Crain's Detroit Business, August 7, 2023

A RISKY LIFELINE

Debt funds could pose problems for borrowers.PAGE 8

Commercial property sales limp through rst half of 2023. PAGE 9

Ruling won’t end ght over no-fault cuts

Motorists injured since the law change could sue

By David Eggert

LANSING — e Michigan Supreme Court’s decision to prohibit insurers from slashing insurance reimbursements for the long-term care of an estimated 15,000 crash survivors hurt before passage of a 2019 law is not the end of the issue.

Both opponents and backers of the auto insurance overhaul are gearing up for a legislative ght. And there could be future litigation on the constitutionality of the cuts’ e ects on a growing number of motorists injured since the law was amended — about 2,000 as of 13 months ago, according to the Michigan Catastrophic Claims Association.

What to watch for next:

Legislation

Brain- and spinal-cord rehabilitation centers, the home care industry and patients are hopeful the ruling will prod the Democratic-controlled Legislature to act. Past e orts stalled when Re-

publicans, who had spearheaded the law and gained bipartisan support, held the majority.

Tom Judd, executive director of the Michigan Brain Injury Provider Council, called the court’s decision a “relief” but said it is narrow.

“People injured after the reform law and those that continue to be injured every day, that need rehab services, that may need long-term care, they’re still going to have trouble accessing care because of the fee schedule,” he told Crain’s.

See INSURANCE on Page 16

Auto suppliers brace for a strike against Big 3

for a possible work stoppage next month that could result in devastating losses depending on how long it lasted. For sub-tier suppliers already in dire nancial straits, the threat is existential.

By Kurt Nagl

Metro Detroit automakers aren’t the only ones worried about contract talks with the United Auto Workers. e entire supply chain is sweating the potential of a strike.

Automotive parts producers up and down the tiers are preparing

For the larger, tier-one suppliers, a halt in vehicle production would result in millions of dollars in nancial losses in short order, according to the companies. Some suppliers have tightened up spending and baked potential losses into forecasts for the second half of the year. e risk is

apparent for those with high exposure to North America and the automakers at the negotiation table: Ford Motor Co., General Motors Co. and Stellantis NV.

With newly installed UAW President Shawn Fain going at automakers aggressively, suppliers feel the tension ratcheting up

CRAIN’S LISTS

Crain’s lists of largest architectural rms and Macomb County employers.

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People protest at the state Capitol in Lansing, during a 2019 Michigan Auto Insurance Promise rally. | AP

LARRY PEPLIN

Automotive seating suppliers Adient and Lear face different risk levels when it comes to a potential UAW strike against the Detroit 3 automakers. ADIENT

Kitchen by Cooking with Que to expand with new location

By Jay Davis

Entrepreneur Quiana Broden is expanding her cooking business to share her brand of healthy eating with the residents of another Detroit neighborhood.

e Kitchen by Cooking with Que II restaurant and kitchen store is set to open by the spring at 6329 Seven Mile Road near Livernois in the city’s Bagley neighborhood, Broden told Crain’s last week.

It will feature the vegan cuisine for which Broden has become known since she opened the rst Kitchen by Cooking with Que in 2015 in Detroit’s New Center area. e new location will also o er craft cocktails and a selection of items for the home kitchen.

e Seven Mile location will operate similarly to the current Kitchen, but without cooking classes. Broden said she wants to keep classes at the New Center location.

“ e Seven Mile space will be more restaurant and kitchen store,” Broden said. “We’re trying to put healthy food in the ’hood. ere’s not a lot of healthy food restaurants in that area. It’s an

area that has constant tra c. We wanted to expand to a place to work to make healthy foods more accessible to everybody in a neighborhood.

“ ... Coming into a residential neighborhood in the city was one the biggest factors in the expansion. We have items for sale for your kitchen. If you want to go to Crate & Barrel for those things, you have to go to the ’burbs. Now you won’t have to.”

e Kitchen by Cooking with Que II will operate out of a nearly 1,900-square-foot space owned by Invest Detroit founder Matt Hessler. Broden last year signed a veyear lease with three additional ve-year options. Auburn Hillsbased Fieldstone Architecture & Engineering is handling design work. Donato Group Inc., also in Auburn Hills, will handle the buildout. Broden expects the buildout to take about 90 days.

Broden said she’s much more prepared to open the Bagley location than she was when she opened the Woodward store in 2015.

“I learned my lesson. I’m mak-

ing smarter investments. When restaurants go out of business, I buy repurposed things I need,” Broden said. “It feels like when you open the rst one, you have no clue what you’re doing so you just do what everybody tells you to. I know things now. I know people now. I know ways to save money.”

e Seven Mile space has seating for 55, compared to the 30 seats available at the Woodward location.

Broden said she’s investing $400,000-$425,000 into the new location, less than the $614,000 it took to open the current space. e lower cost comes from not having the equipment needed for the classes.

Last month, Broden was awarded a $50,000 cash grant for her new location as part of Round 23 of the Motor City Match program.

She expects the Seven Mile shop to bring in about $1.7 million in revenue over the rst six months. e original location saw almost $1 million in revenue last year and Broden said she expects to break $1 million this year.

New Detroit 75 Kitchen restaurant opens in Troy

By Jay Davis

Fans of the Detroit 75 Kitchen food truck in southwest Detroit now have another option to chow down on its popular sandwiches.

e second Detroit 75 Kitchen and rst brick-and-mortar location opened July 31 in Troy at the former Sears Auto Center at Oakland Mall.

e Troy location has indoor seating at picnic benches and tables inside the bays where the auto center operated until 2018 and outdoor space for diners at picnic tables that feature large red umbrellas that will be available during warmer months. It will operate 10 a.m.-6 p.m. Monday-Friday.

Diners who had eagerly anticipated the opening lined up to place their orders for favorites including smoked wings, Detroit-style cheesesteak sandwiches and hand-cut fries.

e original Detroit 75 Kitchen food truck at 4800 Fort St. opened in 2014.

Detroit 75 Kitchen o ers a variety of sandwiches, most of which are named in honor of parts of Detroit. e menu includes the Fisher Fwy. sh sandwich, 3rd Street cheesesteak sandwich, Russell Street veggie, Atwater chicken and Corktown BBQ beef.

e business this year was added to the list of o erings at Comerica Park and last year added catering options.

Quiana Broden

Detroit 75 Kitchen is beloved for its sandwiches, fries and strawberry lemonade. DETROIT 75 VIA FACEBOOK

Tech-infused arts at Michigan Central

Innovation district program to provide place for projects and events

Ford Motor Co.’s Michigan Central Innovation District is rolling out a new program to bring technology-infused art, artists and conversations to the historic train station and 30-acre district being developed around it.

In development for the past year, the program is still nascent but will seek to provide a place for interdisciplinary artists to create and exhibit works that

Pontiac cannabis project collapses

Battle erupts into federal court case

A large Oakland County cannabis development site is up for sale as Pontiac and the property’s developer battle in a federal court case.

e battle marks an apparent end for a $40 million development plan that aimed to remake a derelict old Kmart site into a site for marijuana businesses and other retail. And the legal battle has expanded to include allegations of bribery by the city’s current administration against previous ocials, including a former mayor.

incorporate technology into large-scale, interactive projects and events that would be di cult to commission and produce elsewhere in Detroit, the district said.

It will include artist residencies and fellowships and partnerships with existing cultural institutions, said Nathaniel Wallace, who joined the Michigan Central Innovation District as head of civic partnerships last fall.

“ e ethos of it is we want artists to come in and be able to use the tools we have available on the campus to create new works … works focused on technology in society.”

“We’re looking at artists as innovators,” he said. “Because we’re talking about new technologies ... there’s no better interrogators than artists” who can explore the impact of mobility and other technologies in society.

e mesh of artists, technologists and scientists can create “in-

|

By Sherri Welch

teresting collisions,” both for artists and designers, Wallace said.

Michigan Central has been developing the program for the past year, funded by a $2 million grant from the John S. and James L. Knight Foundation.

“Part of it is thinking through temporary work alongside commissioned work that would exist inside the buildings and in the green space(s)” outside in the district, he said.

Years of complaints — then bankruptcies

Troubled history precedes attorney’s nancial woes

By Kurt Nagl

Rubicon Real Estate Holdings LLC, Browne Design Consultants LLC and Joseph Brown allege in a lawsuit that the city’s intransigence over issuing a medical marijuana license for the redevelopment of the old Kmart Corp. property on Glenwood Avenue caused Rubicon and investors to lose tens of millions of dollars in rental revenue from signed tenants who ultimately abandoned the project due to the delays. Rubicon alleges a loss of $45 million and seeks damages of $60 million.

e city and its clerk, Garland Doyle, have put forward a new defense: at Dwayne Lyons, a former department of public works interim director and an ofcial identi ed in court lings only as “former-mayor O cial No. 1,” were involved in a $5,000 bribe from people with links to the development in order to get a rezoning request placed on a Pontiac Planning Commission agenda.

See PONTIAC on Page 17

A Grosse Pointe Farms attorney’s recent bankruptcy lings follow a long history of complaints, lawsuits and an investigation against him and his law rm, according to a court-appointed receiver, former business partners, opposing attorneys and a trove of court documents.

e Dailey Law Firm PC’s Chapter 11 bankruptcy petition led in early July in the Eastern District of Michigan triggered an automatic stay on creditors owed hundreds of thousands of dollars. e ling, which is being disputed by the receiver, also highlighted a record of law-

suits against attorney Brian Dailey, including allegations of malpractice, mishandling client money and failure to pay judgments against him.

“To avoid the consequences of its malfeasance, the debtor initiated this bankruptcy case,” receiver John Polderman said in his objection to rst-day motions. “Brian Dailey and e Dailey Law Firm have shown that they cannot be trusted to act in a duciary capacity with client funds.”

Dailey, who also led a petition for Chapter 13 personal bankruptcy protection July 25, is facing a 12-count complaint by the Attorney Grievance Commission accusing the personal injury attorney of dishonesty, fraud and deceit. It is scheduled for a hearing Aug. 8. Dailey could be subject to discipline as severe as disbarment.

Ford Motor Co.’s Michigan Central Innovation District centers around Detroit’s historic train station. Below: A ve-story, neon installation on the south side of the Bagley Mobility Hub garage in Southwest Detroit, done by Detroit artist Patrick Ethen, is an example of the type of technology-in uenced art the district is hoping to attract and foster with its new arts and technology program. | PHOTOS BY MICHIGAN CENTRAL INNOVATION DISTRICT | STEPHEN MCGEE/MICHIGAN CENTRAL

Kirk Pinho and Dustin Walsh

Brian Dailey

Nathaniel Wallace

See ARTS on Page 17

An aerial view of a former Kmart Corp. property in Pontiac that developers planned to turn into a cannabis development with other uses, including grocery. | COSTAR GROUP INC.

REDEFINING RELATIONSHIP BANKING

20 or more former Detroit school buildings to be razed

Crain’s has reported a lot on demolition lately. e Packard Plant. e former American Motors Corp. headquarters. Even just last week, a building on Cass Avenue. Many others.

Here are more to add to that list: More than 20 former Detroit school buildings are slated to come down. By the end of the year, the city says, it plans to start razing 11 empty school properties. e city would not identify the additional ones it has targeted to demolish, although a study done a few years ago outlines reuse potential for dozens of unused school buildings, ranging from multifamily to senior housing — if the economics make sense.

ey mark the latest substantial demolition in Detroit, which has been going after dilapidated commercial properties — and their owners — recently, with a rampup in demolitions fueled in part by American Rescue Plan Act, or ARPA, funding doled out during the COVID-19 pandemic to help struggling local governments.

e following former school buildings, all city-owned, are out for bid for demolition:

◗ Monnier Elementary, 13600 Ward. Size: 57,250 square feet on 3.9 acres. Proposed reuse: industrial. Redevelopment cost: $130 million.

◗ Sampson Elementary, 6075 Begole. Size: 76,850 square feet on 2.5 acres. Proposed reuse: senior housing. Redevelopment cost: $16.6 million.

