Crain's Detroit Business, July 25, 2022, issue by Crain's Detroit Business

HAMTRAMCK: Businesses embrace ‘immigrant experience’ PAGE 3

THE CONVERSATION Michelle Sourie Robinson on building wealth among minorities PAGE 18

CRAINSDETROIT.COM I JULY 25, 2022

FORUM I FLOODING

WHERE WILL THE

KIRK PINHO/CRAIN’S DETROIT BUSINESS

WATER GO? How flooding overwhelmed Metro Detroit’s stormwater system — and why it’s so hard to fix. I PAGE 8

Median Detroit home prices hit $100,000

Making crash test dummies smarter

Humanetics drives technology forward

Increase marks highest value ever in city BY ARIELLE KASS

The median sales price for a home in the city of Detroit topped $100,000 in June, the first time values have been that high, according to multiple listing source data. “It’s a very big deal,” said Karen Kage, the CEO of the multiple listing service Realcomp, whose data goes back to 1994. “I think people are seeing it as a better opportunity now than it ever has been.” The median sales price of $100,250 in the city is based on 381 sales in June, and is more than a

third higher than a year earlier, when the median sales price was $72,500. At the same time, values in Wayne, Macomb and Oakland counties were also higher than they’ve ever been — respectively, $217,500, a 17.6 percent increase; $252,500, a 14.8 percent increase; and $355,000, a 10.1 percent increase. The median sales price for the region was $275,000, also an alltime high. Nationally, home prices are also reaching all-time peaks in many other cities. The increase in values is benefi-

NEWSPAPER

BY KURT NAGL This three-bedroom, one-bath home on Biltmore Street was a Detroit Land Bank Authority house that was purchased and renovated with $93,000 going into it. It went on the market for $115,000. | REALCOMP

cial for homeowners, particularly those who have held on to properties for many years. But it can also put houses further out of reach for first-time buyers. See HOMES on Page 14

REAL ESTATE INSIDER Office subleases are on the rise. PAGE 4

Sierra Sam and Sierra Susie have seen some things. For the past 70 years, their crash test dummy family has been subjected to carefully calculated abuse in the hopes of making cars safer for humans. Car safety has improved by leaps and bounds, but U.S. roads are the deadliest they have been in nearly

two decades, government data shows. As more electric vehicles hit the streets, weighing upward of 25 percent more than their gas-powered equivalents, crashes could become more catastrophic, industry experts worry. And for reasons not based just on biology, Sam is far better protected than Susie. Women are nearly 30 percent more likely to die in car crashes than men and up to 70 percent more likely to be seriously injured, according to the Insurance Institute for See HUMANETICS on Page 15

NEED TO KNOW

ON A NEW COURSE

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT  FORD TO CUT UP TO 8,000 JOBS THE NEWS: Ford Motor Co. is preparing to cut as many as 8,000 jobs in the coming weeks as the Dearborn-based automaker tries to boost profits to fund its push into the electric-vehicle market. The cuts will come in the newly created Ford Blue unit responsible for producing internal combustion engine vehicles, as well as other salaried operations throughout the company, sources with the company said. WHY IT MATTERS: The move would mark a significant step in CEO Jim Farley’s plan to cut $3 billion in costs by 2026.

SALVATION ARMY REORGANIZES MICHIGAN OPERATIONS THE NEWS: The Salvation Army Eastern Michigan Division has merged with the state’s west side affiliate, marking the first reorganization for the national nonprofit in Michigan in more than 100 years. Completed July 1, the merger of the Southfield-based division and the Grand Rapids-based Western Michigan and Northern Indiana division creates a roughly $100 million division with more than 800 employees serving most of Michigan. WHY IT MATTERS: Years in the making, the merger was part of larger con-

solidation for the Salvation Army’s central territory that reduced 10 divisions into eight to merge financially struggling divisions into more stable ones.

 AUTOGLOW FUNDRAISER TO RETURN AS PART OF AUTO SHOW THE NEWS: The Children’s Center of Detroit AutoGlow 2022 is set for Sept. 16 at Ford Field, following the blacktie charity preview of the North American International Auto Show, which is also taking place for the first time since 2019. It will provide additional funds for the Children’s Center of Detroit, one of six nonprofits benefiting from the Charity Preview. WHY IT MATTERS: The fundraiser took place every year for 27 years until 2020, raising nearly $6 million over that time.

 CULTURESOURCE MOVES INTO NATIONAL ARTS CONSULTING THE NEWS: Southeast Michigan arts association CultureSource is expanding into national and interna-

tional arts group consulting with its recent acquisition of North Carolina-based EmcArts. Through the deal that closed July 1, CultureSource acquired EmcArts’ change management and adaptive leadership client base for the U.S. and Canada and relationships with contract consultants. It will also take receipt of an estimated $300,000 in operating reserves. WHY IT MATTERS: The deal is expected to significantly expand earned revenue for CultureSource and provide an opportunity to recruit local arts leaders as consultants.

 GM STAYING PUT IN DETROIT

Hercules Electric pivots from road to water with e-boat deal  Farmington Hills-based Hercules Electric Mobility Inc. hopes to make waves in the electric boat market with a new supply contract valued at $60 million after plans to make electric trucks stalled out. The startup signed a deal with Chanute, Kan.-based boat maker Coach Marine Group to provide e-drive systems and battery packs for up to 1,500 Coach- and Xcursion-branded electric boats annually, said James Breyer, founder and CEO of Hercules. Delivery of the boats is expected to start by early next year, though the company has yet to bring its system to production. It has been marketing a prototype to boat makers. Netting its biggest contract yet is a big deal for the company, which launched in 2018, Breyer said. Under its new marine deal, Hercules’ 200-kw drive systems will be installed on Coach pontoon boats, allowing for a top speed above 40 mph and two to 12 hours of cruise time, depending on throttle level. Breyer said the company is aiming to produce a couple of hundred units in its first year and hopes to exceed 10,000 units within two years.

THE NEWS: General Motors Co. will keep its headquarters in the Renaissance Center in downtown Detroit, Chairman and CEO Mary Barra said. She also said the automaker has to look at its space needs now that many white-collar employees are working remotely much of the work week on a hybrid home-and-office schedule. WHY IT MATTERS: GM takes up about 1 1/2 of the RenCen’s towers, which have seen little pedestrian traffic for years. Much of GM’s workforce, including product development and engineering, is north of the city at an updated 1950s technical center in Warren.

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Mortgage demand lowest since Great Recession Housing shortage drives up prices BY ARIELLE KASS AND NICK MANES

Server Emily Sarpolus of Sterling Heights brings food to Jeanette and David D’Agostino of Highland at Polish Village Café in Hamtramck. | NIC ANTAYA/CRAIN’S DETROIT BUSINESS

keeping culture alive Hamtramck businesses adapt to embrace ‘immigrant experience’ |

Carolyn Wietrzykowski’s parents opened The Polish Village Café in the 1970s to serve traditional Polish dishes to the predominantly Polish population of Hamtramck. To this day, the menu includes Eastern European staples like pierogi, stuffed cabbage known as “gołabki” and kielbasa with sauerkraut. But now, however, Wietrzykowski says most of the cafe’s Polish customers are traveling to Hamtramck rather than residing in it. “There are so many Polish people in this area, and they spread out (in search of ) the American Dream, but they still identify (Hamtramck) as a fountainhead,” Wietrzykowski said. “That’s the feeling of it, that they’re coming back to where they started even though they

BY ANNA FIFELSKI

don’t actually really reside here anymore.” Immigration is responsible for the existence of Hamtramck, and it remains the driving factor in the survival of this diverse enclave community. The changing population has allowed new businesses to come in and thrive while long-established places have learned to adapt to serve the clientele. “Immigration played such a great role in creating Hamtramck,” Greg Kowalski, executive director of the Hamtramck Historical Museum, said. “If it wasn’t for the immigrant population in the early 20th century, who flooded into the city, there would be no Hamtramck today. It would have been absorbed by the city of Detroit.” See HAMTRAMCK on Page 16

“THERE (WERE) PEOPLE HERE BEFORE POLISH PEOPLE AND THERE ARE PEOPLE HERE AFTER POLISH PEOPLE.” — Carolyn Wietrzykowski, owner, Polish Village Café

Demand for mortgages has dropped lower than at any time during the Great Recession more than a decade ago, while a severe housing shortage in Michigan and beyond continues to choke the availability of existing homes, driving up prices. Data released Wednesday morning by the Mortgage Bankers Association, a Washington, D.C.-based industry trade group, shows demand for home lending services has essentially fallen off a cliff as surging inflation and soaring interest rates take a bite out of the mortgage market. At the same time, a study from the group Up for Growth showed an ever-expanding dearth of housing. It estimates Michigan is nearly 87,500 houses shy of where it should be; the number in metro Detroit is more than 51,000. And recent data from the multiple listing service Realcomp shows record-high sales prices in June for Wayne, Macomb and Oakland counties, as well as in the city of Detroit. Together, the trends show a housing market that is experiencing narrow demand for available properties, driving prices up, even as fewer people are able to participate in the market as interest rate hikes reduce their buying power. “The rising prices are not a sign of a booming economy, they’re a sign of a perverse economy,” said Tom Goddeeris, the chief operating officer of Detroit Future City. “It’s a sign of inequality.” Indeed, the current environment makes for something of a perfect storm, said Lee Smith, president of mortgage at Flagstar Bank in Troy, among the nation’s largest banks for home lending. See MORTGAGES on Page 17

Mixed economic messages as banks report earnings Those operating in Michigan showing generally strong performance BY NICK MANES

While some top bank executives are warning of a pending “economic hurricane,” many financial professionals are touting relatively calm seas this earnings season. Most bank executives acknowledge some headwinds as inflation continues to hamper the economy, but regional and community banks operating in Michigan are showing generally strong financial performance, and CEOs say their clients remain upbeat. By and large, bank executives are touting key metrics, such as loan growth — meaning businesses and

consumers feel confident enough to continue taking on new debt — and overall increasing assets as signs that the economy remains strong. That’s despite consumer confidence being at “near all-time lows,” according to a monthly report by the University of Michigan. UM’s Survey of Consumers for consumer sentiment was down more than 37 percent year-over-year in July. While many executives remain upbeat, several of the largest banks have reported slumping profits when compared with last year, as Axios noted. Peter Sefzik, executive vice president and executive director of commercial banking at Dallas-based Co-

merica Inc. — Michigan’s third largest bank by deposits — acknowledged the “recession watch” that many business owners and other industry observers are on at the moment. “That’s not unique to you or all of us,” Sefzik said to analysts of the feeling of a looming economic downturn. “Our customers are probably in the same boat. That said, I think that they are doing really well. Our pipeline is strong. Our activity levels are good. So it’s hard to see ... immediate concerns. I think a lot of the concerns that we hear … are further out.” See BANKS on Page 4

Huntington Bank, which is set to move into its new building in downtown Detroit later this summer, reported a record quarterly profit. JULY 25, 2022 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

Office subleases on rise as available space hits 10-year high The office market is still feeling serious pain, more than two years after the COVID-19 pandemic sent companies into workfrom-home Kirk mode. PINHO Office space available for sublease hit a 10-year high last quarter, with some 2.37 million square feet available in the five-county area, according to data provided by the local office of New York City-based brokerage house Newmark. In general, that means more office space once needed in Wayne, Oakland, Macomb, Washtenaw and Livingston counties is now deemed unnecessary for a company’s operations. Sublease space is that which a tenant puts on the market because it no longer temporarily or permanently has use for it. The tenant is still responsible for paying rent to the landlord on the entirety of its leased space, but can sublease some or all of that to another tenant to offset the cost of the unused space. And while the landlord can breathe a sigh of relief that they are still collecting the rents for the time being, some brokers have said that when a tenant puts its space up for sublease,

