Crain's Detroit Business June 21, 2021, issue by Crain's Detroit Business

BLOOD BANKS: New competitor moves in amid shortage. PAGE 3

HR AWARDS: Saluting excellence in a tumultuous year. PAGE 8

CRAINSDETROIT.COM I JUNE 21, 2021

Beaumont bets on 3rd merger plan Latest try would bring bring in-state partner for health system, but questions remain BY DUSTIN WALSH

The proposed merger between Beaumont Health and Spectrum Health is set to be a boon for the Grand Rapids health system but its benefits for Southeast Michigan remain less clear. The health systems hope the

merger cuts costs and sutures the wounds between Beaumont executives and staff with new leadership, but the move may just pick at the scab. The pair of health systems announced a letter of intent Thursday morning to explore a merger to create a new $12 billion health system

Fox

Freese Decker

“for Michigan, by Michigan” and the state’s largest health system and employer by fall of this year.

The merger is expected to boost Spectrum’s rising profile across the state and allow its integrated insurer Priority Health to expand rapidly through the Beaumont network. Leadership of both systems call the merger an opportunity to improve patient care and reduce costs across the state, but experts remain skeptical on who would see those savings. The deal, which would require regulatory approval, would also end a multiyear saga for Beaumont in seeking a partner to improve the

Southfield system, especially for its unhappy employees. Last fall, a group of major donors, top doctors and community leaders at the eight-hospital Beaumont Health called for the firing of CEO John Fox and for the 19-member board of directors to be overhauled. Widespread dissatisfaction culminated in two negative physician and nurse surveys last summer. Much of that displeasure stems See MERGER on Page 17

CONTRIBUTED PHOTOS

Forgotten Harvest, YMCA and EasterSeals received early gifts from MacK enzie Scott (inset).

WHEN SURPRISE MILLIONS LAND Nonprofits work to put MacKenzie Scott gifts to good use BY SHERRI WELCH

Helene Weir, president and CEO of the YMCA of Metropolitan Detroit, ignored both emails she got saying an unnamed philanthropist

wanted to make a gift to the Detroit-based organization. It wasn’t until she got a call from someone at the Bridgespan Group, urging her to get in touch with the representative, that she took the

NEWSPAPER

December emails seriously. “At first, I was skeptical. I thought, ‘who does that?’” Weir said. “I felt pretty sheepish that I didn’t jump on it, but I really did think it was a scam when it started.”

A half a year has passed since then, and the shock has warn off for the nonprofits that got the first round of surprise multimillion-dollar gifts from MacKenzie Scott, the ex-wife of Amazon founder and CEO Jeff Bezos and billionaire philanthropist, who made another round of gifts last week.

Most are looking beyond the need to plug budget holes, with investments planned for deferred maintenance on buildings and investments in new IT systems that will improve client service and help retain staff. Others are sitting on the See GIFTS on Page 18

THE CONVERSATION

CRAIN’S LIST

Kevin Mechigian on moving from auto dealerships to the CBD business.

These are the largest accounting firms in Michigan.

PAGE 22

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NEED TO KNOW

PEOPLE

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

Henry Ford III leaves job at automaker

CANADA EXTENDS COVID BORDER RESTRICTIONS THE NEWS: Canada’s border restrictions on nonessential travel with the United States will be extended until July 21, its public safety minister said Friday. Public Safety Minister Bill Blair tweeted the move has been made in coordination with the U.S.

REMAINING COVID RESTRICTIONS LIFTED EARLY

GILBERTS MAKE GIFT FOR APPLE ACADEMY

THE NEWS: Citing a continued plummet in new cases of COVID-19, Gov. Gretchen Whitmer’s administration said Thursday that Michigan’s capacity limits for indoor gatherings and public-facing businesses will be lifted June 22, nine days earlier than originally planned.

THE NEWS: The Gilbert Family Foundation will contribute a “multimillion-dollar” grant for the developer academy being planned in downtown Detroit by Apple and Michigan State University. The grant will support the Cupertino, Calif.-based tech giant’s first developer academy in North America and help expand Michigan State University’s presence in Detroit, the university said in a release. The exact amount of the pledge was not given.

WHY IT MATTERS: The order marks the end of an unprecedented 15-month intervention by state government to shutter businesses in entire sectors, restrict indoor capacities and private gatherings and mandate mask-wearing indoors — all in an effort to slow the once-rampant spread of the coronavirus, to which 19,578 deaths in Michigan have been attributed since March 2020.

WHY IT MATTERS: The Detroit academy, first announced in January, is part of Apple’s $100 million national racial equity and justice initiative. It’s the first such academy in the U.S., although its first worldwide launched in Brazil in 2013.

Henry Ford III, the great-greatgrandson of Ford Motor Co. founder Henry Ford who last month was elected to its board of directors, is leaving his investor relations job within the automaker effective July 1, according to an email sent to colleagues. Ford, 41, will remain on the board but said stepping down as an employee will allow him to “carve out time to further broaden my perspective outside the company” and help him become a better director. “After 15 years inside Ford, I believe that new external viewpoints will help me guide and support our great company with improved objectivity and an increased ability to constructively critique our strengths and weaknesses,” he wrote in an

WHY IT MATTERS: Metro Detroiters aching for a casual jaunt to Windsor for the first time since March 2020 will have to wait a while longer.

FLEX-N-GATE TO INVEST $52M IN TROY PLANT

Henry Ford III

email last Tuesday. A spokesman said his investor relations role is being filled internally. Ford didn’t say in the email where his next job would be. Ford’s other roles since joining the company in 2006 have included labor relations, product planning, purchasing, dealer relations and marketing for Ford Performance.

THE NEWS: Flex-N-Gate Group plans to invest $52 million and add 245 new jobs in Troy, where it is revamping a 205,000-square-foot plant. The Illinois-based tier one auto supplier will produce sequenced plastic fascias and welded underbody rear rails in the former AxleTech plant at 1400 Rochester Road, according to a Thursday news release from the state.

METRO’S NORTH TERMINAL TO GET A NEW NAME

mously Wednesday on the name change.

WHY IT MATTERS: The new plant is the result of the supplier winning a five-year contract with Stellantis for a new product line, said Mellissa Kendall, director of energy management for Flex-N-Gate.

THE NEWS: The Detroit Metropolitan Airport’s North Terminal will be renamed in honor of Wayne County Executive Warren Evans. The Wayne County Airport Authority board of directors voted unani-

WHY IT MATTERS: The renaming gives B LE 1 2 the airport two A terminals 0 I L A ,named 2 afT AV ter county executives, the first be1S T S ing the McNamara Terminal, where GU Delta Air AULines’ Detroit operations are centered.

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FINANCE

CANNABIS

WAITING GAME

VC, finance Firms make headway on DEI initiatives Starting to see ‘foundation’ form BY NICK MANES

Product on display at Utopia Gardens, which sells medical cannabis on Lafayette Street just east of downtown Detroit. | LARRY A. PEPLIN FOR CRAIN’S DETROIT BUSINESS

What’s at stake as lawsuit holds up Detroit recreational cannabis program BY ANNALISE FRANK

The cannabis industry is watching and waiting as a lawsuit challenging Detroit’s rigorous equity program for recreational marijuana creeps closer to a ruling. Under the city’s regulations, longtime residents and those with marijuana-related convictions or low incomes get first priority in the license review process for opening a cannabis business. Applications began April 1, but a week later a legal challenge halted that process, leaving the adult-use cannabis business in Detroit frozen in limbo. A March 2 lawsuit by resident Crystal Lowe argues that the preference rules, dubbed the Legacy Detroiter program, are unconstitutional and “unfairly favor” a specific group

of residents, discriminating against nonresidents and those who live in the city but don’t fit the checklist. While no official ruling has been made, U.S. District Judge Bernard Friedman said Thursday he agrees. Friedman wrote in a new order that he was issuing a preliminary injunction “because the city ordinance governing the process for obtaining a recreational marijuana retail license gives an unfair, irrational, and likely unconstitutional advantage to long-term Detroit residents over all other applicants.” In practical terms, it means the city remains blocked from processing licenses in recreational cannabis. The process first got put on hold April 7 with a temporary restraining order. The new action Thursday shows the case is advancing, and

that there’s more likelihood the plaintiff will succeed at trial. Friedman wrote that the ordinance’s “favoritism ... embodies precisely the sort of economic protectionism that the Supreme Court has long prohibited.” He added that the “defendant has failed to show that its stated goal of assisting those who have been harmed by the War on Drugs is advanced by reserving fifty percent or more of the recreational marijuana licenses for those who have lived in Detroit for at least ten years.” Despite its large medical cannabis industry, Detroit originally opted out of recreational pot when it got greenlit by Michigan voters in 2018. See CANNABIS on Page 20

It’s not just about retail A lot of the talk over Detroit’s adult-use cannabis ordinance revolves around dispensaries because of a 75-license cap on licenses . But the rules actually cover licensing for 10 different sectors of the cannabis business, including: Medical marijuana provisioning center Adult-use retailer establishment Grower Processor Safety compliance facility Marijuana event organizer Temporary marijuana event Microbusiness Designated consumption lounge Secure transporter

If 2020 was the year of a racial reckoning in America, 2021 is the year of working to implement changes. In Southeast Michigan’s financial sector — mortgage lenders, bankers, investors — that’s meant taking steps, some small, to begin working toward the change many began calling for last spring and summer in the wake of the George Floyd murder by a Min- Evelyn neapolis police officer, and the killings of many other Black people in America by law enforcement. In the immediate days following the Floyd killing on May 25, 2020, corporate executives in Southeast Michigan laid out “commitments” that they hoped would lead to “concrete, tangible change.” At the same time, large banks announced multibillion-dollar commitments for loans in under-represented communities, and the venture capital community in the region — made up predominately of white males — made calls for diversifying both who is writing checks and who is receiving them. While progress has been slow in some cases in the months since, multiple sources say they can point to a variety of tangible changes they have seen as business leaders have sought to make diversity, equity and inclusion a cornerstone pillar of what they do every day. “I think we’re starting to see the foundation,” said Javier Evelyn, the founder and CEO of Alerje Inc., a Detroit-based medical technology company focused on allergy management. “I don’t want to paint a rosy picture, but we’re definitely way better than last year.” See FOUNDATION on Page 21

NONPROFITS

Rival blood-distribution nonprofit expands amid blood shortage BY SHERRI WELCH

Grand Rapids-based Versiti Blood Center of Michigan is looking to tap further into the Southeast Michigan blood donor market amid local and national blood shortages. The nonprofit has operated in other parts of the state for more than 65 years but only entered the local market four years ago, after joining a multistate network and securing supply contracts with Beaumont Health and Henry Ford Health System. Donors stepped up to help replace declining blood supplies during the

Tri-Cities Family YMCA and the American Red Cross Michigan Region joined forces for a blood drive last week in Grand Haven. | AMERICAN RED CROSS VIA FACEBOOK

pandemic when schools, companies and other sites that typically host drives shut down. But their numbers have declined again in recent months, both in Michigan and nationally. That’s got Versiti looking to expand its donor base in the state’s most populated region, where the American Red Cross has long-established operations and brand recognition. “Right now, we’re looking to expand our distribution and mobile staging,” said Versiti Area Vice President Dawn Kaiser. Versiti is teaming up with Beau-

mont on a series of blood drives that will be hosted on the health system’s campuses in the region. “We’re (also) on the hunt for a new site so we can open a fixed donor center. … so that donors in between mobile blood drives can come in and donate,” Kaiser said. The blood collection and distribution nonprofit is looking to add the new donor site in the region either in Livonia, near its lone distribution site, or in Sterling Heights. It plans to open the new site within 18 months, she said. See BLOOD on Page 20 JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

New ownership, rejuvenated apartment plan for Pontiac tower

Kirk

PINHO

Detroit developer, former DEGC executive named Harvard fellow

Pontiac’s tallest building has a new owner. Dalen Hanna is a Birmingham attorney who, along with other investors, bought the roughly 185-foot Oakland Towne Center building at 28 N. Saginaw St.

earlier this year. Hanna said a $7 million to $9 million conversion of the current office building into 132 residential units is planned, with the project being completed in several phases over the course of two and a half to three years. Construction would start once a construction loan is secured later this year. Initial building improvements would take about a year — things like common areas, elevators, lobbies, HVAC and electrical systems — and the build-outs for the apartments would start completing within six months after that. The redevelopment, which is tentatively being called the Audrey Luxury Lofts, has long been envisioned, even under its previous ownership group, Todd Enterprises Inc., which is based in Pontiac. Hanna said a contractor is currently being selected. The building was originally to be purchased all cash, but at the last minute, one of the investors bowed out. The deal was then restructured on a land contract, which was paid off and the building is now owned outright by Loft Holdings LLC, which is registered to his Birmingham-based law firm Hanna & Jarbo PLLC. He said rents would be about $1,100 to $1,200 for a one-bedroom unit, which along with studios would make up the majority of the units, along with between four and eight two-bedroom layouts. “We want to stay at the higher end of the market, and we’ll have some good tenant amenities,” Hanna said. “We are hoping that by this building coming to life, it’s going to fix the neighborhood.”

Oakland Towne Center in downtown Pontiac has been purchased with plans to convert it into 132 apartments and commercial space. | COSTAR GROUP INC.

The building sits in a federal Opportunity Zone, which provides hefty capital gains tax breaks to investors, and also has a 12-year Obsolete Property Rehabilitation Act tax break extending until Dec. 30, 2025. It hit the market last year for $2.95 million, or $24.95 per square foot, I reported at the time. Prior to the sale to Hanna and his investors, it was last sold in 2012 by a court-appointed receiver for $1.25 million ($10.58 per square foot) to an affiliate of Todd Enterprises. The Southfield office of Marcus & Millichap Real Estate Investment Services Inc. had the listing this time around. Gordon Navarre, one of the Marcus & Millichap brokers on the deal, said there had been some interest in the building from investors in New York and elsewhere but they ultimately couldn’t make the numbers work on a rehab. Navarre, first vice president of in-

“WE ARE HOPING THAT BY THIS BUILDING COMING TO LIFE, IT’S GOING TO FIX THE NEIGHBORHOOD.” — Dalen Hanna, attorney and investor

vestments for Marcus & Millichap, said Frank Ayar of Ayar Construction was also part of the ownership group that ultimately bought the building in the $2.25 million to $2.5 million range.

