a new 125,000-square-foot headquarters at the innovation park. Lassiter said Thursday he wasn’t worried about the future of the research center. “When you sign a 30-year partnership, you know that the fruits of the labor in that partnership will occur over time,” Lassiter told Crain’s. “We are on track with all the milestones we set during the first year of the partnership. I’m not concerned at all what I’m leaving behind and both of our boards are 100 percent committed to the partnership.” Instead he will become CEO of Chicago-based CommonSpirit Health. The allure of running one of the largest health systems in the country — the 140-hospital system stretches over 21 states — proved too great.

“It has an explicit focus on the kinds of things that we have a focus on at Henry Ford and that I’ve had a focus on during my whole career, which is serving the entirety of the community and working hard to ensure that people can live out their best lives from a health and wellness perspective,” Lassiter told Crain’s Thursday. “The ability to impact CommonSpirit’s platform, which is more than 30 percent of the United States, as well as some international communities is the kind of impact that I’m proud to be able to lead.” Lassiter joined Henry Ford Health in December 2014. Under his leadership, Henry Ford Health also completed two successful mergers, expanding its geographic footprint, and expanded globally with the 2020 opening of partner hospitals in Saudi Arabia and India. During Lassiter’s tenure, Henry Ford also significantly increased its quality performance, earning top honors in several publicly reported quality programs and also received outlook and ratings upgrades from

Moody’s and S&P services. Lassiter was named 2021 Newsmaker of the Year by Crain’s Detroit Business and has multiple year recognitions among the 100 Most Influential People in Healthcare by Modern Healthcare. Lassiter is chair of the American Hospital Association and was the 2021 chair of the Detroit Regional Chamber and was key to the return in September of the Mackinac Policy Conference to an in-person format during the pandemic. The Detroit Regional Chamber’s annual conference went on hiatus in 2020 due to COVID-19 and its occurrence in 2021 was unsure. But with Lassiter as its chair last year, the conference was able to institute a vaccinate mandate for attendees. Coupled with the presence of Lassiter and his management team, the event would go on in the middle of a pandemic with reassurance that no major breakout would occur. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

CANNABIS

PHILANTHROPY

Mark Fisk joins Cannabis Manufacturers Association as co-executive director BY CRAIN'S DETROIT BUSINESS

Dan and Jennifer Gilbert have committed more than $70 million to research on treatments for the disease that afflicts their son, Nick. | ROCKET COMPANIES

Gilbert Family Foundation commits $18M more to neurofibromatosis research BY SHERRI WELCH

Rocket Cos. Chairman Dan Gilbert and his wife, Jennifer, have committed an additional $18 million to gene therapy research into the disease neurofibromatosis. The couple’s oldest son, Nick, now in his 20s, was diagnosed as a toddler with NF1. The disease spawns tumors on nerves throughout the body that can cause bone, nerve or vision problems, among other effects. Made through the Gilbert Family Foundation, the latest grants to NF1 research more than double the couple’s 2018 commitment of $12 million to gene and curative therapies research to address genetic abnormalities caused by NF1. The latest round of commitments brings the Gilbert Family Foundation’s total investment into curing NF1 to $72.5 million, with additional grant announcements to come later this year, the foundation said. The new grants include $4.4 mil-

“THE PROGRESS FROM OUR LAST RESEARCH CYCLE AND THE PROMISE OF THIS ONE CONTINUES TO GIVE US HOPE THAT ANYONE ENDURING NF1 WILL SEE A CURE IN OUR LIFETIME.” — Jennifer Gilbert

lion to further develop projects that began in 2018, led by researchers at Duke University, University of Alabama at Birmingham, University of Massachusetts and Massachusetts General Hospital. Another $13.8 million will support 12 new research projects at a number of research sites, the Gilbert Family Foundation said. “We are committed to finding a cure for neurofibromatosis by supporting remarkable researchers and physicians as part of our Gene Thera-