The Southfield Town Center office complex has 2.2 million square feet. | LARRY PEPLIN/CRAIN’S DETROIT BUSINESS

are giving space back still. “We do have a number of clients that have excess space that will either give back additional space to their landlord upon an early lease restructure or relocation to another place,” Munaco said. “Additionally, we have automotive clients that will need to sub“I THINK YOU’VE GOT ANOTHER SIX MONTHS lease a portion of their BEFORE OCCUPANCY CREEPS BACK UP.” office space — Terence Edmondson, president, Exclusive Realty LLC because they are still tied to a long-term lease obligation. Beit’s rare they ever take it back. Sam Munaco, president of the Ad- cause of this, the amount of sublease vocate Commercial Real Estate Ad- space on the market will increase in visors LLC brokerage house in the next 3 to 6 months.” So the sublease data is one trouSouthfield, said that while the Southfield Town Center office com- bling metric. Also consider that, according to plex his company is in “has a full parking lot since many employees Newmark data, leasing activity in are now back to work,” some clients general continues to remain slower

than before the pandemic. As of June 22, with just a few days left in the second quarter, there were only 242 deals completed in Q2. The only quarter in the previous 10 years that was lower was Q2 of 2020, when there were 198 and when the COVID-19 pandemic was truly taking hold. Just 824,211 square feet had been leased or subleased as of June 22; the next lowest quarters in the previous 10 years were Q1 of 2021, with 938,860 square feet leased across 299 lease and sublease deals; and 832,370 square feet across 198 deals in Q2 2020. And net absorption figures — how much net space was leased, essentially — have been in the red in every quarter but two since the beginning of 2020. The two exceptions, I must note, are the second quarter through June 22, with a net total of

244,904 square feet absorbed, and the fourth quarter last year, with a net total of 215,251 square feet absorbed. In addition, for the first time in 10 years, there are zero new office buildings that started construction in the second quarter, according to Newmark data. Construction figures have been gradually dwindling during COVID-19, with 19 buildings starting construction representing nearly 1.3 million square feet in the first quarter 2020. At the end of last year, there were just four starting, totaling 300,600 square feet. On the positive side — at least for landlords — rents have remained somewhat steady. In fact, gross office rents for the first time in the last 10 years crossed the $20 per square foot per year threshold in Q4 2019, just before the

BANKS

Second quarter earnings

levels, rising interest rates, and staffing concerns,” Kaminski said in the statement. “(A)nd we believe our commitment to serving as a trusted advisor will present us with additional opportunities to develop mutually beneficial relationships with new and existing customers.” Despite the general feeling of optimism, and the notion that central bankers at the U.S. Federal Reserve might orchestrate a “soft landing” with interest rate hikes that leave the economy short of a recession, some larger banks are gearing up for a rainy day. JPMorgan Chase & Co., the country’s largest bank, earlier this month reported more than $1 billion in credit costs, according to a Bloomberg report. The $1.1 billion in provisions for credit losses included a $428 million build in reserves for loans that go sour and $657 million in net chargeoffs, according to the bank’s earnings report. Chase executives cited loan growth and “a modest deterioration in the economic outlook” as key drivers behind the spending. Regional banks like Huntington and Cincinnati-based Fifth Third Bank have largely kept their allowance for credit losses flat over the last several quarters, according to earnings reports.

Regional banks reported Q2 financials in the last couple of weeks, including:

From Page 3

Steve Steinour, the CEO of Huntington Bank in Columbus and Detroit, echoed that sentiment. “Huntington and the banking industry remain well positioned to withstand the current volatility,” Steinour told analysts Thursday morning, adding that the bank is “not seeing substantive areas of concern within our current loan portfolio.” Huntington’s reported net income last quarter of $539 million represented a quarterly record for the bank, according to Steinour. The general optimism felt by bankers like Steinour appears widespread throughout the industry, according to a report last week by Morningstar Research. “Bank earnings remain strong amid the economic uncertainty,” Eric Compton, a strategist at Morningstar, said in the article. Still, “bank stocks could continue to face some pressure in the near term, as recession concerns do not seem likely to go away anytime soon,” Compton said. “In the meantime, we think valuations for our U.S. bank coverage are looking much more interesting.” 4 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

Huntington Bank Mercantile Bank Fifth Third Bank Net income Marshall

Steinour

Adding to that positive economic sentiment are several top executives of Michigan’s smaller, community banks, which are still churning out profits despite a challenging environment. Mercantile Bank in Grand Rapids reported Tuesday that while its net income fell to just more than $11.7 million in the second quarter, a decline of 35 percent year-over-year, the overall results underscore that core lines of business remain strong. The bank, with assets of about $5 billion, saw “substantial growth” in commercial loan activity and residential mortgage lending, according to a statement from Robert Kaminski, president and CEO of Mercantile. The CEO also credited the bank’s growth in assets, increased revenue from fees and controlling overhead costs with the bank’s performance. “The entire Mercantile team has adeptly pivoted from assisting cli-

$539 million $11.7 million $526 million Revenue $1.26 billion $42.1 million $2 billion Average commercial loan growth 2% 10% 9% SOURCE: CRAIN’S RESEARCH

ents with initial COVID-19 pandemic-related issues to helping them navigate through the latest economic challenges such as high inflation

pandemic, and haven’t softened overall, according to Newmark data. That doesn’t mean there aren’t deals to be found though, said Terence Edmondson, president of Detroit-based brokerage firm Exclusive Realty LLC. One of his clients was looking for 12,000 square feet. They found more than one landlord willing to lease downtown space at just over $20 per square foot per year, including generous tenant improvement allowances — a steep rental rate discount. He believes things will be on the upswing soon though. “I think you’ve got another six months before occupancy creeps back up,” he said. “The companies just now are starting to really lock in and see what the future looks like.” That, he said, is hybrid work arrangements. “Some of my clients, people don’t want to come back to work. They want to work from home,” Edmondson said. That’s trickling into how companies are designing spaces, not only around the country, but here in Metro Detroit, said Tim Kay, managing director in the Royal Oak office of Chicago-based JLL. “Like other cities across the nation, companies are putting money into their office spaces like never before,” he said. “Flight to quality is very real in Detroit, and many companies are upgrading their spaces to improve employee satisfaction. At the same time, hybrid work has played a role in office designs. It’s clear that heads-down work is happening at home, and collaboration is happening in the office. These new office spaces are reflecting that way of thinking by simultaneously supporting hybrid work models and employee well-being.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

That’s also been the case at Bank of Ann Arbor, where it’s been “business as usual” as it relates to allowances for bad loans, according to Tim Marshall, the Ann Arbor-based community bank’s president and CEO. Earnings for the first half of the year at the bank grew by 14.3 percent year-over-year, to $20.9 million, Marshall told Crain’s. Marshall said he feels “generally favorable” about the state of the economy, “but there’s clouds on the horizon that don’t allow you to be totally bullish.” However, it’s not macroeconomic pressures or the potential for loans going bad that’s keeping Marshall up at night. Rather, it’s the ever-present possibility of a cyberattack hitting the bank. “What we’ve learned is, loan losses typically don’t happen immediately. I have a runway that allows for an extended period of communication, and discussion and action planning,” Marshall said. “Whereas, in the cyber and fraud world today it’s immediate and it’s completely unexpected.” — Bloomberg contributed to this report Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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COMMENTARY

Rental market has become the mess we predicted BY MATTHEW I. PALETZ

DANIEL SAAD/CRAIN’S DETROIT BUSINESS

EDITORIAL

Time to invest in mental health in Michigan For the pediatric project in West Michigan, Pine Rest will partner with Helen DeVos Children’s Hospital to build a pediatric behavioral health center outside Grand Rapids, Crain’s Rachel Watson reported this week. Pine Rest said it plans to use the state grant funding alongside additional fundraising to build the $62 million Pediatric Behavioral Health Center of Excellence on its campus at 300 68th St. SE in Cutlerville. “The lack of available services reached crisis levels during the pandemic, leaving families in dire need of support for their children without options,” Pine Rest said in a statement. “The new center of excellence will expand Pine Rest’s full continuum of pediatric behavioral health services, increasing available services to children across the state and drawing new providers from across the country seeking to work in the world-class treatment setting.” The pediatric center will serve children and adolescents statewide and include new or expanded inpatient care, partial hospitalization, crisis stabilization, urgent care, residential, respite, testing, assessment and clinical programs. Less is known about the new state psychiatric hospital in Southeast Michigan. The location hasn’t yet been decided, according to Michigan Department of Health and Human Services spokesman Bob Wheaton. See EDITORIAL on Page 7

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

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 | JULY 25, 2022

GETTY IMAGES/ISTOCKPHOTO

The announcement this week of funding for two separate projects on opposite sides of the state is promising news for desperately needed mental health services in Michigan, especially for young people. Gov. Gretchen Whitmer on Wednesday signed a $57 billion general state budget for fiscal year 2023 that includes:  $325 million to build a new state psychiatric hospital in Southeast Michigan. It will replace the Hawthorn Center in Northville and the Walter P. Reuther Psychiatric Hospital in Westland.  $38 million for a new pediatric mental health center on the Pine Rest Christian Mental Health Services campus outside Grand Rapids. Experts say the need for mental health treatment, particularly among children and teens, was acute before the COVID-19 pandemic and has only gotten worse since. In October, the American Academy of Pediatrics, the American Academy of Child and Adolescent Psychiatry and the Children’s Hospital Association joined to declare a THE NEED FOR national emergency PSYCHIATRIC in child and adolescent mental health. SERVICES IS “We were shouting CLEARLY DIRE from the rooftops, saying we are in criSTATEWIDE. sis,” Emily Fredericks, professor of pediatrics and director of the pediatric psychology division at Michigan Medicine, told the University of Michigan’s Health Blog this month. “There are not enough mental health providers to meet needs of children in our state. We knew we were in a dire situation. “The pandemic has exacerbated that. Infinitely.”

n an editorial I penned for this publication in March 2021, I predicted that COVID-related eviction moratoriums would actually end up putting people on the streets. Specifically, not only are landlords going to be Matthew I. forced to raise rents to Paletz is the make up for COVID-reCEO of Troylated shortfalls, pricing based Paletz many renters out of the Law. market, but they’re also going to tighten the process of financial pre-approvals, a bar many renters will not be able to meet: The rental market has gone absolutely haywire, much like the real estate market. Some people are even being forced to bid above the posted rental rate in order to find a place to live. Although this scenario on its face would look attractive to a real estate investor, this is not sustainable, nor should it be. The underlying pandemic crisis that promoted this issue has waned. Still, the fact remains the State of Michigan (among others) used COVID as a pretext for a curtailment of private property rights which has caused havoc for landlords in the local municipalities and the courts where their rental properties are located. Let’s take a look back at what launched this rental upheaval. Without legislative oversight, the Michigan Supreme Court issued an administrative order in 2020 with subsequent amendments, which eviscerated the eviction process without a sunset provision. It took 60 years’ worth of well-founded landlord-tenant law and obliterated it. As a result, court dockets have exploded and courts have not been able to hire enough staff to meet the caseload. We now have endless adjournments of hearings, exasperated by multiple housing agencies struggling with labor shortages to process the rental assistance applications through the COVID Emergency Rental Assistance or CERA program, which is now winding down. All this confusion in the courts, coupled with more municipal regulation, is severely

impacting the rental property ownership market. The longer a non-rent producing unit remains that way, the less the property is worth, especially in Detroit, where the legal process is taking months. We already had an affordable rental housing crisis prior to the pandemic. The backlog is crushing Detroit property owners in particular because they can’t get their units back. They are waiting an interminable time to get their day in court and also obtain the requisite licensing. In the end, this will destroy the momentum of future investment in the city. These COVID-related measures were supposed to help low-income tenants. Still, they’ve also unwittingly assisted the more well-heeled tenants in more expensive apartments like those in Midtown to unfairly take advantage of these government programs. The result is that what the government is in fact doing is preventing more housing development in the state and especially in Detroit, where the demand will continue to outweigh the supply artificially. The only bright spot is Michigan courts have held more than five million hours of Zoom hearings since the COVID-19 pandemic began. I’m hoping that this option remains for the sake of tenants and landlords. The Michigan Supreme Court is still debating whether to make permanent what had been temporary rules for remote hearings. The remote hearings help tenants who will not have to leave their job in the middle of the day, try and find a ride, travel unnecessary miles and wait for their turn in court while losing wages from their employer. The bottom line is landlords don’t get paid if the tenants can’t pay their rent. So, it’s in all of our best interests to eliminate obstacles to doing that. In the aftermath of illegal eviction moratoriums, the overloaded court docket is causing delays in obtaining repossession of the rental units. This, along with the more than $50 billion of bad debt at property owners’ doorsteps, has magnified this crisis and jeopardized many more individuals’ ability to obtain affordable rental housing. So, the lesson learned should be that the perceived benefits of government intervention in private property ownership are in reality not worth the actual toll it has taken on both landlords and tenants.