One way to repurpose a vacant CVS A vacant CVS drug store property in Detroit is being turned into a new charter school. Orchard Academy is opening up to students kindergarten through second grade in the 11,000-square-foot former store at 10301 Woodward Ave.

north of Lawrence Street for the 202122 academic year. The property’s size is often deceiving, said Yisrael Pinson, president of Orchard Academy. “When people come in and visit they are shocked by how big it is,” he said. Pinson said the school is subleasing the space from CVS and has an option to buy the building. The build-out cost $600,000, with $200,000 coming from a foundation and $400,000 coming from a private interest-only loan, he said. A $1 million federal grant is also being used for things like pre-operational expenses, technology, furniture and books, Pinson said. There are expected to be 60 students the first year, with 20 in each level. Only K-2 students will be admitted. Troy-based Integrated Design Solutions was the project architect and Oak Park-based PCI Industries Inc. was the contractor.

Moddie Turay, a former Detroit Economic Growth Corp. executive who is now the head of Detroit-based developer City Growth Partners LLC, has been selected for a Harvard Graduate School of Design Loeb Fellowship. With the year-long academic fellowship that’s starting in August, Turay said he is going to be researching things like new social capital and development models that “move forward affordable housing and catalytic development” in Detroit. Turay, who has development projects underway or in the planning phases in the Brush Park neighborhood and on the Detroit riverfront, is one of 10 Loeb fellows selected out of 134 applicants. Over the course of the academic year, he will be traveling back and forth between Detroit and Massachusetts, taking classes at Harvard and MIT, participating in panels and doing research. “The Class of 2022 exemplifies our commitment to some of the most urgent social issues of both the current moment and our collective history, among them racial justice, environmental and spatial equity, the societal impacts of technology, inclusive cultural preservation, and activism,” Loeb Fellowship Curator John Peterson said in a press release. “In addition to their year of independent study, we look forward to amplifying the voices and issues that this cohort of Loeb Fellows brings to Harvard and the GSD community, through our events and public programming as well as active engagement with students and faculty.” Maurice Cox, the city’s former planning director, was a Loeb fellow in 2005, as was Dan Pitera, the dean of the University of Detroit Mercy School of Architecture. The stipend for the fellowship is $55,500, Turay said. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

MANUFACTURING

GM supplier to bring 240 jobs to Hazel Park as industrial complex fills up BY KURT NAGL

General Motors Co. supplier Avancez LLC will fill out the last of the remaining 400,000 square feet at the mammoth industrial complex built on the old Hazel Park Raceway by Ashley Capital. The Warren-based company plans to add 240 new jobs for its plant at the Tri-County Commerce Center, which filled up with tenants 18 months ahead of schedule, said Kevin Hegg, vice president at the real estate firm, which bought the former horse racing property in 2018. “Honestly, we’re running out of space,” Hegg said of the New York City-based firm’s portfolio in Southeast Michigan. “It’s indicative of how incredibly hot of a market it is.” The spec industrial development will be fully constructed by the start of July, Hegg said. Avancez will be a tenant in phase three, or the third and final building of the project, 4 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

Construction on the Tri-County Commerce Center started in 2018 after the sale of the Hazel Park Raceway. | KURT NAGL/CRAIN’S DETROIT BUSINESS

neighboring Wisconsin-based Mayville Engineering Co., which announced last week a new $45 million plant there. Investment for Avancez’s plant will

total around $50 million, according to the company. The Michigan Department of Transportation announced in March it would support the project by funneling $1.4 million

into road improvements near the plant, in addition to a $936,315 contribution by Avancez. The Transportation Economic Development Fund grant will be used to rebuild and widen Dequindre Road from Oakgrove Street to 10 Mile Road and add a traffic signal allowing for safer access to the Tri-County Commerce Center, MDOT said in a news release. Avancez signed a 10-year lease at the complex after landing a 10-year contract with GM to produce assembled modules for Factory Zero, the automaker’s first fully dedicated electric vehicle plant in Hamtramck. Avancez is a subsidiary of Android Industries, which is owned by Kathryn Nichols. It specializes in “just in time” manufacturing, sequencing, suspension modules, tire and wheel assembly and instrument panel assembly. The production launch date for the Hazel Park plant has not been an-

nounced. Assembly jobs start at $13.50 per hour, according to the company’s website. The company could not be reached for more information. In addition to Avancez and Mayville, other tenants of the Hazel Park complex include Amazon, LG, Akasol, Dakkota, Hi-Lex Controls and EnovaPremier. For Hazel Park, the sale of the raceway property to Ashley Capital proved to be an economic boon, according to Jeff Campbell, community development director for the city. “The city is so appreciative at how quickly and diligently Ashley Capital was in completing the project and finding amazing tenants,” he said in an email. “This new company will create more jobs for residents of Hazel Park and the Metro Detroit area.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

Making a lasting impact in Detroit At Bank of America, we have long been committed to advancing racial equality and economic opportunity in the communities where we work and live. Recognizing the urgency of the moment, we’ve expanded our longstanding efforts to drive progress by committing an additional $1.25 billion over five years to create opportunity for people and communities of color. By partnering with organizations here in Detroit, we’re continuing to align our resources to help drive sustainable progress locally. Our investments and partnerships will help address critical issues and long-term gaps including: • connecting workers to new skills and enhanced job readiness • expanding affordable housing options for more people • ramping up lending and support to local small businesses • increasing access to healthcare and addressing food insecurity

Working together We’re collaborating with a variety of organizations to help our community move forward. They include: Detroit Future City Greening of Detroit SER Metro

We know there’s so much more work to be done. My teammates and I remain committed to the job ahead. Together with our local partners, we can make a real difference. What would you like the power to do?®

Southwest Detroit Business Association

Matt Elliott President, Bank of America Detroit

Go to bankofamerica.com/community to learn more about the work we are doing with our incredible partners.

Bank of America, N.A. Member FDIC. Equal Housing Lender

CRAIN’S VOICES

A lifetime of service meets a once-in-a-lifetime opportunity BY GILDA Z. JACOBS

EDITORIAL

Use COVID progress to get budget done W hat a difference 8.7 million doses of life-saving vaccine can make — they’ve even got Lansing working

better. There is a tenuous easing of political dysfunction in the state capital that has neatly coincided with the easing of government restrictions after the majority of eligible Michiganians got a COVID vaccine. Through vaccinations and 15 months of painful disruption to life and economic activity, the virus now has been contained to fewer than 200 new cases each day. Think back a year ago in June after Gov. Gretchen Whitmer had just lifted the blanket stay-at-home order: The Legislature was suing the governor over her use of extraordinary emergency powers to keep numerous businesses closed or restricted in their commercial activities and the virus was lingering ahead of a deadly reWE ENCOURAGE surgence in the fall. Just before ThanksLEGISLATORS giving, there were 200 new cases of AND THE COVID-19 discovered GOVERNOR TO in Michigan every 40 minutes. RESIST THE Now, Michigan is URGE TO BLOW just days away from all remaining PAST THEIR OWN lifting capacity restrictions DEADLINE. for restaurants, bars, gyms, retailers and youth sports teams — and the indoor mask mandate for unvaccinated Michiganians will be history at 12:01 a.m. Tuesday morning. The COVID war between the Republican-controlled Legislature and the Democratic governor is over. Or at least it should be. It’s time for lawmakers and Whitmer to get down to business and strike a deal on how to

spend an extraordinary $10 billion windfall of federal stimulus funds and surging state tax revenue. It’s a once-in-a-generation opportunity to make meaningful change to Michigan’s infrastructure, early childhood education system and workforce readiness. They already made significant progress last week when the Legislature passed spending plans for $6.6 billion in federal aid, including money for schools, cities and rental assistance that was left over from the federal stimulus funds Congress sent the states in December. This was the first sign in over a year that GOP legislative leaders and the governor’s team are actually compromising. Senate Appropriations Chairman Jim Stamas, House Appropriations Chairman Thomas Albert and State Budget Director Dave Massaron deserve credit for quietly forging agreements that will move the state forward. There are less than two weeks to go until the Legislature faces its own self-imposed July 1 deadline to send Whitmer a 2022 fiscal year budget. This earlier deadline was written into state law after the late 2019 budget debacle that led to a veto spree by Whitmer and fueled the distrust on both sides of Capitol Avenue. The distrust led to the political warfare wrapped around the pandemic and the governor’s efforts to mitigate the impact on the health care system and save lives. We encourage legislators and the governor to resist the urge to blow past their own deadline and kick budget negotiations into late summer or September. No extensions. Public schools and universities need certainty now in their budget planning for a return to full in-person learning in August. And Michigan’s business community needs stable and predictable governing in Lansing.

As I prepare for retirement after a four-decade career in public service, including the last 11 years at the helm of the Michigan League for Public Policy, I wanted to reflect on some of Michigan’s big Jacobs policy achievements over the past decade — and what challenges and opportunities lie ahead. The formula for progress is pretty universal: bipartisanship, embracing compromise, building broad and diverse coalitions, and lifting up the voices of the people who are being directly impacted by the policies we’re working to change. Here’s how these efforts led to some major policy wins in Michigan, and laid the foundation for continuing improvements. Over the last 11 years, there has been significant investment in early childhood education and child care, and child care has also been something that the pandemic has shined a light on. And with big announcements last week from Gov. Gretchen Whitmer and Rep. Jack O’Malley, huge, bipartisan investment and policy change is on the horizon for child care. Medicaid expansion and the creation of the Healthy Michigan Plan was another huge win for Michigan residents, and continues to benefit the state today. The program continues to be a huge success, and has been a critical support amid COVID-19, with enrollment increasing by almost 200,000 people during the pandemic. Throughout my time at the League, we’ve also successfully fought to undo many harsh changes to state and federal assistance program policies, working with the Whitmer administration to raise the amount on the state’s asset test on food assistance and achieving bipartisan passage of state legislation last session to eliminate Michigan’s lifetime ban on food assistance for certain drug felons. Policy wins can come out of good defense, too. The League was instrumental in saving the Michigan Earned Income Tax Credit from being cut altogether in 2011, and we continue to advocate for it to be restored from 6 percent of the federal EITC to 20 percent. We’ve also helped fend off questionable and inequitable tax cuts and work requirements that would have stymied the Healthy Michigan Plan. Just as it did with our individual lives and livelihoods, the COVID-19 pandemic has turned the political and policy landscape on its ear. But amidst the crisis, the needs — not wants, mind you — of our fellow Michiganders, especially residents of color and those with lower incomes, have become clearer than ever. And with that, the charge to lawmakers and the needed policy priorities are clearer than ever. First, legislators need to learn from their past mistakes and repeal laws that just don’t make sense anymore and repair previous funding cuts that have proved disastrous. Lawmakers need to make sure that the direct impact of the Flint water crisis continues to be addressed while also tackling the threat lead and unsafe drinking water continue to pose around the state. The state should repeal the third-grade read-

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 | JUNE 21, 2021

About Crain’s Voices Crain’s Voices is a series of occasional essays from a panel of contributors selected by Crain’s Detroit Business to offer thoughtful, informed commentary that spans the political and industry spectrums. Today’s contributor, Gilda Z. Jacobs, is president and CEO of the Michigan League for Public Policy and is a former Democratic state lawmaker from Huntington Woods.

ing law and mandatory retention (though parents can and should opt out) that will harm kids now and after the pandemic, and will likely not achieve the intended goal of improving students’ education outcomes. After significant disinvestment in education, the state needs to make greater investments in schools and students with greater needs, including students in families with lower incomes, children with special needs, and kids who are English-language learners. Policymakers need to stop undoing, undermining and complicating state and feder- THE STATE NEEDS al assistance programs like unemployment TO MAKE insurance and food, GREATER cash and housing assistance, and instead INVESTMENTS IN strengthen the safety SCHOOLS AND net and create flexibility in our policies so STUDENTS WITH that we can be prepared for whatever GREATER NEEDS. comes our way. Elected officials need to work together to break down barriers and dismantle systemic racism which is at the core of many issues today, including using a racial equity lens in Michigan’s budgeting and policymaking processes. Lawmakers need to start showing respect for the very democratic process that put them in office to begin with and end the partisan bickering and political maneuvers. Finally, we need to re-examine term limits. As someone who served before and after term limits were in place, I saw the shift of institutional knowledge and power from longstanding legislators to lobbyists a nd special interests, and the change has not been good. The League has been advocating for many of these programs and policies for years, before my tenure and will well after. The pandemic has underscored Michiganders’ needs, and the billions of dollars in federal funding provide a once-in-a-lifetime opportunity to address them. But they will need to remain a priority for all policymakers even after the federal money runs out. We will need to keep working together on both sides of the aisle and in public-private partnership to make sure these investments and improvements made now will be sustained and sustainable for generations to come. A better Michigan depends on it.

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.

