Crain's Detroit Business Sept. 13, 2021, issue by Crain's Detroit Business

THE CONVERSATION: Honigman CEO balancing where lawyers work amid growth. PAGE 22

LOGISTICS: John James sets succession plan in motion. PAGE 3

BUILDING ON A LEGACY

Minoru Yamasaki, insert, is known for adding significantly to the skyline of New York City.

World Trade Center designer’s firm is finding its footing after lawsuits, receivership and a pandemic Robert Szantner has spent more of his professional career as an architect in federal investigations and legal battles than he would have preferred, first after a pair of airplanes two decades ago destroyed

the World Trade Center his firm designed and then after unpaid taxes and other bills destroyed what was then Yamasaki Associates Inc. But the Detroit-based architecture firm now known as Yamasaki Inc. remains at work on key projects in Detroit, Grand Rapids and over-

Biden vaccine order leaves many questions BY DUSTIN WALSH

President Joe Biden is looking to force the hand of the unvaccinated by hitting them at work. The president instructed Thursday the U.S. Department of Labor to draft up rules that require companies with more than 100 employees to mandate the COVID-19 vaccina-

tion or require weekly testing. But the bold move from the White House is leaving local leaders with more questions than answers. David Lawrence, executive vice president and chief administration officer for Livonia metal stamper and engineering firm Alpha USA, is See VACCINE on Page 19

NEWSPAPER

seas, having moved to the city into the Fisher Building from the suburbs in the last few years. It is also much smaller these days, with a fraction of its former payroll of more than 100, as Szantner, the firm’s 60-year-old co-owner with two brothers Mohamed and Aziz

Fahmy, searches for the next generation of Yamasaki leadership as a succession planning move. Szantner couldn’t have known when he was in the World Trade Center on Sept. 7, 2001, that four days later, the towers would crumble in a coordinated terrorist attack

that left 2,977 dead, including 2,753 in the collapse of the 110-story buildings designed by the late architect Minoru Yamasaki, the eponymous firm’s namesake who died in 1986 of stomach cancer. See YAMASAKI on Page 18

BEYOND THE BRIDGE When most people think of St. Ignace, the Mackinac Bridge looms large. But the first county you pass through on your way into Michigan’s Upper Peninsula is a lot more than that, as IT entrepreneur-turned-electric ferry operator Jerry Fetty (pictured) can attest. Take a tour through more of what Mackinac County has going on in this month’s Crain’s Michigan Business. STARTING ON PAGE 10

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

BY KIRK PINHO

Yamasaki President Robert Szantner poses for a portrait inside the architecture firm’s office at the Fisher Building in Detroit.

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NEED TO KNOW

RESTAURANTS

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

Ishbia

UWM TO PAY MSU MEN’S FOOTBALL, HOOPS TEAMS THE NEWS: United Wholesale Mortgage Corp. has become one of the first companies in metro Detroit to move forward with sponsoring college athletes since a recent rule change allowing it — and it’s doing so in a big way. The Pontiac-based mortgage lender (NYSE: UWMC) said it will have individual sponsorship deals with all 133 student athletes on the men’s basketball and football teams at Michigan State University and will pay them $500 a month for 2021-22, totaling $6,000 per player. WHY IT MATTERS: The deals are one of the most extensive since a U.S. Supreme Court ruling cleared the way for college athletes to be paid for the use of their name, image and likeness. MSU is the alma mater of UWM CEO Mat Ishbia, who was a walk-on player on MSU’s 2000 national champion basketball team.

STELLANTIS NAMES NEW CHRYSLER CEO THE NEWS: Stellantis is bringing in a former Ford marketing executive to

lead its Chrysler brand. Christine Feuell, who held numerous roles at Ford including director of global marketing strategy, will join Stellantis on Sept. 13 and report to Stellantis CEO Carlos Tavares, the automaker said. WHY IT MATTERS: Feuell will helm a brand that is short on product and in need of direction, but she’ll be given time to turn it around. Tavares said in May that he’s affording each of the 14 brands melded together from the merger of Fiat Chrysler Automobiles and PSA Group a 10-year window to execute a business plan.

ZOO TAPS ATLANTA EXECUTIVE AS NEW CEO THE NEWS: The Detroit Zoological Society has named Hayley Murphy, deputy director of Zoo Atlanta, as its new top executive. Murphy, a doctor of veterinary medicine, will join the Detroit Zoo Nov. 1. She will be the first female director and CEO in the zoo’s 93-year history and succeeds longtime Executive Director and CEO Ron Kagan, who is retiring after 28 years. WHY IT MATTERS: Murphy brings proven expertise in conservation, animal welfare and education through her extensive involvement with the Association of Zoos and Aquariums and more than 30 years of zoo experience. She is also one of the country’s leading ex-

perts on cardiac health in gorillas, leading an international effort examining heart disease in great apes.

MICHIGAN LEADERS URGE VACCINATION

Mudgie’s deli in Corktown closes temporarily after owner's death ` Mudgie’s Deli and Wine Shop has closed temporarily for bereavement following the Sept. 5 death of owner Greg Mudge, 46. An announcement on the pause came last Wednesday morning via the Corktown deli’s social media channels. No reopening date was given. “The staff and friends and family members related to Mudgie’s Deli would like to send sincerest gratitude to the community for the outpouring of love at this sorrowful time,” a Facebook post reads. The Detroit News reported that the Oakland County medical examiner reported Mudge died of natural hypertensive cardiovascular disease. The restaurant, which received national attention over the years, was established by Mudge in 2008.

THE NEWS: Michigan health and business officials on Thursday renewed their plea for people to get vaccinated against COVID-19, citing hospital workforce shortages, unnecessary deaths and concerns that end-ofsummer travel and the return to school could fuel a surge in cases. WHY IT MATTERS: About 59 percent of Michigan residents ages 12 and older have been fully vaccinated and 65 percent have gotten at least one dose. Those figures trail behind the national rates of 62 percent and 73 percent. Brian Peters, CEO of the Michigan Health & Hospital Association, said hospitals are operating at near capacity as coronavirus caseloads rise and patients seek care they delayed earlier in the pandemic.

Greg Mudge at his restaurant in 2013. | FILE PHOTO

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Cultural jewels put more money in the bank in COVID crisis BY SHERRI WELCH

A NEW BREW HopCat’s location on Woodward Avenue in Midtown Detroit. The chain seeks to open additional locations in the region. | NICK MANES/CRAIN’S DETROIT

HopCat seeks a path forward after bankruptcy, plans to focus on its home state, metro Detroit BY NICK MANES

Nearly one year removed from Chapter 11 bankruptcy, the HopCat bar and restaurant brand seeks to once again pour craft beer in new locations, albeit at far from the breakneck expansion pace the brand once targeted. HopCat’s parent company, BarFly Ventures LLC, filed for Chapter 11 bankruptcy protection in June of 2020, citing financial struggles from the COVID-19 pandemic and legal disputes with one of its landlords. “We were crushed under a moun-

tain of debt and uncertainty about the future due to COVID,” Mark Sellers, the founder of BarFly Ventures, told Crain’s at the time. “It shut us down to the point where our revenues declined 100 percent overnight.” The mountain of debt mentioned by Sellers, who is no longer involved in operations of the restaurants post-bankruptcy, largely came from a $25 million injection of mezzanine financing the company took on in 2015 as a way of expanding the craft beer-focused chain. But that expansion did not play out as Sellers hoped for.

Last October the company was bought out of bankruptcy for $17.5 million by Texas private equity firms Congruent Investment Partners and Main Street Capital, the same groups that initially financed HopCat’s growth. The financiers and now owners, as well as Ned Lidvall, CEO of Grand Rapids-based Project BarFly LLC, do anticipate opening new HopCat locations in the coming months, and see the metro Detroit region as one key area in which to do that. See HOPCAT on Page 20

“WE WERE CRUSHED UNDER A MOUNTAIN OF DEBT AND UNCERTAINTY ABOUT THE FUTURE DUE TO COVID. IT SHUT US DOWN TO THE POINT WHERE OUR REVENUES DECLINED 100 PERCENT OVERNIGHT.” — Mark Sellers, founder, BarFly Ventures

PEOPLE

John James Sr. drove past the obstacles — and is now passing it on BY CHAD LIVENGOOD

John A. James Sr.’s foray into the trucking business in 1971 started when he learned of an opportunity to haul Schlitz beer from Milwaukee to Detroit for a local beer distributor. James, who was 29 years old at the time and learning the ropes of labor relations in management at Chrysler Corp.’s Highland Park headquarters, started investigating how to break into the business. The Starkville, Miss., native and Vietnam War veteran heard a common refrain: “Everybody said, ‘Nope, can’t do it. It’s a closed industry. You can’t get in. Don’t even try it.’” He tried anyway.