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

Fix broken market that lets hospitals charge what they want

ospital prices in Michigan have increased almost 25 percent from 2017 to 2020. It is time to do something about it before this medical inflation does Bret Jackson is incredible damthe president of age to the state’s the nonprofit economy. Economic To be clear, this Alliance for Michigan, which not about rural or safety-net hospiprovides health tals, as they benefits to an should be treated estimated differently. This is 900,000 people. about large hospitals and health systems who are driving up commercial prices at rates that are double or more of what Medicare pays. Health insurance is a hidden tax for any business or individual who must pay for it. For businesses, the cost of health benefits impacts hiring and wage decisions, investments, and the ability to attract and retain talent. Individuals pay more out-of-pocket costs as prices increase, resulting in less household income. To put it in a different way, the average worker has taken a pay cut over the last decade due to rising health care costs. The issue strikes everyone’s bottom line. The Medicare Payment Advisory Commission or MEDPAC has repeatedly reported, year after year, that Medicare pays efficiently administered hospitals very close to what it takes to cover a hospital’s costs. Take note that most hospitals in Michigan are nonprofit. Many Michigan hospitals have demonstrated that they are well-managed facilities, but the broken market allows hospitals to charge significantly higher prices at will. Hospitals, like all businesses, deserve to be profitable; however, when hospital

EDITORIAL

From Page 6

The need for psychiatric services is clearly dire statewide. The number of psychiatric beds available in Michigan has decreased more than 30 percent since 1993, according to the Michigan Health and Hospital Association. “While we do have a small number of outstanding facilities dedicated entirely to mental health care services, and acute-care hospitals have dedicated resources and units to these services, it is simply not enough,” Brian Peters, MHA’s CEO, wrote in an op-ed in Crain’s in February. Michigan has a total of 3,195 inpatient psychiatric hospital beds spread across dedicated facilities and acutecare hospitals to serve adults and children, the Citizens Research Council of Michigan reported in 2020. That’s not adequate to serve Michigan’s population of nearly 10 million, Peters wrote: “Our care delivery system … is crumbling before our eyes, leaving patients in the rubble.” We are eager for more details on the new facility and applaud the state’s investment in both projects. There is hardly a more pressing time for a focus on mental health.

profitability comes at the expense of percent spike in hospital pricing, the every industry in Michigan along with state is much closer to the pack and the ability for the nation and munici- no longer has the competitive advanpal governments and schools to deliv- tage over neighboring states. er services, we need to address MICHIGAN POLICYMAKERS NEED TO it. Employers deserve better, ATTACK AND ADDRESS THIS ISSUE WITH workers deserve better and tax- THE SAME SENSE OF URGENCY AS THE payers deserve STATE OF INDIANA DID. better. In 2017, Michigan recorded some In 2019, an auto executive was of the lowest hospital prices in the talking to an Indiana business leadcountry. The lower hospital prices er and said, “We have plants all over were a difference maker in terms of the country, and whenever we’re attracting and retaining corporate in- talking about opening a new one, do vestment in the state. But with the 25 you know what I say? I say, ABI.

What’s ABI? Anywhere but Indiana. On average we pay $2,200 for every worker’s emergency room visit in Indiana. In Michigan it’s $800. The difference there is the profit margin of one car.” Now the advantage is gone, and Indiana has just attracted a state-of-theart battery manufacturing plant. Indiana lawmakers saw the difference and heard that quote in 2019 and took immediate action. Michigan policymakers need to attack and address this issue with the same sense of urgency as the state of Indiana did. When it comes to hospital pricing, this is one area where being on the bottom of the list is best.

GETTY IMAGES

BY BRET JACKSON

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JULY 25, 2022 | CRAIN’S DETROIT BUSINESS | 7

INSIDE: How flooding ‘despair’ played out, solving Jefferson-Chalmers’ water problems, dealing with damage and the status of possible solutions. PAGES 10-13 ONLINE: As flood waters recede, stress levels rise.

FLOODING

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WATER GO? As climate change makes the world wetter, metro Detroit struggles with flooding after heavy rains. I BY JOHN GALLAGHER

The June 2021 rainfall-induced flooding in metro Detroit caused billions in damages and proved catastrophic to many. But it was hardly a surprise to the experts. As early as 2014, a summer downpour flooded 18,000 homes in lower Oakland County and caused an estimated $1.4 billion in damage. That was the storm that convinced Jim Nash, Oakland County Water Resources commissioner, that a regional stormwater system built over many decades in metropolitan Detroit was no longer up to the task of preventing floods. “The weather patterns are only going to get more saturated,” Nash said in a recent interview. “Our facilities were built for a set of storms that no longer exist.” Beyond the heavy rain itself, a host of other problems and defects made the 2021 deluge even worse. The region is still dealing with the billion-dollar aftermath. The Detroit Water and Sewerage Department got some 25,000 claims for damages. The department warned claimants hoping for a quick payout: “This is going to be a long process.” 8 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

Meanwhile, the Great Lakes Water Authority said Tuesday that it is denying all 24,000 damage claims made in relation to flooding events last summer when up to 7 inches of rain fell. The decision, made after an independent investigation, was based on two factors: Widespread basement flooding was “inevitable due to the unprecedented amount and intensity of the rainfall that occurred on June 25-26, 2021,” and even if all equipment in the regional system had worked perfectly, flooding and basement damage would have still occurred. And there is little assurance it won’t happen again, given the still-developing impacts of a warming climate. “As climate change warms the atmosphere, the atmosphere holds more moisture, it comes across the Midwest warm areas, then it hits the Great Lakes, which is a thermal drop, so as soon as it hits that difference in temperature it lets go of the water,” Nash said. “And that’s why the whole region is going to be more dumped on than it used to be. And I don’t see that getting any better.” Indeed, despite multiple upgrades

“BEFORE MAN WAS SO SMART AND BUILT ROADS, THERE WAS A LOT OF NATURE AROUND HERE. WE DON’T HAVE TO BUILD ON EVERY SQUARE INCH ON WHICH WE SEE LAND. WE CAN’T KEEP DEVELOPING.” — Palencia Mobley, deputy director, Detroit Water and Sewerage Department

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Figu tan den cen inc Top and bottom: Flooding in June 2021 left cars stranded on I-75 south of Mack Avenue. Middle: Flooding at Grosse Pointe Park last year. | PHOTOS BY KIRK PINHO/CRAIN’S DETROIT BUSINESS AND NICK SIZELAND, CITY MANAGER OF GROSSE POINTE PARK

FLOODING At the Conners Creek pumping station on East Jefferson on Detroit’s east side, each of the eight massive stormwater pumps can push along enough rainwater to fill an Olympic size swimming pool every 22 seconds. When they work, that is.

to the system made since the 2021 floods, Suzanne Coffey, CEO of the Great Lakes Water Authority, the regional body that handles wastewater treatment and stormwater control for much of Southeast Michigan, warns that any rainfall anywhere close to that deluge would have similar results. “We would have widespread flooding if we get that kind of event again, no question,” Coffey said. “We would have street flooding; we would have basement flooding.”

What went wrong

The system and how it works Southeast Michigan is laced with thousands of miles of underground pipes that carry wastewater from toilets and other sources to treatment facilities in Detroit, where it is cleaned before flowing back into the Great Lakes waterways. This sewerage system doubles in many areas to handle rainwater that flows into street drains and into the same wastewater pipes and treatment facilities. It’s hard to grasp the complexity of this network. In the city of Detroit alone, the combined sewage/stormwater collection system has nearly 3,000 miles of sewer pipes, more than 90,000 catch basins, and 16 green stormwater pumping and treatment facilities. Add in thousands more miles of pipes in the suburbs, a vast network of pumps that move the flow along, and the individual connections for more than a million buildings in Southeast

The pump gallery is pictured at Conners Creek Pump Station in Detroit in May. | PHOTOS BY NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

Michigan that tie homes, schools, factories and more into the system, and you get some idea of the complexity. As with metro Detroit’s fractured governmental structure in general, this wastewater/stormwater system is run by multiple agencies. The lead agency is the Great Lakes Water Authority, which covers about a third of

Southeast Michigan; other administrators include individual municipal agencies like the Detroit Water and Sewerage Department and similar units in suburban areas. Generally the system works well, treating about 97 percent of all wastewater before discharging it back into the waterways, the remainder representing untreated wastewater discharged during heavy storms. The stormwater side of the network is designed to handle up to 1.7 inches of rain in an hour and up to about three inches of rain overall before being overwhelmed, a design standard that worked well for decades. An important part of the stormwater side of the network is the pumping stations along the way that keep the water flowing toward the treatment and discharge sites.

Power failures during last June’s deluge kept those Conners Creek pumps offline for crucial hours, along with other pumping and discharge facilities along the network. With the pumps not working, the water remained in the pipes and began to back up to Detroit’s east side and the Grosse Pointes. Soon the excess water, with no place to go, flooded streets and basements. Nick Sizeland, city manager in Grosse Pointe Park, recalls seeing water pressure from this backflow literally popping manhole covers into the air. Of 4,100 homes in Grosse Pointe Park, about 3,000 were touched by the flooding. Dearborn, too, was heavily flooded since the rainfall was not a localized cloudburst but general across the region. The damage was catastrophic. On a normal day in Grosse Pointe Park, garbage trucks haul away about 23 tons of trash. For three weeks after the storm, trucks were taking 156 tons per day as residents emptied out furniture, artwork, and debris from ruined basements. Power failures also affected the region’s freeways, which also rely on

pumps to get stormwater from road surfaces and catch basins into the regional system. When the power failed, the pumps couldn’t operate, and soon cars were floating. But the power failures and the extreme volume of rain were made worse by many other factors. Chief among them: Suburban sprawl has put more and more natural landscape under pavement and concrete. Stormwater that once settled into the ground in open fields now runs off parking lots and streets into drains where it can overwhelm the system. Even tiny actions by numerous metro Detroiters can burden the system. The operators of concrete trucks sometimes wash out their mixers and let the residue wash down into street drains; the concrete there dries, hardens, and clogs up sewer pipes. Gary Brown, director/CEO of the Detroit Water and Sewerage Department and a GLWA board member, said his department even has a tool it calls a “nutcracker” to snake through the pipes and break up the concrete growth. Contractors sometimes tap into the local sewer lines to connect a new project without getting permission or following design standards. “People are connecting where they shouldn’t be connecting,” said Michigan Department of Transportation Metro Region Engineer Kimberly Webb. The Rev. Timothy Pelc, pastor of St. Ambrose Catholic Church on the DeSee WATER on Page 11

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How climate impacts our rural wastewater infrastructure Joan B. Rose, PhD, is an international leader in water microbiology, water quality and public health safety at Michigan State University. She co-directs both MSU’s Center for Advancing Microbial Risk Assessment (CAMRA) and its Center for Water Sciences (CWS). Climate change is causing extreme weather like rain and flooding. Excessive amounts of rain overtasks septic systems, and the runoff is negatively affecting Michigan’s rivers and lakes. What needs to be done? Most rural communities rely on wells for drinking water and on-site wastewater systems, namely septic tanks for handling the sewage generated by individual households, restaurants, hotels and other small businesses. In the U.S., about 60 million people rely on septic systems which is equivalent to about 25% of the population. In Michigan, about 35% of the population uses septic tanks, which translates to about 1.3 to 1.4 million people. This means 560 million gallons of raw sewage per day are generated by these on-site systems. Figure 1 shows the density of septic tanks in lower Michigan. The highest density is around some of our urban centers where development did not include sewers and treatment.