py Initiative,” Jennifer Gilbert said in a release. “NF1 affects 1 in 3,000 people throughout the world, including our son Nick. The progress from our last research cycle and the promise of this one continues to give us hope that anyone enduring NF1 will see a cure in our lifetime.” The Gilbert Family Foundation launched the Gene Therapy Initiative in December 2018 to fund research focused on developing therapies that address the underlying cause of NF1, rather than just treating the symptoms. The Gene Therapy Initiative supports research to develop various therapies, including gene replacement, gene editing, RNA editing, exon skipping, and nonsense mutation suppression. The initiative is also supporting development of methods to improve the accuracy and efficiency of delivering NF1 gene therapies to their intended parts of the body. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

cess to safe, tested and high-quality cannabis products,” Fisk said in the statement. “Working together, we will continue to advocate in a Fisk bipartisan way for consumer and product safety and entrepreneurship in Michigan’s burgeoning regulated cannabis industry.” The Michigan Cannabis Manufacturers Association is a business advocacy group for many of the state’s largest growers, processors,

The Michigan Cannabis Manufacturers Association on Tuesday announced that Mark Fisk, lead partner of Byrum & Fisk Advocacy Communications, will join the organization’s current Executive Director Stephen Linder as co-executive director. The appointment of Fisk was unanimously approved by the MCMA board. “I am pleased to announce that Mark Fisk will be joining me as co-executive director to support the MCMA’s dedication to providing safe, tested cannabis products to Michigan consumers in a regulated market and take our “MARK’S EXTENSIVE BACKGROUND WILL bipartisan approach to the BE A GREAT ASSET AS WE ENTER THE next level,” FINAL STAGES OF THE PASSAGE OF THE Linder said in a statement. MICHIGAN CANNABIS SAFETY ACT...” “Mark’s exten- — Stephen Linder, co-executive director, Michigan sive back- Cannabis Manufacturers Association ground will be a great asset as we enter the final and vertically integrated cannabis stages of the passage of the Michi- licensees. All members of the gan Cannabis Safety Act, which MCMA must be licensed by Michiwould help ensure all cannabis in gan’s recently-renamed Cannabis Michigan is tested, clearly labeled, Regulatory Agency. tracked, licensed and taxed.” Fisk told Crain’s his new role at While hailing from opposite the cannabis business group is an sides of the political aisle, both expansion of Byrum & Fisk’s curLinder and Fisk have deep roots in rent contract with the organization cannabis. and that his role at the East LanByrum & Fisk was the lead com- sing-based political communicamunications consultant for Propos- tions firm won’t change. Linder is a longtime Republican al 1, the 2008 ballot initiative that made medical marijuana legal in political operative and former Michigan, and it is — and will con- managing partner in the Lantinue to be — the communications sing-based GOP communications firm Sterling Corp. lead for the MCMA. Fisk is a veteran Democratic poLinder was one of the architects of the Medical Marijuana Facilities litical consultant in Lansing. His partner and co-founder in Byrum & Licensing Act of 2016. “We look forward to continuing Fisk is longtime politician Dianne our work with Stephen and the Byrum. MCMA over the coming months to help ensure all Michigan patients Contact: clivengood@crain.com; and adult-use customers have ac- (313) 446-1654; @ChadLivengood MAY 2, 2022 | CRAIN’S DETROIT BUSINESS | 19

AUTO SHOW

From Page 3

Outdoor activations will include street course ride-alongs on the Grand Prix’s future downtown circuit. There will also be five active tracks inside Huntington Place, whose main show floor is sold out, according to organizers. Organizers provided updates on the show’s planning Tuesday, along with a new logo reflecting the “global flavor” of the show. “With the show’s exciting transformation, it was the ideal time to introduce fresh branding for what will be a Detroit auto show experience unlike any other before,” Alberts said. The show is expected to be a “pivotal player” for consumers’ purchasing decisions as it aligns with new model releases in the fall. Inside Huntington Place, there will be hands-on activations, traditional vehicle exhibits and a “showcase of automotive innovation and technology.” Additionally, more than 80 tech companies, tier-one suppliers and startups will exhibit at the AutoMobili-D exhibit presented by the Michigan Economic Development Corp. The black-tie Charity Preview will return to Huntington Place on Sept. 16, “with downtown restaurants, bars and other venues activated that evening.” Tickets go on sale July 11 at $400 each or $700 for a pair. “The event is a very important night of giving in Detroit, but it also sets the stage for the Public Show that brings thousands of visitors downtown and generates incredible economic impact for our community,” auto show Chairman Joe Lunghamer said in a news release. The auto show has been shelved since January 2019 due to the COVID-19 pandemic and a reimagining of the event by organizers. Last