James and his uncle, the late Calvin Outlaw, pursued an application to haul beer for Sky-Pac Distributing Co. through the federal Interstate Commerce Commission, a federal board original formed to regulate trains that dated back to Grover Cleveland’s presidency. That application set in motion a yearslong battle over a dozen individual applications for James and Outlaw’s trucking company, O-J Transport Co., to haul beer for Schlitz and eventually Detroit-based Stroh Brewery Co. and auto parts for General Motors Co., Ford Motor Co. and American Motors Co. “I had a legal bill that I’m probably still paying after 50 years,” James

Call it a silver lining: The pandemic has spurred tens of millions of dollars in endowment gifts or commitments to nonprofits in Southeast Michigan. As they transfer to nonprofits in the coming years, the gifts, many included as part of donors’ estate plans, will help provide a sustainable source of revenue to ensure the organizations can operate long Donovan into the future. Though some of the planned gifts were in process before the pandemic, a mixture of things has galvanized additional donors to make gifts over the past 18 months, from the high-performing stock markets to concerns about the long-term viability of nonprofits and the legacy they’ll leave, nonprofits said. “We’ve had time to think about things ... to realize our mortality and just the larger world,” said Marla Donovan, retired executive in the office of the chairman at Kaufman Financial Group, who is in her third term as a director on the Detroit Institute of Arts Board of Directors. “I’d always intended to do something for the DIA, but last year, the urgency became clear.” Donovan, 64, has fond memories of visiting the DIA and other museums as a young child, trips that sparked her lifelong love of art and volunteerism at the DIA during the first millage campaign and service on its board since 2014. Late last summer, she added a seven-figure gift to the DIA in her estate plan to ensure the wealth she’d accumulated during her life’s work was deployed for something meaningful and important that could help the DIA continue its work after she’d gone. No one knows what the future holds, so the gift to the DIA’s unrestricted operating endowment made sense, she said. “What the DIA did for me 50 years ago as a young student, I hope it can continue to do: the same enrichment and enlightenment and education of hundreds of thousands of young people now and into the future,” Donovan said.

Significant gifts

Transport Co. that led him into the logistics, real estate development and auto parts sub-assembly businesses.

With Donovan’s gift and those made by many other supporters, the Detroit Institute of Art has raised $16.5 million so far toward its operating endowment during the pandemic and is in the closing phase with donors for several more significant gifts, said Nina Holden, senior vice president and chief development officer at the DIA.

See JAMES on Page 20

See GIVING on Page 17

John A. James Sr., chairman and founder of James Group International, stands in the Southwest Detroit warehouse that his company built in 1998 in partnership with Ford Motor Co. at 4335 W. Fort St. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

said in a recent interview with Crain’s. James, who turned 80 years old last week, is also marking the 50th anniversary of James Group International, the successor company to O-J

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The 1 million-square-foot-plus former Art Van Furniture headquarters in Warren is under contract with a Montreal company that plans to renovate the vacant property and lease it to a new user or users. | COSTAR GROUP INC.

Another HQ about to change hands — this time, former Art Van property A Montreal company is gearing up to buy the former Art Van Furniture Inc. headquarters property in Warren, becoming the latest large loKirk cal headquarters PINHO building with new ownership on the horizon. Simon Yeramian, vice president of investments for Groupe Quint, said his firm is expected to close on the purchase of the more than 1 million square feet of space at 6500 E. 14 Mile Road from New York City-based LCN Capital Partners in the next week or two. The price was not disclosed, but the building, which most recently was occupied by Loves Furniture Inc., had been listed for $65 million this winter, a price jump from the previous asking price of $53.9 million. Loves Furniture bought Art Van’s assets and leases for 27 stores for $6.9 million in May 2020 and then eight months later in January went belly up. The pending sale of the old Art Van Furniture headquarters is the latest prominent local headquarters to sell this year, following the $42 million August sale of the 110,000-squarefoot Cooper-Standard Automotive Inc. headquarters in Northville and

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“WE LIKE TO BUY LARGE, VACANT WAREHOUSES AND THEN SPEND THE MONEY REQUIRED TO GET THE NEW TENANTS IN THE BUILDING.” — Simon Yeramian, vice president of investments, Groupe Quint

ipation of leasing it to tenants. “We like to buy large, vacant warehouses and then spend the money required to get the new tenants in the building,” he said. “We’ve been pretty

aggressive. We want to buy a lot of industrial real estate in the U.S. in the next 12 months.” Marketing materials from Southfield-based Signature Associates Inc., which had the property listed earlier this year, say the 1.06 million square feet sits on 63 acres and has more than 1,150 parking spaces. The property is one of five with $68.75 million in commercial mortgage-backed securities debt that sits in special servicing due to nonpayment, according to Trepp LLC, a New York City-based firm that tracks CMBS debt. Loan commentary says the special servicer on the property, New York City-based Greystone & Co. II LLC, marketed the loan for auction in July “due to a large amount of unsolicited interest and the potential difficulties of administering the Warren (1MM SF industrial) site as REO,” meaning owned by the lender. Yeramian said there was a high offer of $56.375 million during the auction but his company ended up entering into an agreement to buy the buildings from LCN Capital Partners directly. Art Van Furniture founder Art Van Elslander sold the company to a Boston-based private equity firm, Thomas H. Lee Partners LP, in an estimated $550 million deal in 2017. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

RETAIL

Rivertown Market, Meijer’s small-format Detroit store, to open in October BY JAY DAVIS

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the $58 million sale in March of Magna International Inc.’s new 180,000-square-foot seating division headquarters in Novi. Yeramian said Groupe Quint also has the former Blue Bell Mattress Co. LLC manufacturing location in Roseville at 30450 Little Mack Ave. under contract. Blue Bell had been a supplier to Art Van and Bob’s Furniture but permanently closed its facility in March 2020 after Art Van’s bankruptcy and Bob’s Furniture canceled all its orders, according to a WARN notice posted on the state’s website. It is currently home to Anji Logistics USA, which subleases the space. Yeramian said Groupe Quint plans to spend a “significant amount” renovating the Warren property in antic-

A project almost four years in the making will finally become reality when Detroit’s Rivertown Market opens Oct. 6. The Rivertown Market will be the fourth small-format Meijer in the state, following locations in Grand Rapids, Lansing and Royal Oak — all opened since 2018. The 42,000-square-foot store, first announced in 2017, will feature fresh and prepared foods, including bakery, fresh meat and deli items, along with a 4,700-square-foot produce department, according to a news re-

lease. The Rivertown Market, located at 3472 E. Jefferson Ave., will also offer Meijer and national brands. The store in its push to offer local products will feature an estimated 2,000 locally produced artisan items, among them Highland Park’s Pizzaman Pizza, Hamtramck-bassed chocolate shop Bon Bon Bon, Detroit’s MexiBake Bakery. Rivertown Market, with an estimated cost of $16 million to complete, will also offer basic cleaning items, and health and beauty care products from local black woman-owned businesses like South-

field-based Crystal Eikcaj Skincare. Store manager and Detroit resident Marcus Reliford said the store, which has drawn the attention of some local independent grocers, offers customers a unique shopping experience. The market will have a staff of 70 employees. “We are excited to open our doors, be a good neighbor, and work every day to have the best products on our shelves,” ” Reliford said in a statement. Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

Rare Wright hits market in Michigan St. Joseph house, which the architect designed in 1950, is coming on the market for the first time in 25 years

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The upward-tilting roof of this house designed by Frank Lloyd Wright “scoops the light off the lake,” said Gina Flamm, who since 1996 has owned the home on a Lake Michigan bluff in St. Joseph, Mich., with her husband, Arthur Wolak. The house, on Old Lakeshore Road 95 miles from the Loop, is from late in Wright’s career—he was 83 when it was built, in 1950—which makes it more of a modern design than his Prairie-style homes and others from early in the 20th century. On the outside, it’s essentially a ranch house with a jaunty hat on. Inside, the details are quintessentially Wright: an artfully designed fireplace at the heart of the home, built-in furniture and abundant natural materials including brick and wood. When Flamm, the head of a Michigan pickle firm her grandfather founded in 1917, and Wolak bought the house 25 years ago, the house was almost half a century old and in need of attention. “We started bringing in craftsmen right after we moved in,” she said. Over the years, the couple replaced the roof with a high-tech membrane that beats Wright’s notorious penchant for building leaky roofs, replaced all the old windows with energy-saving double-paned glass and yanked black marble flooring off a lake-facing terrace to take it back to Wright’s trademark shade of red. The couple enjoyed the Wright atmosphere. “This is a house that makes music sound better,” Flamm says. “It makes food taste better.” Late last year, Flamm handed over the reins of her grandfather’s pickle company to a longtime deputy. She and Wolak, who was also a Flamm Pickles employee, plan to divide their year between Michigan, Florida and Italy, giving them less time to enjoy life on the Lake Michigan bluff. They listed the four-bedroom, 3,150-square-foot Wright house for sale Sept. 8. The asking price is $1.96 million, and the listing agent is Anne Gain of @properties. The asking price includes the furnishings and art.