◗ Sherrill Elementary, 7300 Garden. Size: 64,950 square feet on 7.4 acres. Proposed reuse: multi-

family or senior housing. Redevelopment cost: $13.4 million.

◗ Hanneman Elementary, 6420 McGraw. Size: 42,650 square feet on 1.9 acres. Proposed reuse: retail or industrial. Redevelopment cost: $10.2 million.

◗ Cadillac Middle School, 15125 Schoolcraft. Size: 48,200 square feet on 5.7 acres. Proposed reuse: unknown. Redevelopment cost: unknown.

◗ Crockett Technical High School, 8950 St. Cyril. Size: 108,450 square feet on 4.4 acres. Proposed reuse: industrial. Redevelopment cost: $19.9 million.

◗ Lynch Elementary, 7575 Palmetto. Size: 41,200 square feet on 1.6 acres. Proposed reuse: industrial. Redevelopment cost: $9.9 million.

◗ Chandler Elementary, 9227 Chapin. Size: 50,150 square feet on 2.9 acres. Proposed reuse: mixed-use housing with retail. Redevelopment cost: $10.7 million.

◗ Stephens Elementary, 5974 Seneca. Size: 73,700 square feet on 1.6 acres. Proposed reuse: multifamily. Redevelopment cost: $16.6 million.

◗ Ruthru Elementary, 6311 Chicago.

Size: 32,000 square feet on 2.1 acres. Proposed reuse: o ce or retail. Redevelopment cost: $8.8 million.

◗ Oakman Elementary, 12920 Wadsworth. Size: 47,500 square feet on 2.6 acres. Proposed reuse: retail. Redevelopment cost: $11.9 million.

Ten of the 11 — sans Cadillac Middle School — were included in a lengthy evaluation of 63 vacant former Detroit school buildings, 39 of which are owned by the city and the other 24 of which are owned by the Detroit Public Schools Community District.

Some of the evaluation describes some of the schools among the 11 as in “good condition” or “repairable,” but the city says those being demolished are “the least salvageable.”

e city-owned schools in the Interboro Partners LLC report total nearly 2.1 million square feet on 147 acres, with buildings as small as 16,750 square feet (Healy) and as large as 108,450 square feet (Crockett) sitting on sites ranging from 1.62 acres (three schools) to 7.4 acres (Sherrill). Interboro determined the price tag to redevelop those was $481.7 million.

e remaining 24 owned by DPSCD total 1.6 million square feet on 141 acres, ranging from the 16,700-square-foot former Hancock Elementary School to the former Cooley High School (302,600 square feet).

Sites are as small as 1.07 acres (Robeson) and as large as 18.12 acres (Cooley).

e city received the former public school buildings from the district in 2014 in lieu of payment on $12 million in what was then Detroit Public Schools’ debt to the Public Lighting Department ($11.6 million) and Buildings, Safety Engineering and Environmental Department ($400,000).

In all, the city and its contractors spent a year analyzing Detroit’s new batch of real estate scattered around the city’s 100plus neighborhoods. e study cost $828,000, with the DPSCD paying $223,000 and the city spending $605,000.

Kirk Pinho

The former Crockett Technical High School property in Detroit is slated to be demolished. COSTAR GROUP INC.

By the end of the year, the city says, it plans to start razing 11 empty school properties.

Honigman law rm co-founder Alan E. Schwartz dies at 97

By Kurt Nagl

Alan E. Schwartz, who founded Detroit-based Honigman LLP, died July 27 at age 97, according to the law rm.

Gotion acquires land near Big Rapids for plant

By Kayleigh

Gotion Inc. has acquired 270 acres of land in Green Charter Township, marking another step forward for the company’s $2.36 billion electric vehicle battery manufacturing plant near Big Rapids.

e land purchase — Gotion’s rst property acquisition in Michigan — announced Aug. 1 includes roughly 260 acres zoned for industrial use and signi es a key step in the project’s development, according to company executives.

“Completion of the land acquisition process is a step forward for Gotion Inc. and the region as a whole,” Chuck elen, vice president of Gotion Inc. - North American Manufacturing, said in a statement.

e acquisition also includes about 10 acres currently designated for residential or agricultural use. elen said that section of the property had previously been zoned for industrial use for nearly 20 years, and that the company will work to rezone it back to industrial use.

“We’ve listened to the concerns of local residents and decided not to purchase two large parcels of land zoned for agriculture use at this time,” elen said. “Gotion Inc. will continue to work with

farmer that has a hay eld on it, and that’s it,” Chapman told Crain’s Grand Rapids Business.

Chapman said plans for the project, the details of which rst surfaced in September 2022, have been uid regarding the exact acreage, and that the township will consider any future requests from Gotion for nearby property.

“ e economic opportunity that this provides is just unbelievably o the scale for our rural community,” Chapman said. e new land acquisition also involved some nearby home purchases near the proposed factory site, according to a news release.

While Chapman has supported the project, some landowners and elected o cials in the area have been vocal opponents about the project’s potential e ects on the environment and Gotion Inc.’s parent company’s ties to the Chinese government.

e property deal is the latest step in the project that comes shortly after the Michigan Strategic Fund board in July approved the company’s plan to remove parcels in Big Rapids Charter Township from the project.

Gotion’s original plan included about 115 acres in Big Rapids Township, but the company reassessed in February to focus on the original 500 acres slated for the project in Green Township.

e Michigan Strategic Fund board also recently approved a one-year extension for the project completion date, which now is expected in December 2031.

“Alan was in every sense of the word a gentleman. He treated everyone he met with kindness and dignity,” Honigman Chairman and CEO David Foltyn said in a news release. “Alan was a lawyer, businessman and friend to his clients, whom he served with integrity and intelligence. It was his vision for Honigman ‘to be the best law rm for the best lawyers’ which has inspired and guided our rm for over half a century,” Foltyn said.

Schwartz, a resident of Birmingham, founded the prominent law rm in 1952 alongside Jason L. Honigman and Milton J. Miller. Irwin Cohn became thenal founding member in 1961, thereby establishing Honigman Miller Schwartz and Cohn LLP. In 2015, the rm combined with Chicago-based Schop & Weiss and in 2020 opened a Washington, D.C., o ce.

Schwartz’s practice focused on corporate organization, governance and M&A. Together with the founding members, Schwartz built the rm into a business law powerhouse with a reputation for top-notch representation for clients. at reputation and a culture of meritocracy continue to make it one of the most sought

after homes for attorneys.

Schwartz was a leader in local, civic, cultural and nonpro t organizations, including Business Leaders for Michigan (formerly Detroit Renaissance), the Economic Alliance for Michigan and New Detroit Inc., the rm noted. He served on boards of some 20 public companies, including AT&T, Burroughs, Comerica and Detroit Edison.

Additionally, he was a donor to and honorary board member of the Detroit Institute of Arts and a director emeritus of the Detroit Symphony Orchestra.

“He was involved in nearly every major development project in the city as an attorney and as a leader in business organizations,” Foltyn said. “His commitment to the cultural treasures of Detroit is well known.”

Raised in Detroit, Schwartz graduated from Cranbrook Schools and the University of

Michigan before earning his law degree from Harvard Law School, where he graduated magna cum laude. ose studies were interrupted by World War II and two years of service in Guam. Schwartz left Detroit to begin his career on Wall Street and returned in 1952 with his wife Marianne.

Schwartz was a lifetime board member of the Jewish Federation of Metropolitan Detroit, earning the Fred M. Butzel Memorial Award in 2008. In 2013, Detroit Mayor Dave Bing created an award in his honor, which is bestowed annually upon an individual for outstanding commitment to community service.

His portfolio of awards includes the George W. Romney Award for Lifetime Achievement in Volunteerism, the Max M. Fisher Community Service Award from United Way for Southeastern Michigan, the Lifetime Achievement Award from the Detroit Institute of Arts and the Judge Learned Hand Award from the American Jewish Committee, as well as honorary doctor of law degrees from Wayne State University and the University of Detroit.

Schwartz was preceded in death by his wife, Marianne, in 2017.

He is survived by children Marc Schwartz, Kurt Schwartz and Ruthanne Fuller, as well as ve grandchildren.

Funeral arrangements are pending.

members of the community, and our municipal, county and state partners, throughout this entire process.”

Green Township Supervisor Jim Chapman noted that the agricultural-zoned land is not in a favorable condition for farming.

“Most of that is very, very marginal land. I know that some others have tried to frame this as prime farmland, but it’s not. at land is so poor. … I have one local

“With the (Michigan Strategic Fund’s) important administrative vote, Gotion Inc. is now one more step closer to investing $2.36 billion into Mecosta County’s economy and creating more than 2,300 good-paying jobs for people living in every community throughout the region,” elen said in a statement last month.

Gotion now will begin work on Phase 2 environmental site assessments ahead of a review by the Michigan Department of Environment, Great Lakes and Energy.

Van Wyk, Crain's Grand Rapids Business

Gotion Inc. has acquired 270 acres of property in Green Charter Township near Big Rapids for its planned $2.36 billion electric vehicle battery manufacturing plant. | BRYAN ESLER

Alan E. Schwartz | HONIGMAN LLP

“The economic opportunity that this provides is just unbelievably off the scale for our rural community.”

Jim Chapman, Green Township supervisor

UAW leadership living in the past with ‘audacious’ contract demands

During his latest Facebook Live video to members, newly installed UAW President Shawn Fain quotes a 71-year-old speech from Walter Reuther, his legendary predecessor.

Harkening back to 1952 was all too appropriate considering Fain’s core message: a list of contract demands that seek to turn back the clock.

But while Fain may be living in the past, his members should not. They should not be enticed by his attempt to lure them with dreams of retiree health care, defined-benefit pensions and costof-living adjustments.

Those are among the “members’ demands” Fain unveiled publicly during the video presentation as he prepared to begin negotiations with Ford, General Motors and Stellantis.

With a litany of tough talk that referenced “corporate greed” and painted a picture of evil companies stealing from workers and destroying their communities, Fain unfortunately dug in his heels as negotiations prepare to begin in earnest.

This approach is neither helpful nor productive.

Pandering to the rank and file on a Facebook Live video does not get his members any closer to a contract. If anything, it gets them further away as Fain hardens a rhetoric that he may find hard to step back from later as negotiations progress.

Such rhetoric risks simultaneously el -

evating member expectations to unreasonable levels and fomenting resentment with the very companies that create the profits that allow their checks to clear and fills their retirement accounts.

One of Fain’s demands — “substantial” wage increases — merits negotiation, depending on the definition of substantial. Sources tell Automotive News that Fain is seeking 40% wage gains —

20% upon ratification and 5% annually over four years, which certainly seems like a nonstarter.

With the rapid inflation of recent years, a reasonable wage increase would help UAW workers maintain their standard of living.

But turning back the clock to reinstitute costly vestiges of the past such as retiree health care and defined-benefit pensions would be disastrous. It was the

weight of those legacy obligations that drove the automakers to the brink during the financial crisis, prompting a federal bailout. We can’t go back down that road and remain competitive on the world stage.

Fain’s list of demands also calls for the elimination of tiers on wages and benefits, which was another important outcome of the bailout that allowed the automakers to regain their financial footing.

Now, the Detroit 3 are clearly in a much better place than they were in 2008. Fain seized on that point in his presentation, prominently displaying headlines about the automakers’ strong second-quarter earnings.

“If the companies want to brag about record profits, then it’s time for record contracts,” Fain said, according to Automotive News. “It’s time for them to deliver for our members, and we’re going to deliver for our members, come hell or high water.”

Fain’s tough talk has Michigan’s auto suppliers worried about what a strike could mean for them, Crain’s Detroit Business’ Kurt Nagl reports. Let’s be clear: A strike would be disastrous for everyone, including autoworkers and their families.

Yes, workers deserve a fair wage. But Fain himself admitted his demands were “audacious.” With contracts expiring Sept. 14, let’s hope he dials back the posturing and lands a deal that’s appropriate for 2023 — not 1953.