The NAIAS Car of the Year press conference during the 2019 The North American International Auto Show in January 2019 at Cobo Center in Detroit. | AFP/GETTY IMAGES

year, Motor Bella and Motor City Car Crawl filled some of the void of the NAIAS absence, but Detroit and its mainstay convention center — which has changed names twice since 2019 — have been hurting for the return of its flagship event. The auto show’s return to Detroit was officially announced in January. In December, Michigan lawmakers passed a $795 million spending bill that included a $9 million one-time grant to aid the auto show reboot.

Alberts declined to say what the budget is for the 2022 show but said it is comparable to 2019. He said the show was able to broaden its footprint without increasing costs by leveraging partnerships with the city, DDP, Grand Prix organizers and others, as well as bringing back more than 100 sponsors from 2019. Organizers are planning free activations and nonautomotive entertainment downtown, but details

have yet to be released. Alberts declined to say what organizers are targeting as far as attendance but said he can “guarantee several hundred thousand” will turn out. Total ticketed attendance for the 2019 show was 774,179. “It’ll be a celebration for Detroit and the region unlike any other,” Alberts said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

PREVIEW

From Page 3

“Our last show was in 2019, which required us to reimagine the show and reassess all aspects of it. When the auto show and Charity Preview were canceled due to the pandemic in 2020 and 2021, we continued our support to our Charity Preview beneficiaries. While we have selected six charities to support with the 2022 Detroit Auto Show Charity Preview, we continue to provide funding to other local charities through the DADA Foundation.” Two of the three charities that were cut told Crain’s they were caught off guard by news they would not be on the list of beneficiaries this year after decades-long relationships with DADA and the charity preview. Both said they learned about the Wellday cuts just 10-15 minutes before DADA’s Tuesday morning auto show announcement. Judson learned it had been cut through a phone call Alberts made to its top development executive Tuesday morning, President and CEO Lenora Hardy-Foster said. Alberts indicated that DADA wasn’t sure how much it could raise during this year’s events and was making the cuts early to ensure the money raised could make an impact for the charities that did receive it, 20 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

Lenora Foster-Hardy, president and CEO, Judson Center. | CRAIN’S DETROIT BUSINESS

she said. To soften the revenue loss, DADA is sending Judson a $50,000 check, Hardy-Foster said. “We’re grateful for the many years that we have been recognized as one of the charitable recipients. We’re very fortunate and grateful for that,” she said. “But I’m so disappointed the way it was handled.” DADA brought the charities to the table in January, leading them to believe they were still part of the Chari-

ty Preview, “and 10 minutes before the announcement you call and say you’re eliminated? That’s not right,” she said. Hardy-Foster said Judson, which is operating on a $31 million budget, planned to get $400,000 from the event this year after its January meeting with DADA. “Here I am, I planned in my budget to serve more (people) because ... we were informed Charity Preview was back on, as it had been in 2019,”

she said. “Now I have to look at my budget and make some tough decisions. And I’m not sure how it will impact the people we serve and the staff we employ. “It’s an unfair decision that was made, not giving those nonprofits (that were cut) enough notice to readjust themselves and their budgets. I feel they need to reconsider this decision that was made.” Charities benefiting from the event help sell tickets to it. Judson sold

2022 DETROIT AUTO SHOW DATES The schedule for the 2022 North American International Auto Show: Media Day: Sept. 14 AutoMobili-D and Industry Tech Days: Sept. 14-15 Charity Preview: Sept. 16 Public Show: Sept. 17-25