ANDREW PIELAGE

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U of D Jesuit High School receives largest-ever estate gifts Totaling $10 million, they will create the school’s top two endowed student scholarships BY SHERRI WELCH

University of Detroit Jesuit High School and Academy has received two estate gifts totaling $10 million, the largest ever received during the school’s 145-year history. The gifts of $5 million each will be made by the estates of the late Dr. Leonard Scherock, an alumnus of the school, and by a friend of the school, Nicholas Labedz, a private real estate investor and longtime resident of Southern California. The value of the bequests will create the school’s top two endowed student scholarships. Scherock, who died in April 2020 at age 78, was a member of the U of D Jesuit High School and Academy class of 1959. The all-male school said he credited his education there for laying the foundation of his numerous lifetime achievements and wanted to leave a legacy so other young men could experience the same life-changing opportunity. After graduating from high school, he earned his medical degree at Wayne State University School of Medicine and launched his practice in Mt. Pleasant, where he worked for several decades as a double-board certified doctor in diagnostic radiology and nuclear medicine. Labedz, a Detroit native and friend

Leonard Scherock, left, stands with Brother James Boynton, a Jesuit teacher at University of Detroit Jesuit High School and Academy, in spring 2019. | UNIVERSITY OF DETROIT JESUIT HIGH SCHOOL AND ACADEMY

Nicholas Labedz, a Detroit native and friend of the school who died in May 2019 at 86, made the donation through his estate in honor of his lifelong friend and business partner, Richard Mazurek, M.D., a 1954 graduate of U of D Jesuit. | UNIVERSITY OF DETROIT JESUIT HIGH SCHOOL AND ACADEMY

The University of Detroit Jesuit High School and Academy’s largest estate gifts will create the school’s top two endowed student scholarships. | UNIVERSITY OF DETROIT JESUIT HIGH SCHOOL AND ACADEMY

of the school who died in May 2019 at 86, made the donation through his estate in honor of his lifelong friend and business partner, Richard Mazurek, M.D., a 1954 graduate of U of D Jesuit. His gift to the Detroit high school follows one made to Wayne State University years earlier in honor of Mazurek, who graduated from the WSU School of Medicine in 1961. Labedz committed $10.2 million to support construction of the Richard J. Mazurek, M.D., Medical Education

Commons on the university’s campus in 2005. The largest individual gift ever made to the university at the time, it brought his total support for the medical school to $25 million. At U of D Jesuit, “The donations from these two remarkable people strengthen our ongoing renaissance,” said Theodore Munz, president of U of D Jesuit, in a news release. The gifts will increase the school’s endowment, allowing it to expand tuition assistance to more boys, he said. Founded in 1877, U of D Jesuit, located on Cambridge Avenue, is the oldest continuously operating high school in Detroit, according to its leaders. It has about 900 students, nearly 40 percent sharing in annual tuition assistance totaling $3.5 million. The school is nearing completion of a $7.5 million redevelopment of a former city of Detroit recreation center and nearby park in northwest Detroit. The project will more than double the size of the school’s campus, expanding athletic facilities and providing community service opportunities for students, while reopening the fully renovated Johnson Recreation Center, which had been shuttered for 15 years, to the community. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

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COMMENTARY

Coalition seeks to overhaul Michigan’s school funding

Michigan State guard Nia Clouden brings the ball up court past Minnesota guard Alexia Smith during an NCAA basketball game last season.

COMMENTARY

In MSU-UWM college sports deal, where are the women?

omething striking is missing from United Wholesale Mortgage’s plans to start paying student athletes at Michigan State Univer-

sity. An entire gender. The Pontiac-based mortgage lender announced Wednesday it has secured individual $6,000 sponsorship deals with all 133 members of the men’s basketball and football teams for the 2021-22 season. In return, players are expected to tout the UWM brand on social media. It’s a bold but not entirely surprising move for UWM CEO Mat Ishbia, a walk-on player on MSU’s 2000 national champion basketball team. Ishbia has been bleeding a lot of green in his efforts to one-up Quicken Loans founder Dan Gilbert, another MSU grad and major donor, for the title of Biggest Billionaire Spartan Booster. As an MSU alumna myself, I’m not unappreciative of investments in my alma mater. What is surprising is that a CEO so sensitive to his company’s public relations image would not include female athletes in this first round of funding. The roughly $90,000 cost to add the school’s 15 women’s basketball players to the list is a rounding error for a company that made more than $3 billion in net income last year. The snub is ironic given how hard women at all levels have to work to secure the resources they deserve. Inequities in women’s sports are endemic, from small private colleges to the elite U.S. Women’s soccer team. UWM has said it will consider compensating women’s teams in the future, but the message for now is clear: Men are worth more. UWM elaborated — indirectly — on the equity issue in a statement Thursday, saying it considered funding all 900 MSU student athletes but that “we are going to walk before we run with this.” “We have rooted relationships with the men’s basketball program as well as football that allowed us to complete these agreements faster and more efficiently,” the statement said. “This is new to everyone and we are continuing to explore additional MSU teams ... This was the first step to understand the (sponsorship) process, and we’re always looking at different ways we can help out Spartan student athletes.” Ishbia and UWM, as a private citizen and

Kelley

ROOT

Executive Editor business, have every right to steer their money as they see fit. But these deals offer a look at how the new world of money in college athletics could exacerbate the gender gap on the playing field. The omission matters because UWM’s offer is innovative and sets a new standard for how player sponsorships will work. They come a critical time for university athletics — just months after the U.S. Supreme Court ruled student athletes can be compensated for their accomplishments. Since those rules took effect, college athletes have begun cashing in a wide variety of deals to profit from their name, image, likeness, often abbreviated “NIL.” That’s in addition to the scholarships and other perks they already get just to step foot on campus. It’s unclear how this Wild West atmosphere ultimately will affect college athletics. University of Michigan President Mark Schlissel, in a recent interview with Crain Communications CEO KC Crain, said his opinion on the issue has evolved. “I’ve really come to the view that (student-athletes) deserve opportunities based on their talents, just like any other students,” Schlissel said. “…. So the ability to use your name, image and likeness and benefit from it, you know, good for them. We just need to be sure it doesn’t corrupt the recruiting process, it doesn’t distract from their studies, it doesn’t diminish their commitments to their athletic program.” But that was before the UWM deals, in which a single company essentially bought every player on two teams. It paves the way for the most cynical of funding formulas: The universities with the most billionaires will win, and the boosters can now pay the players directly above the table. In that equation, gender equity in college athletics surely will take the loss.

LIVENGOOD

$500 per student in general education funding to pay for special education programs and services. This has been the practice at Detroit Public Schools Community District for years, with that diversion of funds to pay for special education often exceeding $1,000 per student. In a school system of 50,000 students, that’s tens of millions of dollars that can’t be used to attract and retain hard-to-find math and science teachers. The researchers Education Trust-Midwest did the math and found that, overall, Michigan’s highest poverty school districts get 5 percent less taxpayer support than its lowest poverty school districts. Michigan is not alone in having an inequitable K-12 funding system — 15 other states also underfund schools with higher levels of poverty, according to the report. High-poverty school districts aren’t just limited to Detroit, Pontiac and Flint. They’re also in places like Evart, North Branch and Waldron. The Michigan Legislature, which has been completely controlled by Republican legislators from rural corners of the state for a decade, does provide rural school districts with additional funding to compensate for higher operational costs due to a lack of economies of scale. Busing, in particular, is very costly in rural areas of the state, while some compact suburban Detroit school districts don’t even have student transportation costs. See FUNDING on Page 9

School districts with a high percentage of students living in poverty such as Detroit Public Schools Community District get a substantially smaller increase in state aid than high-poverty schools in peer states like Maryland and Massachusetts, according to a new report on school funding inequity from Education Trust-Midwest.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

Chad

COURTESY OF DETROIT PUBLIC SCHOOLS COMMUNITY DISTRICT

AP PHOTO/BRUCE KLUCKHOHN

nother day, another report about how Michigan underfunds the education of its children. Except the newest report — this one from Education Trust-Midwest — drives home the funding crisis that is particularly pronounced for K-12 schools with high levels of students living in poverty, students with disabilities or those who come from families where English is not the primary language. “Michigan underfunds these groups of students at devastating levels,” the report reads. The Education Trust-Midwest report draws attention to how the Legislature weights additional funding for at-risk children from low-income families who require more individual attention — and are more costly to educate. Michigan adds 11.5 percent to its roughly $8,000-per-student grant to K-12 schools to educate low-income children. By comparison, Maryland adds 73 percent and Massachusetts — that higher wealth state business leaders always seem to want to emulate — funds low-income students at 105 percent above the base per-pupil rate. For English language learners, Michigan adds 11 percent to the per-pupil grant. Maryland adds 85 percent and Georgia increases its aid by 159 percent for children whose parents don’t speak English at home, according to the report, which is bluntly titled, “Engine of Inequality: Michigan’s Education System.” Students with disabilities, who often cost twice as much to educate, don’t have a special weighted funding formula. They’re just “chronically” underfunded through a partial reimbursement to school districts of their actual costs, according to the report from Education Trust-Midwest, a Royal Oakbased education reform organization. A Michigan State University study found that Michigan school districts use more than

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FUNDING

From Page 8

Arellano

Meador

tribution to the school aid fund in the 2020 fiscal year was about 7 percent of its funding last year). Changing those sources of funding or adding a new one to the mix — such as a higher individual or business income tax — would require major changes in state law and probably the state Constitution. The coalition does propose using one-time federal stimulus funding as the bridge funding to get to a