OTHER VOICES

Biden’s ‘infrastructure’ plan is a partisan wish list of waste BY ARIC NESBITT AND ANNIE PATNAUDE

To recover stronger in the aftermath of COVID-19, we must rally as a state and a nation around policies that empower our people to build, innovate and create. Unfortunately, President Joe Biden’s latest spending plan being promoted under the guise of infrastructure places belief in top-down government overreach over belief in people. Michiganders want our roads and bridges improved. But less than 5 cents of every dollar in Biden’s $4 trillion proposal have anything to do with the roads, bridges, and primary infrastructure that we depend on. Instead, it is a grab bag of bad ideas we’ve seen too many times before. Trillions are allocated to corporate welfare subsidies and deals that prop up politically favored businesses, government agencies, and labor unions. Hundreds of billions more would disappear into undefined, government-run slush funds, to be doled out by unelected, unaccountable bureaucrats at the direction of the Biden administration. A handful of politically favored businesses are lining up for the government-funded windfall. But make no mistake — people and small businesses across Michigan will pay for it, including our share of the $2.75 trillion in tax increases the proposal includes. Michiganders know all too well the end result of these type of policies. Gov. Jennifer Granholm, now Biden’s secretary of Energy, raised taxes to pay for special tax deals and subsidies to prop up failed schemes for jobs that never

State Senator Aric Nesbitt represents the 26th District.

Annie Patnaude is state director of Americans for ProsperityMichigan.

materialized. She advanced similar green energy giveaways and mandates. Instead of revitalizing our economy,

her approach compounded a national recession. Michigan experienced the Lost Decade and unemployment approached a staggering 15 percent in 2009. Michiganders also know the recipe for coming back from decline. Beginning in 2011, the Michigan legislature went to work. We lowered the tax burden. We balanced the budget without gimmicks. We reduced longterm debt and paid down unfunded liabilities. We ended thousands of burdensome regulations and reformed our tax code to allow our job creators to thrive. We passed a right-to-work law to ensure no one was forced to join a union to keep their job.

As a result, our state became more competitive for jobs, personal income rose, and Michiganders kept more of the money they earned. Michigan’s population began to grow again as we became a better place to live, work and do business. Biden’s so-called infrastructure plan threatens the progress we have made as a state. It would reinforce prevailing wage laws that drive up the cost of building libraries, schools and yes, even roads. It would roll back Michigan’s right-to-work law that ensures unions are responsive to the needs of the workers they represent. And it would impose massive tax hikes and deficit spending that would sink our economy even

deeper into debt. We call on Michigan’s congressional delegation to reject Biden’s spending plan and instead enact real reforms. Repeal of Davis-Bacon wage mandates would save almost $11 billion over 10 years. If, as Rep. Haley Stevens says, “our roads are in desperate need of improvement,” why is $700 million a year in federal gas tax allocation for Michigan being diverted to things other than roads and bridges? Before raising taxes and wasting trillions more, put that money where it belongs. On the subject of roads, we’ve been down this one before, and we shouldn’t head down it again.

S:7.5"

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Governor and her team need an economics lesson TO THE EDITOR: S:9.5"

Well, you can’t say the governor isn’t throwing everything at the wall to see what sticks. Her latest plan to pay “workers” $300 in weekly unemployment benefits if they work part time may get a few folks off the couch, but doesn’t fundamentally address the issues of small business, which desperately needs fulltime employees they can’t currently find. This “subsidize part-time work” plan also gives employers an excuse to pay part-timers less initially and allow the taxpayer to pick up part of the tab, and is yet another well-intentioned but misguided effort to use tax money to force employers to raise wages for workers. In case the governor and her economic planners haven’t been paying attention, employers are being forced to raise wages anyway just to stay open. The simplest and quickest way to get Michiganians back to work and to stimulate hiring and GDP is to follow the lead of 28 other states that have ended the federal unemployment subsidy keeping their workers at home. Trying to offset the negative effects of misguided federal spending with equally misguided state spending is an experiment guaranteed to be both expensive and unsuccessful. The governor and her team need an economics lesson … and fast. Steve Brownell Detroit

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JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 7 6/10/21 12:57 PM

In this section Winner - Overall Excellence: Trinity Health Michigan. THIS PAGE Winner - Overall Excellence: Julie Lattanzi, Union Joints. PAGE 9

EXCELLENCE IN HR AWARDS

Winner - Finding and Growing Talent: Shyft Group. PAGE 10

Winner - Managing Change: Barton Malow. PAGE 13

Winner - Finding and Growing Talent: Tivoli Fountain, Auto Pets.

Winner - Employee Engagement: Nichole Roumayah Shaya, RouteOne.

Winner - Managing Change: Stefanini Group. PAGE 12

Winner - Diversity and Inclusion: DTE Energy Co. PAGE 14

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THE YEAR OF FLEXIBLE THINKING HR professionals move quickly to ensure perks, productivity during pandemic This year’s Excellence in HR Awards winners reflect all of the resilience, resourcefulness and really big thinking this year has required, in business and life. They moved quickly to roll out remote and flexible work plans — and found perks and productivity gains along the way. They’ve managed reorganizations and rebrands and meaningfully moved the needle on diversity and inclusion — over Zoom meetings and virtual town halls. They’ve found creative ways to keep employees engaged, connected and supported and managed growth in a tight labor market.

Winners will be celebrated at a virtual event on Monday, June 21, as part of Crain’s 2021 HR Summit, to be held June 21-24. To learn more, visit crainsdetroit.com/ events. The winners were selected from nominations by a judging panel of experienced HR professionals:

WINNER: OVERALL EXCELLENCE

Trinity Health Michigan BY RACHELLE DAMICO | SPECIAL TO CRAIN’S DETROIT BUSINESS

COVID-19 created a massive juggling act for Trinity Health Michigan’s HR team. The pandemic magnified the need to support colleagues, reduce financial losses and keep clinical units adequately staffed. The Livonia-based nonprofit, which includes Mercy Health and Saint Joseph Mercy Health System, serves communities in western and southeast Michigan. The health system consists of more than 22,500 employees spanning eight hospitals, nine outpatient health centers, 12 urgent care facilities and more than

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35 specialty centers. In March 2020, the coronavirus outbreak led Michigan to shut down elective surgeries at hospitals. As part of a comprehensive plan to reduce financial losses, which included operational efficiencies and redeployment of staff, the HR team furloughed 10 percent of Trinity Health Michigan’s workforce. About 600 employees were redeployed to roles directly related to COVID-19 patient care. To support its workforce during the pandemic, Trinity rolled out a number of initiatives across the nonprofit. See TRINITY on Page 14

Jocelyn Giangrande, Founder and President, SASHE LLC; 2020 Excellence in HR Award winner Nikki Kallek, Chief Human Resources Officer, Crain Communications Johannah Schiffer, Director of People and Places, Telemus Capital; 2019 Excellence in HR Award winner

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WINNER: OVERALL EXCELLENCE

Julie Lattanzi

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HR Manager, Union Joints When COVID-19 led the state to impose a number of restaurant restrictions in an effort to curb the spread of the virus, Julie Lattanzi, HR manager of Union Joints LLC, quickly put processes in place to help keep the Clarkston-based restaurant group afloat. Union Joints has about 400 employees across seven restaurants, a general store and cupcakery, a main office in Clarkston and a commissary. The restaurant group is known for restaurants including Clarkston Union in Clarkston and Vinsetta Garage in Berkley. When Michigan’s indoor dining restrictions were enforced last March, Lattanzi was tasked with furloughing nearly 600 employees, a majority of Union Joints’ workforce at the time. To help mitigate the furloughs, Lattanzi created a Union Joints Family Page, a website where staff can access up-to-date information and submit anonymous feedback. The website contained information and tips to help employees manage Michigan’s Unemployment Insurance Agency process. “We wanted to make sure employees knew we had their back,” Lattanzi said. “Half the battle was making sure they had the information.” Three weeks later, Lattanzi rehired about 600 employees after Union Joints received funds from the federal government’s Paycheck Protection Program. When Union Joints came off of the PPP last June, Lattanzi implemented Michigan’s workshare program, which allows employers to call back laid-off workers at reduced hours while they collect partial unemployment. “We knew that would help get money in our employees’ pockets at a time when they desperately needed it,” Lattanzi said. However, in November, the state issued indoor restaurant capacity restrictions and Lattanzi furloughed about 200 employees. Throughout these challenges, Lattanzi maintained communication by creating a HR phone hotline and organizing virtual town hall meetings via Zoom, allowing employees outlets to ask questions and air concerns. Since Michigan’s restaurant restrictions have been relaxed, Lattanzi has been working toward re-hiring restaurant staff, which she said has been a challenge due

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— Julie Lattanzi, HR manager, Union Joints LLC

to a restaurant labor shortage. To help recruit and retain talent, Lattanzi used an online applicant tracking system through Union Joints’ payroll vendor, Paycor. The system integrates with Union Joints’ career page and online job boards to be able to track where its applicants are coming from and what Union Joints’ hiring trends are. “It’s given us a leg up in terms of recruiting, especially this year,” Lattanzi said. Lattanzi also re-worked Union Joints’ benefits package to include perks such as additional time off and extended insurance coverage. “The foundation of HR is building the bridge between doing what’s best for the business and doing what’s best for the people,” Lattanzi said. “Having compassion but also having an understanding of the business element of it and a strategic mindset is critical.” Rachelle Damico Special to Crain’s Detroit Business

Gallagher Better Works Builds a Better Workplace Gallagher Better Works is a comprehensive approach to benefits, compensation, retirement, employee communication and workplace culture that is holistically focused on organizational wellbeing. Jay R. Schreibman Area Chairman, Michigan D 248.758.1181 I M 248.860.3415 jay_schreibman@ajg.com

JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 9

FOCUS | EXCELLENCE IN HR AWARDS WINNER: FINDING AND GROWING TALENT

Shyft Group Inc. The Shyft Group Inc. rolled out a number of fresh tactics to recruit and onboard 1,000 employees last year. Shyft produces walk-in vans, truck bodies, and upfits used in e-commerce and grocery delivery, work trucks and service bodies used for infrastructure support and more. It also produces and upfits infrastructure utility vehicles and luxury Class A diesel motor home chassis. The Novi-based company has 3,000 employees and reached nearly $1 billion in revenue in 2020. It operates facilities in 10 states and in Mexico. Last year, Shyft experienced rapid growth after shifting from emergency vehicles to walk-in vans and truck bodies used for e-commerce delivery. It also scored major contracts with large parcel-delivery fleets. As the COVID-19 pandemic spiked an increase in home deliveries, Shyft’s customer orders increased quickly. The company needed to hire — and fast. “I think COVID has made all HR professionals sit back and say, the traditional way may not work any longer,” said Colin Hindman, chief Human Resources officer. “You’ve got to think outside the box.” To streamline hiring, Shyft hired executive recruiters and staffing organi-

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“I THINK COVID HAS MADE ALL HR PROFESSIONALS SIT BACK AND SAY, THE TRADITIONAL WAY MAY NOT WORK ANY LONGER. YOU’VE GOT TO THINK OUTSIDE THE BOX.” — Colin Hindman, chief Human Resources officer, Shyft Group

zations. This included staffing organizations such as Charlotte-based ManPower and Specialized Staffing, a minority- and women-owned business enterprise based in South Bend, Ind. Along with the organizations, Shyft created hiring centers at plants in Bristol, Ind., and Charlotte. The centers offered a place for candidates to fill out job applications and be interviewed on the spot by the staffing organization. Candidates also watch videos on job operations so they know what their role would entail. When the U.S. was in the thick of the COVID-19 pandemic, Shyft held nine outdoor drive-up job fairs to safely recruit candidates. Candidates interested in working at Shyft were

A drive-thru job interview at The Shyft Group. | THE SHYFT GROUP

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FOCUS | EXCELLENCE IN HR AWARDS WINNER: FINDING AND GROWING TALENT interviewed car-side at various Shyft plants. Offers were made on the spot. “Time’s extremely valuable to these folks,” Hindman said. “When they show up, we’ve got to be ready to make some hiring decisions. If not, you’re going to lose folks.” Shyft has also instituted a number of methods to retain employees. For instance, Shyft created an employee transit service in 2020 at select locations, offering transportation to and from work in an effort to reach a better workforce in diverse socioeconomic areas. Shyft also streamlined onboarding and training methods and increased compensation and employee bonuses last year. In addition to the 1,000 new hires last year, the company plans to bring on another 1,000 across its campuses — a staff increase of more than 30 percent in a time of labor shortage. “By leveraging our internal team of HR experts, partnering with leading talent acquisition agencies to extend our capabilities, and doing what it takes to reach the talent pool where they are, The Shyft Group continues to bring an increasing number of great employment opportunities to good people across an expanding geographic footprint,” Hindman said. Rachelle Damico Special to Crain’s Detroit Business

Tivoli Fountain

Director of People and Human Resources, AutoPets Tivoli Fountain has grown AutoPets’ employee base by more than 300 percent, an effort that has been instrumental in supporting the company’s growth. Fountain is the director of people and human resources at AutoPets. The Auburn Hills-based company makes the Litter-Robot, an automatic-cleaning cat litter box, as well as a variety of other AutoPets products. AutoPets has 226 employees and 100 contract-to-hire employees between its Auburn Hills headquarters and warehouse facility in Wisconsin. For the past 18 months, AutoPets has experienced rapid growth. Company sales increased more than 90 percent year-over-year in 2020. To accommodate the growth, AutoPets is increasing its manufacturing operations from a 60,000-square-foot building in Juneau, Wis. to a 210,000-squarefoot facility in 2021. “As consumer demand has increased for our products, we have grown our team member population to meet the produc-

tion demands,” Fountain said. Since joining the company in 2019, Fountain has grown AutoPets’ team from 80 to 226 full-time team members. Fountain also grew AutoPets’ management team from four to 17 professionals, including the hiring of AutoPets’ VP of manufacturing and CFO. To find qualified candidates, Fountain used employment websites such as LinkedIn and Indeed. She also found employees through employee referrals and word of mouth. “I’m a big believer that good people know good people,” Fountain said. “I surround myself with people that are as excited about the company as I am.” Last year, Fountain assembled an HR team to accommodate AutoPets’ growing workforce. The team of three includes Fountain, a recruiter and a HR generalist who helps oversee HR functions at AutoPets’ Wisconsin facility. “At AutoPets we believe strongly in the value of collaboration,” Fountain said. “As I have been leading the culture push to encourage this across our organiza-

tion, it became apparent that we needed this in our people operations as well.” In addition to recruitment efforts, Fountain introduced and revamped a number of HR processes. For instance, Fountain established a more formal employee performance review process, streamlined employee onboarding and added more flexible and personal time off for employees. As AutoPets continues to grow, Fountain and her HR team plan to hire an additional 200 people within the next 12 months, a staff increase of more than 100 percent. “Tivoli transformed the way we were recruiting to find more qualified candidates, helped us staff up 300 percent, and still finds time every day to interface with employees about their HR needs,” said Jacob Zuppke, COO of AutoPets. “She quickly earned my trust and that of the entire organization.” Rachelle Damico Special to Crain’s Detroit Business

“AT AUTOPETS WE BELIEVE STRONGLY IN THE VALUE OF COLLABORATION. AS I HAVE BEEN LEADING THE CULTURE PUSH TO ENCOURAGE THIS ACROSS OUR ORGANIZATION, IT BECAME APPARENT THAT WE NEEDED THIS IN OUR PEOPLE OPERATIONS AS WELL.” — Tivoli Fountain, director of people and human resources, AutoPets

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RETURN-TO-OFFICE PLANS: WHAT’S FLEXIBLE AND WHAT’S NOT Employers find themselves walking a fine line as they make returnto-office (RTO) plans. Surveys show most people do not John Price, J.D. is: want to go back strategic consultant, to the office benefits & human full-time. Facing capital, risk talent shortages management, for and employees Lockton Michigan. willing to look elsewhere for flexible jobs, employers may find themselves in a precarious position. As you create your RTO plans, here are important issues to consider. New MIOSHA health and mask requirements. When it comes to masks and vaccines, Michigan Occupational Safety and Health Administration (MIOSHA) rules were recently updated: • Employees who come to the office must perform a daily self-screening. • Temperature screening is not required. • MIOSHA is following the Centers for Disease Control and Prevention (CDC) guidance on masks, which says vaccinated individuals do not have to wear a mask.