more than $543,000 in gross ticket sales in 2019, the last year the Charity Preview took place in its traditional format at the downtown Detroit convention center. It netted just more than $433,000 from the event that year, Hardy-Foster said. Bethanne Wellday, executive director of the Michigan office for March of Dimes in Southfield, said she learned her organization had been cut through a voicemail 15 minutes before DADA sent out its press release, which included a shorter list of charities benefiting from the preview. “It was disappointing. It hurts the March of Dimes and our mission of supporting moms and babies here in Michigan,” she said. The funding, roughly $200,000 in 2019, supports programs like implicit bias training for maternal health care providers, maternal support sites added in Detroit during the pandemic and a NICU family support program set to open at DMC Children’s Hospital of Michigan. March of Dimes is operating on a $1.4 million budget in Michigan this year. Wellday said she called Alberts to better understand how the decisions on which agencies were cut were made but has not heard back. “I asked if there’s something we did wrong or something we can help to clarify to understand why the choices were made so abruptly after such a long-term partnership,” she said. “If it’s a business decision, I’m OK. We’re business people, too. We just want to understand it.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

CAVNUE

A rendering of Cavnue’s proposed autonomous vehicle road near Detroit.

CAVNUE

From Page 3

The investment was led by Ford Motor Co. and Sidewalk Infrastructure Partners, Cavnue’s founding company and a firm with connections to Google parent company Alphabet Inc. “We will prove to the world that we can create an operating environment for advanced vehicles that is safer and more efficient than just a normal roadway,” Duvall said of the work that’s planned for the coming months now that the stretch of highway has been identified. “So next year is a big year. This year is what I call the detailed planning work.” While other roads in Southeast Michigan, such as Michigan Avenue, are being explored to get similar treatment, an interstate offers “a cleaner, less complicated test bed to

start with,” and the hardware and software can then be fine-tuned for other roads in the future, according to Duvall. Making Michigan a leader in electric and autonomous vehicles has become a rallying cry for the state’s business and political leaders over the last several years. The 2020 announcement that Cavnue had been selected came just after the state’s economy, like much of the rest of the country’s, had fallen off a cliff at the onset of the COVID-19 pandemic. “In 2019, we saw record-breaking investments in next-generation automotive, advanced manufacturing and high tech, in particular,” Gov. Gretchen Whitmer said at the announcement nearly two years ago. “Planting this flag in the ground today and getting to work on a regional groundbreaking technology and infrastructure effort sends a strong

signal that we will rebound from this (coronavirus) crisis and pick up where we left off.” For their part, MDOT officials say they’re taking a three-pronged approach as they seek to navigate the future of driverless vehicles, looking at the issue from operations, business and regulatory perspectives, according to Collin Castle, the intelligent transportation systems program manager with MDOT, who is managing the Cavnue project for the state. “So kind of the end state is having a fully baked technology and infrastructure solution that facilitates the safe use of (autonomous vehicles), trying to kind of get them to a more safe operating domain,” Castle said of the work. As Cavnue and MDOT move forward with the continued work of seeking to designate a lane of busy I-94 for the project, there’s also a

piece of enabling legislation awaiting passage in Lansing. Senate Bill 706, sponsored by Frankenmuth Republican Sen. Ken Horn, who chairs the state Senate’s Economic and Small Business Development Committee, cleared the upper chamber in January with bipartisan support, but has yet to receive a vote in the state House. In short, the bill would authorize MDOT to “designate a segment of a roadway under its jurisdiction as an automated vehicle roadway.” Cavnue spokesperson Katelyn Davis said the company has had “productive engagement” with Michigan lawmakers, and Cavnue is “optimistic that the legislative process will result in a final bill that benefits all parties involved.” Duvall and Castle said they expect it will be 2024 or 2025 before actually commencing a pilot program that would have driverless vehicles going

along I-94 between Detroit and Ann Arbor. To help get to that point, the company needed money, Duvall said. Specific cost projections are still being fleshed out, but the company expects to make a nine-figure investment in metro Detroit. The Series A round of $130 million, announced in conjunction with the I-94 news, will help with that work and go toward pre-construction, technology development and further growth for the company, according to Duvall, who said the company has not yet generated revenue. “It’s a capital-intensive business,” Duvall said. “We did need to do kind of a meaty fundraise, and we needed to ensure that we had the capital, and we want the state to have confidence in us as a partner as well.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