Sewage contains hundreds of pathogens including bacteria like (Campylobacter, E.coli, and Salmonella) viruses (like adenoviruses and noroviruses) and protozoa (like Cryptosporidium and Giardia). The conventional septic tank is not designed to treat these pathogens and the systems rely on the soil to “remove” them. However, it is now known that bacteria, viruses and nutrients (phosphorous and nitrogen) move with the water from these drainfields as it travels toward ground and surface waters. Viruses, in particular, are so small that they can travel quickly as bio-nano particles with the water. The studies in Michigan have used new human microbial fecal source-tracking tools to show large scale pollution in surface waters arises from septic system discharges — and transport was linked to rainfall. Heavier rainfall events and flash flooding are on the rise, and this means higher frequency and intensity of heavy rainfall will likely be in our future. Besides property damage, there are

serious concerns associated with the rapid movement of viral and bacterial pathogens to both ground water and surface water, thus impacting both drinking water and recreational beaches in Michigan. Michigan is one of the few states without a state sanitary code and thus has fragmented regulation of septic tanks. This not only impedes assessment of the problem, but the solutions. Michigan has little information that could be used to guide the prioritization and funding of rural wastewater infrastructure using the dollars that will come into the state with the new Infrastructure Investment and Jobs Act. Our rural communities may be left out when it comes to modernizing wastewater collection and treatment or building key resource recovery facilities as part of a circular economy. To achieve a resilient Michigan, while advancing our economy and protecting water quality and health, more effort is needed toward assessment and solutions. While development of a state sanitary code moves forward, the state can take advantage of the Michigan Network for Environmental Health and Technology which provides water

Figure 1

quality testing and source tracking around the state. This knowledge can be used to address critical infrastructure needs for wastewater benefiting not only Michiganders, but the 40 million citizens that rely on the Great Lakes for safe drinking water, recreation and their livelihoods.

JULY 25, 2022 | CRAIN’S DETROIT BUSINESS | 9

FLOODING

From

The Rev. Timothy R. Pelc poses for a portrait at St. Ambrose Church in Grosse Pointe Park. | PHOTOS BY NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

How ‘despair’ played out at 2 Grosse Pointe landmarks Flooding took toll at St. Ambrose, War Memorial BY JOHN GALLAGHER

The Rev. Timothy Pelc, pastor of St. Ambrose Catholic Church at Alter Road and East Jefferson, got a call from his nephew the evening of June 25, 2021. A family home in Dearborn was flooding from the heavy rain. Pelc looked out the window of his rectory. Indeed, it was raining very badly on the Detroit-Grosse Pointe border. “Streets were flooded, cars were beginning to float down the street,” Pelc said recently. “I went to look for my wading boots that I use for fishing, slipped them on because the water by that time was at least three feet high. A lot of the neighbors were out in the street. The police department, the fire department, across the street from us kind of putting their hands up as we all watched the water flow past us.” The greatest loss at St. Ambrose was to the Ark, a skylighted underground community space designed by noted architect Gunnar Birkerts. For more than 20 years, the Ark had hosted weddings and funerals, graduations and fish fry dinners. Now it was awash in floodwaters; dual sump pumps were working, but the outflow pipes were so backed up that the chest-high water in the Ark merely swirled around like a giant bathtub. “The impact is truly severe,” Pelc said. “It’s not just cosmetics. It took out boilers. It took out air conditioning systems. It took out the pipe organ blowers. It took out the commercial kitchen. It took out elevators. And so as those things began to tally up, we began to see the impact of putting things back together again.” 10 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

About the same time that Pelc was pulling on wading boots, the flood alarm went off in the Grosse Pointe Park home of Charles Burke, who is the president and CEO of the Grosse Pointe War Memorial. “That was when I knew that this was going to be serious,” he recalled recently. As dawn broke on the 26th, he drove to the War Memorial, where he found the historic Alger House, the heart of the complex, lapped by a couple of feet of floodwater. “Then we went down to the theater,” a gem of a performance space only recently renovated and upgraded. “The theater had about 10 feet of water in it.” As at St. Ambrose, water was flowing in through multiple penetration points; the loss proved all but total. “The curtains were completely soaked, plaster soaked, water coming in through the ceiling,” Burke recalled. “Sunday the power went off, so sump pumps didn’t work. The temperatures were in the 90s, and on Monday and Tuesday there was mold growing. It became a very big issue. Everything became exponential at that point. Everything was damaged. Everything was buckling. We had to gut everything down to its core.” As at St. Ambrose, insurance will cover repairs and fundraising will also put the War Memorial back on a firm footing. But the trauma of losing a year or more of theater performances and community celebrations shook both Burke and Pelc badly. Asked what he felt as when he entered the War Memorial’s flooded theater that morning, Burke answered in a single word: “Despair.”

The former Patriot Theater at The War Memorial in Grosse Pointe Farms.

The Ark at St. Ambrose Church in Grosse Pointe Park.

The War Memorial President and CEO Charles Burke at The War Memorial in Grosse Pointe Farms.

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From Page 9

troit/Grosse Pointe Park border that was severely damaged by the flooding, said the web of pipes near his church “is a little bit of a rat’s nest and I’m not sure anybody knows how it all fits together. It’s a giant puzzle.” Then, too, a lot of houses still have gutter downspouts that feed directly into the home’s sewer line. Experts are trying to get all those downspouts disconnected so water flows onto lawns, not into the stormwater pipes. Better a soggy yard than an overburdened stormwater system. And the smallest things can add up. Candy wrappers and burger boxes dropped on the street may wind up clogging sewer lines. “Annually we have contracts where we clean out the drainage structures,” said MDOT’s Webb. “A lot of what we clean out is just trash and debris. Those are the things that really clog up the system.” So old and complicated are some parts of the system that some sewer lines may not even be mapped correctly. When builders of the Orleans Landing residential development on Detroit’s east riverfront broke ground a few years ago, they had to stop construction at one point because they ran into sewer lines that weren’t supposed to be there. So power outages, clogged sewer lines, and impervious landscapes all made the June storms that much worse. And to top it off, the workforce

that deals with wastewater and stormwater across Southeast Michigan is aging; experts say perhaps a third of all the water engineers and system operators may retire in coming years, and there aren’t enough younger people going into the field.

Some ways forward The first fixes in the aftermath of the flooding addressed the power failures at the pumping stations. Some stations that had been getting power from Detroit’s Public Lighting department were switched to DTE Energy’s network, deemed a more reliable source of electricity. Then, too, GLWA installed power monitoring equipment at all its stormwater facilities to detect any problems more quickly. GLWA recalibrated its instruments, installed rain gauges and level sensors in sewers, reinspected 25 miles of sewer lines, upgraded its communication protocols, and took other steps as well. “We invest a lot,” Coffey said. “We’re always upgrading. But we now have an even sharper focus on what would make the system more resilient in the face of climate change and these intense rain events.” MDOT also turned its attention to power sources. It plans to install new electrical generators at each of its 144 pumping stations along freeways in Southeast Michigan. The first 14 generators, a $10 million allotment, are in progress. It takes time because each must be individually engi-

neered for its specific site. “These are not generators where you can go out to Home Depot and buy a generator. This is big stuff,” Webb said. In Grosse Pointe Park, site of some of the worst flooding last year, the city is seeking permission from regulators to create an EERV, an Extreme Emergency Relief Valve, at the Fox Creek outflow into Lake St. Clair. The project would allow the city in emergencies to dump untreated water into the lake. “Nobody wants to do that, but it’s a fail-safe option,” City Manager Sizeland said. Better management of the existing network is also in the works. MDOT’s Webb said the agency has come to see that when pumps and pipes along, say, I-94 are at capacity, those along I-96 may still have room. MDOT is working to see if overflow can be diverted to alternative parts of its network to better manage the event. And there’s a new focus on green infrastructure, the idea of creating more pervious landscapes and otherwise keeping rainwater on the ground where it falls rather than flowing into storm drains. “Before man was so smart and built roads, there was a lot of nature around here,” said Palencia Mobley, deputy director of the Detroit Water and Sewerage Department and co-chair of a water task force for the Southeast Michigan Council of Governments. “We don’t have to build on every square inch on which we see land. We can’t keep developing.”

That, of course, is a hard sell in a region where the real estate industry is such a powerful lobby. As MDOT’s Webb notes, “Along I-94 near Telegraph we’ve set aside a big chunk of property for infiltration and drainage. But we constantly get pushback from people that MDOT needs to sell that and develop it. And when you tell them it has a purpose, they say, ‘well, we don’t see the purpose.’” Nonetheless, green infrastructure, if done across the region, might absorb inches of rainwater that otherwise would flow into the system. For individual houses and buildings, backflow preventers can be installed that would close off during storms and prevent water from backing up into basements. They run about $2,500 per valve, a big-ticket solution, but over time could save homeowners a lot of grief. And the professionals are hoping to persuade the public that sometimes a flooded road is better than a flooded basement. “You may have to go only 15 miles an hour, but it’s not coming into your home,” said Nash. “That’s the thing we’re trying to make people understand, keeping that water out of our systems.” Having faced disaster last time, the professionals are hoping to do better next time. Everybody is meeting more on the potential flooding problem, both internally within organizations like GLWA and across boundaries and jurisdictions. “If there’s a good thing that’s come out of this, I think it’s more

community collaboration between all of us,” he said.

But remember … Earlier this year, SEMCOG, the regional planning agency, hosted a panel discussion on the flooding problem. Panelists were decidedly downbeat in their assessments of what can be done to avert future disasters. For one thing, there is no easily available pot of money to expand the system. “There really is no funding for stormwater and there really is no funding for resiliency,” said DWSD’s Mobley. Along I-75 near 12 Mile Road, MDOT is installing a big new underground tunnel to handle water flows. “Yes, it’s going to help tremendously for that area,” said MDOT’s Webb. “But we can’t go putting tunnels everywhere because if you put tunnels everywhere then guess what, we don’t fix the road. It’s the same funding source. The dollar that we use for fixing underground is the same dollar we use to fix the roadway.” And even if there were billions of dollars available, some doubt it would totally safeguard the system. “Whenever you talk about increasing the infrastructure, you’ve got to remember there’s always going to be a bigger storm,” said Oakland County’s Nash. “When you build a 50-million-gallon tank, there’s going to be a 60-million-gallon storm coming up.” MDOT’s Webb agreed: “We can’t build our way out of this.”