We’re all better for Alan E. Schwartz’s leadership

There are very few people you meet along the path that command your attention, just by mention of their name.

One such person was Alan E. Schwartz.

Tall in stature and character, Alan had a particular way about him that was unique and might only be seen in a select few in any generation.

I met Alan over 30 years ago when I served at the Jewish Federation of Metropolitan Detroit as chief nancial o cer. Alan served as chair of the Investment Committee.

Alan was a master-level investor, and honestly, I knew nothing. Alan was consistently ranked as the most in uential leader in Detroit, and he had no business messing around with a 33-year-old ac-

countant.

But Alan understood the value of investing in people as well.

Over these many years Alan invested in me, as a professional and as a person, taking time to meet and talk about community, about leadership, and about life. By osmosis, I may have learned a bit about investing as well.

Alan brought a measure of wisdom to every conversation and led with a soft-spoken demeanor that allowed the opinion of others to matter. His commitment to community was never ending and he touched so many with his involvement at a leadership level with the most important civic organizations across our great city.

Whether it was lunch at e Detroit Club, for a Turkey Burger ala Schwartz, or

a meal at the Detroit Athletic Club; when Mr. Schwartz was in the room, everyone knew it.

Alan challenged those around him to think deeper, to lead with passion, to see what others couldn’t see.

We are all better for it.

Alan would ask those providing services to the various organizations he served, “Are we receiving your most favored nation pricing?” ere was nowhere to hide once that question was on the table.

One of the most memorable moments for me was a lunch meeting with Alan and Phillip Fisher at Opus One, sometime in the late 1990s. Alan and Phillip were talking about me and my future, as if I wasn’t there, and Alan said to Phillip, “ e question is, does he have it in him?”

I think about that question all the time. One would never want to disappoint Alan E.

Mark Davidoff is president and CEO of the Fisher Group.

UAW President Shawn Fain addresses members during a Faceook Live stream program on Aug. 1. | UAW FACEBOOK

Pandering to the rank and le on a Facebook Live video does not get his members any closer to a contract.

Mark Davidoff and Alan E. Schwartz. PROVIDED

State universities to offer degree programs in prisons

By Sherri Welch

Michigan’s four-year public universities are taking their degree programs back into prisons in the state for the rst time in nearly 30 years.

Quali ed inmates at U.S. prisons are once again eligible to receive annual federal grants of up to $7,395 to pay for a college education while they are incarcerated.

e renewed eligibility, which took e ect July 1, was approved as part of the FAFSA Simpli cation Act in December 2020 and has been in the works since then.

For their part, colleges and universities can apply to o er Pell-eligible degree programs, meaning they can pull in federal dollars to operate degree programs in the prisons.

To o er degree programs that are eligible for the federal grants, colleges and universities must get approval from the Michigan Department of Corrections, the Higher Learning Commission and the U.S. Department of Education, said Kyle Kaminski, o ender success administrator for the state Corrections Department.

Eastern Michigan University will be the rst of Michigan’s public four-year universities to launch Pell-eligible, bachelor’s degree programs at a prison in the state. It has admitted 22 women at the Women’s Huron Valley Correctional Facility, the state’s only prison for women, into the programs for the fall semester.

Western Michigan University has committed to take a four-degree program into Lakeland Correctional Facility in Coldwater, Kaminski said. And Lake Superior State University and other institutions are also talking with the Department of Corrections about launching bachelor’s or associate degree programs of their own at prisons in the state.

e Michigan Department of Corrections “is actively seeking additional partnerships and intends to increase the availability of post-secondary education programs within our system,” Kaminski said.

ere is a signi cant amount of research that shows education can reduce the likelihood of recidivism while also increasing lifetime earnings, he said.

“As we put people on a better path post release, ultimately, we want people to be successful. And we think education is one important aspect of achieving that,” Kaminski said.

Roughly half a dozen public and private colleges in Michigan have taken part in a pilot program that launched privately funded degree programs at several prisons in Michigan in recent years. ey include Calvin University, Hope College/Western eological Seminary and Siena Heights with bachelor’s degree programs and associate degree programs from Jackson College, Delta College and Mott Community College, he said.

EMU has o ered noncredit courses at Women’s Huron Valley Correctional Facility for more than a decade, said Decky Alexander, di-

rector of Engage at EMU and professor of communications, media and theater arts.

e state’s scal 2024 budget includes $250,000 to help EMU launch the bachelor’s program at Huron Valley, which will build on an existing two-year degree program that Jackson College is o ering there.

“(For) the individuals we’ll be teaching and working with, this is an intervention that will change the trajectory of their lives. ... personally and economically ... as it does (for) any of EMU’s students,” Alexander said.

EMU has admitted 22 inmates

into new bachelor’s degree programs in business administration or general studies, a program enabling students to choose their own areas of focus and specialty, said Meghan Lechner, director of EMU’s College in Prison Program.

e women admitted to the program at Huron Valley either held an associate degree prior to being incarcerated or earned one from Jackson College during their incarceration.

“ e Department of Corrections tells us who is eligible to apply” based on good behavior and completion of high school or GED, Lechner said.

Enabling inmates to earn a college degree while they are incarcerated helps reduce recidivism and increase earning power once people are released, experts say. | MICHIGAN DEPARTMENT OF CORRECTIONS

A RISKY LIFELINE

Debt funds could pose problems for commercial borrowers

Aform of unregulated, highinterest lending that took hold in commercial real estate may end up leaving sour tastes in borrowers’ mouths.

Debt funds emerged the last several years as providers of a key, but risky, type of oating rate short-term loan for some local owners and developers.

While debt funds are not at all new — they started cropping up as capital sources more pointedly following the Great Recession as banks were still reeling — their prominence increased the last ve or so years, said Dennis Bernard, founder of South eld-based Bernard Financial Group.

Around that time, the low-interest rate environment prompted investors to ock where they could make more money, and debt funds proved to be an ideal choice.

London-based Preqin, an investment data company, said in

May that there were 2,035 real estate funds looking to raise about $547.5 billion, an increase from 1,779 ($512 billion sought) funds at the beginning of 2023. ose are aspirational, however, and some may never get o the ground.

According to data from New York Citybased Trepp LLC, which tracks commercial real estate nance and commercial mortgage-backed securities data, collateralized loan obligations called CLOs — securitizations that bundle together debt fund loans and other nancing instruments and sell those bundles to investors — have exploded the last few years.

In 2014, there was just over $2 billion in CLO issuance across just six deals. In 2020, that gure was $8.7 billion in 13 deals, Trepp says. But in 2021, that ballooned to $45.4 billion across 51 deals and, last year, $30.7 billion across 31 deals.

On the plus side, they provide

easy and quicker access to shortterm cash for things like property stabilization as it leases up, tenant improvements and new construction at higher leverages. But that comes at a cost with things like higher interest rates than traditional banks and some perhaps less favorable terms on the back end if a borrower wanted to extend the loan’s maturity by a year or twoor was not able to pay o at maturity.

“In 2008, we were over-levered on properties that weren’t doing well. In 2023, we have a lot of over-leverage of properties that are doing just ne,” Bernard said. “ ey’re over-leveraged not because the underwriting at the time was wrong, but because interest rates have gone up even on performing properties.”

Debt fund lending has become more prominent in the last few years, said Adam Lutz of Birmingham-based Q10 | Lutz Financial Services.

“When the markets are soft on the debt side is when the debt funds become stronger and larg-

er, and try to take advantage,” Lutz said. “ eir rates are usually a bit higher and more often than not, they are oating.”

Filling a gap

Debt funds have, in some cases, started stepping in as traditional banks slow or halt commercial real estate lending.

Jim Costello, chief economist on the MSCI Real Assets team in New York City, said in June at the annual National Association of Real Estate Editors conference in Las Vegas that debt funds are sometimes leveraged lenders, meaning they get a line of credit from a bank, pair that with some equity, and fund real estate loans that way. Other times, they are funded purely by investors.

“ e most aggressive loans in 2021 and 2022 were from the debt funds,” Costello said. “I know the regulators are very worried about them because they can’t see what they’re doing. ey have no oversight over them.”

And Annie Rice, a managing di-

rector in multifamily nance at JLL in Los Angeles, said at the same conference that while debt funds historically had been used for “transitional assets” where renovations or management changes are intended to boost revenue, debt funds the last 18 months or so have been used “across the board for all nancing needs.”

“Multifamily, it’s still a very favorable asset class, so if you do have a strong cash- owing deal, the debt funds are leaning in, still getting really, really aggressive,” Rice said.

Manus Clancy, senior managing director of Trepp, said the short-term loans made sense in instances where a buyer was attempting to rehab and ip a property.

“ ey didn’t want to get into 10-year, xed-rate situations,” Clancy said. “Traditional CMBS loans have signi cant pre-payment restrictions, so if your window is two, three or four years, you don’t want to be locked into a 10-year situation.”

COMMERCIAL REAL ESTATE

| By Kirk Pinho

Dennis Bernard

Whereas traditional banks would issue loans at 2% to 2.5% above what at the time was called LIBOR, shorthand for the London Inter-Bank O ered Rate, debt funds would o er loans at 4.5% to 5% over LIBOR, and give LIBOR a oor of 1%, Bernard said. (Today, LIBOR has been replaced with the Secured Overnight Financing Rate, or SOFR.)

And while a bank loan may come in at about 70 percent of the cost, debt fund leverage would clock in at 80 to 85 percent.

Bernard said debt fund loans issued in the last three to ve years are facing one of two “walls of foreclosures” in the coming few years.

e rst is on what is nationally $1.5 trillion in maturing commercial real estate debt — commercial mortgage-backed securities loans, life insurance company, bank loans. What’s particularly troublesome are the o ce loans which may face re nancing challenges due to continued softness in the

By Kirk Pinho

Metro Detroit commercial property sales are on pace for an o year as high interest rates and other factors have iced the market.

And for the foreseeable future, what the Federal Reserve does or doesn’t do, how the ofce market rebounds or doesn’t and when precisely banks will resume lending on those properties will determine commercial sales volumes, experts said.

Midway through 2023, the region has had just 936 sales of retail, o ce, industrial and apartment buildings, according to data from CoStar Group Inc., a Washington, D.C.-based real estate information service.

Total sales volume during the rst six months of the year is about $991 million.

In 2022, there were 2,612 sales for a total transaction value of $3.06 billion, while in 2021, there were 2,849 sales for $2.44 billion in value, CoStar says.

“ is data is not surprising,” said Marc Nassif, senior managing director in the Detroit ofce of Dallas-based real estate advisory services rm BBG Inc.

Nassif said the Fed’s interest rate increases have made it so that “many deals that penciled out in the third quarter of 2022 no longer do.”

ere also haven’t been as many big-dollar sales.

market stemming from the COVID-19 pandemic and the changing nature of o ce work. e second, Bernard said, is coming in the form of debt fund loans being “resized” to re ect the current interest rate environment, with banks issuing loans at about 8% while debt funds are now 10% to 12%.

For example, there have been just a handful of properties — the Huntington Bank tower ($150 million) in downtown Detroit and Fairlane Town Center in Dearborn ($41.5 million) among them — that have traded for more than $30 million so far this year.

But in the rst six months last year, there were 17 such sales, ranging from suburban apartment buildings to the Pinnacle Landing Commerce Park ($96.6 million).

“People that are really interested in the issue like me and brokers and title people are all a little perplexed at how long this has gone on,” Sanna said. “It’s probably not just a high interest rate environment that’s causing this. It’s banks changing their standards because of fear in the market and all that kind of stu . We’re pretty slow and colleagues are pretty slow.”

“When they resize them,” Bernard said, “all of them (borrowers) are needing capital calls and equity calls ... All these short-term loans that were done in the last two, three, four, ve years, every one of them needs equity because they’re all over-leveraged.”

Borrowers are also facing steeper costs for purchasing interest-rate caps, which were highly a ordable just a few years ago but have skyrocketed in cost recently.