• Employers can mandate maskwearing for all employees or follow CDC guidelines. • If you do not mandate mask-wearing, employers are required to track each employee’s vaccination status.

they cannot maintain a distance of six feet from others.

There may be conflict around maskwearing. Some employees may want to wear a mask even if vaccinated. Communicate a culture of respect for employees who must or choose to wear masks. Difficult employee interactions are likely to be escalated to management. Help prepare your managers to diffuse potentially sensitive issues.

Where’s my desk? In spring 2020, most employers sent employees home for remote work, taking personal belongings with them. As employees return, they will wonder:

Requirements for tracking vaccine status. As noted above, employers can, and in some instances, must ask employees for proof of vaccine. Make it clear that employees should not show you any medical information, and a copy of the vaccine card is sufficient. Employers should determine how to track and retain vaccine cards received from employees. For unvaccinated employees, you can ask if they are planning to get the vaccine in the next 30 to 60 days. If the answer is no, you should not ask why. Unvaccinated employees must wear a face covering in the workplace when

If you prefer to avoid the vaccine question altogether, you can require all employees to wear a mask at work.

• What does day one look like? • Is my workspace the same as before or different? • If employees work a hybrid schedule, are they in shared workspaces? • Are there cleaning requirements for shared spaces? Be sure to revisit basic policies and processes. Consider changes that have occurred in the past year and design necessary updates. Clearly communicate changes, along with new expectations. Where to go from here. The returnto-office issues faced by employers are challenging, especially as talent retention is considered. To learn more about RTO requirements, please email John Price at jprice@lockton.com. JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 11

FOCUS | EXCELLENCE IN HR AWARDS WINNER: MANAGING CHANGE

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Stefanini Group’s HR team helped transition employees from in-person to remote office work, leading the company to increased productivity and improved employee and client satisfaction. Stefanini Group is a global technology consulting firm, with its North American headquarters based in Southfield. The company has 3,400 employees in its North American and Asia/Pacific region and 25,000 employees globally. In March 2020, all employees at Stefanini’s Southfield office switched to remote work in response to the coronavirus pandemic. In the span of a week, the HR team briefed employees on how to effectively work from home. To keep employees connected and informed, the HR team maximized communication efforts through phone calls, e-mails and virtual town hall meetings. “It was a great deal of communication on all ends of the spectrum in order to get all of these employees remote,” said Heidi Hagle, Stefanini vice president of people and culture. “Through all of the panic of wondering whether it was going to work, it absolutely did.” Employees who were used to working face-to-face quickly shifted their working model, collaborating on client projects using online business collaboration tools like Microsoft Teams. Clients were also consulted virtually through the platform, as well as a variety of other tools.

“WHEN PEOPLE KNOW IF THEY’RE TRUSTED IN THEIR POWER THEIR PRODUCTIVITY GOES UP. AND THEN THEY HAVE THE FLEXIBILITY TO MANAGE THEIR OWN TIME.” — Heidi Hagle, vice president of people and culture, Stefanini

The remote working model proved to boost productivity among its employees. The company saw an increase in employee attendance and an increase in the amount of work processed during a shift, as well as other factors. “When people know if they’re trusted in their power their productivity goes up,” Hagle said. “And then they have the flexibility to manage their own time.” Employee and client satisfaction also increased. Using Flex Surveys, an online survey platform that measures employees engagement scores on a scale of 1-5, employee engagement increased from 3.9 in 2019 to 4.1 in 2020. Client satisfaction also increased. In annual client surveys, client satisfaction went from 92 percent in 2019 to 94 percent in 2020. “Employees were so dedicated to making this work that their productivity went up, and their experience that they can give the customer was

Barry Swatsenbarg barry.swatsenbarg@colliers.com Jim Roberts j.roberts@colliers.com Lisa Tangney 312 886 9480 lisa.tangney@gsa.gov Colliers Metro Detroit 2 Corporate Drive, Suite 300 outhfield 248 540 1000 www.colliers.com/detroit

A staff photo at Stefanini Group. | STEFANINI GROUP 12 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

better in some cases,” Hagle said. “It actually improved what the customers' perception was of us.” As a result, Stefanini launched a new project, Stefanini Everywhere. The project implements new work models and an expanded talent pool. The three work models include 100 percent remote teams, face-to-face and remote, and a flexible model in which the employee, Stefanini, and client determine the working format together. The new models allow employees to be recruited from all over the world. “Talent is hard to find right now if you're focused on just one geographic area,” Hagle said. “Our recruiting team can now look in many different places, and have a much broader pool.” Today, nearly 25,000 employees are successfully working remotely across its global footprint. “While the global pandemic brought tragedy and challenge, it also brought great triumph and had a positive effect on how we think about the world of work — that it can be done anywhere, successfully and with great productivity,” Hagle said. “What we’ve experienced this past year will have a profound effect on our future and continue to open our eyes to the possibility of finding talent to be a part of our team, wherever they might be.” Rachelle Damico Special to Crain’s Detroit Business

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FOCUS | EXCELLENCE IN HR AWARDS WINNER: MANAGING CHANGE

Barton Malow Barton Malow’s HR team helped transition its employees from one entity to an entire family of companies. Barton Malow started as a general contractor 97 years ago. The Barton Malow Family of Companies is comprised of four entities and five partner firms across North America. More than 2,500 team members in 15 offices work for Barton Malow companies. In April 2020, the Southfield-based company split into four separate entities to provide more flexibility for its clients and to grow into different market niches. The entities include Barton Malow Company, its industrial division, Barton Malow Builders, its commercial and institutional division, Barton Malow Holdings, where its core services live, and LiftBuild, its engineering technology division. The rebranding and restructuring meant more than 600 team members were assigned to a new entity — a six-month process that included new team leaders, roles and responsibilities and W-2s. “Even though we were all getting a new entity, we wanted to make sure that the culture and brand ex-

Barton Malow in Southfield. | BARTON MALOW

perience transcends across the family of companies,” said Jennifer Sulak Brown, senior vice president of people and culture. “It was a vision we had to align team members on.” The company achieved this by following the “8-Step Model of Change,” which was introduced by business entrepreneur and Harvard professor Dr. John Kotter in his book “Leading Change.” Following the model, Barton Malow’s HR team identified and re-

cruited specific managers, leaders and employees as “change agents.” The change agents were tasked with helping employees understand why the change was necessary and acted as cheerleaders for the companies’ restructuring and rebranding. An important part of that process was identifying employees who were least resistant to change. To achieve this, the HR team sent out biweekly surveys to team members. Change agents then conducted one-

on-one meetings with employees, allowing an open forum to help alleviate concerns. “This was instrumental in helping to bring the team member through the change curve faster,” Sulak Brown said. Part of the process also took place during the coronavirus pandemic, which meant communications were done remotely at times rather than face-to-face. “We were managing the biggest change our company had ever seen in years, and then we were hit with a pandemic,” Sulak Brown said. “But we made it work, because there was an incredible amount of trust and loyalty to the family of companies and to leadership throughout this process.” Throughout the whole process, The Barton Malow Family of Companies has also experienced a significant decline in turnover — down from 9 percent to 5 percent from the previous 12 months. “Our HR team managed a major, organization-defining event in a seamless, streamlined manner,” said Ryan Maibach, president and CEO. “When it comes to taking something as major as an enterprise entity structure change and essentially making it a non-event, it says a lot about the high level of planning and execution that went into it.”

“EVEN THOUGH WE WERE ALL GETTING A NEW ENTITY, WE WANTED TO MAKE SURE THAT THE CULTURE AND BRAND EXPERIENCE TRANSCENDS ACROSS THE FAMILY OF COMPANIES. IT WAS A VISION WE HAD TO ALIGN TEAM MEMBERS ON.”

Rachelle Damico Special to Crain’s Detroit Business

— Jennifer Sulak Brown, senior vice president of people and culture, Barton Malow

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Congratulations Nichole Roumayah Shaya, Senior Manager, Human Resources for being selected by Crain’s Detroit Business as a 2021 Excellence in HR Awards winner. As a technology leader, RouteOne is dedicated to answering the ever-changing demands of the vehicle finance industry. Nichole’s work is integral to the growth and development of RouteOne company culture that drives organizational success and allows us to deliver innovative solutions to our customers.

Interested in contributing to an industry-leading fintech? Check out our open opportunities at routeone.com/careers

JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 13

FOCUS | EXCELLENCE IN HR AWARDS WINNER: EMPLOYEE ENGAGEMENT

WINNER: DIVERSITY AND INCLUSION

Nichole Roumayah Shaya

DTE Energy Co.

Senior Manager, Human Resources, RouteOne Nichole Roumayah Shaya, senior manager of human resources at RouteOne LLC, increased employee engagement by improving communication and collaboration across the company. RouteOne is a web-based credit application management system for dealers and finance sources. The company, located in Farmington Hills, was formed in 2002 by automotive finance companies Ally Financial, Ford Motor Credit Co., TD Auto Finance, and Toyota Financial Services. The company has about 334 fulltime employees and generated about $500 million in revenue last year. In 2019, Roumayah started a mid-level manager group, meeting with managers on a monthly basis to discuss subjects that include workforce best practices, honing leadership skills and how to best give feedback and coach RouteOne teams. Managers are also trained on the importance of diversity and inclusion, including how implicit bias can affect the workplace. “We never really had a mechanism for the manager level to meet and tackle ongoing engagement things or talk about what’s going on in the workforce,” Roumayah said. “It gives managers an opportunity to express ideas and collaborate on best practices.” Another way Roumayah captures employees’ voices is by collecting

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“IT IS ALWAYS GOOD FOR LEADERSHIP TO UNDERSTAND THE PULSE OF THE ORGANIZATION SO WE HAVE BUY-IN FROM THE TOP DOWN ON ANY INITIATIVES HR PUTS IN PLACE.” — Nichole Roumayah Shaya, senior manager of human resources, RouteOne LLC

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anonymous feedback through SurveyMonkey, an online survey tool. The platform is also used for annual engagement surveys. The HR team uses the feedback to propose solutions to the company’s executive team. From there, HR has an open forum with the company’s leadership staff to talk through problem-solving tactics. “It is always good for leadership to understand the pulse of the organization so we have buy-in from the top down on any initiatives HR puts in place,” Roumayah said. Roumayah also organizes social activities for employees, such as picnics and potlucks. Last year, when the COVID-19 pandemic caused the company to go remote, Roumayah organized events through Microsoft Teams, an online platform used for business collaboration. Employees could use the platform to organize events such as virtual happy hours or play games like bingo. “People are not used to seeing their peers every day anymore,” Roumayah said. “We are encouraging more time carved out for camaraderie and team building.” Under Roumayah’s leadership, the HR team created RouteOne online platforms, including the company’s Route Fun page. The website features contests and games and allows employees access to company initiatives and programs. Among these initiatives is the company’s health and wellness program, where employees can access online health and wellness activities such as meditation courses or fitness classes. Since Roumayah has helped implement these efforts, RouteOne has seen employee engagement scores increase by 13 percent last year. “The entire leadership team at RouteOne relies on Ms. Roumayah Shaya to help guide company policy and RouteOne culture,” said Justin Oesterle, RouteOne chief executive officer. “She does an outstanding job in creating an HR structure that advances the interests of our team and the company together.” Rachelle Damico Special to Crain’s Detroit Business

TRINITY

From Page 8

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“There was nothing normal about conducting business during the coronavirus pandemic,” said Ane McNeil, chief human resource officer and senior vice president of Trinity Health Michigan and Trinity’s southeast regions. “But what our leaders can do is to keep workers happy, healthy and productive by just creating connection.” One of these initiatives included Trinity Health Michigan’s COVID-19 Colleague Care Program. The program is aimed at supporting colleagues during the pandemic by providing a range of comfort and support services. Employees can visit on-site relaxation rooms and enjoy services such as sanitized massage chairs, refreshments, fresh flowers and stress-reduction booklets.