Working to advance racial equity and economic mobility for the next generation in the Great Lakes region.

JoyceFdn.org JULY 25, 2022 | CRAIN’S DETROIT BUSINESS | 11

FLOODING COMMENTARY

Cooperation — and money — can solve water problem in Jefferson-Chalmers A

lished just two days before the storm, provides a framework for organizing while identifying three goals: 1) Keep sewage out of basements and canals; 2) Keep stormwater out of the system; and 3) Keep the Great Lakes out of the neighborhood. Achieving these goals will require a dedicated organization with professional staff. Neighborhoods like St. Anne’s, Grandmont-Rosedale, Corktown and Midtown have flourished due to their organizations focused on their progress. Comprehensive solutions developed in Jefferson-Chalmers will require significant and dedicated longterm resources, including appropriations at the city, state and federal levels, along with early and sustained support from the philanthropic community. The work will not only have ripple effects through the Detroit Water and Sewerage Department and the Great Lakes Water Authority, but can also serve as an international demonstration project for what a 21st century sustainable community should look like. Jefferson-Chalmers residents are 88 percent African-American. A third live in poverty. Aged and failing infrastructure had an even greater impact as demonstrated last June confirmed by GLWA’s independent report. “The event across the southern portions of the service area, particularly in the east, far exceeded designed capacity.” All three facilities that had failures the night of the storm highlighted by

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Rouge Project was pollus we pass the annition, the unprecedented versary of last year’s cooperation across municilate June disastrous pal lines turned a river storm and flooding, we’re most considered dead into weary from the absence of a a robust source for kayakclear, comprehensive apers to fishermen as 75 orgaproach to solving the Jeffernizations have secured son-Chalmers communinearly a half-billion dollars ty’s interconnected water in investment from governresource challenges, even Jay C. though incremental efforts Juergensen is a ment and foundations for combined sewer overflow are underway by various planning, organizations. capital program, and stormwater control projects, stream restoAt the same time, how is disaster ration, removal of tons of it that the community most recovery, public PCBs and the restocking of impacted by last year’s utility and real more than 30,000 fish. storm and flooding and estate The Rouge Project was recognized nationally for development its challenges has not re- expert. He was a born on a Friday afternoon when John Dingell’s chief ceived any direct appropri- Crain’s Detroit of staff asked what resourcations from Congress or the Business 40 es would be needed and on Under 40 in state Legislature? Monday, a direct appropriFor a model on how co- 1995 and was ation was headed to metro operation might work, you the founding Detroit. While the public need look only a little to the president of sector was the conduit for west to the Rouge River wa- Jefferson East. initial resources, the nontershed. profit alliance continues to The Rouge River Wet play the leadership role, and a deWeather Demonstration Project and cade after the Rouge Project began, the Alliance of Rouge Communities the EPA in August 2002 said, “Rouge show what an organization and reRiver Project is a Blueprint for Sucsources can do to effect measurable, cess.” remarkable and regional change and Jefferson-Chalmers is bounded by improvement across municipal Conner Avenue, the Detroit city limboundaries. its, East Jefferson Avenue and the The Rouge Project covers a waterDetroit River. The Jefferson-Chalmshed of 466 square miles, 48 commuers Water Access, Technology, Edunities and 1.4 million residents in cation, and Recreation Project (jefparts of Oakland, Wayne and Washtfersonchalmerswaterproject.org), enaw counties from Detroit to Novi that I proposed in a white paper pubto Salem. While the focus of the

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the investigation are on the east side, Freud sits within Jefferson-Chalmers and Conner is less than one block west. Great Lakes flooding along with greater-than- predicted, historically unprecedented and intense rainfall shows us the impact of climate change. Currently, lead service lines are being replaced. Examining how water moves through the community will be critical in considering green alternatives to traditional gray infrastructure. Solutions will need to take into account and involve upstream neighbors, making it also multi-jurisdictional and beyond the purview of any one agency. DWSD; Detroit’s Buildings, Safety Engineering, and Environmental Department; GLWA; Michigan Department of Environment, Great Lakes, and Energy; the Army Corps of Engineers, etc. will all have roles to play — making it multi-departmental at every level of government across municipal boundaries.

Breaking down bureaucratic, programmatic, and funding silos to address the intersectionality of these challenges must be the cornerstone. Gary Brown’s comment about GLWA’s report should be lauded, but it’s also important to note that for the $2.75 million spent on the report, you could buy a mile of seawall along Fox Creek. And, while residents are organizing, they should be supported in those efforts with funding sources asking how they can help. A Jefferson-Chalmers water project, similar in scope and scale to the Rouge restoration, is large enough so that any and every interested stakeholder — residents, businesses, elected officials, public agencies, nonprofits — can have a seat at the table, working in an unprecedented collaboration seeking solutions that will unlock economic opportunity. The experience with the Rouge suggests a model for how that can happen.

COMMENTARY

‘I still have nightmares’: Navigating $40K in damage

Why is this brown? What am distinctly remember the I smelling? How many stairs phone ringing at 4 a.m. on are underwater? What am I June 26, 2021. “Is there going to wear?! I had recently water in your basement?” suffered a major back injury my neighbor asked. “No! Of and kept my entire wardrobe course not. Why would in the basement so it was there be?” I responded, half easy to access. in a daze and still not fully The first call I made was to comprehending what they my other neighbor, asking were asking. Then the two Sarah Feldman her to bring me something to words, “go look,” hit me. I is a resident of wear. Then I called my parstumbled out of bed, half- East English clothed since it was summer, Village in Detroit. ents in Arizona. Even after and walked to the top of the She currently almost 40 years, they are alstairs. I still have nightmares works for E. ways my go-to when someabout this moment. thing major happens. This Warren I remember the sound of Development call happened to be the best gurgling before my eyes Corp., a decision I could have made even adjusted. As I looked community and because not more than an into the basement, it took economic hour later, our cell and intermy brain a minute to catch nonprofit. net service went down. What up with what was in front of I didn’t realize was behind me. The first thing I rememthe scenes, my family was ber was my dehumidifier, completely booking restoration services and callsubmerged yet still running, shooting a ing friends to see who could lend a brown stream into the air like a foun- hand. Not fully understanding the extent tain. Then the two cat litter boxes went floating by. A storm of questions flood- of the storm, I attempted to drive and ed my mind. Where were the cats? buy a pump; however, as I started to 12 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

enter the freeway, I quickly realized I was going nowhere. All I could see were the tops of cars. Many cars. I backed up and was forced to drive home. As time passed that day, the facts started to set in. I had almost 3 feet of raw sewage and water in my finished basement. All of my neighbors were in the same position, many of whom had never seen water intrusion in their homes. Everything in my basement was a total loss. The next few months proved to be some of the hardest of my life. Navigating through insurance, FEMA, and the city was exhausting. I had over $40,000 in damage, and while I was fortunate insurance provided something, it wasn’t near enough to recover and rebuild. Dealing with FEMA was a whole other experience. Between phone and in-person interviews, I had over 10 interviews, each time reliving the experience and repeating everything that happened. In the end, they provided about 5 percent of funding toward the disaster. Working full time in education, while running my own business,

was already a full-time job. Adding the component of having to be available for drop-by visits, contractors, and repairs was a jigsaw puzzle I was not prepared for. However, even in this challenge, I could not have asked for a more supportive network of friends and neighbors willing to jump in and help one another. From wading through sewage to turn off the main power, to hauling out hundreds of square feet of soaking carpet, to dropping off meals, clothes, gloves, and cleaning supplies, I am tru-

ly grateful and blessed for everyone who had a hand in helping hold me together. Today, my neighbors and I are still trying to put our basements back together. We still haven’t had accountability from anyone, but we’re pushing forward. Each time the rain starts, our anxieties are heightened. This storm changed the way many of us live our lives. Will I ever store anything of value in the basement again? Absolutely not. But will I move forward? Absolutely. It’s the only option.

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Together we can address ‘climate resiliency’ R miles of local combined ain events are becomsewer collection pipes ing more intense with maintained by the Detroit higher volume. In the Water and Sewerage Delast decade alone, three of partment. Third, the 200 the highest volume rain miles of sewer pipe, pumpevents in Detroit are in the ing stations, nine wet top 10 of all flooding in the weather facilities, and the past 50 years. wastewater treatment plant Most existing infrastrucoperated by the Great ture was not designed to Gary Brown is Lakes Water Authority. handle this type of rain vol- the director of Detroit and some parts of ume. After what we have ex- the Detroit southeast Michigan have perienced here in Detroit Water and combined sewer systems, and southeast Michigan, I Sewerage whereby sanitary sewage believe we can all agree that Department. and stormwater from rain we must invest in climate and snowmelt are collected resiliency and do so in a phased approach to reduce the cost in the same pipe. There are many impact on ratepayers. Together, re- suburban cities that have separate gional and local entities along with pipes for sewage and stormwater as private owners can take measures to these communities were built after Detroit constructed the sewer system. become more climate resilient. In response to the three intense We first must recognize there are three parts to the sewer system. First, rain events in 2021, DWSD investithe sewer and stormwater infrastruc- gated hundreds of miles of city sewer ture on private property, which in- and cleaned more than 500 miles of cludes the gutters and downspouts, local sewer collection pipe that had drain tiles, parking lot drainage on trash and other debris inside them commercial property, and sewer lat- from the storms. In the last three eral service line(s) coming from the years, DWSD has lined or replaced house or building. Second, the 3,000 more than 60 miles of local public

sewer in Detroit. This spring, we launched the Basement Backup Protection Program for 11 Detroit neighborhoods that historically see sewer backups. We are helping homeowners protect their property from future flooding by installing backwater valves. DWSD is also seeking additional grant funding to extend this program beyond the currently identified neighborhoods. Also, we recently endorsed a warranty program with American Water Resources for water service line and sewer service line protection at single family homes. We encourage businesses to have a master plumber perform an audit at your property to consider stormwater management measures. In Detroit, we have a post-construction stormwater ordinance, passed by city council in 2018, that requires developers of properties of 0.5 acres or more to create measures that manage stormwater onsite. And, when you remove impervious acreage, we have credits available on the drainage charge. Where do we go from here? In the next five years, more than a billion

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NICK SIZELAND, CITY MANAGER OF GROSSE POINTE PARK

COMMENTARY

dollars will be invested into our water and sewer systems in Detroit and throughout the region. This will be further accelerated by the Bipartisan Infrastructure Law passed by Congress in late 2021. This federal funding is essential in making sewer infrastructure improvements while limiting the impact on the rates you pay. Short-term efforts must focus on private and public sewer cleaning and inspection of private and public sewer assets. Mid-range efforts can include sewer pipe rehabilitation to extend the useful life as well as stormwater management projects including bioretention gardens and pervious pavement. Residential and nonresidential property owners should disconnect their downspouts from the sewer system and redirect the rain onto lawns and gardens as

an immediate measure to reduce flooding. In the long-term we must look at opportunities to hold rainwater flows and redirect stormwater during major rain events. To maximize dollars, we need to determine where the long-term upgrades should take place to have a significant benefit. Just recently, DWSD started a $40 million stormwater improvement project in far west Detroit near Rouge Park that will remove 98 million gallons of stormwater annually out of the combined sewer system by installing two new detention basins inside the park. Utilizing existing green space to better manage stormwater is a key component of becoming more climate resilient. Together, we can reduce the impact of these intense rain events.