COMMUNICATIONS

PR exec Van Dyke launches firm with other communications veterans BY NICK MANES

Just seven weeks after a sudden departure from the Detroit public relations firm with his name on the front door, Peter Van Dyke is back with a new venture. Van Dyke and two other partners — Jamie Kaye Walters and Michael Sherman — have formed VVK PR & Creative LLC, a Detroit-based communications firm focused on public relations, video production, and other services. Launching last week with a team of more than a dozen staffers and revenue-generating clients on board, the nascent company is essentially “a startup with an incredibly strong foundation,” Van Dyke said. The chief executive of the new firm abruptly resigned from Van Dyke Horn

Left to right: Michael Sherman, Peter Van Dyke and Jamie Kaye Walters. | MARVIN SHAOUNI

Public Relations LLC in early March, where he had been CEO for six years and a partner for a decade before that. “I thought it best that I resign and to allow the company to continue under the vision of the majority owner,” Van Dyke told Crain’s at the time, referring to former business partner Marilyn Horn. Lambert Global, the holding company for Grand Rapids-based PR, investor relations and integrated marketing firm Lambert & Co., has since taken a minority investment position in Van Dyke Horn. In an interview with Crain’s last week, Van Dyke said plans for the new firm, VVK, were not yet in motion at the time of his resignation. The type of business VVK seeks to be, however, has been part of a “long-term vision.” The “foundation” Van Dyke men-

tioned consists of bringing Sherman and Walters’ long-standing company, video production firm Velocity Cow LLC, under the umbrella of the new VVK firm. Sherman will serve as VVK partner and executive vice president of production. He started Velocity Cow with Walters in 2008, and will bring his nationwide portfolio of clients and six team members to the new agency. Kaye Walters, who served as creative services and programing director at WDIV-TV for eight years after co-founding Velocity Cow with Sherman, will serve as VVK’s COO and partner, and will lead the agency’s marketing practice and talent development. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes MAY 2, 2022 | CRAIN’S DETROIT BUSINESS | 21

THE CONVERSATION

Ronnie Hall on nurses in leadership, staffing woes and violence at work Nurses have steadily climbed the corporate ladder in health care and are now leading several organizations. Ronnie Hall, president of Henry Ford Hospital, runs the largest hospital in Detroit and has been using her past experience as a registered nurse to direct operations and solve the staffing crisis conundrum that has crippled hospitals across the country. | BY DUSTIN WALSH `We’re seeing more and more nurses climb to leadership roles. How advantageous is that background in leading an organization? We have seen a greater shift nationally of nurses at the presidents and CEO level. Nurses that have come up though the ranks clinically can see all the operational issues at large-sized organizations. That experience helps us make decisions that make sense. We understand what needs to happen at a clinical level or say, ‘Nope, I’m calling foul on that.’ We also tend to have a really good rapport with physicians and nurses in an organization because we speak the same language. I’ve been here for 38 years, but starting out as a registered nurse allowed me to see what problems needed to be solved. Understanding our clinical objectives informs all the other objectives we’re taking on. We can drive clinical quality differently than an administrator that doesn’t understand processes. `As a former nurse and now an administrator, the pandemic staffing issues must have hit you on both sides? You’re correct. This was the most difficult as this pandemic dragged on over time. When it first happened, people were really jumping in. Now it’s really taken its toll. Nurses were considered heroes. But the shortages started to develop and the rates that nurses were making, the highest rate was $170 an hour, started to really hurt. I understood why they were doing it. If they were going to be exposed to COVID at their home (hospital) why would they not travel and make more money? But the shortages did have us making decisions. We had to manage through by asking if all of our nurses were performing to their highest license, and open and close beds based on staffing. `How did that impact existing staff? Because places we usually would discharge patients to also didn’t have staff, length of (patient) stay crept up. And because you’re treating patients for longer