“THAT RESULTS IN MICHIGAN ACTUALLY ONLY PROVIDING 9 PERCENT MORE FOR LOW-INCOME STUDENTS — AND THAT’S FAR BELOW THAN WHAT WE’RE SEEING IN OTHER STATES AND WHAT RESEARCH CALLS FOR.” — Mary Grech, chief of staff, The Education Trust-Midwest

with the underlying facts in the new report, which illustrate how inequitable Michigan’s formula for school funding has become. Meador wants to move policymakers away from the “scarcity discussion” that assumes the pie will never grow more than the rate of inflation (which has been the case since 2000). “We need to change the narrative here and get out of this scarcity mindset that says, ‘I only have a

dollar, so we need to decide who the winners and losers are’ versus saying, ‘No, I need $10 and not only do we need to fund this at the top level but then we need an equitable distribution,’” Meador said. “Let’s change the narrative to say if we did this and did this right, what are going to be the great outcomes that come out of this?” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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Yet they all get roughly the same amount of state aid under Michigan’s one-size-fits-all funding formula (unless they’re in a school district that got a special deal a quarter century ago to let its property owners pay higher taxes for better schools). Education Trust-Midwest’s research — which got funded by the Ballmer Group, the philanthropic foundation of former Microsoft CEO and Detroit native Steve Ballmer — notes that even Michigan’s 11.5 percent bump in funding for high-poverty schools is not guaranteed. In the event of a budget shortfall, the Legislature wrote a provision into the law that triggers a cut to that extra money first before lower-poverty school districts take a hit in their base funding. “That results in Michigan actually only providing 9 percent more for low-income students — and that’s far below than what we’re seeing in other states and what research calls for,” said Mary Grech, chief of staff at The Education Trust-Midwest. Education Trust-Midwest is leading a new diverse coalition called the Michigan Partnership for Equity and Opportunity to call on the Legislature to create a new funding formula that gives greater weight to school systems with higher levels of poverty, special education students and English language learners. The coalition is a mixture of civic and education groups, such as the Detroit Parent Network, the Autism Alliance of Michigan and Dearborn-based ACCESS. It also includes a pair of heavy hitters from the business community: DTE Energy Co. and 42 North Partners, the private equity firm of Mike Jandernoa, the former CEO and chairman of West Michigan pharmaceutical giant Perrigo Co. Jandernoa and DTE Vice Chairman Dave Meador have put their companies’ weight behind the coalition because they see a rapidly deteriorating education system that’s failing on several fronts. For all of the aspirational talk about Michigan being a “Top 10” state, we’re actually hovering closer to the Bottom 10 in K-12 educational achievement. Long term, the coalition wants lawmakers to rewrite the formula for funding K-12 schools and give a greater weight to students with higher needs to make their educational opportunities more equitable. “This is not the same old, same old coalition,” said Amber Arellano, executive director of The Education Trust-Midwest. “In many ways, this is an outside-of-the-(Lansing)beltway coalition.” That may be true, but it’s the still same old conundrum: Everyone recognizes Michigan’s public education system is in danger, but the state’s leaders are tied in knots about what to do about it. What the report doesn’t specifically propose is how to get more money into the $16 billion annual school aid budget. Taking existing money from lower-poverty school districts and redistributing it to the Detroits and Waldrons of the state is a losing proposition, politically. Baseline funding for Michigan’s schools primarily comes from the 6 percent sales tax and the 6-mill statewide property tax (the Michigan Lottery’s $1.8 billion profit con-

new per-student funding formula that’s more equitable. The group also wants new transparency reporting by schools so they have to account for how it’s being spent. “We think using the federal stimulus dollars to build a better statewide system of accountability and fiscal transparency is absolutely the right move to create that kind of buy-in and generate that kind of trust among the Michigan public and other stakeholders,” Arellano said. Whether the Michigan Partnership for Equity and Opportunity can spark movement on education funding reform remains to be seen. This mission has seen one failed launch after another in Lansing. But Meador said making “complicated, systemic change” starts

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SEPTEMBER 13, 2021 | CRAIN’S DETROIT BUSINESS | 9 6/10/21 12:57 PM

CRAIN’S MICHIGAN BUSINESS: ST. IGNACE

PROJECT PLANS

Funding opportunities have Mackinac County targeting ambitious to-do list

` IT ferry fund and

PAG

PAGE 12

A BIG LIFT

Fam ha reb CO up

IT entrepreneur takes helm of ferry company, puts together funding for muchneeded ship hoist and steers toward all-electric fleet

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

BY T

Jerry Fetty stands underneath the Huron, which is getting major repairs after winter freighting to Mackinac Island. Before, this work would have had to be done in Wisconsin.

`BY TOM HENDERSON For someone in charge of running

boat ferries to Mackinac Island, Jerry Fetty has a unique background. In 1991, he founded Sterling Heights-based SMART IT Services Inc., which offered automation IT tools to insurance agencies and medical offices and began rolling out cloud-based services in 2012. He had spent his summers as a youth in Mackinaw City and had an aunt and uncle who were major investors in the Star Line ferry boats that ran out of St. Ignace. In 2011, they suggested he ought to consider taking over management of the ferry operation. He invested some money in the business, formally known as the Mackinac Island Ferry Co., joined the board of directors and in the summer of 2012 worked three days a week at the offices in St. Ignace. He took over as CEO and president of the ferry service in 2013.

10 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

Fetty continues to own the IT company and retains the title of CEO, delegating day-to-day operations and a share of equity to one of his managers. In 2016, Fetty bought the assets of Arnold Transit, another ferry and freight service to Mackinac Island, out of bankruptcy. “Arnold was in foreclosure, so I picked up the phone and called the CEO. It took three years to get the deal done,” said Fetty. That gave him a piece of land that was both an eyesore and a potential treasure, a 15-acre parcel in downtown St. Ignace with 3,000 feet of frontage on Lake Huron. Over the years, the property had become a veritable junkyard, with long disabled boats, boat parts, engines, engine parts and other detritus scattered about. For as long as anyone could remember, the property was called the Mill Slip. Decades earlier, a saw mill

had sat on the site, milled wood being loaded on ships for transport to various markets. It also served as a fuel port for the Kincheloe Air Force Base in nearby Kinross Township before it closed in 1977. The size of the parcel and the length of the frontage far outweighed any concerns over getting the property cleaned up, said Fetty. Two years ago he created a division of the company called Mackinac Marine Services. The marine services division got a big lift in mid-April 2020, during the panic moments of early COVID shutdown. Fetty was told that on his second try, he had gotten a federal marine grant from the U.S. Department of Transportation’s Maritime Administration’s Small Shipyard Grant Program. See FERRY on Page 12

“GETTING $330,000 IN FUNDING DURING LOCKDOWN, WHEN WE DIDN’T HAVE ANY REVENUE COMING IN, AND HAVING TO DO IT UP FRONT WAS A SCARY THING TO DO. IT WAS NOT AN EASY DECISION, BUT I THOUGHT IT WAS AN IMPORTANT THING TO DO FOR OUR AREA AND IT WORKED OUT.” — Jerry Fetty, CEO and president, Mackinac Island Ferry Co.

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ALSO IN THIS PACKAGE

ave ng

` IT entrepreneur takes helm of ferry company, puts together funding for much-needed ship hoist and steers toward all-electric fleet. PAGE 10

` Family-owned hardwoods company rebounds from COVID-19, starts up a new mill. THIS PAGE ` Sault Ste. Marie Tribe sets its sights

on boat-building business. PAGE 13 ` Gchi Mshiikenh Deh Minising state park to celebrate region’s indigenous heritage. PAGE 14

TIMBER! Family-owned hardwoods company rebounds from COVID-19, starts up a new mill

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

BY TOM HENDERSON

Maple Hardwoods Inc., a second-generation timber company, has broken ground on a new sawmill, a $10 million project on 20 acres of land down the road from its current site near Hessel, northeast of St. Ignace. Its current sawmill operations will be converted to store both personal belongings of the Jaroche family as well as operating as a commercial boat storage facility. “It was time to invest in technology. We were 25 years behind the tech curve,” said Andrew Jaroche,the company’s vice president and operations manager. His parents, Luke and Lynelle, bought the company 30 years ago are still active in the business, though day-to-day operations have been turned over to Andrew. Luke buys stands of hardwoods and Lynelle helps out in the office. Andrew’s sister, Casey Reid, is an office manager; his wife, Brittany, runs the transportation division; and an uncle, Gary Purgeil, is a lumber inspector. The company has been on its current site for 60 years. What used to be the family house now operates as the office, surrounded by large stacks of cut timber, milled wood and the mill. The company employs lumber crews that range east into Ontario, as far west into the U.P. as Newberry, and as far south in the Lower Peninsula as Cadillac. Currently it mills about seven million board feet of timber a year. Jaroche says the new mill could double production but should at least produce 12 million board feet a year. “Best case scenario, the new mill could be up and running by next May or June,” he said. He said the company employs about 35, now, and has already hired four or five in anticipation of increased production from the new mill. He anticipates hiring another five or so. “Technology eliminates some positions but increased production creates other jobs, like the need for more forklift operators,” he said. Jaroche said Maple Hardwoods produces lumber of varying dimensions that it supplies mostly to wholesalers who in turn cut or mill it and sell it to retailers; mulch for landscaping and hog food; and sawdust and chips for animal bedding and pressed particle board. He said the lumber the company harvests includes hard and soft ma-