COMMENTARY

MDOT invests to mitigate flooding

needed to operate the s Gov. Gretchen pumps. Whitmer has obMost of the pump staserved, catastrophic tions in Metro Detroit date weather events, like those to 1960 or even earlier. that have overwhelmed MDOT began rehabilitating drainage systems and these pump stations in earflooded Detroit freeways in ly 2000 and the work is conrecent years, are a result of tinuing. climate change. As she also Even while working on has observed, it will take a Paul Ajegba is the permanent installagreat deal of investment to director of the tions, MDOT staff have rebuild transportation in- Michigan done a number of things to frastructure to be resilient Department of mitigate freeway flooding: and withstand what we Transportation.  Working with the Southknow will be more of these east Michigan Council of events as a warming planet Governments, MDOT staff develsparks more volatile weather. This is why the Biden administra- oped a GIS map identifying frequent tion and U.S. Department of Trans- flooding locations. The map is a basis portation under Secretary Pete Butti- for mitigation plans. gieg have put an emphasis on  MDOT deploys generators near frerebuilding for resiliency, but we also quent flooding areas in advance of a know that state and local road agen- significant rain event. MDOT owns cies will need to invest with that in two portable generators and is rentmind, too. This is an enormous chal- ing another. The Wayne County Delenge that one-time investments partment of Public Services also has won’t address. This calls for an ongo- four generators available to deploy, ing and continued investment strate- making seven portable generators available, an increase of five in 2022. gy. Toward that end, the governor  MDOT staff members are working asked Michigan Department of with DTE to have the most frequent Transportation officials to capitalize flooded pump station locations deon $10 million in Infrastructure In- clared as Community Sensitive. This vestment and Jobs Act reimbursable makes them a priority during power funds and $66 million in federal outages. American Rescue Plan funds to in-  MDOT stages a traffic trailer at strastall permanent standby generators tegic locations in advance of a signifat pump stations that help remove icant rain event, allowing for faster water from freeways. Some massive closure of ramps and roadways. storms have produced what should  Special contracts are in place for be 500-year — if not 1,000-year — additional catch basin cleaning in deluges and flooding events, causing the frequent flooding areas. I want to underscore that adding utility companies to lose the power

generators to the pump stations will yield tangible rewards but is not a comprehensive solution. During some major rain events, the combination of power outages — and lack of creeks or rivers to take in the water — caused the flooding. Even when MDOT crews pumped water with generators, with no available outlet capacity, water was coming back to the system, especially on busy I-94 at Michigan Avenue. There was simply no place for the water to go. Because of the commitment of Whitmer and some vital assistance from President Joe Biden and Buttigieg, through the Infrastructure Investment and Jobs Act and other federal programs, MDOT is making large-scale investments to maintain mobility during future heavy rains. At the governor’s urging, my staff inked an innovative design-build contract to add generators to 12 of the 19 critical pump stations. Phase II pump station generator design-build contracts are expected to be advertised in the fall with an estimated $60 million in additional investment. We expect drainage investment within other projects from 2015 to 2026 to total $400 million. This includes the unique $200 million I-75 modernization project drainage tunnel in Oakland County. At MDOT, our highest priority is the safe and efficient travel of the public whether you are commuting to work or delivering vital goods. I assure you these investments will help us meet that mission.

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HOMES

From Page 1

In a city that has long been known for its cheap housing stock following the aftermath of the Great Recession, there is also an “important psychological benchmark, of course,” in hitting $100,000, said Jeff Horner, an associate professor of teaching in the Department of Urban Studies and Planning at Wayne State University. “Any time housing valuations are going up in the largest poor city in America, it’s going to be good,” he said. There are a lot of reasons for the

increase, including inflation, a dearth of new construction and high demand for housing. Horner also credited the city’s land bank with eliminating many of the lowest-value houses, either through demolition or by selling them. The Detroit Land Bank Authority’s own Rehabbed & Ready program has worked to improve values in certain neighborhoods and others have bought land bank houses to refurbish them. Esmat Ishag-Osman, a research associate in the Detroit bureau of the Citizens Research Council of Michigan has seen it himself. He and his wife bought a $1,000 land bank house

in the city’s Greenfield neighborhood last spring. After $93,000 worth of renovations, they’re in the process of selling it for $107,000 to a woman with a child who plans to live in the house. Two of his cousins have sold four other homes in the city for more than $100,000 as well, Ishag-Osman said. Since he started working on the home, he said neighbors have improved their properties and yards. They comment on how happy they are that work is being done on their block. “The psychology of that, we saw it directly,” Ishag-Osman said. “The comps in that neighborhood have increased, equity has increased. It is

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14 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

said a strong Detroit helps lift the rest of the region. “It’s good for Detroit; it’s good for the surrounding area, too,” he said. “It’s synergy. They’re all lifting each other up.” Tozzi owns duplexes in the city. While he said many landlords sold their homes to owner-occupants, he said he expects investors to continue to buy up Detroit homes, even as prices rise, because the rate of return is so promising. That will likely lead to higher rents for tenants, he said. Austin Black III, an associate broker with @properties Christie’s International Realty, said rising values are “definitely a big deal.” Black said he is seeing more owner-occupants in Detroit. People are buying homes as primary residences, he said, and stabilizing communities. For years, Black said, homeowners worried about over-improving their houses — spending more on them than they were worth — but higher values make those homes feel like good investments. “There was a period of time when it was all about the $1,000 house in Detroit,” he said. “That helps shift the narrative a lot. The city is a good place to live and own a home. We continue to build the momentum.” While a lot of houses are still being sold for less than $100,000 — after all, it is a median price — the figure helps show Detroit “isn’t as distressed as it was 10 years ago,” said Paul Isely, associate dean of the Seidman College of Business and professor of economics at Grand Valley State University. “I think this is exciting news for Detroit,” he said. “It’s now in record territory.” Houses in the city are selling more quickly than they had been, too, and with higher prices, it gives potential buyers more confidence that if they purchase a house, they’ll be able to sell it and get their money back — or even make a profit, he said. Isely said Detroit may even be able to use the higher-but-still-low values as a competitive advantage for attracting economic development. And he said that while there are still affordability issues, buying a home should not be out of reach for the average Detroiter. After years of big falls, he said, it’s good to see values rising at a quick clip, as well. “There’s a sense that it’s moving forward, and if something’s moving forward, it’s something worth taking a bet on,” he said. “When you start seeing six figures, it starts changing your thoughts about it.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

Total sales (units) June 2021

June 2022

City of Detroit

424

381

-10.1%

Wayne County

2,094

1,784

-14.8%

Macomb County

1,398

1,293

-7.5%

Oakland County

Percent change

2,206

1,856

-15.9%

Washtenaw County

553

488

-11.8%

Livingston County

336

288

-14.3%

Median sales price

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what the city needs.” At the same time, he said, hitting the $100,000 threshold isn’t a panacea to Detroit’s housing issues. There are still problems with affordability and evictions, he said, and the top-line number “might provide a false sense of comfort about what’s going on in the city” when there is still a lot of work to be done. There are still many vacant homes that need to be rehabilitated, said Chase Cantrell, the executive director of Building Community Value. But it’s hard to get a loan to fix up a low-value house, and there aren’t enough contractors, he said, to do the work. While higher values might help residents get equity out of the homes they live in, Cantrell said there is still a racial disparity in the city regarding who has access to mortgages. And as more investors bought property in the city — turning homeowners into renters — there are fewer long-term residents who stuck it out and can now benefit from higher values. “It’s nuanced,” he said. “Detroit is less of a risk, but it’s not like a light switch just flips. It’s going to take time before we see any benefits.” He said he would expect the $100,000 figure to make a difference from an outside perspective, including possibly for lenders who may see the worth in writing higher-value mortgages in Detroit. But Cantrell noted values are rising in areas where white residents are moving in. “The market doesn’t value Blackness,” he said. And higher values highlight other problems, said Sherita Smith, the vice president of community development for Cinnaire, a nonprofit Community Development Financial Institution. Detroit’s high tax rate compared to other local governments penalizes people for living in the city, she said. While Smith said the appreciation is good, she added that it showed the need to address some of the city’s systemic issues, such as its tax rate. Still, she said, higher sales prices and appraisal values are being noticed by residents. Especially since home values fell by 87 percent between 2003 and 2009, she said, a 38 percent yearover-year increase is something to celebrate. And for homeowners, it can make a real difference. “It’s just been so disconnected from the economic mainstream,” Smith said of the city. “I definitely think it’s a lift. We know intrinsically that it has value. It’s always great to see it validated. As property values appreciate, it should be reflected in the equity folks have in their homes.” Gino Tozzi, an associate broker at Real Estate One in Clinton Township,

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

Percent change

June 2021

June 2022

City of Detroit

$72,500

$100,250

Wayne County

$185,000

$217,500

Macomb County

$220,000

$252,500

Oakland County

$322,500

$355,000

Washtenaw County

$361,098

$375,000

3.8%

Livingston County

$345,000

$358,000

3.8%

SOURCE: REALCOMP

38.3% 17.6% 14.8% 10.10%

HUMANETICS

From Page 1

Highway Safety. Still, federal crash safety tests do not require use of a dummy representing the average female. All this weighs on the minds of engineers and executives at Farmington Hills-based Humanetics Group, where crash test dummies of all shapes and sizes come to life in Frankenstein-like fashion. “Initially, the dummies were designed to prevent death, so you’re just looking at, ‘OK, does the head stay on?’” Barney Loehnis, president and chief marketing officer of Humanetics, said during a recent tour of its headquarters and testing facility. The science has changed dramatically. Crash test dummies have grown from crude plastic manikins to million-dollar, biofidelic dummies made up of dozens of load cells and sensors measuring impact with precise detail. The testing and manufacturing environment has become far more sophisticated, too. Humanetics moved five years ago from its medieval torture chamber in Plymouth as it were, to a more technologically refined torture chamber in Farmington Hills. Most of the raw materials that make up the dummies are made in the company’s manufacturing plant in Huron, Ohio, before it heads north. “We do the instrumentation and integration here — the brain and nervous system of the dummy,” Loehnis said, strolling the 100,000-square-foot plant. Within its global headquarters, 210 employees work to turn the dummy shell into a final product that is shipped primarily to OEMs and aerospace companies. First, engineers design the gauge load cells, which are then manufactured on site by precision machinists and passed along for instrumentation, which takes 70 hours under a microscope per cell, operations manager Dave Danes said. Along the back of the facility, engineers put the cells through tests that measure force and impact in a variety of ways such as dropping anvils onto various plastic limbs strewn about the plant. Upstairs, a separate team of computer engineers skips the spectacle as they create digital twins of the dummies — a steadily growing aspect of the business. Like the mad scientists piecing together dummies, the private equity owners of Humanetics have grown it into a juggernaut by bolting on different types of businesses and acquiring smaller competitors. In the past 10 years, the company has tripled in size to more than $300 million in revenue and 850 employees worldwide. The company traces its origin back to the late 1940s when Sam Alderson made a safety test dummy for the U.S. Air Force in Connecticut. Around 30 years later, Robert Denton launched a sensor manufacturing shop in Detroit. Iterations of the two companies eventually met in a merger between Denton and First Technology Safety Systems in 2011, when the company became Humanetics. Owned by Bridgepoint EU, the company is composed of three main business units — physical dummies, digital dummies and fiber optic sensors — each of which generate a roughly equal share of its revenue. Loehnis said the company has maintained a double-digit growth percentage for the past several years and that more acquisitions are in sight this year. It faces some competition — Switzerland-based Kistler Group, which

Old crash test dummies are pictured on display at Humanetics in Farmington Hills. | NIC ANTAYA | CRAIN’S DETROIT BUSINESS

Traffic deaths jump The traffic fatalities in the following categories showed relatively large increases in 2021, as compared to 2020:

16% x

Increase in fatalities in multi-vehicle crashes

16% x

Increase in fatalities on urban roads

14% x Increase in fatalities among drivers 65 and older

13% x

Increase in pedestrian fatalities

13% x

Increase in fatalities in crashes involving at least one large truck

11% x

Increase in daytime fatalities

9% x

Increase in motorcyclist fatalities

5% x Increase in bicyclist fatalities 5% x

Increase in fatalities in speeding-related crashes

5% x

Increase in fatalities in police-reported, alcohol-involvement crashes SOURCE: NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION

has a base in Novi, is a challenger — but Humanetics has automotive market dominance, Loehnis said. “We continue to buy companies we think are going to add value to the business,” he said, declining to elaborate on future deals.