Anthony Sanna, executive director of Integra Realty Resources, said the perception is that capitalization rates — a way to measure investor returns — are going to rise, meaning commercial real estate values go down. at is causing investors to sit on the sidelines waiting for better deals, perhaps a year or so from now.

“People are smelling blood in the water,” Sanna said. A higher cap rate tends to mean lower property value, higher risk and potentially higher reward; lower cap rates tend to mean higher property values, with lower risk and lower, but more stable, reward.

“The most aggressive loans in 2021 and 2022 were from the debt funds.”

Jim Costello, chief economist, MSCI Real Assets team

Ranked by 2022 revenue

KamranQadeer senior VP and principal JulietJakobowski Maes VP and senior architect

CharlesLewis

president MichaelNowicki executive VP and director of operations

DavidHunter

chief operating o cer JamesButler project executive

environmental sciences, architecture and construction

mechanical and electrical engineering, interior design and technology design rm

and geotechnical engineering, landscape architecture, land surveying, ecological consulting, and facility consulting.

Center practice leader MikeDecoster principal $24.6 $35.0 21 428 $10,971.1 $18,775.9 Architecture, engineering and design. 9 ALBERT KAHN ASSOCIATESINC. 3011 W. Grand Blvd., Suite 1800, Detroit48202-3000 313-202-7000; albertkahn.com AlanCobb CEO and chairman $24.0 $11.5 42 42 $3,000.0 $850.0 Architecture, engineering, planning, design and management 10 SIDOCK GROUP 45650 Grand River Ave., Novi48374-1351

8 STANTEC ARCHITECTUREINC. 2338 Coolidge, Berkley48072 248-336-4700; stantec.com

248-349-4500; sidockgroup.com

13 FRENCH ASSOCIATESINC. 236 Mill St., Rochester48307 248-656-1377; frenchaia.com

SHAFFER & PAPPAS, INC. ARCHITECTS & PLANNERS 550 E. Nine Mile Road, Ferndale48220 248-543-4100; fsparchitects.com

and RobbBurroughs,principals

ResearchedbySonyaD.Hill:shill@crain.com

|Thislistofleadingarchitectural rmsisanapproximatecompilationofthelargestsuch rmsinWayne,Oakland,Macomb,WashtenawandLivingstoncounties.Itisnotacompletelistingbut themostcomprehensiveavailable.Unlessotherwisenoted,informationwasprovidedbythecompanies.Projectvaluesareinmillions.CompanieswithheadquarterselsewherearelistedwiththeaddressandtopexecutiveoftheirmainDetroit-area o ce. Actual revenue gures may vary. NA = not available.NOTES: e. Crain's estimate.

1. Formerly Stephen Auger & Associates Architects Inc.

Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data

CRAIN'S LIST |

MACOMB COUNTY'S LARGEST EMPLOYERS

Ranked by full-time employees July 2023

baesystems.com/us

23 U.S. FARATHANE 10 2700 High Meadow Circle, Auburn Hills48326 248-754-7000; usfarathane.com

24 DTE ENERGY CO. One Energy Plaza, Detroit48226-1279 313-235-4000; dteenergy.com

ResearchedbySonyaD.Hill:shill@crain.com

|ThislistofMacombCountyemployersencompassescompaniesheadquarteredinWashtenaw,Oakland,Wayne,MacomborLivingstoncounties.Companieswithheadquarterselsewhereare listedwiththeaddressandtopexecutiveoftheirmainDetroitareao ce.MagnaInternationalofAmericaInc.whichwasNo.20onlastyearslistdeclinedtosubmit.Thisisnotacompletelistingbutthemostcomprehensiveavailable.Unlessotherwise noted,informationwasprovidedbythecompanies.Numberoffull-timeemployeesmayincludefull-timeequivalents.NA=notavailable.NOTES: e. Crain'sestimate. 1. AsofJuly2022. 2. AsofJanuary. 3. AsofDecember2022. 4. AsofJuly2021. 5. FiguresareFTEcountsfromtheCenterforEducationalPerformanceandInformation. 6. EstimatebasedonnumbersfromMWPVLInternationalInc. 7. Soldtoana liateofConnecticut-basedprivateequity rmLittlejohn&Co.inNovember2022. LittlejohnacquiredthefooddistributorfromMiami-basedprivateequity rmH.I.G.Capital,whichacquiredLipariinearly2019. 8. From SupemarketNews.9. AfterFaurecia'sacquisitionofacontrollingstakeinHella,thecombinedcompanyisnow knownasForvia.Faurecia'sacquisitionofHellawascompletedinFebruary2022. 10 AtlasHoldingsLLCannouncedonApril25thatithadagreedtobuyU.S.FarathaneLLCfromtheGoresGroupinvestment rm. 11. BeaumontHealthandSpectrum Health merged as an integrated health system with the temporary name, BHSH Health on Feb. 1., 2022. Rebranded as Corewell Health in October 2022. Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data

Rocket makes a ‘bet on the future’ with new CEO

Varun Krishna has ntech-focused background

Nick Manes

Rocket Mortgage, perhaps the most recognized mortgage brand in the country, will be led by an executive largely lacking in home lending experience.

Rather, Rocket Companies Inc. (NYSE: RKT) — the Detroit-based umbrella organization for Rocket Mortgage and a host of other consumer nancial companies — last week named Varun Krishna to be CEO of both the publicly traded parent company and its mortgage lending a liate.

While not altogether unfamiliar with Rocket and its business, Krishna’s background stems more from a focus in the nancial technology, commonly called ntech, space, particularly on the product side. In naming Krishna as CEO, industry experts say Rocket and its board appear to be doubling down on the company’s long-stated desire to move beyond the cyclical mortgage space and solidify itself as a ntech company connected to all manner of consumer nance.

Krishna, 41, was not made available for an interview with Crain’s last week.

Ultimately, the hiring of Krishna to lead both Rocket Companies and its mortgage lending entity that makes up the majority of the company’s business illustrates that Rocket aims “to be a successful ntech company that happens to have a large footprint in the mortgage market,” said Guy Cecala, executive chairman of industry trade publication Inside Mortgage Finance.

Over his 20-year career, Krishna has held executive roles at Silicon Valley-based software rm Intuit Inc., which makes TurboTax. Prior to Intuit, Krishna served as senior director of product at PayPal, where he managed the company’s global consumer product team.

While not a veteran of the mortgage industry, Krishna’s background in ntech product development appears in line with the vision of Rocket’s billionaire founder.

“Varun is a visionary leader with a proven track record of helping consumers achievenancial freedom.

roughout his career, he has delivered innovative, technology-driven client experiences for complex personal transactions in large, fragmented markets,” Dan Gilbert, founder and chairman of Rocket Companies, said in a statement. “Varun’s experience aligns perfectly with Rocket’s vision, making him the ideal person to drive growth, strong performance and operational excellence at Rocket. On behalf of the entire Board and our team members, I welcome Varun as Rocket’s new CEO.”

e naming of someone with Krishna’s experience is “not surprising,” Cecala told Crain’s last week, noting the need for mortgage companies to diversify in the face of elevated interest rates and a housing shortage around the country.

And despite long-stated goals and tangible e orts to do so — solar lending, car loans, consumer nancial planning — the overall

public company still remains largely a one-trick pony dependent on its mortgage business, Cecala said.

Rocket stock jumped around 2.5% on July 31 when Krishna was named as the next CEO.

‘The next chapter’

Krishna will join Rocket on Sept. 5, having previously spent nearly eight years at Intuit.

Most recently he was executive vice president of its consumer group and he previously oversaw its Mint and TurboTax products, according to his LinkedIn pro le. He’s currently based near San Diego. Rocket spokespeople declined to comment on any relocation plans.

While at Mint, Krishna headed up partnership deals with Rocket Companies that integrated Rocket’s digital mortgage process with Intuit’s platform, largely geared toward speeding up the application and approval process.

While Rocket’s mortgage business remains its largest driver — even amid a challenging environment of elevated interest rates and low housing inventory— industry experts say they do see

some limited opportunity for growth down the road with at least one of the company’s diversi cation e orts.

In late 2021, the company acquired Truebill — which has since been rebranded as Rocket Money — for $1.275 billion.

e personal nance app aims to help consumers manage subscriptions, track spending and build budgets and could be a source for growth, according to Jay McCanless, a senior vice president for equity research at investment banking rm Wedbush Securities.

“I think Rocket Money really helps the breadth of their funnel because you are getting younger buyers,” McCanless told Crain’s in an interview earlier this month and prior to Krishna being named CEO of Rocket. “You’re helping them learn a budget, how to save for down payment … I don’t think you’re creating customers for life, but I do think you’re creating a stickier customer if you get them young, and then you can pull them through the different pieces that Rocket

has to offer, whether it’s auto, mortgage, etc.”

And while Krishna himself may lack direct mortgage experience, the company still has a deep bench of executives with knowledge of the industry. at includes interim CEO Bill Emerson, who will revert to president and COO of the company when Krishna comes aboard in September, and who spent 15 years as CEO of the mortgage business. Emerson took over the mortgage andnancial services company in June, following the retirement of Jay Farner. Given Krishna’s focus on the product side of financial technology, it begs the question of how that experience transfers to being CEO of a publicly traded mortgage company that also has a fintech component to its business.

When it comes to questions

around gain-on-sale margins, interest rate volatility, the nation’s housing market and other components integral to running a residential nance company, there could well be a learning curve, acknowledged Cecala with Inside Mortgage Finance.

“When you get down to talking about what makes a mortgage business, that’s not really ntech in my mind,” Cecala said. “His selection is an indication of where they want to go for their next chapter. Not how do they support the old business … It’s a bet on the future.”

UAW to seek ‘ambitious’ contract, president says

By Michael Martinez, Automotive News

e UAW plans to demand from the Detroit 3 what union President Shawn Fain called the “most audacious and ambitious” set of proposals in decades, including double-digit wage gains, restoration of pensions and better bene ts for retirees.

In a Facebook Live stream last week, Fain shared with viewers what he called “the members’ demands” — a list of 10 economic proposals that are o cially being presented to bargainers at Ford, General Motors and Stellantis. In past years, Fain said, that process typically happened behind closed doors.

ose demands include:

◗ e elimination of tiers on wages and bene ts.

◗ Substantial wage increases.

Restoration of cost-of-living adjustments.

De ned bene t pensions for all workers.

Re-establishment of retiree

medical bene ts.

e right to strike over plant closures.

A “working family protection program” that keeps union members employed in the event of a plant closure or nancial downturn.

◗ An end to what the union called “abuse” of temporary workers.

◗ More paid time o .

Signi cant increases to retiree pay.

e union will also be seeking bene ts and protections outside of that formal list. While reading member questions on the Facebook Live stream, Fain said he planned to push the companies to move to a shortened 32-hour work week.

“When I was elected, I said the UAW was back in the ght,” Fain said. “ at’s what the Big 3 are going to see when we deliver our economic demands.”

e union formally began bargaining with the Detroit 3 last month. Contracts expire Sept. 14.

Fain, on the livestream, pre-

sented charts showing the automakers’ recently announced second-quarter earnings, followed by a chart that showed wage concessions made by the union since its contract in 2007, during the Great Recession.

“If the companies want to brag about record pro ts, then it’s time for record contracts,” Fain said. “It’s time for them to deliver for our members, and we’re going to deliver for our members, come hell or high water.”

Fain last week also reiterated past comments that the union would not pick a traditional lead company to bargain with but would instead negotiate with all three simultaneously.

e union could face an uphill battle on many of its demands.

e automakers are likely open to wage increases but are expected to balk at reinstituting cost-ofliving adjustments and pensions, according to sources.

Fain has insisted the automakers can a ord the union’s demands, pointing to their collective $250 billion in pro ts over the past 10 years. e newly elected president has made a point of interacting with members on social media, like on last week’s Facebook stream, to get them on the same page heading into the potentially contentious talks.

“ is isn’t a time for ghting amongst ourselves or division,” Fain said. “ is is a time to be united for a common cause. We have to do it, and we’re going to deliver.”