Andrew Jaroche, director of operations, Maple Hardwoods. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Ground has broken on a new $10 million sawmill. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

ple, cherry, red oak, aspen, basswood and ash. Darren Hubartt is vice president of purchasing for White Pigeon-based Banks Hardwoods Inc. It doesn’t have lumber crews of its own but buys cut hardwood and mills and planes it most for wholesale distribution to large cabinet makers. It also sells in large volumes to distributors who resell it in small volumes to small cabinet makers. The company, which was founded in 1985, claims 2.5 million capacity in its dry kilns and 10 million feet of lumber inventory. “Maple Hardwoods has been a

very good, loyal supplier of ours for more than 20 years. We buy as much as we can from them,” he said. “We get the majority of Maple Hardwoods’ production. We used to buy from 30-40 companies and narrowed it down to the very best. We have about 15 suppliers, now. Buying from the best makes quality-control easier.” Banks supplies MasterBrand Cabinets Inc., of Jasper, Ind., one of the largest cabinet makers in North America, claiming it has 10,000 craftsmen and 1,000 designers. Jaroche said that COVID knocked sales in half. While prices for milled

hardwood rose sharply as people social distancing at home began working on home-improvement projects, those increases were for his customers, who cut back on their buying over worries about the future and supplied the increased demand out of existing inventory. Sales volumes have rebounded, with sales of aspen and basswood at record levels, he said. Sales of mobile homes and recreational trailers have spiked nationally, and the interiors of those generally use lighter woods like aspen and basswood for cabinets and interior trim. Jaroche is keeping his fingers

crossed that at least some of the big development plans recently unveiled by Chris Byrnes, director of the Mackinac Economic Alliance, the county’s economic development agency, come to pass. Byrnes is optimistic that the time is right for the first major investment in infrastructure in the region in decades, thanks to the entire Upper Peninsula being designated an Opportunity Zone by the federal government as part of the federal Tax Cuts and Jobs Act passed in 2017; the $1.9 trillion Recovery Plan Act passed by Congress in March; and the $1 trillion infrastructure bill Congress passed on Aug. 11. (See related story, Page 12.) Byrnes hopes to get funding to expand one of the existing shipping ports in or near St. Ignace so it can handle the 1,000-foot ships that take containerized cargo to Europe, up from current size limits of 650 feet; and he hopes to get a shipping rail head built to enable cargo from the area to be transported by train. Each of those has the potential to sharply increase Maple Hardwoods’ distribution capabilities. “Trucking freight is an expensive proposition. Sending large volumes by rail and ship offers huge opportunities for us and would allow us to hit new markets. This area has been challenged since the Kinross air base shut down,” said Jaroche, referring to the closing of the Kincheloe Air Force Base in nearby Kinross Township in 1977. Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2

SEPTEMBER 13, 2021 | CRAIN’S DETROIT BUSINESS | 11

CRAIN’S MICHIGAN BUSINESS | ST. IGNACE

A LONG WISH LIST

Funding opportunities have Mackinac County targeting projects BY TOM HENDERSON

A convergence of funding opportunities may mean now is the time for the region north of the Straits of Mackinac, long economically challenged, to target big, ambitious projects. At least that’s how Mackinac County’s economic development officials see it. Those funding opportunities include the entire Upper Peninsula being designated a federal Opportunity Zone as part of the federal Tax Cuts and Jobs Act passed in 2017; the $1.9 trillion American Rescue Plan Act passed by Congress in March; and the $1 trillion infrastructure package now being hashed out by Congress. Chris Byrnes, director of the Mackinac Economic Alliance, the economic development agency for the city of St. Ignace and Mackinac County, said that the infrastructure bill’s funding breakdown is a perfect fit for some of his wish list of projects. The bill calls for spending $110 billion on roads, bridges and major infrastructure projects; $11 billion for transportation safety and pipeline improvements; $39 billion to modernize public transit; $66 billion for passenger and freight rail;

$17 billion for port infrastructure; $7.5 billion for zero- and low-emission buses and ferries; and $55 billion to upgrade water infrastructure. The American Rescue Plan provides $195 billion for states, with a minimum of $500 million for each state; $130 billion for local governments, with a minimum of $1.25 billion per state; and $20 billion for tribal governments. Opportunity Zones are considered undercapitalized communities. The law creating them allows any corporation or individual with capital gains to defer current taxes owed by investing in companies in those regions and to avoid taxable income altogether on new gains on those investments. Byrnes, who previously headed up economic development in Holland for 20 years and had stints heading up economic development in Niles and Three Rivers, is chair of the county committee that was set up to determine how to spend Recovery Plan Act funding. His plan is to use the $2.1 million Mackinac County will get from the Recovery Plan Act to pay for engineering and feasibility studies for his hoped-for projects, and then to use the results of those studies to apply for infrastructure funding and to convince Opportunity Zone inves-

FERRY

From Page 10

It was a grant for $752,933 to install a marine hoist capable of lifting boats as heavy as 220 tons onto dry dock for repairs or winter storage. Previously, the hoist on the site had a maximum of 80 tons. If boats larger than that needed repair, they had to be taken to Wisconsin, Sault Ste. Marie, Chicago, Detroit, Cleveland or Toledo, depending on who had dry-dock space available. There was only one catch: Fetty had to put together a matching grant of $334,000 in order to get the federal funding. “Getting $330,000 in funding during lockdown, when we didn’t have any revenue coming in, and having to do it up front was a scary thing to do. It was not an easy decision, but I thought it was an important thing to do for our area and it worked out,” he said. “We had some capital on hand and we got some bank money. We closed on the deal in April.” The hoist opened for operation that October. Fetty said it took five trucks to haul the lift’s pieces to the site and a week to assemble them. Depending on the varying work load from week to week in the offseason, he said between 12 and 25 workers, including deckhands and some captains, and his own welders and mechanics, keep busy. “Our heavy duty diesel mechanics are highly paid,” said Fetty. The lift, the biggest in Michigan, is named the Mr. Timmons, in honor of Clayton Timmons, a longtime shareholder in the ferry company who died two years ago. One early and happy customer for the hoist was Cheboygan-based Durocher Marine division of Westerville, Ohio-based Kokosing Industrial Inc. Durocher has a fleet of six tugs and several barges that help build large breakwalls, do major dredging opera-

tors to write checks. “If you don’t have engineering studies done, when you apply for government funding, they send you to the little kids’ table,” he said. Byrnes said that in anticipation of a federal infrastructure bill being passed sooner or later, he began coming up with a list of projects a year and a half ago. “We wanted to have projects ready to go that can get invested in,” he said. “Mackinac County has the worst seasonal unemployment in the state. Unemployment more than half the year is over 40 percent. There are a lot of locked doors up and down the streets here, and it’s not because of COVID. “There hasn’t been any new commercial development in the city in 10 years. We need to create projects that provide for high-paying jobs all year round.” His wish list of projects includes: ` Graham Point development — Graham Point is at the far southeast corner of St. Ignace, the site of the former automotive ferry landing before the Mackinac Bridge was built. The Michigan Department of Transportation owns the site. Byrnes envisions $28.5 million in funding to create a new freight port and multistory housing, with high-end condos on the upper floors and market-rate

Chris Byrnes, director of Mackinac Economic Alliance, across from his downtown office. | TOM HENDERSON/ CRAIN’S DETROIT BUSINESS

Jerry Fetty, CEO of Mackinac Island Ferry Co., owner of Star Line ferries to Mackinac. In the background is a 220-ton boat lift in St. Ignace. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

tions and lay underwater power cables and pipes on the Great Lakes. Until Fetty put in his hoist, if a Durocher boat needed a major repair, it had to travel long distances and face lengthy times out of service. Now, says Joe Shields, Durocher’s shop supervisor, that has all changed. Last year he said he had a tug that needed a new rudder. He called Fetty on Friday, had his tug there Saturday, had the boat fixed Sunday and it was back in operation after a Coast Guard inspection on Monday. Moreover, he is able to use his own mechanics and welders there instead of having to hire expensive crews at other dry docks. “It’s a convenience to put our own guys on it,” he says. “It’s been a huge savings of money.”

12 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

It’s been a big savings to Fetty, too. His largest vessel, a former Arnold ship called the Huron, is a freight carrier and does the heavy work of hauling supplies, horses and residents to Mackinac Island all winter, taking a pounding as it breaks through ice on the way in the dead of winter. Even during the winter of 2020, as COVID raged, it never missed a day. Islanders call it the Mighty Huron. At the end of winter, the Huron’s hull generally needs substantial repair, previously requiring a trip to Manitowoc, Wis. Today, the ship is being repaired onsite, with Fetty’s employees doing the labor. Though COVID didn’t have too much of an effect on the Huron’s operations, it had a sharp effect on the traditional ferry service, with boat and

hotel capacities on the island greatly reduced last summer. Though Star Line is back to running a full schedule to the island, Fetty said his employee count is down to 170 from 240. Many of the workers were seasonal, and when COVID mostly shut down the island last spring, many of them moved and never came back. “It’s a very tight labor market. There’s a lot of competition for employees,” said Fetty. To help ease that shortage, compounded by a tight housing market, Ferry bought an old, small motel in town and converted it to 16 housing units for employees. Fetty said he ended up providing storage space at the hoist site for 35 boats last winter and expects that to grow substantially this year as word

goes out. “I’m getting a ton of calls,” he said. What’s next for Star Line? Eventually, the electrification of the fleet. Describing himself as a longtime IT guy who likes modern technology versus old, Fetty has owned three electric vehicles, a Chevy Volt and two Teslas. “Big ferries have big diesel engines that eat a lot of fuel and contaminate the environment,” he said. Next year, he wants to have his largest ferry, the 350-passenger Radisson, operating with a hybrid diesel/electric system. He is getting bids on the cost of suitable engines and eventually sees the hybrid engine being replaced by an all-electric engine and, longer term, by an engine running on hydrogen. He said a boat company in Alabama is designing a new, all-electric ferry boat for him. He said once he gets design specifications, he can start applying for grants to help support the cost, with the help of Chris Byrnes, the director of the Mackinac Economic Alliance, the county’s economic development agency. “I’m hoping to begin building the boat in two years. It’ll be more than 200 passengers and take 18 months or more likely two years and $7 million to $10 million to build,” said Fetty. “It’s future proofing the business.” That process was helped on Sept. 2 when the state notified Byrnes it had awarded Mackinac County a $200,000 grant from the Department of Transportation’s mobility and electrification program to do an engineering and feasibility study on electrifying the diesel powered ferry fleet to Mackinac Island and the possibility of generating electricity from the deep, fast flowing currents running through the Straits of Mackinac. That grant is in partnership with Michigan Technological University. Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2