DTE Energy Co. redesigned steps in recruiting to further diversify its talent pool. During a workforce review in 2019, the Detroit-based energy company analyzed the diversity of previous job applicants. The results showed a lack of diverse candidates in certain front-line operations positions. A job applicant analysis from 2017 revealed that only 18 percent of candidates for those jobs were racial and ethnic minorities and women. “We realized that we were not getting a nice, strong, diverse pool of applicants applying,” said Chris HooSang, director of enterprise workforce strategy and HR operations. “That pushed us to start making changes.” One of the ways DTE addressed this was to expand its outreach to diversity-based organizations by participating in virtual job fairs and using targeted social media posts on LinkedIn, Twitter and Facebook. This included veteran associations, military bases, historically Black colleges and universities, Black sororities and fraternities and women in skilled-trade organizations, as well as others. DTE also collaborated with members of its employee resource groups. This included its African American resource group REACH, which helped recruit from churches and community organizations. “When we attract diverse talent, we bring different perspectives and ideas to our company, which improves our ability to innovate, solve problems and better serve our customers,” HooSang said. Preferred qualifications were updated on job postings to remove unintentional barriers and unconscious bias in the hiring process. Candidates are taken into consideration if they have transferable job skills or by how closely they are aligned with DTE’s values. Diverse review panels also have a direct hand in the hiring process. These teams are made up of DTE team members of different ethnicities, genders and job posiTrinity Health Michigan’s HR team also identified and organized a group of internal “resiliency rounders” who are tasked with comforting employees who work in high-volume, high-stress hospital areas. The rounders check in on staff’s well-being by phone or in person and may refer employees to services available through Trinity Health Michigan. The HR team also helped organize a Colleague Emergency Assistance Program for employees dealing with financial stress during the pandemiche program has helped more than 700 employees pay for necessities such as food, medical bills, prescriptions, transportation, utilities, rent and mortgage payments. Funds are donated by colleagues, leaders and community organizations. Since its inception, the program has raised more than $2 million for its affected employees. “As an organization, and especially

“WE REALIZED THAT WE WERE NOT GETTING A NICE, STRONG, DIVERSE POOL OF APPLICANTS APPLYING. THAT PUSHED US TO START MAKING CHANGES.” — Chris HooSang, director of enterprise workforce strategy and HR operations, DTE

tions. Panelists’ responsibilities may include reviewing job candidates and providing feedback to hiring managers. “It’s important to have an inclusive recruiting process,” HooSang said. “Having diverse thoughts and opinions helps to mitigate unconscious bias.” As a result of these and many other efforts, diversity hiring in the front-line operational job postings went from 18 percent in 2017 to 45 percent in 2020. “At DTE, creating a diverse and inclusive workplace is one of our top priorities,” HooSang said. “We know that when people feel welcomed, valued and included, they are more likely to give their full energy and share their perspectives, thoughts and ideas, which makes us a better company.” Rachelle Damico Special to Crain’s Detroit Business for me as an HR leader, investing in our colleagues well-being is really critical,” McNeil said. When Trinity Health Michigan’s employees struggled to find child care due to the pandemic, the HR team created a study club. A dedicated space was set up inside a day-care facility next to St. Joseph Mercy Oakland to provide supervision and tutoring for children attending virtual school while parents worked. And to ensure adequate staffing, the HR team filled more than 5,500 permanent and temporary positions during the pandemic. The positions were filled to support screening checkpoints, vaccination clinics and other day-to-day needs. “Even in the hardest times, you have to keep in mind the people because the people are the heart of the organization,” McNeil said. “As a health care provider our mission calls us to be a healing presence.”

CRAIN'S LIST | MICHIGAN ACCOUNTING FIRMS Ranked by number of Michigan employees (includes Southeast Michigan employees) NUMBER OF EMPLOYEES SOUTHEAST MICHIGAN JUNE 2021/ 2020

NUMBER OF MICHIGAN EMPLOYEES ENGAGED IN AUDIT/ ACCOUNTING

NUMBER OF MICHIGAN EMPLOYEES ENGAGED IN TAXES

NUMBER OF MICHIGAN EMPLOYEES ENGAGED IN CONSULTING

NUMBER OF MICHIGAN EMPLOYEES ENGAGED IN OTHER

NUMBER OF CPAS MICHIGAN JUNE 2021/ 2020

COMPANY ADDRESS PHONE; WEBSITE

MANAGING PARTNER(S)

NUMBER OF EMPLOYEES IN MICHIGAN JUNE 2021/ 2020

PLANTE MORAN PLLC

James Proppe

1,689

1,240 1,241

457

337

455

441

695 732

DELOITTE LLP AND SUBSIDIARIES

David Parent

1,320

1,151 1,115

225

224

400

232

309 320

ERNST & YOUNG LLP

Angie Kelly, Detroit; Jay Preston, Grand Rapids

913

787 786

317

253

252

338 309

PRICEWATERHOUSECOOPERS LLP

Ray Telang

784 1

735 1 750 1

316 1 322 1

REHMANN

Ryan Krause

682

265 294

161

199

106

216

241 255

BDO USA LLP

Keith Klucevek and Andy Zaleski

639

177 154

120

226

264

201 197

UHY LLP

Thomas Callan

457

435 403

153

141

196 174

KPMG LLP

Kevin Voigt

376

311 322

171

87 83

DOEREN MAYHEW & CO. PC

Chad Anschuetz

277

277 235

127

126 108

YEO & YEO PC

Thomas Hollerback

202

33 36

76 78

CROWE LLP 2

Rhonda Huismann

201

0 2

77 74

ANDREWS HOOPER PAVLIK PLC

William J. Mulders Jr.

168

30 29

70 61

MANER COSTERISAN

Edward "Trey" L. Williams III

134

4 4

56 57

RSM US LLP

Greg Burnick

90 66

29 41

GRANT THORNTON LLP

Jim Tish

86 92

44 45

BAKER TILLY US LLP

Patrick Killeen

81 80

30 38

CLAYTON & MCKERVEY PC

Robert Dutkiewicz

69 70

37 37

GORDON ADVISORS PC

Paul Arment, Maureen Moraccini

64 59

31 30

DERDERIAN, KANN, SEYFERTH & SALUCCI PC

Ursula Scroggs

55 46

34 30

COHEN & COMPANY

Christopher Bellamy

54 83

28 29

COLE, NEWTON & DURAN CPAS

Christopher Boloven

48 50

23 19

MRPR GROUP PC

Angela Mastroionni

50 50

27 28

CROSKEY LANNI PC

David Croskey

NA 48

NA 26

EHTC (ECHELBARGER, HIMEBAUGH, TAMM AND CO. P.C.)

David Echelbarger

0 0

18 18

MATTINA KENT & GIBBONS

Vincent J. Mattina Jr.

24 24

18 18

3000 Town Center Suite 400, Southfield 48075 248-352-2500; plantemoran.com 200 Renaissance Center, Suite 3900, Detroit 48243-1895 313-396-3000; deloitte.com/us/en.html 777 Woodward Ave., Suite 1000, Detroit 48226 313-628-7100; ey.com 500 Woodward Ave., Detroit 48226 313-394-6000; pwc.com

1500 W. Big Beaver Road, 2nd Floor, Troy 48084 248-952-5000; rehmann.com 2600 W. Big Beaver Road, Suite 600, Troy 48084 248-362-2100; bdo.com 230 E. Grand River Avenue, Suite 700, Detroit 48226 313-964-1040; uhy-us.com 150 W. Jefferson Ave., Suite 1900, Detroit 48226 313-230-3000; kpmg.com 305 W. Big Beaver Road, Suite 200, Troy 48084 248-244-3000; doeren.com 5300 Bay Road, Suite 100, Saginaw 48604 989-793-9830; yeoandyeo.com

55 Campau Ave. N.W., Suite 500, Grand Rapids 49503 616-774-0774; crowe.com

691 N. Squirrel Road, Suite 280, Auburn Hills 48326 248-340-6050; ahpplc.com 2425 E. Grand River Ave., Suite 1, Lansing 48912 517-323-7500; manercpa.com 719 Griswold St., Suite 820, Detroit 48226 313-335-3900; rsmus.com 27777 Franklin Road, Suite 800, Southfield 48034 248-262-1950; grantthornton.com 2000 Town Center, Suite 900, Southfield 48075 248-372-7300; bakertilly.com 2000 Town Center, Suite 1800, Southfield 48075 248-208-8860; claytonmckervey.com 1301 W. Long Lake Road, Suite 200, Troy 48098-6319 248-952-0200; gordoncpa.com 3001 W. Big Beaver, Suite 700, Troy 48084 248-649-3400; DKSScpas.com

719 Griswold St., Suite 920, Detroit 48226 313-424-4871; cohencpa.com 33762 Schoolcraft Road, Livonia 48150-1625 734-427-2030; cndcpa.com 28411 Northwestern Highway, Suite 800, Southfield 48034 248-357-9000; mrpr.com 345 Diversion St., Suite 400, Rochester 48307 248-659-5300; croskeylanni.com 2301 East Paris Ave. SE, Grand Rapids 49546 616-575-3482; ehtc.com 1214 N. Main St., Rochester 48307 248-601-9500; mkgpc.com

1,646

1,375

906

800 1

696

634

421

411

236

158

197

156

140

Researched by Sonya D. Hill: shill@crain.com | This list of accounting firms is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available. NOTES: 1. Crain's estimate. 2. Formerly Crowe Horwath LLP

Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 15

REAL ESTATE

Jeffersonian Houze control moved from investors Barbat, Leibovitz in legal battle over high-rise apartment building on Detroit riverfront BY KIRK PINHO

Control of the Jeffersonian Houze high-rise apartment building on the east Detroit riverfront is now out of its owners’ hands. But whether you call Ronald Glass of B. Riley Financial Inc. the receiver or the person to “oversee” the 410unit building at 9000 E. Jefferson Ave., you can’t say suburban real estate investors Joe Barbat or Arie Leibovitz are in charge of it anymore — at least for now. Glass’ appointment earlier this month to “oversee” the former Jeffersonian came nearly four months after a Wayne County Circuit Court case prompted concern from lender Fannie Mae, which requested a receivership in late April after what it described as several loan default events. The appointment also threatens Barbat’s and Leibovitz’s tenure as the building’s owners. Glass, who B. Riley lists as a senior managing director on its website, has wide-ranging powers and is responsible for the management, maintenance and financial performance of the property until it is sold, foreclosed or redeemed, whichever comes first, according to the 27-page federal court document approving his appointment. He collects rents, signs and renews leases, approves contracts and has hiring and firing authority for on-site staff, all tasks that fall under his sweeping authority. That document does not describe Glass or his company as a receiver, although Glass has the powers traditionally associated with one, and both Fannie Mae and, earlier, Leibovitz had requested receivership in

A federal judge has appointed Ronald Glass to oversee operations of the Jeffersonian Houze high-rise on the Detroit River. | KIRK PINHO/ CRAIN’S DETROIT BUSINESS

varying forms. Fannie Mae specifically requested Glass. The term “receiver” was used throughout the court case until Thursday’s order. “It’s substantively indistinguishable from a receivership order,” said Stephen McKenney, partner with Birmingham-based law firm Altior Law PC who reviewed the federal document detailing the appointment for Crain’s. Michael Jacobson, partner with Southfield-based law firm Jaffe Raitt Heuer & Weiss PC who is representing Barbat’s part of the ownership group, said in an emailed statement Monday morning that Glass has been selected “so that the asset can contin-

ue to run smoothly for the tenants and the owners.” An email was sent to Bloomfield Hills-based Carson Fischer PLC, which is representing Leibovitz. A message was left for Glass at his Atlanta office last week. A spokesperson for Fannie Mae declined comment, saying it doesn’t “comment on matters under court supervision.” The Detroit office of Foley & Lardner LLP referred questions to Fannie Mae. Jeffersonian Houze becomes the latest high-profile Detroit area building to fall under control of a third party. Together, Barbat and Leibovitz,

PEOPLE ON THE MOVE

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

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Paul Chaben has been named Business Development Manager of the Midwest region for CBIZ Valuation Group. Based in the Detroit area, Chaben will be responsible for helping professionals throughout the region deliver a full range of services, including tangible asset valuations, risk mitigation and insurance valuations. Prior to CBIZ, Chaben spent 30 years with financial services firms successfully building high-profile business relationships that elevate client profitability.

Brieden Consulting Group, a leading employee benefit management company and culture consulting firm out of Grosse Pointe, Michigan, has announced the addition of Matthew Taylor as a Benefit Analyst. Matthew will be responsible for evaluating and compiling data sets to analyze our clients’ financial pictures, gauge their risk tolerance, and to assist our clients in making the best decisions for their culture and corporate profitability.

David A. Mollicone has joined the shareholder group of commercial litigation firm Altior Law. Dave has over 2 decades practicing in commercial and corporate litigation, banking litigation, creditors’ rights, real estate litigation, employment law and environmental litigation. He has represented clients in all stages of litigation through trial and appeal across a variety of matters in state and federal courts across the Midwest.

16 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

through River Houze LLC’s ownership structure, own the building 5050 after paying $30.2 million for it and planning $10.2 million in renovations. Ambler, Pa.-based Berkadia Commercial Lending LLC originated a $35.919 million, 15-year Fannie Mae loan at 3.84 percent to River Houze. In a February complaint in Wayne County Circuit Court, Leibovitz alleged mismanagement, self-dealing — which is not a crime but a breach of fiduciary trust — and accounting and financial reporting failures by Barbat over the course of the last three-plus years after buying it in late 2017. That case was settled earlier this year, although terms of the business “divorce” settlement have not been disclosed. Glass was the receiver for another iconic residential property along the Detroit River: Riverfront Towers.