Rocket Mortgage remains the largest driver of business in the Detroit-based Rocket Companies Inc. portfolio. ROCKET COMPANIES INC.

Varun Krishna

“His selection is an indication of where they want to go for their next chapter.”

Guy Cecala, executive chairman, Inside Mortgage Finance

UAW President Shawn Fain greets workers outside of Ford’s Michigan Assembly Plant. | MICHAEL MARTINEZ

Ex-NBA star bringing restaurant to historic part of Detroit

By Jay Davis

Former NBA All-Star and Sacramento mayor and now restaurateur Kevin Johnson is bringing his soul food concept to downtown Detroit.

Johnson plans to open the next Fixins Soul Kitchen in the city’s Paradise Valley neighborhood — an area that featured a thriving Black business and entertainment district from the 1920s through the 1950s.

Fixins Detroit will make its home at 1435 Randolph St. in a building owned by architect Rainy Hamilton Jr. of Detroit-based Hamilton Anderson Associates architecture rm. Johnson aims to open the restaurant in December.

Fixins Soul Kitchen is billed as a full-service soul food restaurant that celebrates African American culture and traditions, while redening the American soul food experience by o ering tradition with great service and a modern vibe.

Johnson told Crain’s that the move into Detroit is a part of a national expansion. e Paradise Valley restaurant will be the fourth Fixins restaurant, joining locations in Johnson’s hometown of Sacramento, Calif., as well as Los Angeles, and Tulsa, Okla. e Tulsa location is in the area that was home to what was called Black Wall Street, which was destroyed in 1921.

Detroit is a natural t for the restaurant concept, Johnson said.

“... Detroit checks so many boxes for us,” Johnson said. “We found a killer space located in a historically important Black business neighborhood owned by a Black businessman whose family has deep roots in Detroit. We also know that Detroit is the only U.S. city with all four major (professional) sports teams playing in arenas and stadiums in its downtown. Add to that the rich history with Motown and the auto industry, and it only made sense for Detroit to be our next city.”

Founded in 2019 by Johnson and his wife Michelle, Fixins pays homage to the food Johnson grew up on. e menu includes Fixins’ signature chicken and wa es, oxtails, shrimp and grits, and deep fried deviled eggs. Recipes come from Johnson’s grandmother, Gladys. e name of the restaurant comes from the side dishes that go with the entrees, like collard greens, candied yams and macaroni and cheese.

Various avors of Kool-Aid will be featured on the menu, and Johnson asks that diners order by the color (red and purple) and not the avor (tropical punch and grape). Alcoholic drinks will be offered, too, with the libations coming from Black-owned businesses.

“You’ll walk in and smell scratch cooking from the South,” Johnson said Wednesday during an announcement of the restaurant’s

planned opening. e project is a major one, as Johnson is investing $3 million-$4 million into the Detroit restaurant.

Tulsa-based GH2 Architects Inc. will handle interior design work on the Paradise Valley space, previously home to the Detroit Seafood Market and Intermezzo. Johnson projects annual revenue at the Detroit restaurant to hit around $5 million.

Before deciding to open in Paradise Valley, Johnson looked at spaces in various areas of the city, including Corktown and Eastern Market.

“I came out here in February 2021. I had dinner with (Detroit Mayor Mike Duggan). He told me

about Black Bottom, Paradise Valley. I fell in love. I wanted to be here.”

e planned restaurant is another sign of life being breathed back into the area after it was devastated in the 1960s by urban renewal and construction of the I-375 portion of the Chrysler Freeway. Hamilton’s architectural rm is also based inside the same building.

“ is is a long time coming,” said Hamilton, a past Crain’s 40 under 40 honoree. “We’ve been in (Paradise Valley) for 30 years. We’re the longest-standing tenant. We’re thrilled to have Fixins. (Paradise Valley) honors African American businesses displaced by

I-75. To add another Black-owned business to the area is wonderful.”

Duggan on Wednesday said the continued growth of the area is vital to the city’s success.

“I’m excited to see what’s happening here,” the mayor said. “To have a group of business owners and building owners creating a culture to honor Paradise Valley is great to see.”

Actor and Michigan U.S. Senate hopeful Hill Harper spoke during Wednesday’s announcement in support of Johnson. Harper is also a Sacramento native, and he and Johnson have a relationship that spans 40 years.

Harper called Johnson’s investment in the city an indicator that Detroit can bring in more outside backing.

“To bring this investment here is an example of bringing in a business to help elevate people,” Harper said. “You’ll have people who work here go on to possibly own their own businesses and open more businesses in the area. at’s the power of small businesses. ey’re the engine to any economy.”

Ready to play

Fixins Detroit will span 8,400 square feet of space, making it the largest of Johnson’s restaurants.

e others average 6,000-7,000 square feet. e new restaurant will have seating for 325 guests and a sta of more than 85 people, according to Johnson. e Detroit Fixins will be the rst with a bar and private event space that is physically separate from its main

dining area, giving the restaurant a distinct look and feel, Johnson said. ose spaces will be located in an adjoining building.

Johnson recognizes that the newest Fixins is a large-scale project. at’s by design.

“We’ve come to nd out that in order to deliver the dining experience at the high level we expect, our kitchen has to be a certain size,” Johnson said. “We also anticipate hosting some larger private parties, so we’ve created our largest private dining space to date in our Detroit location. Given the proximity to such large event venues, we wanted to ensure we had enough seating capacity to accommodate our guests.”

Just like in his 12-year NBA career with the Cleveland Cavaliers and Phoenix Suns, Johnson knows Fixins is entering a market with some other talent.

Detroit has a bevy of soul food options, including Savannahblue, Urban Soul Restaurant and Steve’s Soul Food. Johnson believes Fixins can add to the city’s list of strong soul food restaurants.

“We appreciate Detroit’s longstanding history of great soul food,” Johnson said. “We use my grandmother’s recipes, so we o er traditional southern soul food combined with a dynamic atmosphere and environment driven by our outstanding and attentive sta . We don’t compare ourselves to other restaurants, and we’re not looking to compete with them. We’re simply focused on providing our patrons with a great overall dining experience.”

Fixins Soul Kitchen owner and former NBA All-Star Kevin Johnson said the soul food restaurant should open in December. At left, a rendering of the interior of Fixins Detroit.

PHOTOS BY NIC ANTAYA, RENDERINGS BY GH2 ARCHITECTS

Hill Harper, left, shakes hands with Mayor Mike Duggan during the press conference at Fixins Soul Kitchen in Detroit on Aug. 2.

Michigan’s budget: Where the money is going

By David Eggert

LANSING — Gov. Gretchen Whitmer nalized the next state budget July 31, signing a $62.8 billion spending bill that covers everything except aid to pre-K-12 schools, community colleges and universities.

It includes $57.4 billion for the scal year starting Oct. 1 and $5.4 billion more — mostly federal pandemic rescue funds — in the current scal year. At least $1 billion in grants are earmarked to about 250 projects. e plan reects the priorities of Democrats who have control of the Legislature and governor’s o ce for the rst time in almost 40 years, though some Republicans also backed it.

Whitmer signed the bill at the Wyandotte Fire Department.

A look at some key or overlooked aspects of House Bill 4437, including those related to economic development, energy and infrastructure:

Leverage fund

e newly created Make it in Michigan Competitiveness Fund, seeded with $337 million, will help leverage big competitive grants available under three major federal laws enacted by Congress and President Joe Biden: the Infrastructure and Jobs Act, the CHIPS and Science Act, and the In ation

Reduction Act. e money could fund matches to go after billions in funding to accelerate the use of hydrogen as an energy source, to become “tech hubs” aimed at leading critical technologies and industries, and to economically revitalize distressed communities.

Renewable energy

e new renewable-ready communities program will issue $30 million in grants to incentivize local governments to host wind, solar and energy-storage projects with at least 20 megawatts of nameplate capacity. No more than $3 million can go to one project.

Economic development

e bill includes up to $1 billion more for the Strategic Outreach and Attraction Reserve Fund over this scal year and next, as direct-

ed under a tax-relief plan that Whitmer signed in March. e account has been used to subsidize electric vehicle battery plants and other business expansions for a year-and-a-half. e law also directs $50 million annually to the Michigan Housing and Community Development Fund; $50 million per year goes to the new Revitalization and Placemaking Fund to disburse grants for the redevelopment and rehabilitation of vacant and blighted properties and the development of “place-based” infrastructure and public spaces.

Bridges

An $80 million initiative will replace or x more than 20 locally owned bridges.

Water infrastructure

ere is nearly $600 million for

water infrastructure, much of it federal funds, to replace lead service lines, water mains and do other work such as upgrading wastewater treatment plants. at includes roughly $150 million for speci c projects. Bene ciaries include the Great Lakes Water Authority, Eastpointe, Saline, Chester eld Township, St. Clair, Downriver, Hamtramck, Gibraltar, Center Line, Milan and Wayne.

Public health

Nearly $81 million is aimed at strengthening the public health infrastructure, workforce and data systems in the wake of the pandemic.

Broadband

e state has nearly $1.6 billion, the fourth-highest federal grant in the U.S., to expand high-speed internet to more than 200,000 people in unserved and underserved areas.

Talent teams

e Michigan Economic Development Corp. will spend $15 million to provide or contract for services to provide specialized economic assistance to businesses expanding or locating in Michigan. e “talent action teams fast track system” will help with workforce training and recruitment, among

other things. e state could contract with universities, community colleges, Michigan Works! agencies, private training providers or other entities.

Contaminated sites

e state will disburse $100 million to municipalities to clean up contaminated sites, including $75 million that lawmakers earmarked speci cally to Rochester Hills.

High-speed rail

e state will allot $20 million for “transformational” projects to expand high-speed rail or rapid transit bus service. Recipients must demonstrate a match and show a plan for nancial viability.

Reconnect expansion

ere is $70 million to expand eligibility for Michigan Reconnect to those ages 21 and up. e program provides tuition-free community college for adults ages 25 and older by covering the “last dollar” gap once federal Pell grants and other nancial assistance are applied.

Environmental permitting

Lawmakers agreed to Whitmer’s request for $6.6 million to hire more workers to help expedite the review of environmental permits.

State budget pumps millions into housing initiatives

A slew of housing initiatives around the state received tens of millions of dollars under the 2024 scal year budget bill signed July 31 by Gov. Gretchen Whitmer.

Statewide housing advocates lauded the legislation as taking a signi cant step toward addressing the state’s housing shortage, and one provision in particular — $50 million for the Michigan Housing and Community Development Fund — could be a “game changer,” said Jessica AcMoody, policy director for the Community Economic Development Association of Michigan, a Lansing-based nonpro t trade association for the state’s community economic development industry.

“We were the only state in the Midwest that didn’t have dedicated funding to a State Housing Trust Fund, and now we have the $50 million a year as long as the corporate income tax comes in high enough,” AcMoody told Crain’s. “And I think that’s going to make a really big impact across the state just to have that dedicated state funding. In the past, all of our funding has been federal for housing. So along with that $50 million (and) the other housing provisions in there — earmarks for individual housing projects — I think will have a pretty big impact, too.”

e overall goal of the fund is “to develop and coordinate public

and private resources to meet the housing needs of low income, very low income, and extremely low-income households in the state, and provide exible funding options for other populations with a speci c housing need,” according to a memo from the Michigan State Housing Development Authority.

HCDF funds “can be used to oset costs associated with the acquisition, rehabilitation, new construction, development, predevelopment, and operating or replacement reserves” of rental housing, permanent supportive housing and community development projects located in a downtown or adjacent neighborhood, according to the MSHDA memo. e funds can be

used for homeownership, housing rehabilitation, façade improvement, infrastructure improvement, economic development projects, in- ll new constructions, and community facilities.

e funding in the statewide budget for the trust fund follows a $150 million investment in the fund made earlier this year, part of a supplemental budget bill signed by Whitmer in January.