CRAIN’S MICHIGAN BUSINESS | ST. IGNACE apartments below, with a total of 50 units. ` Mining port expansions — There are two ports near St. Ignace that are used to ship out products from area mines, Port Sand and Port Dolomite. Byrnes wants to spend $6 million on Port Dolomite and $4 million on Port Sand to increase the size of ships that can dock from 650 feet to 1,000 feet, which would open up those ports to ocean-going vessels and to European markets. ` Kewadin Casino Port — $4 million to establish ferry service between the ferry docks in St. Ignace and a new dock at the casino, north of the city. ` St. Ignace parking — Much of the city’s waterfront on Lake Huron is taken up by parking lots for the ferries to Mackinac Island. Byrnes wants to spend $14 million to move those parking lots inland and take much better advantage of the waterfront. ` Viability Lab Launch Pad — This would be a $21 million partnership with Michigan Technological University and Michigan State University. Tech would house a Great Lakes Research Center and Advanced Power Systems Center in the launch pad. Helping that project along was the news earlier this month that the state had approved a $150,000 grant to Mackinac County from the Department of Transportation’s

mobility and electrification program to do an engineering and feasibility study on electrifying the diesel-powered ferry fleet to Mackinac Island and the possibility of generating renewable electricity from the deep, fast-flowing currents through the Straits of Mackinac. Michigan Tech is a partner in that grant, which will come with a $50,000 match from the MEA and Mackinac Marine Services, a business affiliate of the Star Line ferries to Mackinac Island. MSU would have a Mass Timber Institute and cooperative extension in the launch pad. Mass timber refers to a new way of engineering wooden beams by laminated layers of wood glued or nailed together. MSU’s new STEM center, in the former Shaw Lane power plant on its East Lansing campus, incorporates two large mass-timber wings. ` A new rail head for shipping and a new containerized shipping port — Byrnes said the old rail line into the county was long ago torn up and needs to be replaced, and a port capable of handling 1,000-foot international containerized vessels needs to be built at a location to be determined in or near St. Ignace, possibly at Graham Point. He is budgeting $9 million toward those projects.

Sault Ste. Marie Tribe sets its sights on boat-building business BY TOM HENDERSON

The Sault Ste. Marie Tribe of Chippewa Indians has grand ambitions of becoming a major player in the Michigan boat building industry. It took a small step down that path when it got a grant of $70,000 from the Native American Business Development Institute of the U.S. Bureau of Indian Affairs to assess the feasibility of a port development and how to leverage funding through the Upper Peninsula’s designation as a federal Opportunity Zone. That small step was dwarfed by the huge step the tribe took on July 17 when they learned they had qualified for participation in the Small Business Administration’s 8(a) Business Development program, the goal of which is to award at least 5 percent of all federal contracting dollars to disadvantaged businesses each year.

Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2

See TRIBE on Page 14

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SEPTEMBER 13, 2021 | CRAIN’S DETROIT BUSINESS | 13

CRAIN’S MICHIGAN BUSINESS | ST. IGNACE

A PLACE TO CONNECT Gchi Mshiikenh Deh Minising state park to celebrate region's indigenous heritage BY TOM HENDERSON

A state park in St. Ignace that has been little visited ever since its 5,000-square-foot Father Marquette Memorial Museum was struck by lightning and burned to the ground in 2000 is undergoing a complete makeover and name change, financed in part by a grant of $500,000 from the National Endowment for the Humanities. The museum opened in 1979 in Straits State Park, celebrating the life of Jacques Marquette, the French Jesuit missionary and explorer who founded Sault Ste. Marie in 1668 and St. Ignace in 1671. The park is just north of the Mackinac Bridge and split by I-75. There is a campground to the east of the freeway that is well used, but the parking lot west of I-75, near where the museum used to be, is often empty, or nearly so. The makeover is spearheaded by the Michigan History Foundation, with the support of the Mackinac Economic Alliance, which is the county’s economic development arm, and the Sault Ste. Marie Tribe of Chippewa Indians. The foundation is raising $1.5 million in matching funds. According to Sandra Clark, director of the Department of Natural Resources’ Michigan History Center, so far it has raised almost $300,000 of that goal, including $100,000 from the Meijer Foundation. Companies or individuals wishing to be part of the grant match can contact Clark at clarkss721@gmail.com. The reimagined park will dramatically raise the profile of the area’s Native American heritage. First and foremost, the park will be renamed Gchi Mshiikenh Deh Minising, the translation in the Anishinaabe language for Heart of the Great Turtle Island. Many Anishinaabe refer to North America as Turtle Island, named for what they see as the shape of a turtle, with the Great Lakes serving as the heart. After the museum burned, the Sault Tribe began holding a big three-day powwow on the grounds annually, with contests featuring professional and amateur dancers, drummers and

TRIBE

From Page 13

The program opens up equity and debt funding, grants, mentorship and partnership opportunities for the tribe. According to the 8(a)website, certified companies can get specialists to help them navigate complicated federal rules; helps them form joint ventures with established businesses through the SBA’s Mentor-Protégé Program; and get management and technical assistance, including business training, counseling, marketing help and executive development. The SBA also invests indirectly in 8(a) companies or entities through its investments in Small Business Investment Companies, which invest in small companies. According to Joel Schultz, the tribe’s executive director for economic development, rules for fund-

a wide variety of vendors, drawing thousands. The powwow was canceled for the last two years because of COVID concerns but will resume next summer. Clark said she hopes to put architectural plans out for bid to sharply improve the powwow circle grounds in time for next year’s event. Instead of food and other vendors setting up on grass, they will have concrete pads that will have electrical lines running to them, eliminating the need for generators for three days. Nearby, an amphitheater will be built, to host various tribal events as well as acts being sponsored by the nearby Kewadin Casino. Plans also call for a building called the Learning Commons, a welcome center that will highlight both the French Canadian and Native American heritages of the region, with space for workshops, classes and vendors selling Native American goods and artifacts. “The DNR will operate and maintain the building,” said Larry Jacques, director of strategic planning for the Sault Tribe. “The programs, workshops and exhibits will be developed by the Tribes and the Michigan History Center. They will contrast the lifeways, beliefs and knowledge that first came into contact with each other in the time of Father Marquette and remain today, challenging visitors to see through different eyes from both the past and the present. “There will be space to learn about a range of topics, from working with birchbark, to food, making and using snowshoes, and how we interact with water and other parts of the natural world.” Clark said the Michigan Department of Transportation will do a feasibility study to see if a pedestrian bridge can be built over I-75 to join the two halves of the park. Jacques said he is optimistic more matching funds for the NEH grant will be forthcoming from the state as part of the $400 million it has been granted by the federal government to improve state and local parks. In an email to the tribe in August, Gov. Gretchen Whitmer, said: “The Heart of Turtle Island in St. Ig-

nace is a unique effort between the state of Michigan, the Sault Ste. Marie Tribe of Chippewa Indians, local governments, and business partners that symbolizes our commitment to preserving areas of special significance. As the park develops over the coming years with its new name gifted by the Tribe, we hope to honor the deep and irreplaceable connections between people, land, water, and history. With recent, record utilization of our extraordinary state parks, we recognize

the value of continued investments to provide a safe place to stretch our legs and share our respect for the natural wonders of the region. That’s why I have proposed that Michigan use $400 million of the federal funds we have received to invest in our state and local parks. I look forward to seeing this project finish and witnessing the impact that additional park capacity will bring to our families, communities, and small businesses.” Jacques said the powwow circle

and amphitheater will be done in the first phase, with the Learning Commons next and finally the bridge, pending MDOT approval. He said he has been working on the project since 2016 and the Tribe first began proposing the park upgrade in 2012. “We wanted to have a space that lets us tell our story,” he said.

ing limits on contracts to supply federal agencies with goods and services greatly favor tribal businesses over other 8(a) companies. “As an individual company, as a Schultz rule there’s a limit on a single contract of $4.5 million, but as a tribal-owned company, it is $100 million,” he said. He said the tribe has already landed one partnership and government contract through the program, which is in the process of being signed. He declined to name the government agency until the paperwork is completed but said a new tribal company, Sault Ste. Marie-based Chippewa Government Solutions LLC, will share a $7 million contract to produce interactive training videos. The tribal company has formed a joint

venture called NationPoint LLC with Denver-based Tipping Point Solutions Inc. to fulfill the contract. Schultz said that had it not been for the 8(a) status, the Sault company would have been considered too inexperienced to get the contract. Instead, it will share the contract with an established company that otherwise would not have been eligible for 8(a) funding. Schultz found a potential partner for the boat-building business in Jerry Fetty, the CEO and president of Mackinac Island Ferry Co., which operates the Star Line ferry boats to Mackinac Island. He has a division called Mackinac Marine Services that operates on a 15-acre plot of land on the Lake Huron lakefront in downtown St. Ignace, which has plenty of empty land available for a new building to house the tribe’s boat company. (See related story, Page 10.) Last year, Fetty built a giant hoist, the largest in Michigan, capable of

lifting 220-ton boats in and out of the water, compared to the previous limit of 80 tons on his old hoist. That would allow the tribe to build boats in the 65-foot range and put them in the water and to haul out and repair other vessels. Fetty said his partnership options with the tribe are fluid. He could own the tribe’s new building and lease it to the tribe, share an equity stake in the building with the tribe, or the tribe could own the entire building outright, as funding through the 8(a) program evolves. Perhaps more important, Fetty has introduced Schultz to the owner of a long-established boat building company in Alabama. The company has been a supplier for Fetty and is in early talks to build him a new electric ferry. The company is owned by a Michigan man who is interested in selling it. “We know the owner well and are in serious discussions with him,” said

Schultz. “We have a very good relationship with him.” He said if the tribe buys the company and moves it to St. Ignace, the business could realistically employ 25 members and build three ships a year. He said the move north would increase the cost of doing business for the company. Now, it does much of its building outdoors. In St. Ignace, it would be indoors, meaning a very expensive ventilation system to vent off dangerous fumes and airborne particles from various building components, especially fiberglass. “Paying for HVAC will be a heavy lift,” said Schultz. He said one possible large customer for the tribe could be the U.S. Navy, which contracts to have boats built that are used as targets during training exercises by ships at sea. “The Navy favors minority suppliers.”