Fannie Mae gets involved Fannie Mae, which does not issue home loans but does issue debt on commercial real estate, said in late April that Leibovitz’s February lawsuit “has laid bare the severe mismanagement and failed operations of the property, including an obvious dispute between borrower’s members as how to properly and effectively manage and operate the property.” Barbat, for his part, denied mismanagement and said Jeffersonian Houze was well managed and current on its loan payments to Fannie Mae. But Fannie Mae also said the ownership group “failed to timely notify” it of Leibovitz’s legal action, which would be a default event. The county court complaint also “may materially impair Fannie Mae’s lien and security interest,” which constitutes another default, Fannie Mae says in its receivership request. “Fannie Mae is justly concerned that while the two competing principals of borrower battle it out in arbitration, they will continue to neglect borrower’s obligations regarding the operation and maintenance of the

property,” the Fannie Mae complaint reads. The high rise has had a series of property managers under its current ownership: Southfield-based Village Green Cos. (December 2017 to February 2019); Essential Property Management LLC (February 2019 to February 2020); JS Dean (February 2020 to July 2020); and then ultimately Barbat’s Houze Living (July 2020 to present). The property management firm musical chairs has left the building’s financial records in disarray as all the firms used different software and Houze Living was not equipped to handle the transitions properly, the lawsuit claims. That means a cohesive and comprehensive set of financial records does not exist, the lawsuit says. The Leibovitz lawsuit also says Barbat has paid himself $323,324 in management fees. Fannie Mae says that the allegations in Wayne County Circuit Court, if proven true, would be additional default events. Other default events include liens for unpaid construction work, the complaint said. “The allegations in the State Court Complaint are significant and concerning to Fannie Mae,” the federal complaint says.

Allegations denied For his part, Barbat, through an attorney, Birmingham-based Scott Yaldo, issued a statement in February denying the allegations leveled in the Leibovitz lawsuit. “These allegations are absolutely false, hypocritical and are merely an attempt by Arie Leibovitz to seek to change the terms of an agreed upon operating agreement that he signed ... and which does not allow him the controls he so desires, and which he clearly cannot honor or fulfill,” the statement reads. It continues: “We are disappointed in the recent false and unwarranted claims that Arie Leibovitz has filed against his own company, and maintain that the allegations are entirely baseless, frivolous, and frankly, delusional. At minimum, they arise out of Mr. Leibovitz’s misunderstanding of the operations involved, all of which are well documented by the management team, and which wholly and unequivocally disprove Mr. Leibovitz’ allegations.” “There has been absolutely no wrongdoing by any of the defendants named in the litigation, rather only by Mr. Leibovitz himself, which wrongdoing will be borne out in a soon to be filed countersuit against Mr. Leibovitz, in which we will seek all available remedies available to us under the law, and under the parties’ operating agreement, and we are confident that the legal proceedings will prove just that.” In Fannie Mae’s motion seeking the receivership, it says Barbat alleges Leibovitz entered into $1.5 million worth of unauthorized construction contracts for the Jeffersonian resulting in liens against the property. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

REAL ESTATE

$31 million Midtown Detroit development gets brownfield tax break BY ANNALISE FRANK

A nearly $31 million mixed-use development in Detroit's Midtown is getting a boost from the state. The Michigan Strategic Fund, which approves economic development agreements that use public dollars as incentives, gave the green light for a more than $247,000 state tax break to fund environmental decontamination, known as brownfield, activities, Gov. Gretchen Whitmer announced Thursday. The 92-unit project, Petit Bateau, also got $2.6 million from the city in

tax abatements for brownfield work due to contaminated soil and for being in a Neighborhood Enterprise Zone, which is an area considered distressed and in need of redevelopment. The residential units include 20 percent set aside for individuals at 80 percent of area median income or below. The development has been in the works for years, with its brownfield plan going through City Council in 2019. It got city NEZ approval in January. Developer Julio Bateau's Nailah LLC is behind the project, which takes up a city block bounded by

Beaubien, Fredrick and Antoine streets and an alley. It comprises two 36-unit apartment buildings, with ground-floor commercial space in one. There are also 20 townhome condominiums, according to the development's website. Completion is expected in 2023. The site's residential listing agent is Berkshire Hathaway Home Services, The Loft Warehouse and its commercial agent is Re/Max Commercial Connection, according to a news release from the developer last month. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

MERGER

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CLASSIFIEDS

From Page 1

from Beaumont’s mergers and acquisitions aspirations. When Beaumont announced a plan last year to merge with Downers Grove, Ill.-based Advocate Aurora Health it was quickly met with backlash. A month after announcing the letter of intent, a “no confidence” petition began circulating among Beaumont’s physicians, calling for the system’s board to fire Fox and Chief Medical Officer David Wood Jr. “Over the last five years, we the medical staff of Beaumont Health have seen a rapid and progressive deterioration in every aspect of patient care at Beaumont Health. We no longer have confidence in the administration’s ability to provide a safe place for us to care for our patients,” the petition said. The group took issue with out-of-state governance of its hospitals, so Beaumont appears to have tried to rectify that issue with an in-state deal and a new 16-member board that consists of seven members from each entity and dual headquarters in Grand Rapids and Southfield. However, the board will be rounded out by Spectrum’s President and CEO Tina Freese Decker, who will also be the CEO of the new system, and a member to be named later. Mark Kopson, partner at Bloomfield Hills law firm Plunkett Cooney PC and chair of its health care practice, said the deal is hardly a merger among equals. “... The proposed board structure already places Spectrum in majority control of the board even without the currently ‘unspecified 16th board member’ who is likely to also fall into the column,” Kopson said. “That does not enhance the likelihood of a merger of equals. Similarly, dual headquarters tend to last about as long post-merger as duplicative middle-managers do.”

Will doctors get on board? Beaumont’s leadership insisted on a call with reporters Thursday morning that Beaumont doctors are on board with the deal and were consulted over the details. Dr. Robert Welsh, a physician at Beaumont and on the system’s board, said in the call that the deal was “carefully considered” and “enthusiastically endorsed” by physicians. It’s possible the doctors have greater faith in Spectrum’s ability to run Beaumont than the current leadership, Kopson said. “Spectrum has always had very as17 | CRAIN’S DETROIT BUSINESS | MAY 24, 2021

Developer Julio Bateau’s Nailah LLC plans to build a 92-unit development in Midtown Detroit and estimates completion in 2023. The block-long project is on Frederick Avenue between St. Antoine and Beaubien streets. | STEVE FRITZ ART SERVICE

To place your listing, contact Suzanne Janik at 313-446-0455 / sjanik@crain.com or, for more information, visit our website at: www.crainsdetroit.com/classifieds A new health system created by a merger between Spectrum, left, and Beaumont would be the state’s largest employer. | SPECTRUM HEALTH/BEAUMONT HEALTH

tute management,” Kopson said. “They are fully cognizant of the differences in the marketplace. They really know how to manage a health system.” Alex Calderone, a turnaround adviser and managing director of Calderone Advisory Group LLC in Birmingham, said the merger is another signal that Beaumont’s leadership has thrown in “the towel” in trying to correct its operations and culture. “The health system is laden with inefficiencies and problems,” said Calderone, who advises health systems in crisis. “There’s been an exodus of specialists and this shows (Beaumont leadership) believes it’s beyond their ability to fix.”

Keys to the deal The deal is being sold as a cost-savings measure and a way to improve care on both sides of the state. However, neither executives from Spectrum nor Beaumont were able to directly answer how those savings would be achieved. Freese Decker in the call with reporters indicated there would be no wide-ranging layoffs across the new entity, at least right away, which seems counter to the idea of merging and eliminating duplicative operations. Fox said, “we all know that health care has room for improvement,” that the merger would allow the new system to save costs on technology buys. “This opportunity is very good for our patients, communities and employees,” Fox said. But a 2020 study by the New England Journal of Medicine that researched outcomes from 246 hospital acquisitions found that patient experiences actually got modestly worse after integration and readmission and mortality rates did not improve. “I don’t know how they can say a lot of patients that are right now going to either Beaumont or Spectrum are suddenly going to get better care because they merged the two enti-

ties,” Calderone said. “Judging this merger in the court of public opinion is hard to do but the easiest answer to this merger is cost. Don’t ever waste a crisis. And in the aftermath of the pandemic, both institutions suffered.” For Spectrum the math is clear. Its integrated insurer, Priority Health, is a rising star in its portfolio and expanding its scope across the state is a clear benefit to its bottom line. Priority accounted for more than $5 billion of Spectrum’s $8 billion in revenue last year. Beaumont does not have an insurance arm. On a call with Crain’s Wednesday night, Freese Decker said the opportunity to expand Priority’s scope via a merger with Beaumont is a major selling point. Priority has 1.2 million members. “We will want to expand Priority Health throughout the system,” Freese Decker said. “We can deliver on value with integrated health systems.” The ability to have a thriving health plan is a leading catalyst for hospital mergers, said Ash Shehata, principal and U.S. industry leader for KPMG’s health care and life sciences unit. “Michigan is a rich health care market,” Shehata said. “There are adequate opportunities for health systems to play out their insurer strategy without overextending into other states and more complicated multistate operations.” In 2013, Beaumont was on the hunt for an integrated insurer and sought a merger with Detroit’s Henry Ford Health System, largely to get access to Henry Ford’s Health Alliance Plan portfolio. That deal, coincidentally, fell apart because the two organizations couldn’t agree whether the headquarters should locate in Detroit, where Henry Ford was located, or Royal Oak, where Beaumont was headquartered at the time, among other issues. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

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REAL ESTATE

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Sale of business pursuant to U.S. Bankruptcy Court, Eastern District of Michigan Case No. 18-40809-pjs Case No. 21-43364-tjt Minal Pharmacy is an independent, community-based pharmacy located in Hamtramck, Michigan. It takes great pride in its ability to service the Hamtramck community and its patients, many of whom receive government assistance. All qualified bids must be received by August 11, 2021 For further information, please contact Elliot Crowder 248-354-7906 x2254 or ecrowder@sbplclaw.com

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GIFTS

From Page 1

funds until they can decide the best way to ensure they are "transformational" — a word they all used — for their organizations and the people they serve. While the nonprofits were asked to check in with Scott and her team annually for three years through short summaries sharing how they are making an impact with the gifts, there was no specific direction of what to do with the funds, Weir said. “The sense I got was to continue doing the work you were doing to (support) the community.” Like other nonprofits, the YMCA is in COVID pandemic recovery mode, Weir said, operating on a $15 million budget, less than half of what it was before the pandemic, just like its remaining memberships. Of the $10 million gift, it plans to invest $2.5 million in deferred maintenance and updates like new air conditioning at its locations in the region. Another $1 million will be split between pay increases for staff who haven’t seen them in years and increased starting wages for entry level workers to help the YMCA be more competitive, Weir said. It will also put several hundred thousand dollars behind its high school completion and children’s’ water safety programs, technology upgrades, marketing to lift up the programs it provides beyond gyms (like emergency food assistance and youth arts) and $25,000 in microgrants for small nonprofits through a program launching this fall. “We wanted to do a ‘pay it forward’” for smaller nonprofits, Weir said. “There’s a lot of great work happening in the area.” Perhaps at some point, a portion of the gift will be used to replace the $2 million the YMCA drew down from its board-designated endowment to survive during the pandemic, she said. But for now, the remaining twothirds of the gift, about $6.5 million, will be kept in reserve, with annual assessments of its use. “We didn’t want the Scott money to be consumed by the recovery from the pandemic because we have a huge operating challenge now,” Weir said. While the gift is the largest in the local YMCA’s 169-year history, it will run out some day. “You’ll look around and say what was the permanent, lasting impact of the gift?” she said. “Staying open is pretty important, but (the goal is) are we able to find other ways to do that so the gift can be transformational, as was intended?”

'Our most prized asssets' Easterseals Michigan is thinking similarly, with plans to make some short-term investments but hold most of the funds, investing them while it waits for the right opportunities to have long-term impact. “If you would have asked me six months ago if we’d be further along, I would have thought so. But we definitely want to be thoughtful and deliberate about how we’re using the gift,” President and CEO Brent Wirth said. The nonprofit has created a board-designated fund and committee that will weigh in on how the funds are used, based on ideas that come up from the staff. It plans to invest most of its $15 million gift from Scott so it can make money for the organization. But a 18 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

Forgotten Harvest received $25 million, almost two years’ worth of its operating budget. | CONTRIBUTED

Scott’s gifts to Southeast Michigan nonprofits

Near-term needs

the $25 million gift over the next few years: addressing immediate crisis during the pandemic; diversity, equity and inclusion; and innovative ways of finding new solutions to old problems. It granted $5 million over the winter to support COVID relief and immediate assistance, said Eric Davis, vice president of community impact. It plans to add another $1 million to its annual allocations made to organizations working to help people meet their basic needs. On the equity front, United Way has brought in a DEI team to watch over its own internal culture, how it engages with the community and works to help the community achieve equity through efforts such as its 21day Equity Challenge of curated virtual sessions designed to help people think about equity and change behaviors where needed. The agency was already two years into developing a community information exchange to enable digital communication and record-sharing among organizations providing health and human services and host key information used to determine eligibility for assistance so clients don’t have to keep providing the same thing over and over. When complete, the system will build upon the 211 health and human service referral hotline, enabling, for example, a health care provider who identifies food insecurity in a patient to connect digitally to an emergency food provider in the region. It will also help identify hurdles to people keeping those appointments and receiving assistance, like transportation, and eventually help people overcome them by adding more service providers. The Scott gift will enable the remaining development of the community information system with Michigan 211 and other partners to move forward, Davis said. He projects the project will draw hundreds of thousands rather than millions of dollars in additional investment. But from an impact standpoint, “this is transformation,” Davis said.