New generation The company’s latest generation of crash test dummies looks nothing like Sam and Susie, the original, sensor-less dummy prototypes. Launched in 2015, the THOR (test device for human occupant restraint) models are equipped with 80 censors and 150 channels of data for crash responses of body parts ranging from the neck and thorax to pelvis and femur. THOR is the update to Humanetics’ previous model, Hybrid III, a comparatively unsophisticated dummy with a fraction of the sensors and far less biofidelity, Loehnis said. The Hybrid dummy became the industry standard when the National Highway Traffic Safety Administration formed in 1970.

It is still the standard, despite it being decades old and the availability of superior testing technologies. Loehnis said the THOR model had been set to be the new federal standard around seven years ago but was shelved by the Trump administration, which favored less regulation. THOR has already been adopted by Europe, China and Japan. NHTSA has said it plans to update the dummies but has not specified when. “NHTSA is working to improve the reliability of a new set of more human-like dummies for use in crash tests,” a spokesperson said in an email. “NHTSA is working as expeditiously as possible and looking for ways to speed up these important efforts.” Although THOR is not in the driver’s seat for federal crash tests, there is a high demand from automakers for the most advanced technology. Humanetics supplies every automaker across the globe, Loehnis said, and most of them use THOR. “A lot of automakers in the U.S. want to test with it because it’s a better device, and it gives them more data,” Loehnis said.

often-overlooked inequity in the area of vehicle safety: the gender-based discrepancies in traffic injuries and fatalities that are in part attributable to the absence of female crash test dummies in the current crash test system,” the letter said. “Ultimately, omitting crash test dummies that reflect women inhibits complete information gathering and produces inaccurate vehicle safety performance evaluations.” NHTSA said it plans to issue new proposed regulations with specifications for a new female crash test dummy in the next year. “Gender disparities in outcomes of traffic crashes are unacceptable, and NHTSA is dedicated to solving this problem using all the tools it has — including ensuring stronger safety standards and an updated and more effective set of NCAP (New Car Assessment Program) standards, as well as using high-quality computer simulations and crash dummies,” the administration said. Even as regulation lags the technolo-

gy available, Humanetics is working on newer generations of dummies that it predicts will become the standard years down the road. It has poured millions of dollars into prototyping THOR AV, a dummy designed with a flexible pelvis to accommodate multiple body positions within an autonomous vehicle. “The industry knows that they need a solution for autonomous vehicles where you’ve got people reclining or sitting backwards,” Loehnis said. On the computer side, the technology is evolving beyond digital dummies used in simulated crash tests. Engineers are now starting to model the actual human body. While the process is complicated and time consuming, it is expected to eventually be done at scale, Loehnis said. “I think we see the digital and physical as growing together,” he said. “You’ll always need a physical validation of your simulation.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

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Crash bias THOR’s female counterpart, THOR-5F, is a vast improvement over female dummies of the past because it resembles the average female build. Previous female dummies were basically just scaled down versions of the males, Loehnis said. “Women have different physiology, less muscle structure, a different bone structure and different fat distribution,” he said. “It is important to test for different sizes of occupants and also to understand how they respond differently to different injuries.” The female dummy is designed with sensors where women are most vulnerable to injury in a car crash, such as the neck, legs and abdomen. It also has a lower pelvis than the male dummy, which is important in measuring how a seat belt engages differently with a female in a car crash. Despite the differences, automakers only need to pass federal crash safety tests with a standard male dummy at 5 feet 9 inches and weighing 171 pounds. That standard was set in the 1970s, when the average man weighed less. NHTSA did not introduce female dummies, which are just scaleddown versions of the male, into crash tests until 2003. And at 4 feet 11 inches and weighing 108 pounds, they are also significantly smaller than today’s average female. There has been a recent push to address the inequality in crash safety tests. U.S. Rep. Brenda Lawrence, D-Southfield, and 65 other House members sent a letter last year to the Department of Transportation, urging it to update crash-test standards. “We write to call your attention to an

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HAMTRAMCK

From Page 3

That’s why immigration is the overarching theme of the nonprofit museum, which opened in 2013 and showcases exhibits for all nationalities that reside in Hamtramck, most notably a 150-foot mural. “Each panel of the mural represents (an) ethnic group that has come to Hamtramck through the centuries,” he said. “The (Indigenous peoples), the French, the German, the Polish, African American, Ukrainian, Albanian, Yemeni, Bosnian and Bangladeshi.”

A history of change The history of Hamtramck has been inexorably tied to the auto industry. In 1910, the Dodge brothers decided to build an automobile parts factory in Hamtramck, a city the size of two-square miles with a population of about 3,500 German farmers. Polish immigrants flocked to the town for work and the population grew exponentially. At its peak in 1930, Hamtramck had a population of 56,268 residents, approximately 83 percent of which were of Polish origin, according to Kowalski. In 1981, General Motors razed a working-class neighborhood on the Hamtramck and Detroit border known as Poletown, with Polish and African American residents, to provide space for a new assembly plant. The 465 acres needed for the factory contained 1,500 homes, 144 businesses and 16 churches, the Detroit Historical Society says. While most residents agreed to sell their homes and businesses, not everyone wanted to leave. After protests and demonstrations that attracted national attention, the government won a landmark case in the Michigan Supreme Court that allowed Detroit and Hamtramck to claim eminent domain and transfer the land to GM, according to the State Bar of Michigan. The Detroit-Hamtramck Assembly Center opened in 1985, providing only half of the promised 6,000 jobs, due to the use of automation. Eventually it was phased out in 2020, before a lengthy retooling that resulted in the Factory ZERO Detroit-Hamtramck Assembly Center, the automaker’s first dedicated all-EV facility. Since the GM factory was build, the Polish population in Hamtramck has sharply declined over the past few decades, according to data from the U.S. Census Bureau. In 2010, 14.6 percent of the Hamtramck population identified as having Polish ancestry, while, in 2020, only 6 percent identified the same way. The city’s total population dropped to 18,000 in 1990, but in 2000 the population suddenly rose to 24,000 due to an influx of immigrants from across the world: Russians, Albanians, Yemenis, Bangladeshis, Bosnians, Filipinos and many other ethnic groups were making their way to Hamtramck. Now, with a population of less than half of its peak, Hamtramck continues to have the largest percentage of immigrants in the state of Michigan — something locals boast about as the ethnic makeup of the city changes. Al-Noor Supermarket, owned by Rafeeq Ahmed Essa, opened at 8842 Joseph Campau Ave. three years ago, and is one of many international food stores that has appeared in Hamtramck over the past decade. 16 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

Executive Director Greg Kowalski poses for a portrait at Hamtramck Historical Museum in Hamtramck. | PHOTOS BY NIC ANTAYA/ CRAIN’S DETROIT BUSINESS

Owner Carolyn Wietrzykowski poses for a portrait at Polish Village Cafe in Hamtramck earlier this month.

Polish Population in Hamtramck, 1960-2020 Hamtramck’s Polish population has dropped to 5.9 percent. Thirty years ago, almost half of the city’s residents identified as having Polish ancestry or being of Polish origin. Percent of Total population Polish population population 5,428

1960 1970

9,208

1980

9,244 8,503

1990 2000 2010 2020

34,137 27,245 21,300 18,372

1,392 3,265 1,294

15.9% 33.7% 43.4% 46.3%

22,976 22,594 21,704

6.1% 14.6% 5.9%

SOURCE: U.S. CENSUS BUREAU

“He likes Hamtramck because the community here is all Yemeni,” Essa’s son, Ayad Mazeb Essa translated. “He chose Hamtramck because he doesn’t speak English and so many of the people here speak Arabic.” Despite the variety of international food stores, Essa said business is well because of the community makeup. Imad Algahmi, manager of the Al-Haramain International location in the Town Center Plaza at 9027 Joseph Campau Ave., said that the business had to expand because of the demand owners were facing at the original location at Caniff Street. The supermarket sells fresh goods, meat, spices,

herbs and kitchen essentials in the style of a traditional Middle Eastern “souk,” according to its website. “It brings in all types of people from Bangladesh, Yemen, Albania (and) Poland to Hamtramck.” Algahmi said.

Embracing the differences The city’s slogan is “The world in two square miles.” With such a diverse history, it’s not surprising that Hamtramck is home to many different types of cuisines, traditions and events, including the Paczki Day Festival and the Diversity

Festival, held annually by the Bangladesh Association of Michigan. Students in Hamtramck schools cited 23 different countries of origin in a 2014 report from the district; Fewer than 45 percent said English was their primary language. In January, Hamtramck made history by becoming what is believed to be the first city in the U.S. to have a Muslim mayor and all-Muslim city council. Amer Ghalib, a Yemeni-American health care worker, defeated fourterm mayor Karen Majewski for the seat in the November 2021 election. It was the first time in 100 years that a non-Polish mayor has led the city. Ghalib did not respond to requests for an interview. Majewski, who owns the Tekla Vintage boutique at 900 Joseph Campau Ave., said that the types of businesses in Hamtramck have always reflected the makeup of the population. “Naturally, you’ll have more Yemeni businesses (and) Bangladeshi businesses opening up because there’s a community that needs their services,” Majewski said. “(With) fewer Poles and Polish Americans living here, naturally you don’t see a lot of new Polish businesses opening up.” Majewski says that many of the Polish businesses that remain, and the newer businesses owned by people who have more recently immigrated to the city, are “legacy businesses” which attract commerce outside the city. “Folks come here to eat at Yemeni restaurants, they come here to shop at other kinds of ethnic businesses that may not reflect their own ethnicity,” Majewski said. “The draw of ethnic commerce and immigrant commerce is really important to Hamtramck’s economy in general…I think the combination of businesses that reflect those different ethnicities is part of what draws people here.” Among the most well-known of the newer generation of businesses is the Yemen Café at 8740 Joseph Campau Ave. Manager Tareq Murshed said that eight years ago, the café had to upgrade to a larger building because they were experiencing more demand than they could keep up with.