14 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

Keith Massaway, (left) treasurer of Sault Ste. Marie Tribe of Chippewa Indians; Bridgett Sorenson, secretary of Sault Tribe; and Larry Jacques, director of strategic planning for the tribe, on the site of what will be the new Powwow Circle when powwows return to the renamed state park next year. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

A rendering of the state park project. | MICHIGAN DEPARTMENT OF NATURAL RESOURCES

Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2

DEVELOPMENT

Detroit council nixes community benefits threshold expansion 5-3 vote was one of more than a dozen during lengthy virtual meeting on ordinance changes BY ANNALISE FRANK

Detroit City Council has turned down a proposal that would have made more real estate developments subject to community benefits rules. The lawmakers voted 5-3 to nix a recommendation pushed by Council President Pro-tem Mary Sheffield to lower the requirement for developments to qualify for a mandated neighborhood improvement process from $75 million in investment to $50 million. The vote was one of more than a dozen made last Tuesday afternoon and evening during a lengthy virtual meeting. Council members were voting on 17 proposed changes to the ordinance refined over the course of years. Those approved would be sent along to be incorporated into an amended Community Benefits Ordinance. Most significantly, the banner change over which stakeholders squabbled years back when the original ordinance was on the table — the dollar threshold for a project to trigger the benefits process — did not pass. And the conversation Tuesday was yet another entrant in a battle pitted as Mayor Mike Duggan’s administration and business interest against those of community advocates. Sheffield, Council President Brenda Jones and Council member Raquel Castañeda-López voted for lowering the threshold, while members André Spivey, James Tate, Janeé Ayers, Roy McCalister Jr. and Scott Benson voted to keep the status quo. There’s been a push for years to update the legislation that voters passed in 2016, aimed at creating a more equitable development process by including things like jobs, local hiring, environmental protections, land use programs and local small business and resident inclusion in agreements drafted with developers. Community advocates say the ordinance doesn’t go far enough to protect the interests of residents that big developments impact by locating nearby. Sheffield proposed lowering the threshold in 2018 as part of her equity-focused “People’s Bills” agenda. Opponents of the lower threshold including many developers and Duggan’s administration say stricter rules would just make construction even

Council members voted on 17 proposed changes to the ordinance refined over the course of years during a lengthy virtual meeting Tuesday. | SCREENSHOT

“I ASK THE QUESTION, WHAT MESSAGE ARE WE SENDING TO TAXPAYERS? THEY ARE COMING INTO THEIR AREA, DEVELOPING AND NOT TALKING TO THEM. THEY’RE JUST DEVELOPING AND ALL THAT IS CONCERNED ARE THE DOLLARS THAT ARE BEING MADE.” — Brenda Jones, council president

harder in the city and hurt the city’s finances by scaring off new projects. While the vote on the $75 million threshold was the most high-profile, it was just one of Tuesday’s votes on the community benefits ordinance amendments. Council voted to approve another proposal that requires the city to bump up the number of public meetings it holds before City Council greenlights a project from one to five, and another that expands the area under which it needs to notify residents of a public meeting. But it turned down another one that would have lowered a second-tier investment threshold from $3 million to $300,000. As written, the ordinance affects developers in two categories: Tier 1

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One last chance to nominate a Notable Real Estate Executive The deadline to nominate an outstanding leader for Notable Real Estate Executives has been extended to Friday, Sept. 17. Crain’s seeks to celebrate Michigan real estate executives with a track record for innovation, impact and accomplishment. Eligible nominees must work in the real estate industry (e.g., development, investment, brokerage, management) in a role no more than three levels from the CEO. We’re looking for leaders who have

made a substantial contribution to their industry and community and who give back through mentorship of others and civic involvement. It’s free to nominate a candidate. Nominees will be invited to complete a more in-depth candidate application. Winners will be featured in a special section in Crain’s on Nov. 15. Submit a nomination at crainsdetroit.com/nominate. Questions? Contact Special Projects Editor Amy Bragg: abragg@crain.com.

developers investing $75 million or more have to enter into legally binding commitments. But Tier 2 developers investing $3 million or more merely need to “partner” with the city and its workforce development agency “when appropriate.” Before voting on the $75 million threshold change, McCalister said Tuesday he was worried about the change hurting the city’s finances, considering its slow financial recovery from COVID-19. Detroit’s chief financial officer’s office under Mayor Mike Duggan has argued that the city would take a financial hit if council lowered the

threshold to $50 million. It would “have the largest impact by influencing the decision making of potential developers,” the administration wrote, according to a May 28 City Council Legislative Policy Division analysis. If developers chose not to come to Detroit due to these changes, it could lose the city income tax and property tax revenue, the CFO’s office wrote in a May 20 letter addressing the fiscal impact of the ordinance changes. Or, the city may need to spend more on tax abatements to keep developers happy, the letter adds. But Castañeda-López said Tues-

day that if a developer sees community benefits rules as such a burden, she doesn’t want them to build in the city. “It’s saddening to hear that the thought of having to engage with community and meet what their requests are ... that that is seen as a detriment to development,” Castañeda-López said. Developers, and Black-owned development companies specifically, don’t want to see the threshold lowered because it creates “greater economic hurdles” they have to jump through to participate, said Nicole Sherard-Freeman, Detroit’s group executive of jobs, economy and Detroit at Work. “When we talk with developers across the country ... the world is a very different place than it was pre-pandemic, and our recovery is on the brink of either really being solid and taking off or suffering because we are about to send a message by making any substantive changes ... that Detroit is not a stable place in which to do business,” Sherard-Freeman said. Jones responded by arguing that residents’ concerns should be the priority as developments surface near them. “I ask the question, what message are we sending to taxpayers? They are coming into their area, developing and not talking to them. They’re just developing and all that is concerned are the dollars that are being made,” Jones said. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

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MERGERS & ACQUISITIONS

NONPROFITS

GreenLight Fund seeks second-round funding for anti-poverty efforts

Group launched in 2017-18 with $3 million in first-round funding BY SHERRI WELCH

Lambert’s Detroit office. | NICK MANES/CRAIN’S DETROIT BUSINESS

Lambert PR firm extends streak of acquisitions BY NICK MANES

Michigan communications firm Lambert & Co. has closed on its fourth acquisition in two years. The Grand Rapids-based Lambert, which has offices in Detroit, Lansing, New York City and Phoenix, and does both public and investor relations work, said Wednesday that it has acquired The Vandiver Group Inc., a St. Louis-based communications and marLambert ket research firm. Terms of the deal were not disclosed. “We are always looking for great talent, and acquisitions is one way we can complement and catapult our strategic goals,” Jeff Lambert, founder and CEO of Lambert, said in a release, noting that he has known Donna Vandiver, president and CEO of Vandiver Group, “for several years and this acquisition is a culmination of a relationship driven by values alignment and strategic fit.” Vandiver, in the release, said the

acquisition allows the firm to “now be able to offer additional services and diverse perspectives, while continuing the award-winning work we have always produced,” Vandiver will join Lambert & Co. as managing director and will continue to lead the St. Louis office. The Vandiver firm “has led communication efforts for a host of Fortune 500 companies, nonprofit organizations, and consumer brands,” according to the release. Lambert & Co. in 2020 netted $13.65 million in total fees, a 29 percent increase from the previous year, according to O’Dwyer’s, which ranks PR firms. The firm ranked as the 40th-largest PR firm in the country last year, based on net fees, according to the O’Dwyer’s rankings. The Lambert firm last December acquired the public relations business of 9th Wonder, a marketing and advertising agency headquartered in Houston and maintaining offices around the world. Early in 2020, the firm acquired a New York banking and financial services communications company, as Crain’s reported at the time. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

GreenLight Fund Detroit is seeking commitments for a second fund to support efforts to lift Detroiters out of poverty. It’s seeking individual and grant commitments in excess of $3 million, the amount raised during its first fund five years ago. That amount leveraged another $8 million in commitments so far secured by the three groups that have come into Detroit, GreenLight Fund Detroit’s Executive Director Rishi Moudgil said. “We’ve done what we promised with our first fund, which is listen to Detroiters on what we need …bring three top programs here that complement the existing landscape, and then (third) ... measuring that Detroiters and their lives are positively impacted,” Moudgil said. GreenLight Fund Detroit has also hired Detroiters to run the programs, as it promised it would, and did so with a race and equity lens, he said. “As a permanent part of the landscape and social infrastructure of Detroit, we plan on raising and closing a second fund over the next several months,” Moudgil said. “We’ve received fantastic feedback from our initial social investors and are highly confident most will return for another round. For Fund II, we expect to raise a bigger fund and also have many new people and institutions involved.” The long list of initial funders included Bank of America, Children’s Hospital of Michigan Foundation, Ford Motor Co. Fund, Skillman Foundation, Strategic Staffing Solutions, United Way of Southeastern Michigan and several other promi-

PEOPLE ON THE MOVE

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Brieden Consulting Group, a changedriving employee benefits management and culture consulting firm has announced the addition of Erica Andary as their new Business Analyst, also known as their “Genius”. Erica brings a wealth of experience from the carrier and agency perspective, which she will leverage to assist our clients in making the best data-driven decisions for both their culture and their corporate profitability.