United Way is focusing on three things as it looks at where to spend

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

Southeast Michigan nonprofits receiving gifts in December 2020 from MacKenzie Scott included: Easterseals Michigan: $15 million Forgotten Harvest: $25 million Invest Detroit: not disclosed United Way for Southeastern Michigan: $25 million YMCA of Metropolitan Detroit: $10 million YWCA of Metropolitan Detroit: $1 million

YMCA is in pandemic recovery mode after many program shut down. | CONTRIBUTED

near-term investment in talent attraction and retention is likely for the Auburn Hills-based provider of substance use, autism, occupational and speech therapy, vocational and mental health services. Demand for mental health services has risen during the pandemic. At the same time, employee turnover is rampant, with many clinical staff including social workers, psychiatrists and Applied Behavior Analysis therapists leaving companies with large numbers of Medicaid patients to take positions at employers with private payors and fewer reporting requirements that enable them to spend more time with clients, Wirth said. Since the start of the pandemic, Easterseals has hired 161 new employees, nearly all in mental health services. It currently employs 530, most in Oakland County but others in Macomb County, Flint and Grand Rapids. “There’s very large competition for our most prized assets: our staff,” Wirth said. “We need to make we’re recruiting and retaining the best staff possible. That’s our first priority with some of the Scott funds and (investments in) the technology in order to better serve people and support our staff.” Beyond that, the gift gives it the

ability to move when it sees the right ideas, he said. “Now, if we think something has the right ROI for the people we serve, the staff, we’re going to go ahead and do it.” Like the others, Forgotten Harvest isn’t rushing to spend its $25 million gift. “Management and the board feel like it’s responsible to take the time to thoughtfully use the funds,” said Christopher Ivey, head of marketing and communications. The gift represents about two years’ worth of operating expenses for the food rescue. “Whatever we create or put forward with this gift, we want to make sure that’s sustainable for the community long term,” he said. Forgotten Harvest’s board has authorized the use of about $2.5 million of the gift to help complete its $17 million campaign to fund a larger facility. But Ivey said the organization has already raised $12.6 million, and management believes it can reach its goal without tapping the Scott gift. “We’re trying to really use it to make more impact,” he said. Forgotten Harvest is in the midst of finalizing a new five-year strategic plan that will include short-term, medium-term and long-term goals for the organization and investment of the $25 million Scott gift. It’s hired a new chief information officer to help it use data more effectively to meet new data goals in the plan, Ivey said. Some part of the Scott gift could be used to expand the number of pantries on the Linked to Feed system it operates with Gleaners Community Food Bank of Southeastern Michigan to collect information about where

people show up for emergency food assistance, when and how often, so they can better tailor inventory and offer closer sites if people are traveling long distances. “Through COVID, one of the things we learned is that our pantry network is fragile,” given that it's run by volunteers, many of them senior citizens, Ivey said. It will use some part of the Scott gift to expand and stabilize the pantry network in Wayne, Oakland and Macomb counties to ensure that anyone in need of food assistance will know where to go, when to go and have food to pick up when they get there, he said. The specifics of that may take even another six months to figure out, Ivey said. “We’re just taking our time to make sure we do it right.” In December, the YWCA of Metropolitan Detroit said it would use its $1 million gift to support agency programs including child care and its domestic violence shelters, as well as its general operations. Invest Detroit’s focus is to strike a balance between immediate assistance and long-term support. It’s working to ensure that Detroit small businesses, developers and entrepreneurs of color have a full range of tools and resources — lending, grants and capacity — to recover from the current crisis but also have long-term support like technical assistance and equitable access to capital, Randy Hyde, senior vice president, external relations, said in a email.

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BLOOD

From Page 3

Long history, new name Founded in 1955, Versiti operated as Michigan Blood until 2017 when it joined the Versiti network with independent blood collection nonprofits in four other states: Indiana (where all donated blood it collects is tested), Illinois, Ohio and Wisconsin, where it operates a blood research institute with hematologists, oncologists and transfusion specialists. It collects blood in Grand Rapids, Kalamazoo, Traverse City, Saginaw and Livonia and has a distribution site in each of the markets except Kalamazoo. Kaiser said Versiti supplies more than 80, or 55 percent, of the in-bed hospitals in the state, including those at Beaumont, Henry Ford Health, Spectrum, Munson and Mid-Michigan health systems. Still, it’s taking time to gain name recognition in Southeast Michigan, given its relative short time in the area, its transition to the Versiti name and the foothold the Red Cross has in the region, Kaiser said. Versiti reported an operating loss of more than $1 million on total revenue of $58 million in 2019, the year of its most recent 990 filing with the Internal Revenue Service. “There’s a lot of competition in Southeast Michigan, and that actually is with Red Cross,” Kaiser said. Earlier this month, the American Red Cross, the AABB international association of transfusion medicine and biotherapies professionals and institutes and America’s Blood Centers — the national association of independent, U.S. blood centers, including Versiti — issued a joint statement urging people to

donate blood to ensure the availability of the nation’s blood supply and life-saving medical treatments. “In times of crisis, the U.S. blood community has a long history of working together to ensure the needs of all patients are met,” said Meghan Lehman, regional communications director for the American Red Cross Michigan Region. Both Versiti and Red Cross reported expenses outpacing revenue in their most recent filings with the IRS. Since they sell the pints of blood to health systems for hundreds of dollars to help cover collection, testing and distribution costs, blood shortages translate to revenue shortages.

Strong headwinds Both of the blood suppliers are facing the same headwinds. Cancer treatments — which represent a significant percentage of blood needs — along with elective Tullio surgeries were delayed during the pandemic, said Jacqueline Tullio, who was named regional donor services executive of the American Red Cross Blood Services Michigan Region last month. With the resumption of those treatments and surgeries, and people getting out more as the pandemic lets up and the weather heats up, demand for blood is rising, she said. The American Red Cross declined to comment last week on how far donations have dropped in Michigan. But in mid-April, a spokesman for the Michigan Region told WILX-10 in Lansing that it was seeing the lowest

blood donor turnout since the pandemic began, with about 1,000 blood drives canceled each week. The decline in donations comes at a time when all blood suppliers, including the Red Cross, see strong demand for blood products by hospitals, the organization said, as the number of trauma cases, organ transplants and elective surgeries rise. That’s led to emergency need for platelet and type O blood donors not only in Michigan, but across the country. Versiti is also seeing donations drop. About 40 percent of those who signed up to donate aren’t showing up to its Michigan blood drives, Kaiser said. “That’s been hurting us.” “We were getting people to donate, and now things have opened back up,” Kaiser said. “People are going on vacation; they’re busy.” To woo donors, the Red Cross offers T-shirts and gift cards. Versiti is offering its donors at select drives in its five states a chance to win a $500 e-gift card for rare sneaker drops, through a partnership with Nike. Staffing shortages for the two nonprofits are also hampering collection efforts. Both are looking to hire additional phlebotomists they can train to work at area blood drives. Versiti is offering $1,000 signing bonuses for the positions, which start at $15 per hour.

Decreased fill rates The ongoing blood shortages are translating to lower fill rates for local hospitals requesting blood. “Due to the low inventory of certain blood products and concerns about declining inventory of others, the Red Cross has advised its hospital partners that it will be limiting the fulfillment of scheduled orders of specific products,” the organization said in an emailed

that on to its customers, she said. “We’re committed to supply that blood.” The American Red Cross collected more than 190,000 units of blood and over 40,000 platelet donations in Michigan during fiscal 2020 ended July 31. Nationally, it said it supplies about 4050 percent of the blood needed across the U.S. Both Versiti and the American Red Cross declined to share the cost for a unit of blood in Michigan, citing it as proprietary information that could differ from health system to health system, depending on a number of factors. Costs have been higher during the pandemic with the need for enhanced testing for the virus and antibodies and expanded collection of plasma from recovered COVID patients for use in treatment, Tullio said. A 2018 study by Consumer Reports with the American Society of Hematology put the cost of a unit of blood at between $200 and $300. Currently, the average cost nationally is about $250, not inclusive of storage and processing by the hospital, Jim Hayward, manager of the Henry Ford Health System Department of Pathology, said in an emailed statement. The cost health providers pay isn’t for the donated blood, Tullio said. It supports the marketing, collection, testing and distribution services that get the blood to hospitals and at the Red Cross, humanitarian services it provides after local house fires and natural disasters like tornadoes and hurricanes, across the U.S. At Versiti, the cost of a unit of blood also helps support the expertise it provides to Michigan health systems and others, like the Mayo Clinic, through the Versiti Blood Research Institute in Milwaukee. Blood is big business. The global

statement. “This is a necessary action to safeguard the limited supplies and ensure immediate patient needs can be met.” Kaiser said Versiti is able to fill 75-80 percent of hospital blood orders currently. The Red Cross declined to provide its fill rate in Michigan for the 60 hospitals it supplies. In a statement, it said it is the country’s single largest supplier of blood and has the only national network of blood collection and distribution centers, which lets it quickly move blood around the U.S., as needed. “While local hospital needs are prioritized, the Red Cross is committed to ensuring all hospital patients throughout the country have blood when and where they need it,” the organization said. Finances for the Michigan Red Cross operations are aggregated as part of the national organization’s 990 filing and not broken out publicly. In fiscal 2019, the year of its most recent 990 filing with the IRS, the national reported an operating loss of $123.7 million and total revenue of $2.8 billion. Its net assets/fund balances totaled $1.4 billion at year’s end. In Michigan, Versiti collects 127,000 units of blood each year, Kaiser said, just 7,500 of them from Southeast Michigan. But it distributes 160,000 units to hospitals in the state annually. If it’s not able to secure the transfer of blood from its affiliates in the network, it has to go to the open market to buy it. “If you don’t have enough blood to fill need in your market, we’ll reach out to other blood centers around the country — the open market. But we have set prices with each of our health systems,” Kaiser said. Even if it costs more to secure the blood from other centers, it can’t pass

CANNABIS

Legal sales for nonmedical use started Dec. 1, 2019. The industry reported $341 million in sales in fiscal 2020, according to the state. Detroit City Councilman James Tate spearheaded creation of an ordinance over the course of more than a year that would establish the recreational, or adult-use, industry and aim to bring more Black Detroiters and longtime residents into the fold. The idea was to get those hurt by the war on drugs involved now that cannabis is legal, and to regulate the way to more diversity in the largely white sector. The effort comes after medical cannabis hasn’t garnered local participation: There were 46 operational medical dispensaries in Detroit as of October, but a mere four were owned and operated by Detroit residents. Now, though, there are questions over how Detroit is tackling that problem: Does the Legacy Detroiter program work? Who does it harm, if anyone, and — at the center — is it even legal?

Inside the case Lowe, who wants to open a cannabis shop in Detroit, argues that her past and residency make her a prime candidate for a regulatory framework that’s seeking equity. However, despite Lowe living in Detroit 11 of the last 30 years and her experience with marijuana — her mom was convicted in 2007 for a marijuana-related crime, and she’s been working in the cannabis industry — she doesn’t qualify for the legacy program. Thus, 20 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

BLOOMBERG

From Page 3

Schroder

Colett

the lawsuit argues, she has little to no chance of getting a license. The adult-use ordinance gives preference in a couple ways: It allows for up to 75 retail licenses in the city, and at least half of those must go to Legacy Detroiter applicants. They also get priority in a tiered application review process, pay less in fees to get started and get land discounts. To qualify for the Legacy Detroiter program, an applicant must have lived in the city for 15 of the last 30 years; have lived there for 13 of 30 years and qualify as low-income; or

have lived there for 10 of 30 years and have a marijuana-related conviction, or a parent who was convicted of a marijuana-related crime before the applicant turned 18 years old. Lowe’s mother has a marijuana conviction, but it was when Lowe was 19, according to court documents. The lawsuit argues that with Detroit’s rules, legacy applicants will get the great majority of the licenses because they’re ahead in line, and there’s no cap on how many of the 75 licenses they can get. The city denied the allegations in an April 6 response to Lowe’s complaint. The city’s legal team argued that the legacy program is not discriminatory, but rather provides “equal footing” in competition. After the judge’s Thursday order, though, the city is offering to make changes to its rules. Still, it refuses to concede on giving its residents preference in some way.

“We will review the decision and can develop a revised plan to address the judge’s concerns,” Kim James, chief administrative corporation counsel for the city, said in a statement to Crain’s. “In the meantime, one thing is for certain: the City of Detroit will not issue any adult use marijuana licenses unless there is legal assurance that Detroiters will receive a fair share of those licenses.” A request for comment from Lowe’s lawyer was not returned.

Watching closely Among those following this case are prospective entrepreneurs, established medical cannabis businesses in the city and those who want to see equity in an arena known for resulting in the arrests of Black Americans at a rate 3.6 times more than their white counterparts, according to the American Civil Liberties Union.

“Obviously there are great concerns about this ordinance and whether it’s constitutional,” said Jeffrey Schroder, co-leader of Bloomfield Hills-based law firm Plunkett Cooney PC’s cannabis industry group. “There are other communities that have given preferences to local residents or property owners or businesses in their applications. … except when you look at other communities that have done that, it hasn’t been as strong as the Detroit legacy program. So I think that’s why this one made it quickly to the federal courts.” Right now, Detroiters seeking nonmedical cannabis must leave the city for nearby communities with adultuse shops galore, like Ferndale and Hazel Park. Existing Detroit medical cannabis retailers want to get into the adult-use market to compete. In three to five years or less, Schroder predicts, a business won’t be able to hold out if they’re approved for just medical use. “The Detroit facilities are hamstrung right now,” Schroder said. “They’ve invested a lot of money … now the city’s saying you cannot get an adult-use license ... unless you follow this process, and we’re going to give preference to legacy Detroiters.” Schroder said he respects the city’s goal. But still, he argues, the regulations say to someone who’s invested in the industry already in Detroit and done everything legally that they need to wait in line until, just maybe, getting a shot to enter the market. Rebecca Colett, founder of the Detroit Cannabis Project and CEO of wholesale cannabis brand Calyxeum, has been helping cannabis entrepreneurs create businesses under the statewide social equity program and Detroit’s legacy rules.

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market is a $7.2 billion industry that’s expected to grow to $10.3 billion by 2027, according to Allied Market Research.