In addition to funding for the housing trust fund, the budget provided $10 million for Habitat for Humanity for a homeownership program for those making 80% and below of the regional area median income. e funding makes for the rst “direct appro-

priation” that Habitat for Humanity has received in its 30-year history, according to a news release.

e funding will support Habitat’s 46 a liates around the state and be used in four ways, according to an email from John Williams, Habitat’s statewide president and CEO.

e appropriation will:

◗ Establish a revolving housing capital fund to purchase a ordable housing for hard-working families who earn below 80% of the area median income.

Create a lease-to-purchase model to support households moving from rental to homeownership.

◗ Establish a need-based down payment assistance repayable

loan fund to ll the appraisal gap for a ordable housing or subsidy gap between building costs versus an a ordable mortgage.

Create programs to support existing housing stock conditions and a ordable ownership in rural areas.

Additionally, “the funds will support Habitat Michigan’s existing low-income homebuyers’ counseling and nancial education coaching programs,” Williams wrote in an email to Crain’s. Also included was $5 million for grants to cities, villages and townships for costs associated with adopting land use policies, master plan updates, zoning text amendments and similar actions that help increase housing supply and a ordability.

e budget signed by Whitmer also includes around $1 billion of earmarks, sometimes called “pork,” for speci c projects advocated by lawmakers. e budget includes $39.25 million for housing projects around the state, including in Mount Clemens, Muskegon, Detroit, Ann Arbor and Ypsilanti.

e redevelopment of the blighted Lee Plaza tower along West Grand Boulevard in Detroit also received a $6 million earmark, as Crain’s has previously reported.

Crain’s Grand Rapids Business reporter Rachel Watson contributed to this report.

Nick Manes

Habitat for Humanity of Michigan is getting a $10 million appropriation. HABITAT FOR HUMANITY

The redevelopment of the blighted Lee Plaza tower along West Grand Boulevard in Detroit received a $6 million state earmark. CRAIN’S DETROIT BUSINESS

Gov. Gretchen Whitmer nalized the next state budget July 31. STATE OF MICHIGAN

and they most assuredly have a game plan if a new deal isn’t reached when the current contract expires Sept. 14, said Glenn Stevens, executive director of MICHauto and vice president of mobility initiatives for the Detroit Regional Chamber.

“ ey’re all preparing to various degrees,” Stevens said last week on the sidelines of the Center for Automotive Research Management Brie ng Seminars in Traverse City, where the topic of a potential strike was the elephant in the room. “If you’re not anticipating that, you’re ying blind, and companies aren’t doing that.”

While talk on stage at the annual conference of industry leaders centered on themes of vehicle electri cation and driverless technology, chatter among many attendees was about the UAW labor talks underway and what it would mean for business if they broke down.

“It’s been a topic of discussion at the conference — some companies are really proactive, and they’ve got roadmaps already built,” Stevens said.

It is also a major topic of discussion for stock analysts. e question of a potential strike came up multiple times on analyst calls with some of the industry’s largest suppliers reporting quarterly earnings last week, including Lear Corp., Adient plc and BorgWarner Inc.

Lear, the South eld-based seating supplier, has painful memories of the GM strike in 2019. e sixweek work stoppage, which cost

the automaker about $4 billion all told, cost Lear $70 million-$75 million each week. GM is the company’s most vertically integrated business, Lear CFO Jason Cardew said on the analyst call Tuesday.

“Each week of downtime, if all three customers were to go down, it’s about $140 million of revenue,” he said.

Lear’s revenue projections for the second half of the year included $350 million of contingency — $300 million in seating and the rest in e-systems — for potential downtime due to labor negotiations, according to the executive.

“(We) have the playbook outlined on what we will do if a strike takes place,” Cardew said. “ ere are things that we can control on discretionary spending, certainly some customer negotiations or discussions.”

Lear’s crosstown competitor Adient — whose business is tied more to Toyota and Honda, and increasingly to Chinese automakers — is less exposed to a strike against the Detroit 3 automakers.

Still, if all three manufacturers were to go down, it would amount to $80 million to $100 million of revenue per week for Plymouth-based Adient, CEO Doug Del Grosso said on a call with analysts Wednesday. e company chose not to factor the potential losses

into its forecasts, “given the unpredictability of how that strike could play out,” but it has compelled Adient to check its spending.

“We think about the UAW strike as a reason to maybe give us pause and hang on to (the cash) until we have a better idea of what the impact will be to our scal year ’24, speci cally our fourth quarter,” Del Grosso said.

BorgWarner’s North American exposure to the Detroit 3 amounts to a little less than $250 million per month, CFO Kevin Nowlan said on an analyst call Wednesday. e Auburn Hills-based company did not embed that potential loss into its guidance.

“It’s hard for us to sit here and guess with a crystal ball what that might look like,” Nowlan said.

Plant closures and mass layo s have mounted among injection molders and tool-and-die shops around Michigan. A strike could add to the casualties of small suppliers in a dramatic way, Stevens said.

“ ere’s a lot of trepidation about the status of the supply base as a whole, but there’s a real big concern for the smaller tier suppliers across the supply base,” he said.

e next best thing to peering into a crystal ball, he added, is for companies to get on the phone with lenders and customers to keep them apprised of their nancial and operating status. Perhaps the past few years of managing supply chain chaos brings some patience to the turmoil that a strike would create.

“I would say this year in particular is a period of a lot of communication because the OEMs have had to work with the suppliers on input cost relief,” Stevens said.

Francois Castaing, engineering ace behind Chrysler’s 1990s hits, dies

French engineer Francois Castaing, along with product development ace Bob Lutz, design chief Tom Gale and several other key executives were part of a dream team of brash, scrappy leaders that turned Chrysler into America’s hottest car company in the 1990s.

Castaing was just 35 when he was dispatched to the U.S. in 1980 by Renault, the French automaker that had just bought American Motors Corp. His job: Run product engineering and development at AMC. Castaing, along with chief engineer Roy Lunn, created the industry-changing Jeep Cherokee in 1984, which kicked o the SUV boom that is still going strong.

Castaing, who retired at the young age of 52 in 1998, died July 26. He was 78.

Castaing’s early jobs in racing — he worked on engines for cars that ran the 24 Hours of Le Mans and then rose to become technical director of Renault’s racing division — colored his approach to product development in his Chrysler years. It was about speed and e ciency.

He played a major role in the development of the big rig-styled

Dodge Ram, and the Dodge Viper, Chrysler Cirrus, Dodge Stratus and Neon, and Chrysler’s minivans.

It was Castaing who developed the concept of platform teams, breaking down the silos between departments, such as engineering, purchasing and design.

“He was the foundation of our success. Francois believed in speed, simplicity, minimum bureaucracy, don’t over-analyze and go to hardware right away,” Lutz told Automotive News. “He had an interesting way of challenging people and getting the best out of them.”

Detroit-based Clark Hill PLC law rm has combined with a Los Angeles boutique rm in its fourth acquisition of the year.

Ten attorneys from Barton Klugman & Oetting LLP, known for its nance, transactional and litigation practices, joined Clark Hill’s downtown Los Angeles ofces July 31.

“ is combination expands our transactional capabilities and competitiveness in southern California and nationally,” Clark Hill CEO John Hensien said in a news release. “For more than 65 years, Barton Klugman has been doing outstanding sophisticated work for its clients. We are pleased to have them join the Clark Hill team and look forward to continuing to build upon their expertise and success.”

Tod Beebe, managing partner of Barton Klugman, will transition his practice to Clark Hill in the Los Angeles o ce and in its litigation group.

“Barton Klugman has been committed to providing sophisticated legal services with a personal touch since our founding in 1958,” Beebe said in the release. “With Clark Hill, we have found like-minded colleagues who value relationships and collabora-

tion as we do. Clark Hill’s international platform will allow us to provide our clients with a broader array of services and to maintain the e cient, e ective legal counsel they’ve come to expect from us. We believe this is a great combination for all involved.”

Clark Hill’s Los Angeles attorneys work in a variety of practices, including immigration, transportation and logistics, employment and litigation.

In addition to the Los Angeles o ce, Clark Hill also has California-based lawyers in San Francisco and San Diego. e rm has about 700 lawyers total in 27 ofces in the U.S., Ireland and Mexico.

“We couldn’t be more pleased to welcome the Barton Klugman folks to our team,” said Lisa Reimbold, co-member in charge of Clark Hill’s Los Angeles o ce.

“Now, with more than 75 attorneys with deep experience across a range of practices and industries, we’re better positioned than ever before to help our clients pursue their business goals.”

Other deals earlier this year were with real estate rm Larsson & Scheuritzel PC in Philadelphia, litigation boutique Conrad O’Brien in Philadelphia and Funkhouser Vegosen Liebman & Dunn Ltd. in Chicago.

Paul Wilbur, a product planner who worked with Castaing on the cab-forward LH cars — the Chrysler Concorde, Eagle Vision and Dodge Intrepid — that debuted in 1993, said the platform team approach changed everything. “ e whole company was split from chimneys and silos into platform teams, and it was really revolutionary,” said Wilbur.

“I remember very vividly talking about line rates with manufacturing guys and color choices and how many colors we should have. ese were discussions that typically product planning and marketing wouldn’t have ... with manufacturing,” Wilbur said.

“Between Lutz, Gale and Castaing, Chrysler would not have been the same without one of the three. It took all three to make legendary greatness,” said Wilbur.

Another 1990s Chrysler executive, Bud Liebler, head of marketing and communications, said Castaing’s heavy French accent did not impede his ability to get things done.

“He was ambitious, hardworking, aggressive and strong. When he had something to say, he said it loud and clear. He didn’t care who was bothered by it,” Liebler said.

Lear CFO Jason Cardew Adient CEO Doug Del Grosso

“From day one, we said we need a legislative solution, and that’s still the case.”

e law cut reimbursements for post-acute services that do not have a Medicare code by 47.5% and limited reimbursements for in-home attendant care services provided by family members to 56 hours a week — moves that had disastrous, even deadly, consequences for patients facing catastrophic injuries, according to friend-of-the-court briefs led by physicians and other groups.

e ruling does not a ect claims for crashes occurring on or after June 11, 2019. It e ectively ensures “reasonable,” higher payments for ongoing long-term residential and in-home continuous care and nursing as well as vocational rehab, transportation and other services for claims stemming from crashes that happened before that date.

Democratic Gov. Gretchen Whitmer helped to enact the law. She urged legislators to make changes before the provisions at issue took e ect in 2021, but she never speci ed how while also later pushing for and touting

DAILEY

From Page 3

Some of the allegations against Dailey in the 2022 Attorney Grievance Commission ling to the Attorney Discipline Board date back more than a decade. As part of their defense, Dailey and his rm have led complaints and countersuits against those going against his practice. In court documents, Dailey alleges that a former employee embezzled $600,000 from his rm, which contributed to its nancial insolvency. e former employee denies the allegation.

Dailey declined to speak to Crain’s on the record for this report.

“Brian and I are looking forward to a full and fair hearing before the hearing panel at which time we will be able to prove that he did not engage in the conduct of which he is accused,” said Philip omas, the Grosse Pointe Farms-based attorney representing Dailey in the Attorney Grievance Commission case and who ran the AGC about 30 years ago.

Dailey, a resident of Grosse Pointe Shores whose practice is based in downtown Grosse Pointe Farms, has achieved some name recognition in the community. At one point, he hosted a legal-themed radio show on WJR-AM 760, and in 2015, he made headlines for a campaign to help a homeless man in Detroit named Willie Payne. In legal circles, though, some lawyers who have worked with Dailey have a less-than- attering opinion of him.

Dalen Hanna, a South eld-based collections attorney, sued Dailey in 2018 over bounced checks. Hanna led his lawsuit after several attempts to get Dailey to make good on checks he sent to a client, according to the complaint. Dailey led unsuccessfully to have the

$400-per-vehicle refunds that she said were due to the law.

No bill has been introduced yet this term. Advocates are working with legislators to propose one.

Judd said the goal is not to “go back to the way it was before 2019. We’re trying to meet the intent of the law by implementing a reasonable fee schedule.”

One lawmaker supporting changes is Democratic Rep. Julie Rogers of Kalamazoo.