and the supply chain issues, we’d have a shortage of supplies. We’d have to use the second- or third-level backup supplies... How do you keep you staff engaged when you’re out of supplies? We kept our staff very safe but we had to improvise and that takes a toll on the existing staff. Everyone was really taking on all these extra challenges. `Are there fundamental changes that need to be made to better staffing? We are going to the Philippines to bring in some staff. We go across the Canadian borders as well. The Philippines is going to take us a bit longer. We’re sending a team there this summer to do the interview process and bring people here. When I had a 2 percent vacancy rate, life was great. Now it’s in the 20 percents, that’s the hard part for us. Longer term, a lot of the issue is what can the schools take. Do they have the instructors? Do they make enough money at colleges to draw workers in to teach? How do we pay instructors? How do we get people through school? What about a loan forgiveness program? Many people can’t go to school, live life and be a nurse at the same time. We need to look at more creative ways to supplement staffing. The days of people working 40 hours a week may become less common. Most of our nurses work three 12s. Maybe we do different types of shift work. More fourhour blocks or six-hour blocks. A lot of nurses also like working from home. There are so many things you can do from home now — social work, pharmaceutical type of work. People are looking for that type of flexibility and we’ve got to find out how to meet them there.

health cases in our ED (emergency department). The mental health care in our communities isn’t as robust as it needs to be. We have 16 patients this morning (April 22) needing placement for mental health. That’s an awful lot for one morning. But I will say our health care workers are usually pretty forgiving when it’s someone who may be demented or on drugs. We are finding there’s violence even with the patients’ families. The change seems to be no one has any patience. Even the families are getting into fights and arguments.

While there is a recognition that when a nurse gets kicked or slapped, that’s part of what they signed up for, it’s been compounded. We’re now putting panic buttons in all parts of the organization. Especially in those areas where people are more isolated with patients. We want to make sure our staff feels supported. There’s nothing worse than having a nurse put out because of an injury because they have been assaulted. Residents and doctors are feeling it too. People in the past used to stop because of the white coat out of some perceived respect. That’s not stopping society any longer. Ronnie Hall, president of Henry Ford Hospital in Detroit

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`There’s been a lot of chatter about the rise in violence in hospitals. Recent legislation made violence against health care workers a felony. Is that punishing someone in a mental health crisis at their most vulnerable? We have seen an increase in mental

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RUMBLINGS

Ishbia knocks Rocket over buyouts; Gilbert lobbyist fires back

22 | CRAIN’S DETROIT BUSINESS | MAY 2, 2022

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THE LATEST SALVO in the longtime rivalry between metro Detroit’s two largest mortgage lenders spilled over into social media last week. Mat Ishbia, the president and CEO of United Wholesale Mortgage in Pontiac, took to LinkedIn on Wednesday to express “disappointment” with Rocket Companies Inc. — his company’s main rival — over employee buyouts Rocket announced earlier in the week. Rocket’s top lobbyist fired back in the comments. It’s the latest in a years-long feud most recently marked by Ishbia’s ultimatum that mortgage brokers wishing to do business with his company, the nation’s largest wholesale mortgage lender, cease sending loans to Rocket.

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Ishbia

Fleisher

As a historic wave of refinancings has ebbed, mortgage companies have resorted to cutting headcount. Last week, Rocket offered voluntary buyouts to 8 percent of its 26,000 employees. “Disappointed is the nicest way to describe my thoughts around Rocket Mortgage/Quicken Loans laying off over 2,000 of their people, as this

should not be necessary for a company that made over $5 Billion last year in profits,” Ishbia wrote in his LinkedIn post on Wednesday. “Even though United Wholesale Mortgage directly competes with Rocket, I hate seeing this type of negative impact on families in Metro Detroit,” Ishbia continued. “These 2,000+ people will struggle to find new jobs, and I think it’s disgusting that they’re thinking short term and are solely focused on cutting a few million per month in costs.” Jared Fleisher, vice president of government affairs at Rocket Central — a business services firm under the Rocket Companies umbrella — fired back, saying he was not asked to write the response. “Mr Ishbia’s comments about

‘families in Metro Detroit’ is nothing but empty cynicism,” Fleisher wrote. “There isn’t another company in Detroit or this country that can match Rocket’s record of philanthropy and community investment and service and overall commitment to its community,” Fleisher continued. “You sir have no such record to speak of. Rocket is responding to dramatically changed market conditions in the most thoughtful and caring way possible. The fact that you seek to exploit it for your own ends is evidence of nothing but the true depth of your cynicism, lack of caring and immorality.” Spokespeople for both UWM and Rocket declined comment for this report.

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