Hospital impact The Michigan Health & Hospital Association is monitoring the current blood supply in the state and in communication with members to evaluate the shortage, said John Wilson Karasinski, director of communications. “In the anecdotal comments we have received, the collective feedback is that hospitals are managing their supply carefully,” he said. The extent to which the delivery of patient care may be impacted has varied by health system in the feedback we have received so far.” Despite the shortages, Henry Ford Health System, whose sole blood supplier is Versiti, is maintaining a full schedule of surgical cases to meet the needs of patients by optimizing its blood supply, Hayward said. Elective procedures are also proceeding at Beaumont, Carolyn Wilson, executive vice president and COO, said in an emailed statement. It’s teaming up with Versiti to host multiple blood drives at its campuses around the region. “Post COVID-19, ‘normal’ has changed in that demand for blood is up roughly 20-30 percent due to delayed surgeries and increased trauma cases,” Wilson said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch “The ordinance, as it was designed, I think really provides opportunity for people who are not multimillionaires into the legal cannabis industry and it really promotes diversity,” said Colett, who is a Legacy Detroiter and helped lobby to get City Council to pass the legislation starting the program. Colett formed the Detroit Cannabis Project to address educational gaps in a complex industry, between regulatory and legal processes, access to capital and creating a viable business plan. The incubator trained a cohort of 35 certified Legacy Detroiters starting in early April, continuing despite the application process being halted by the courts. While the city cannot take any applications now, pending a ruling, it says on its Homegrown Detroit website that “we still encourage prospective applicants to continue diligent preparation for submission.” Nearly 400 Legacy Detroiters pre-qualified to apply. “So many people are interested in investing in Detroit,” Colett said, but investors don’t necessarily want to commit until they know what happens with this lawsuit. Some would rather pack up their money and go to a less litigious city. And legacy applicants have already invested their own time and money. It’s a waiting game. But not when it comes to education, Colett said. Adult sales will become legal in Detroit and, regardless of when, she wants the businesses her incubator helps to be ready. “Nobody knows the day, or the hour, but we know it will come,” she said. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

GETTY IMAGES/ISTOCKPHOTO

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FOUNDATION

From Page 3

As proof, Evelyn points to the hiring earlier this year of Nicole Walker, a Black woman and veteran in the venture capital world, as a managing partner at Arboretum Ventures, an Ann Arbor-based health care venture firm. Last year, not long after the rallying cries began for increasing the diversity of the region’s investor class, as well as the broader financial sector, Evelyn told Crain’s that who writes the checks is of utmost importance. “The lowest-hanging fruit is to hire more Black folks to write checks,” Evelyn said at the time. “That’s a start because we’re talking about people that are going to work their way up.” He also noted the diversity of the portfolio within Invest Detroit Ventures, an early stage venture firm that has supported upward of 200 startups around the state, 54 percent of which have “diverse founders,” according to the firm. Patti Glaza, executive vice president and managing director of ID Ventures, told Crain’s in an interview that the fund bases that by the number of Black, Brown, Native, female and immigrant founders within the portfolio. “So the reason our portfolio is so diverse is because we were very intentional about building a diverse team from the beginning,” Glaza said. It’s clear, however, that much of the rest of the venture capital community, and the broader startup community in Michigan in which it invests, has a long way to go in terms of diversity, equity and inclusion. Of the 165 current venture-backed startups in Michigan, more than 72 percent, or 119, were founded by white men, according to findings in the 2020 report released by the Novi-based Michigan Venture Capital Association.

‘Rapid’ pace of change Still, multiple sources in the venture capital and broader financial sector echo Evelyn’s comments that change is happening, and it might be occurring faster than many might think. The biggest challenge within Michigan’s relatively small venture capital world, according to Glaza with ID Ventures, is the fact that it’s quite small. “We’re such an insular community, jobs happen so infrequently, that it’s about your network,” she said. “And so

Glaza

Muller

I see a lot of efforts to reach out to new, different networks, asking others what networks do you use? Really trying to go beyond: ‘Oh, hey, we’ve got a known candidate, versus hey, we should really be trying to find a bigger pool.’” Conversations like that can make for a “rapid” pace of change, Glaza added. “I think the change is happening, and either you get on board, or you don’t,” she said. “I don’t see this as taking another 10 years to happen. Maybe I’m being wildly optimistic, but based on what I see, I think 18 to 24 months, we’ll see a very different venture capital system than we have, let’s say, a year ago.” Cynthia Muller, director of mission investments at the W.K. Kellogg Foundation, said she’s also seeing changes. The Battle Creek-based foundation, which dates back to 1930, has committed more than $100 million from its endowment for investments in capital markets, more than half of which has been in nonspecified private equity endeavors, according to the foundation website. The foundation “only invests in enterprises and fund managers that directly advance our mission.” Muller told Crain’s that means organizations that have racial and social equity as part of their focus. Prior to last year, Muller said, the foundation was frequently the anchor investment in many deals. That’s increasingly not the case, and more individual and institutional investors are cognizant of how their money can impact those issues, according to Muller. “It just feels like such a leap-frog in the conversation,” she said.

Implementing change Outside of the region’s venture space, companies are still working to carry out programs they rolled out last year . At Rocket Companies Inc. (NYSE: RKT), the Detroit-based parent com-

pany of Rocket Mortgage and a host of other financial service firms controlled by billionaire Dan Gilbert, the last year has been one of implementation and fine-tunScott ing. Last August, the company laid out its six-step diversity and inclusion plan, which includes: recruiting; team member engagement; leadership development; external affairs and community partnerships; law enforcement engagement; and communications. Since rolling out that plan, Rocket Companies also added supplier diversity to its diversity, equity and inclusion efforts, said Trina Scott, Rocket’s chief diversity officer. Speaking with Crain’s in an interview, Scott said that Rocket and many other companies with a focus on DE&I are working to get to a point so that it is part of everyday operations. “I think that every organization is trying to determine, how does this get woven into their fabric,” Scott said of DE&I efforts. “So that it doesn’t become a programmatic thing. It becomes an automatic thing. So everyone recruits and everyone recruits individuals, and everyone wants to get the best talent out there. “So it shouldn’t just be diverse talent and what are your numbers around diverse talent. It should be how do you ensure that you have systems that are bringing in the top talent that you need, that is complementary for your organization. I think that’s what last year highlighted.” Last August, when the company had about 18,000 employees based in the city of Detroit, approximately 25 percent were Black, while 35 percent identified as people of color, which could include Black and Indigenous people, Latinos and many other nonwhite people. The latter number holds true across the companies’ four-city national footprint with a total of 30,000 employees, the company said at the time. About 20 percent of employees total are Black, according to the figures provided by the company last year. Scott said the company has no update on its diversity numbers at this time. Over the last year, the corporate community around the country has made a multitude of statements and commitments, many financial,

around trying to increase economic equity to Black, Brown and other under-represented populations. Banks and other major corporations have pledged $50 billion to racial equity, but spent only $250 million of that, according to a report from Creative Investment Research and cited by multiple news outlets. Several banks that have announced such commitments did not make specific data available to Crain’s on what the results have been of such efforts. Rather, they largely pointed Crain’s to their specific previously announced initiatives. Huntington Bank, headquartered in Detroit and Columbus, Ohio, last week announced a $40 billion nationwide lending initiative “with a focus on affordable housing, small business loans and increased capital to historically disadvantaged and low- to moderate-income communities.” The bank, the 25th largest in the U.S. with assets of more than $170 billion, plans to put $1 billion of that to work in Detroit and Wayne County. Asked by Crain’s how the initiative will be different than the bank’s everyday lending, Huntington Chairman, President and CEO Stephen Steinour pointed to the narrow focus of the initiative. “This is targeted, low-to-moderate income,” Steinour said. “We’re trying to specifically help those that haven’t had access ... So, we will be reaching into the community — with our partners and through our partners — to do even more in the neighborhoods here in Detroit and other cities.” Rasul Raheem, senior counsel in the financial services practice of Detroit law firm Dykema Gossett PLLC, pointed to the Huntington initiative as the type of change that’s needed in a city like Detroit. Such an initiative “moves the economic needle,” Raheem said in an email. In a previous interview with Crain’s, Raheem said systemic change has to include a reduction in predatory lending and easier access to banking services. “I think an increased access to credit to Black-owned businesses,” he said. “A reduction in the reliance in Black and Brown communities relying on check cashing places, payday loans ... The poor get hit with high fees because they (lack access to the banking system).” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes JUNE 21, 2021 | CRAIN’S DETROIT BUSINESS | 21

THE CONVERSATION

Treehouse CBD CEO Mechigian on jump from the auto business TREEHOUSE CBD: CEO Kevin Mechigian knows about margins and sales tactics. Mechigian spent nearly 20 years as president of the family business, Bob Saks Automotive, before the recession and automakers brand realignment put them out of business. A serial entrepreneur now, he couldn’t resist the “green rush” of cannabis. But slinging weed wasn’t in his interests, so instead he settled on selling cannabidiol, the second most active ingredient behind THC. CBD is said to offer many of the benefits of THC — pain relief, relaxation, etc. — but without the psychochoactive effects. | BY DUSTIN WALSH Your dad founded Bob Saks car dealers — talk to me about that. My dad founded it in 1969. I started selling cars when I was 16 and began working my way up the family business right out of college in 1988. We had eight franchises at the peak. I took over for my father around 2004-2005. Then in 2008-2009 when the Great Recession hit, everything changed. We had just built a brand-new building in Lyon Township, and then General Motors went bankrupt and Chrysler went bankrupt. GM canceled the Pontiac brand, so we lost our franchise, which was 70 percent of our business. We sold our Farmington Hills (Buick) franchises to build out the big dealership and were a year into the build when everything went haywire. How did you go from selling cars to selling CBD? It’s a funny thing, huh. A few years ago the “green rush” started and everyone was just running at it. I was already running a few other companies, like a property management company and an auto finance and warranty firm, so I am always open to looking at new opportunities. I have two sons, who are now in their 20s but always played travel hockey and are into snowboarding, wake boarding and the more extreme sports. They are always breaking bones. Through that I saw a lot of their friends and teammates get hooked on opioids. So we all started looking for natural healing and found CBD. But we had mixed results and the consistency seemed impossible to predict. So, we thought we could do better. How so? Our products are tested. We’re licensed and insured. This isn’t the CBD you buy at the gas station or video stores. If you buy a 1,000 MG tincture, the consistency and strength will be the same every time. We have a really good product. Our sleep gummies are second to none. They are our one of our top sellers. We have pain balms that we engineered with (former Detroit Red Wings player) Joe Kocur. His

that requires more raw product and is more expensive. So we had to figure out a way to make that more cost effective, so we offer higher dosages but in smaller portions. That way it’s more cost effective for consumers but the product actually works. I want my products to work for as many people as possible.

hands are pretty beat up from punching helmets. If we can help his hand pain, I think that says something about our products. Your products are noticeably more expensive than some other products. Why? A lot of times people put the cheapest things they can find on the shelf, not what delivers results. People would come into a dispensary and maybe see a tincture that is 2,500 milligrams but then buy only a 500 milligrams tincture because it’s cheaper. We use 500 milligrams for pets. It’s just not strong enough for most humans. Retailers would just put inexpensive products out there that wouldn’t be effective. We figured you needed a higher dosage to work and

It’s a pretty competitive market. How do you stand out, especially if consumers can get CBD at the gas station? It’s lucrative or I wouldn’t be in the business. Luckily, a lot of what we do is B2B business. (Popular cannabis retailer) Greenhouse of Walled Lake is one of our distributors. We have retailers in Michigan, Florida, Ohio and Kentucky. We’re in a lot of salons and some vitamin shops as well as several marijuana shops. There’s not a better salesman than the staff at a dispensary that learns all the complexities of CBD. Other than that, the only retail we have is our website, which does well. What’s the future hold for Treehouse? We continue to expand our product base into new chemistries. We also white label for other businesses. We grow and make the product for them, so they can start their own brand. We’re a one-stop shop for labeling, bottling and creating an entirely unique product line. It’s easier for us to get them through all the holes we already stepped in. So I expect that side of the business to really do well moving forward.

Kevin Mechigian CEO Treehouse CBD

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Galapagos founder pays off $2.7 million in medical debt ROBERT ELMES, FOUNDER AND EXECUTIVE DIRECTOR of Galapagos Art Space, and his wife, Phillippa Kaye, have paid off more than $2.68 million in medical debt for residents of Highland Park and other parts of Wayne County. The debt was purchased through a donor-advised fund the couple established at the Community Foundation for Southeast Michigan with a $500,000 gift in 2018, the year they sold a Corktown building they owned to Bedrock Detroit for about $5.5 million, based on an analysis of transfer taxes. 22 | CRAIN’S DETROIT BUSINESS | JUNE 21, 2021

Elmes had planned to move the organization from Brooklyn into the Corktown building after property rates in the New York city area skyrocketed, Elmes pricing many artists out of the community. A similar gift from a group of Lansing nurses a few years back to repurchase medical debt inspired the couple to recommend a gift from their

donor-advised fund to do the same, Elmes said in an email to Crain’s. “When we saw the opportunity to purchase with cents what had been dollars we felt that it was a modest way to do good in a difficult time.” The Community Foundation paid $20,000 from the donor-advised fund to purchase the debt from New York-based nonprofit RIP Medical Debt and then forgave it. Elmes announced the debt forgiveness in a Facebook post. “Running an arts organization is not a lucrative career choice but we’ve recently been a bit lucky,” El-

mes said in the post. “Since I’ve been crushed by debt before and know it feels terrible, and because our family has had health issues that are thankfully behind us, we understood the benefits of doing this.” Elmes and Kaye called on other philanthropists and nonprofits to buy back medical debt — starting with $14 million in long-term medical debt for Detroit residents for just $100,000. “We’re hereby creating the ‘Michigan Medical Debt Challenge’ to the Detroit region’s most successful people,” he said.

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Crain's Detroit Business June 21, 2021, issue

Articles inside

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