Murshed said that the menu has also expanded since the move, now including chicken wings and tenders alongside Yemeni and Middle Eastern favorites — though the “fahsah,” a traditional soup dish, is still one of the most popular options. “It’s one of the most famous dishes here,” Murshed said. “So many people will get it so we’ll (prepare) two or three lambs a day…we have to prepare so much lamb just because we know it’s gonna sell.” Murshed said customers of Yemen Cafe are both residents of Hamtramck and people traveling to Hamtramck to eat at the restaurant. “It’s like you get a mixture of everybody,” Murshed said. “You’ve got Yemenis, you’ve got Black people, you’ve got white people, you’ve got Pakistanis, you’ve got all types... So it’s nice serving customers and talking to them about their day or their life.” Wietrzykowski, the owner of Polish Village Café at 2990 Yemans St., says both the small size of Hamtramck and the bond of sharing food, help to spread awareness between people of different cultures. “When you live so close to somebody, you start to appreciate things about their food or culture that you enjoy,” Wietrzykowski said. “So I think in that regard, all of the cultures kind of stay alive…something that was so strange is now not so strange and it’s wonderful and yummy and I think that’s part of why the restaurants are one of the thriving (businesses) (because) we associate so much (with) food.” As Hamtramck drifts from its distinction as a Polish city, what keeps people returning to, and living in, Hamtramck is the diversity of the city, she says. “(Hamtramck) is basically an immigrant experience, which I think is important for people to remember,” Wietrzykowski said. “There (were) people here before Polish people and there are people here after Polish people.” Contact: anna.fifelski@crain.com (313) 446-0458; @annafifelski

MORTGAGES

From Page 3

In short, the rising interest rate environment that’s been playing out over the last few months as the Federal Reserve tries to cool demand has not yet caught up with the real estate environment of the last two years or more. The COVID-19 pandemic helped fuel a home-buying and refinancing frenzy, due largely to the rock-bottom rates being offered at the time. Now those days are over. Homebuilders, Smith points out, are also feeling inflationary and supply chain pressures, adding to the storm. Smith told Crain’s he hopes it’s a temporary situation. “I think everything will sort of correct itself in time,” he said. “But it’s going to take time for the interest rate environment … to catch up with the real estate environment.”

Falling demand Amid that mismatch, demand for mortgage loans Smith has fallen greatly from the peak pandemic years of 2020 and 2021, when loan origination volume topped $4 trillion. The MBA’s Mortgage Composite Index, which measures mortgage loan application volume, two weeks ago decreased 6.3 percent on a seasonally adjusted basis from one week earlier, putting the index at its lowest level since 2000, according to Joel Kan, the MBA’s associate vice president of economic and industry forecasting. In a statement, Kan said buyer demand has been hampered by high inflation, affordability challenges and a weakening economic outlook. The decrease in mortgage applications, he said, is in line with slower building activity as home builders deal with higher costs, materials shortages and reduced buyer traffic. Refinancing, usually done during a period of lower interest rates, is 80 percent lower than the same week one year ago, according to MBA data.

‘New normal’ The current environment has mortgage industry veterans like Tim Ross feeling like they’re walking straight into a strong rainstorm with the wind in their face. Ross, CEO of the Troy-based mortgage banking company Ross Mortgage Corp., said he’s also feeling the mismatch of shrinking loan volume alongside still stellar demand for housing.

ers, his company has had to lay off staff in recent weeks, after having beefed up for the boom years. David Hall, president and CEO of rival Troy-based lender Hall Financial, said the rising rates have made for a shock to the system, but something consumers will adjust to. “I think that people just have to get used to the new normal,” Hall said. “And anytime rates go up quickly or down quickly, people just have to get their arms around that. There’s a certain digestion period.”

Demand is there At the local level, Bob Filka is still optimistic about housing trends. Filka, CEO of the Home Builders Association of Michigan, said that despite a 13 percent year-over-year reduction in new single-family permits through May, he is projecting building will increase even more than originally predicted through the end of the year — absent a recession. “The underlying economics at this time are positive for our industry,” he said. “We’ve done quite well with higher interest environments; that’s not going to be the underlying issue. The demand and need for housing is there and our model shows the need is there.” Filka said while some demand has waned as people watch economic conditions, he expects there will be more workforce housing built to satisfy the needs of residents. That, he said, is “one of the bright spots I see from all this chaos.” Tina Dhariwal, a senior analyst with Anderson Economic Group in Chicago, said rising interest rates and homes that are selling for more than they are worth are driving down demand. Redfin data from metro Detroit shows just more than 40 percent of homes had multiple offers in June, down from close to 69 percent just the month before — and the year before. Existing home sales nationally were down 5.4 percent in June, according to the National Association of Realtors; that number in Southeast Michigan was 11.4 percent lower in June than the year before, according to data from the multiple listing service Realcomp. At the same time, the region’s median sales price of $260,000 was 8.8 percent higher than a year prior. And the $275,000 median sales price in metro Detroit is higher than it’s ever been.

Gaps in the system

The gaps in the system continue to widen, said Mike Kingsella, "IT’LL TAKE A GOOD LONG TIME FOR CEO of Up for DETROIT TO CATCH UP TO ITS HOUSING Growth. He said the cost to build NEEDS." continues to rise, — Mike Kingsella, CEO, Up for Growth as materials and land prices be“There’s no question that people come more expensive and commuhave pulled back from the nities expect impact fees or other home-buying decision because of payments to allow growth. That rising interest rates, coupled with comes as home prices jump and inhigh prices,” Ross told Crain’s. “They comes fail to keep pace. have taken a step back, but there is “You have real housing needs on still such a demand for housing that one hand and housing needs the we’re not seeing a reduction in new market can deliver, and you’ve got a mortgage opportunity or applica- gap between the two,” he said. “It’s the economic disconnect. ... You tions because of a lack of demand.” Rather, people are largely delay- still have more buyers than available ing those decisions, Ross said. He homes.” In Detroit, where homes are still acknowledged that like many lend-

Demand for mortgages has dropped lower than at any time during the Great Recession, while a severe housing shortage in Michigan and beyond continues to choke the availability of existing homes, driving up prices. | BLOOMBERG

being demolished, Kingsella said uninhabitable units are a big part of the problem. More than 60,000 units are uninhabitable, the study said. Often, Kingsella said, the cost to rehabilitate those homes is more than they are worth. But if those houses are fixed up, he said, they could solve a lot of the city’s underdevelopment problems. Still, he said, “it’ll take a good long time for Detroit to catch up to its housing needs.” The challenges are national in scope and Robert Dietz, the chief economist at the National Associa-

tion of Home Builders, said builder confidence declined for the seventh straight month — now lower than at any point since tracking started in 1985, save April 2020. High materials costs have driven new home prices 35 percent higher than they were before the start of the pandemic, he said, and building is taking longer. Dietz said there is a “really dramatic lack of home inventory” that is causing some people to shift back toward renting. Paradoxically, that’s good for some builders — namely, those who build single-family rental properties, a group

that now makes up 10 percent of national home starts, triple its historical norm. Dietz said while the NAHB calculates its under-building numbers differently, he thinks Up for Growth’s figures are realistic. And he thinks it will get worse before it gets better. “We are clearly in a housing downturn,” he said. Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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THE CONVERSATION

Michelle Sourie Robinson fights to build wealth among minorities Amid protests over George Floyd’s death at the hands of Minneapolis police two years ago, major companies in Michigan and around the country made commitments to improve diversity. As president and CEO of the Michigan Minority Supplier Development Council, Michelle Sourie Robinson’s job is to make sure they keep those promises. Robinson, 54, believes the most efficient way to build wealth among minorities is to funnel capital to companies operated by and within those communities. Robinson thinks corporations are failing on this front for a variety of reasons, and evidenced by the council’s ongoing legal feud with the Piston Group LLC, she isn’t afraid of a fight. The following conversation has been lightly edited and condensed. | BY KURT NAGL  How did you get your start? It was the mid-’90s when I started as an attorney. I was corporate counsel for Walmart — the youngest and first African American corporate counsel. So back then it was like 14 people. Today, it’s 150 or so. It’s totally changed, but I learned from some of the best in that role. I have always been an innovator, so it was an opportunity for me to go in and take something like product liability and create a flowchart and teach them how to minimize the risk and teach the store associates really what they needed to do. But I found that it opened many doors for me … From there I went to the Home Depot.

gap and the fact that it’s costing us about $8 trillion in GDP when you look at money that we’re leaving on the table as a nation because we haven’t figured this out, it’s astonishing.  How are companies in Michigan performing? We would not have supplier diversity programs the way we do if it were not for industries primarily represented here, like the automotive industry that literally created joint ventures and second tier reporting where you report your downstream spend with your suppliers and buyers. Those things came from the automotive industry, so I don’t fault them because they went in and they tried to create tremendous growth by testing and trying models. They must be reinvigorated, however... Many of the gains that they helped the industry make, they’re being bypassed by other industries. It’s not because I think the senior executives don’t care. I think they don’t understand the power of supplier diversity.

 Was that role centered on diversity issues? Had nothing to do with that. I moved into supplier diversity only to go help problem-solve because they needed to figure it out, because at the time, Home Depot was trying to become a major government contractor. And I got intrigued by it because with that part of the business, I found that I was able to do well while doing good. I could help the corporation make money, but I can also see that it was making a difference in the community.  Did that make for a natural transition to nonprofit work? Not at all... I wanted to leave corporate America. I had an opportunity to take a package out, and I knew that I needed to make a shift. I didn’t want to get too old before I created a nonprofit that I had already always wanted to create. So, I created an organization called Give & Receive (in the Atlanta area). We had women business owners that would literally come in and take their teams through these volunteerism projects

Michelle Sourie Robinson is president and CEO of the Michigan Minority Supplier Development Council

and donation projects where they raise hundreds of thousands of dollars in their local communities. The one I’m most proud of is an organization that we helped start that created a leadership academy for girls in Sierra Leone, and hundreds of girls have now graduated from that academy. Those are the things that were near and dear to my heart.

 How are corporations failing? We know that over the last 50 years since these programs were created, (minority-owned suppliers) grew about 1 percent, and in that 1 percent, we now see about 2.6 percent of all minority firms grossing more than a million dollars with more than one paid employee. When we look at what it would take to close the racial wealth

 Your organization made headlines last year due to the legal battle with the Piston Group. I think it demonstrated that you’re not afraid to upset the apple cart. Why is that? Without talking directly about the litigation, I am a person of faith. I don’t take a job that I haven’t really prayed about and know that I can make a difference in. If I don’t feel like I’m the right person, or it’s not the right time, I’m not taking a role, because I take it very, very seriously. That is my job to go in and leave an organization better than I found it, like exponentially. It’s a totally different organization than the one that I inherited …. So, it’s really my job to come in and make that difference.

READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION

RUMBLINGS

Dance teachers realize dream with completed studio THE CO-OWNERS OF DETROIT DANCE CENTER unveiled their finished studio in Midtown on Thursday, which the owners completed using a $35,000 cash grant from Motor City Match. Motor City Match, designed to help small business owners develop their businesses, is run by the Detroit Economic Development Corp. Detroit Dance Center co-owner Jasmine Woods, 32, said the grant allowed her and co-owners Dominique Hamlett and Linda Hendricks to teach dance in their own space and in their own way. They had been operating in shared and temporary spaces. The dance studio, which began holding classes in May, specializes in lessons for 2-year-olds to teenagers for individual classes or a fullyear program. In addition to the 18 | CRAIN’S DETROIT BUSINESS | JULY 25, 2022

Detroit Mayor Mike Duggan celebrates the grand opening of Detroit Dance Center in Midtown with its owners on Thursday. | CITY OF DETROIT FLICKR

three co-owners, they recently hired an additional instructor.

“We used the cash grant to get our floor because the floors for

dance are very expensive,” Woods said. “So we got real hardwood floors and we got subflooring underneath to make sure that when our dancers dance, they’re able to have that cushion so that it won’t be so hard on their knees years from now.” Woods, Hamlett and Hendricks are leasing the 2,600-square-foot space at 831 Selden St. where they also sell leotards, tights and ballet shoes, including shoes designed to match with darker skin tones. The owners invested about $200,000 into making the space compatible with the studio’s needs, using a loan from ProsperUS and the Motor City Match grant, Woods said. They hired Procida Companies for the project. —Anna Fifelski

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