“It is an absolute tragedy that people have su ered, some have even died, because of this misinterpretation of the law and our state constitution,” she said in a statement. “I am grateful the Supreme Court is righting this wrong, and I stand ready to work with my colleagues to address the de ciencies in the 2019 law which are not addressed by this ruling. ose injured after 2019 are still struggling with arbitrary caps and cuts in their care.”

e insurance industry, however, said preserving the fee schedule for those hurt after the law is important.

It “will continue to provide relief to drivers saddled with some of the highest insurance costs in the nation,” Erin McDonough, executive director of the Insurance Alliance of Michigan, said in a statement.

motion dismissed. A judgment was entered against him for $2,805 in 2019, but it has gone unpaid.

“I don’t want to deal with this guy. He’s bad luck,” Hanna said. “He’s never gonna pay it.” at isn’t the only instance of that situation playing out, according to the AGC complaints. In 2010, Dailey was ordered to pay $5,495 to Gursten, Christensen and Raitt PC, which he has not, according to the Attorney Grievance Commission complaint.

e counts compiled by the commission allege a pattern of Dailey failing to pay funds owed in a timely manner, often going several years before paying judgments. In one case, South eld-based Lemon Law attorney Steven Lehto partnered with Dailey on seven cases, but when Lehto sought his share, Dailey said he was having trouble with funds and never paid him, according to the complaint.

Bob Smith, a former partner of Dailey, said the only thing that surprises him is that Dailey has gotten away with those business practices for so long.

Smith said Dailey would put o paying money he owed in hopes he’d get away without paying, or paying less.

“Nobody’s turned him in until I started telling clients to call the Attorney Grievance Commission,” Smith said.

Smith rst met Dailey around 30 years ago at Amerisure Insurance, where both worked as attorneys. Dailey left after a year or two to start his own personal injury practice. Smith said Dailey asked him to refer car crash victims, so one day he referred a co-worker.

As Smith recalled, Dailey took the case and settled it for the policy limit, and then asked Smith if he wanted the referral fee or to invest in his law rm. Smith said he asked for the former but never got a

“We urge the Michigan Legislature to protect that important cost control and consumer protection and stop e orts by those who pro t o overcharging and pushing unnecessary medical procedures from taking us back to the old broken system with astronomical rates, rampant fraud and widespread abuse and overcharging.”

Detroit Mayor Mike Duggan, a strong backer of the law, has said it has enabled residents to a ord insurance for the rst time.

Rep. Brenda Carter, chair of the House Insurance and Financial Services Committee, said the decision was “undoubtedly the right one,” but she did not indicate how legislators will proceed.

“We are going to keep the conversation going between lawmakers, stakeholders and the people of Michigan,” the Pontiac Democrat said in a statement.

Lawsuits

A key issue still ripe for a legal challenge is whether the fee cuts can be applied to those hurt since the law went into e ect.

e high court dismissed the patients’ claims on that issue because those who sued were injured before the law was passed. It tossed a residential brain-injury facility’s

check.

“ at’s when we became estranged,” he said.

After 39 years at Amerisure, the company cut its sta counsel and Smith was out of a job just a couple of years short of retirement. Scouring the classi eds, he happened upon an opening at Dailey’s law rm. He called up his former colleague and began working for him and helping on cases in 2018.

ings went well, Smith said, though he was a little suspicious of Dailey’s practices. en four or ve months in, after Dailey settled a big case, the attorney was nowhere to be found, Smith said.

“ is was the rule: Anytime a check came in on any case, the receptionist would stamp it with the deposit stamp and at lunch run all the checks that came in the mail to the bank,” he said. “ ey didn’t note them on the le or anything.”

Smith said he quit working for Dailey after a year and three months.

“Nobody knew where he was or what he was doing,” Smith said of Dailey. “ e clients that I was representing for him were calling me wanting their money. I just said, ‘I can’t do this anymore. is is unethical, it’s probably illegal what he’s doing, and I’m getting out of here.’”

Complaints pile up

e Attorney Grievance Commission led its complaint against Dailey to the Attorney Disciplinary Board in October.

e AGC is funded solely by dues to the State Bar of Michigan and functions as an arm of the Michigan Supreme Court. e disciplinary board, composed of three volunteer attorneys, operates essentially as a court for grievance cases against attorneys.

Michael Goetz, grievance ad-

claims on prospective application, too, saying it lacked standing to sue on behalf of patients and rejected the center’s own argument that the law threatened its ability to stay in business.

George Sinas is the managing partner at the Lansing-based Sinas Dramis Law Firm, which led the lawsuit in 2019. He also is general counsel of the Coalition Protecting Auto No-Fault, or CPAN.

e ruling, he told Crain’s, “does not in any way a ect the rights of patients to make the identical constitutional challenge. ey can come in there and say, ‘Prospective application of this fee schedule violates my right to equal protection, violates my right to due process,’ even though the provider didn’t have standing to raise those arguments. If they are successful, then not only would the patient bene t but so would the provider who’s rendering those services and therefore would not be subject to such an unconstitutional benet reduction.”

e court used a “rational basis” test for the Ann Arbor-based Eisenhower Center, one that is advantageous to the government. An argument can be made that a higher, “strict scrutiny” test should be used for patients with “inherently personal” rights and needs

ministrator for the Attorney Grievance Commission, said cases are con dential until a formal complaint is led.

“Quite honestly, it takes quite a bit to rise to the level of a formal complaint,” he said.

Goetz said an investigation can last from six months to six years depending on the complexity and number of complaints. Several attorneys involved in or tracking Dailey’s situation said they have been surprised it has not moved more quickly.

“I’m shocked that it’s taken the Attorney Grievance Commission this long to go after this guy given the number of complaints against him and the nature of the complaint,” said Hanna, the collections attorney. “I know guys that have done way less than this and they get reprimanded.”

Smith added: “ at’s a damn good question. Why is it taking them so long? He’s still out there hurting people.”

Goetz pushed back on the idea that his department is understa ed, though he did acknowledge the challenge of handling thousands of complaints each year among Michigan’s 46,000 attorneys, with just 14 lawyers and 35 personnel on sta .

“We do our best to expedite every investigation that comes through here, but by the same token, I think you can see if we’re getting two to three thousand complaints a year, it can be somewhat of a daunting task,” he said.

Aligning the schedules of three volunteer attorneys to listen to testimony can also be a headache, he added. “It’s kind of a rarity sometimes that a hearing actually goes on the rst date.”

Not part of the Attorney Grievance Commission complaint — but “far more egregious,” according to an opposing attorney — is the

like round-the-clock care, Sinas said.

He said his rm would consider ling suit again in the right case. It was not clear if there are existing lawsuits related to motorists who have been hurt in the past four years.

Fund

In 2021, Whitmer and legislators set aside $25 million for post-acute providers that can show de cits caused by the changes. Twenty-three applications were submitted, but none met the criteria to qualify and no money has been disbursed, a Michigan Department of Insurance and Financial Services spokesperson said.

As of April 2022, more than 30 businesses had closed due to the law, according to a study funded by the Brain Injury Association of Michigan.

It was not immediately known if the Legislature will revisit ways to compensate such operations.

“A lot of people aren’t going to be made whole again,” Judd said. “We’re trying to salvage what’s left in the post-acute continuum. is will help. But we need that legislative solution so that we can ensure some sustainability for our businesses.”

case of Jody Ingram, who su ered a debilitating traumatic brain injury in a car crash on Big Beaver Road in 2016. She hired Dailey to represent her to collect no-fault bene ts.

Dailey settled the case with Frankenmuth Insurance for $600,000$700,000 and took his fee but never paid Ingram or her medical providers, said Bob Drazin, the Southeld-based attorney Ingram eventually hired to go after Dailey.

“Over the next three years, Jody kept calling Dailey with no success,” Drazin said, adding that Ingram led a grievance with the Attorney Grievance Commission in 2021.

at same year, Dailey led a countersuit against Ingram, claiming she was entitled to no money from the settlement and that the funds from the settlement were not enough to cover claims from care providers. But a Wayne County Circuit Court judge ordered Dailey to pay $600,000 into an escrow account created by Drazin. Unable to pay the sum, Dailey’s rm was appointed a receiver.

Dailey claimed his former partner Lauren Sitto embezzled $600,000 from the rm before she left and attempted to delete les from the company’s server. e Dailey Law Firm sued Sitto in 2021, claiming she “took advantage of her position” to divert settlement proceeds to her own account and took over clients as her own while still collecting a salary from Dailey, according to the lawsuit.

Sitto could not be reached for comment, but her attorney Scott Yaldo said the claims are false. Leaving a rm and taking client business along is common practice for attorneys, he added.

“Mr. Dailey’s problems are self-created, and he’s simply trying to de ect from his own problems by placing blame where it does not belong,” Yaldo said.

ARTS

“We’ll commission artists to create and exhibit work on campus using our studios, labs and shops.”

In developing its vision, district leadership benchmarked the High Line park in New York City, which has a dedicated multimedia contemporary art program, Wallace said.

Also in the plan: talks, panel discussions, curatorial and research fellowships, and convenings of artists, designers and engineers, curators, critics, researchers and others.

PONTIAC

From Page 3

e lawsuit alleges the bribe was paid early in 2020, when Deidre Waterman was the city’s mayor. Both Waterman and Lyons denied to Crain’s that they took a bribe. Neither has been charged with any crime. An attorney for the developers called the accusations “pretty ridiculous.”

Magistrate Judge Curtis Ivy Jr. recently ruled that the city can argue in court that a bribe was paid to secure an agenda spot for a rezoning request. But he did not allow the city to assert that bribes were paid to secure actual votes for the rezoning from the Planning Commission or City Council.

e city, which is now led by Mayor Tim Greimel, said it would not comment on pending litigation or its own public corruption allegations against its former mayor and department director.

Last year, Waterman accused Greimel of embarking on a smear campaign after a forensic audit found what the city described as $1.6 million in misspending on things like personal expenses and unauthorized trips, the Detroit Free Press reported. Waterman has denied wrongdoing in that matter as well.

“I can tell you right now, no such money ever was in my campaign co ers or received by me,” Waterman told Crain’s in response to the city’s accusation of bribery.

And in a later email to Crain’s, she said: “ ... I have never accepted any bribe or illegal payment. Any allegations to the contrary are patently false and injurious.”

In an email, Lyons provided the following statement: “ ese allegations are totally false and unfounded. I have always maintained a high ethical and legal standard in my interactions with the community during my tenure with the city of Pontiac, and would never involve myself in any illegal actions. I am appalled and disheartened to see that the city of Pontiac’s executive o ce would stoop so low to falsely defame my character in their feeble attempt to defend the $60 million lawsuit that Rubicon Real Estate Holdings LLC has led against them.”

Yearslong saga

It’s the latest twist in a yearslong ght between Rubicon — whose

Works will be ever-changing, Wallace said, and could include three- and four-dimensional pieces, large-scale installations, interactive media and the use of virtual, augmented and mixed reality. One example already in place is a ve-story, neon installation on the south side of the Bagley Mobility Hub garage in southwest Detroit, created by Detroit artist Patrick Ethen.

With a rmer vision for the program in hand, the district is looking locally and nationally for an arts leader to help shape it.

Detroit-based Rootoftwo is assisting on the search. Michigan Central hopes to name someone to the position by September,

members are Brown, Rita Bolis, Manuel Ferraioulo and Brad Klintworth — and Pontiac, where the development group was supposed to turn the decrepit 26.5-acre property northeast of downtown into a $45 million medical cannabis hub with growers and dispensaries, plus other uses including a Hollywood Market grocery store.

Following the property purchase in early January 2020, the Pontiac Planning Commission granted Rubicon a rezoning request and, later that month, the Pontiac City Council signed o on it.

Pontiac alleges in its court lings that on Feb. 6, 2020, Lyons sent a $5,000 consulting invoice “to Rubicon and/or Brown” on behalf of Innovative Community Elevations LLC. At the time of that alleged invoice, Lyons was employed with the city as Waterman’s executive assistant, according to an employment history the city provided ursday afternoon.

at entity was later incorporated by Lyons at a Waterford Township address, state business records show.

A few days before that company was registered, Vladimir Abu-Ali, who is vice president and controller for another company owned by Rubicon partner Klintworth, Southeld-based D-A Contracting LLC, sent a signed $5,000 check to Lyons’ company, Pontiac alleges in its ling. e check was signed March 6, 2020, according to the lawsuit, the same day Lyons became DPW director, according to the city’s employment history for him (he later became Waterman’s chief of sta ).

Klintworth said in emails to Crain’s that Rubicon was responsible for determining “service needs” during biweekly meetings and “most likely” D-A “agreed to the costs and paid the costs.”

“We cannot be involved in all aspects of every item happening on projects,” Klintworth said in emails to Crain’s. “ at’s what partnerships are for. As stated, we were heading up the construction of the project.”

And in an emailed statement to Crain’s, Abu-Ali said he was “shocked and disappointed in the allegations made in this lawsuit.”

“At no point in my course of doing business was I made aware that my business partner had an ownership interest in Rubicon,” Abu-Ali said in the statement. “I also have never had any communication or meetings with city of Pontiac o cials on this matter. And while my signature

Wallace said.

“We have a top-line vision of what the arts program is going to be. We want somebody who has a point of view and a history of work in arts and culture to kind of lead the vision and the execution of the work,” he said.

“For somebody to come in and put their thumbprint on what this arts and culture program is going to look like going forward is a big thing and a rare opportunity. It’s not very often that somebody comes in at the beginning of this type of major work.”

e six- gure, contract position will rotate every three years to ensure fresh ideas and approaches, Wallace said.

is on the check in question, it was done so at the direction of others in our company and I was not given any reason to doubt the legality of the expense.”

e check was deposited March 10, the day after Lyons created Innovative Community Elevations, Pontiac’s legal response says.

e response states “Public Ocial No. 1” — Waterman is never identi ed by name, although at one point the response refers to that ofcial as a “former mayor” whose term aligned with Waterman’s — “ led falsi ed campaign nancing statements as a direct and proximate result of receiving bribe payments, including but not limited to bribe payments made by Rubicon.”

Waterman was ultimately disquali ed for the 2021 August mayoral primary because she didn’t le campaign nance reports on time. First elected in 2013, she was sworn in in January 2014 and left o ce in January 2022 after running as a write-in candidate and placing third. Greimel won that election.

e complaint, which is being litigated in U.S. District Court in Detroit, does not specify a theory of how Waterman allegedly received payments, but it does say Lyons and she — again, not by name — removed documents and destroyed data and information relating to payments received.

e city says a Pontiac Housing Commission employee who is not identi ed noti ed it on Jan. 8, 2022, that “Public O cial No. 1 and/or Lyons received bribe payments from Rubicon as a condition of placing its zoning request on the City Planning Commission’s agenda.” e city then says that upon receiving that information, Lyons was told to go to City Hall to return electronic devices used by him and the public o cial, Waterman. e city determined information and data was deleted before returning the electronics.

An internal investigation that included an interview with Lyons resulted in his termination. e city says in its ling that “Lyons admitted that he never performed any work on behalf of Rubicon, despite sending an invoice for ‘consulting’ services.”

e FBI, which is noted as a witness for the city in the case, declined to provide additional information and said it “doesn’t con rm or deny the existence of investigations.”

Brown and his attorney, Cindy Rhodes Victor of e Victor Firm PLLC, who also represents Rubicon

and Browne Design Consultants, say the bribe allegations introduced in the case are false.

“ ere’s no allegation that we paid the mayor a single penny,” Rhodes Victor said.

“( ey are saying) that there was a bribe, that this money that went to a contractor, somehow they’re alleging it ended up in the mayor’s pocket with no proof, nothing whatsoever,” the attorney said. “ at something that went to Innovative Community (Elevations), somehow ended up to the mayor but they have ... no chain of custody to a check written to a legitimate business by a company who is not identi ed as a plainti in this case is now somehow alleged to be a bribe to the mayor. at really takes a huge leap of faith.”

e attorney also says a bribe to get on the agenda doesn’t make sense because, typically, a mere ling fee would be paid to do that. In addition, it says the alleged bribe was paid after the meetings and votes, not before.

A halting cannabis rollout

e allegations are the latest in the ongoing saga over the former Kmart property and Pontiac’s marijuana licensing process writ large. e Kmart property was listed for sale about a month ago by e Jonna Group in Birmingham, a division of the Royal Oak o ce of Colliers International Inc.

“ ey’re at a position where there’s really not a lot of choice” but to sell the property, Rhodes Victor said. “ ey would have loved for this to be nancially bene cial. We think it would have been very benecial to the city of Pontiac, brought in tax revenue and brought in people and really have been a positive thing. But you can only ght a battle for so long before it kills you.”

Due to lawsuits like Rubicon’s and others, Pontiac didn’t approve medical marijuana licenses until July last year. By then, medical licenses had lost their value in the market, which is now dominated by adult-use recreational marijuana. In June, medical marijuana sales in the state totaled just $6.6 million, compared to $254.2 million in recreational sales.

As a result, not a single medical marijuana dispensary has opened in Pontiac. Operators would rather get a recreational marijuana license, but the city has yet to launch that part of its licensing process.

e city’s recreational marijuana

industry was set to begin in July this year with the opening of its license application process. But a group backed by some of the city’s medical marijuana license holders halted that process with a ballot referendum.

In May, Sensible Cannabis Reform for Pontiac submitted two petitions with the necessary signatures to put a measure on that ballot that voters could vote to repeal the city’s current recreational marijuana ordinance and repeal its related zoning ordinance. e nancial backers of the petition drive are East Lansing-based Pleasantrees, Royal Oakbased Pontiac Ops Inc., Oak Parkbased GreenHouse Farms Pontiac LLC and real estate investor Dennis Jaboro, according to reporting by e Oakland Press.

Pontiac City Council either had to rewrite its current licensing process or allow the ballot measure to proceed to voters in November, which it allowed, delaying the rollout of the recreational market.

An expansive plan

Rubicon and the city have long been at odds.

e company led its complaint in Oakland County Circuit Court earlier this year before it was moved to federal court. Rubicon alleges that Pontiac and Doyle, its clerk, delayed issuing a medical marijuana license, leading a lender to yank a $45 million commitment and several tenants to drop away from the project. Rubicon and the other plainti s were seeking close to $60 million in damages and legal fees.

According to the lawsuit, Rubicon only achieved the conditional rezoning, from local business zoning to commercial and light manufacturing zoning, by agreeing to construct a retail strip and grocery store as part of the development, which would include two medical marijuana licenses.

Rubicon negotiated leases with several retailers and secured a lease obligation from grocer Hollywood Market for the project.

Family Rootz, a medical dispensary, and Pharmaco, a marijuana processor, had planned to move into the development.

e leases held millions of dollars in value, according to the lawsuit. Pharmaco’s 15-year lease is valued at $37.5 million; Family Rootz’s two, three-year leases were valued at $21 million and $15 million for Hollywood Market’s 10-year lease, the lawsuit said.

Michigan Central | STEPHEN MCGEE/MICHIGAN CENTRAL

Developer uses travel to learn how to make people feel at home

SINGH DEVELOPMENT LLC: Saab Grewal has a taste for excitement, traveling the globe, getting outside of his comfort zone and experiencing new cultures and people. When he is not embarking on some transoceanic adventure, he is director of asset management for West Bloom eld Township-based Singh Development LLC, his family’s real estate development and management company celebrating a half-century in business this year. Grewal, an expert in multifamily housing, earned his nance degree from Indiana University in 2004 and his master’s in nance and real estate from New York University in 2008. He spoke with Crain’s about the state of the industry, emerging trends and his travels.

Let’s talk a little bit, big picture, on the state of the multifamily market. It’s long been kind of an industry darling, basically since the Great Recession. What’s it like as you see it right now, both in terms of existing as well as new construction?

e existing market is really strong. Occupancies, locally, are strong and tra c is still really at all-time highs. We used to essentially say, anksgiving through March 1, you would see this kind of dip in tra c at your communities, and since 2020, you don’t see that anymore. Month to month, the tra c always remains high. Part of that is probably because we haven’t produced as many units that are necessary in the market, but the other thing is that the rising cost of for-sale housing is creating renters out of necessity, as opposed to choice. Rents were crazy. You saw normal rental increases probably 3-7 percent in the 2010s to last year and the year before, you were getting double-digit rent increases, 10-12 percent, which was ba ing. Today, rental increases are still pacing probably with in ation, but you’re hearing nationally that revenue/expense growth number is inverted in other major markets, where expenses are out-pacing revenue growth. I don’t know if we are seeing that 100 percent here, but in ation is always a little bit lagging, so my guess is that the margin between the two is attening out.

Interest rates have hindered everything from construction to acquisitions to re nancing. How do you see those playing out the next couple years?

For new construction, I think the days of inexpensive capital are probably behind us for the foreseeable future. A lot of the growth of multifamily has a lot to do with cheap capital. Today, you have to have a little bit more of a di erent approach. I think if you’re one of these short-term guys that’s looking to make a quick buck, I don’t know if the market is in your favor. But if you’re like us and you’re a longterm holder of real estate, you go back to the values of your developments. at’s having a bit more of a measured approach. When we do an analysis on a piece of property and looking

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to do any type of development, we are not necessarily looking at what the capital markets impact is going to be on that deal. We are going to look at whether there is a need for this product, and whether people are going to buy this product, essentially. at’s the long-term look. Where the capital markets impact it, if we were a company that was previously doing 2-3 construction deals per year, today because interest rates are higher and the loan amount that you’re going to receive is a bit lighter, you may not be able to do those 2-3 deals on an annual basis. You may only be able to do one or two.

Singh has been involved in some big projects over the years, perhaps most recently The Grif n in Royal Oak. What are some of your other bigger efforts these days? Because we have been around 50 years, there are pieces of land that have been acquired over the last few decades we are sitting on that we’ll be developing ourselves at some point. We do look for opportunities for new deals, e Gri n being one of them. We do like the suburban/ urban markets in metro Detroit, similar to what we did with e Gri n. We have a deal we are working on in Novi around Twelve Oaks Mall. If there is anything that’ll be next in metro Detroit, it’ll be the property we have on 12 Mile next to Twelve Oaks.

This is also a big year for Singh as it celebrates a half-century in business. Can you talk a little bit about the company’s history and where the company is today?

If you ask my father and uncles, they’ll say 50 years kind of snuck up on them. If you look at the totality, we are really proud of it. My father and uncles are the heart and soul of this organization, guys who grew up on the east side of Detroit. ey have a great story of building relationships, working with people and positively impacting the communities they are in. Looking forward to the next 50 years, what we try to focus on is to carry on with that legacy they created by keeping it simple with a core family and company philosophy to do the right thing in how you deal with people,

the communities you are in and your developments. If we can stick to that, I think we have another 50 in front of us.

You were talking about traveling. What draws you to that and where have your travels taken you?

Life is all about perspective. Every day you deal with people that are not the same as you and have di erent cultural and family and religious backgrounds. e more we can do to get in touch with how people view the world and live their life, the more accepting we can be. From a business owner perspective, the better we can be at delivering product for people that are going to be consuming it in the communities you’re in, the better. Although travel and being involved in sports is fun, I think there is a true value in what we do on a daily basis. Several years ago, I had the opportunity to hike the Inca Trail in Peru. I grew up in a great school system and they teach you about these ancient civilizations. You hear about Machu Picchu and read about it, but being there and seeing the indigenous communities and learning about the civilization and seeing how advanced they were at that time ... you almost think we in this generation created all this great value to mankind, right? But hundreds of years ago, that same value was created in a di erent way by other civilizations. For me, the beauty of being on the Inca Trail, learning about that culture and civilization, and just seeing the art and meeting the people was a phenomenal experience.

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Saab Grewal is director of asset management at Singh Development LLC