We are pleased to welcome Heidi Boyd, CFRE, as the agency’s new director of philanthropy. She most recently served in the same role for the Plymouth Philharmonic Orchestra in Massachusetts. The Milwaukee native’s other positions include campaign director for the Wisconsin Humane Society. Boyd is a classically trained soprano who has sung with the Milwaukee Opera Theater. She looks forward to connecting new donors with the agency’s mission of enhancing the lives of seniors and caregivers.

16 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

The Center for Employment Opportunities, launched to serve formerly incarcerated residents of Detroit, was GreenLight Fund Detroit’s first social investment. | GREENLIGHT FUND DETROIT

nent business and community leaders and corporations. Boston-based GreenLight Fund announced its intent to come to Detroit in 2016 and made its first Moudgil “investment” or grant of $600,000 in 2018 to New York-based Center for Employment Opportunities to bring its proven model for getting returning residents into jobs to Detroit. Since then, the group has employed 250 returning citizens in Detroit, Moudgil said. “Not only was the goal to find employment, but ... those employed through their program had dramatically lower recidivism rates. Very few ended up back in incarceration.” The Center for Employment Opportunities is here for the long term, he said. “One of the reasons we really like their model is they don’t primarily rely on philanthropy. They run a social enterprise model. They actually bid on contracts for work within the city to keep people employed.” The group and its employees are currently doing beautification work in the Fitzgerald neighborhood, Moudgil said. In its second year of operation here, 71 percent of the folks given transitional work immediately upon exiting the system moved into permanent job placements, Moudgil said. The Center for Employment Opportunities is also having an impact on the policy front: It led a coalition to end a statewide ban barring people with multiple felony convictions from accessing federally funded food provided by the state. The majority of those convictions were for marijuana possession, which previously led to a ban on food assistance for life, Moudgil said. In 2019, GreenLight Fund Detroit made its second grant, a $650,000 investment as seed funding for the California-based New Teacher Center to bring its evidence-based model to support and train new teachers to increase their performance and increase retention among new teachers to Detroit Public Schools Community District. Currently, veteran Detroit school district teachers are being trained as

mentors and coaches for first- and second-year teachers, Moudgil said. “This program is one of the pillars of the districts’ vision to lift and support the entire profession.” So far, more than 150 new teachers have taken part in the program, he said. The pandemic has thrown off timelines, but Moudgil said the commitment to new teachers is over four years. The program is now in its third year. “We hope by the end of four years they’ll be fully integrated and we can start seeing these positive gains,” Moudgil said. Over the long term, the effort will gauge the number of teachers who come to the district, along with teacher retention and student performance, Moudgil said.

Teacher retention and recruitment Last year, GreenLight Fund made its third and final grant from the first fund to Springboard Collaborative to work with parents alongside teachers to boost young children’s reading proficiency and help overcome their concerns about home learning. It’s too early to measure the program’s impact, Moudgil said. “What we can measure, however, is we’ve already had 1,000 kids going through this program over first year,” most with a parent or family member also participating, following its summer 2020 launch. Other groups are focused on improving reading, “but we had parents say they wanted to be involved,” Moudgil said. Through the Springboard Collaborative program, parents participate in learning workshops with teachers and students and meet on a weekly basis to review progress, glean tips and incentives for their child to develop reading habits and growth. Just as the earlier groups funded by GreenLight Fund Detroit did, the Springboard Collaborative has leveraged additional support for its work in Detroit. Skillman Foundation, General Motors Co., United Way for Southeastern Michigan and Ballmer Group have come in with additional funding, Moudgil said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

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The Detroit Institute of Arts has raised $16.5 million so far toward its operating endowment during the pandemic. | DETROIT INSTITUTE OF ARTS

GIVING

From Page 3

With those gifts and the strong markets this year, the museum’s unrestricted operating endowment was $315 million during the last quarter ended June 30, Director Salvador Salort-Pons said, up from $135 million five years ago. The number of gifts to the DIA’s unrestricted operating endowment in fiscal 2021 ended June 30 by about 20 percent over the previous year, led by an increase in the number of seven-figure gifts, the museum said. “There were a lot of donors that we had been in conversation with whose gifts came to fruition during that time period, but there were also a couple of significant gifts that we weren’t expecting that also came through in that time period,” Holden said. The endowment gifts came with strong support in all categories for the museum, with more than 400 new donors making smaller gifts of about $20-$100 to the museum’s annual fund last year, Holden said. At the same time, the DIA also received gifts of $250,000 and $1 million from first-time donors. The endowment gifts during the pandemic have taken the DIA well past the halfway point of what it now expects will be about a $600 million endowment target, up from the original, $400 million endowment goal set in 2012. The increased spin of interest revenue from the permanent endowment will help fund the $45 million-$50 million annual budget the DIA projects it will need by 2032 when its second millage expires, to cover inflation, cost increases and the services provided to residents of Wayne, Oakland and Macomb counties as part of its service agreements for the millage, Salort-Pons said. The increased giving to endowment and all areas of charitable giving at the DIA mirrors national trends, Holden said. In 2020, total charitable giving in the U.S. from individuals, bequests, foundations and corporations rose 5.1 percent year over year, hitting a record $471.44 billion, the Lily

Salort-Pons

Holden

School of Philanthropy at Indiana University said, which researched and wrote Giving USA 2021: The Annual Report on Philanthropy for the Year 2020 published by the Giving USA Foundation. Giving by bequest totaled an estimated $41.19 billion in 2020, up 10.3 percent from 2019, according to the annual report. “What drove the record year was a reckoning,” Donovan said. “People everywhere were thinking you can’t take it with you.”

Legacy support Though the Detroit Symphony Orchestra had a digital strategy that has continued to bring music to audiences throughout the pandemic, “people saw the risk of losing the arts right because it’s taken so long, audiences couldn’t come in live to our buildings,” said President Anne Parsons, who returned from leave Sept. 1, following cancer treatment. Their concerns helped spur gifts not only to current operations but $5 million so far in commitments to the DSO’s permanent and board-designated endowments, she said, providing support for general artistic excellence and operation, education programs and the DSO’s home, the Max M. Fisher Music Center in Detroit’s Midtown neighborhood. With those gifts, the DSO has raised $60 million of its $125 million endowment goal. “People who have been coming to the symphony and giving us support for decades (are realizing that) when they go, when they are no longer able to do that, endowing their annual funding gift is a really smart idea,” Parsons said. The DSO has a lot of conversations underway right now with people who

are really passionate about working with the orchestra to ensure long-term, legacy support, she said. “Detroit shied away from endowment for a Sznewajs long time, but I think that there’s a corner that has been turned a little bit.”

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‘Thinking about mortality’ During the pandemic, so many people have called to ask what wording to use to put the University of Detroit Jesuit High School and Academy in their will, to find out what they needed to do to create a charitable remainder trust as they met with their attorneys or how to name the school as a beneficiary of their life insurance policy, said Katie Sznewajs, director of planned giving for the school. “People were in their houses, inside. With the news, they were thinking about their mortality,” she said. U of D Jesuit has raised substantially more toward its endowment during the pandemic, but Sznewajs declined to provide specifics or to share the total value of its endowment. The organization’s religious underpinning and ties to the Catholic Church excuse it from being required to file a 990 form with the Internal Revenue Service, so its financials are not publicly available. Sznewajs said endowment commitments to the school, however, have nearly tripled during the pandemic, from seven in 2019 to 20 last year and 19 in fiscal 2021, beyond two others totaling $10 million that the school is receiving through planned gifts made years ago. “We’re all human, and the pandemic just had people think about what kind of legacy they want to leave for their lives and to the places that made them who they are today,” she said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

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YAMASAKI

From Page 1

“We had a client in the building very close to the floor where the impact was,” Szantner said. “We were there to sign a contract for a new high-rise project in South America and, the day after 9/11, they sent us a cancellation.” After American Airlines Flight 11 and United Airlines Flight 175 took down the buildings, Congress authorized the National Institute of Standards and Technology to conduct an investigation into the towers’ collapse, ultimately yielding 47 reports totaling some 11,000 pages — which said the towers that further catapulted Yamasaki even more into architectural stardom (he was on the cover of TIME magazine in January 1963) performed as they were designed. While they were built to withstand the crash of a Boeing 707 airplane — the largest at the time of design and construction in the 1960s and 1970s — they were not designed for the pair of larger 767s that ultimately careened into them at speeds north of 450 miles per hour 16 1/2 minutes apart, severing support columns and triggering large fires that reached temperatures up to 1,800 degrees. In addition, the thousands of gallons of burning jet fuel had not been considered, said Szantner, who started at Yamasaki in 1984. He became a partner in 1993, then managing partner in 1996 and in 2006 he took over direct management of the firm’s larger Middle East design commissions. He was also involved in the NIST investigation and the class action lawsuit by victims’ families. “I learned more about the buildings after they came down than before,” he said.

decade before it became the norm for entirely different reasons, got a taste of what was to come.

‘Tap just turned off’ The COVID-19 pandemic also hasn’t been kind to Yamasaki, much like others in the commercial real estate industry. Although projects that were already in the pipeline continued, new work dried up. Revenue plunged by 75 percent, as did its staff, falling from 34 down to just eight, Szantner said. Today, the company has 16 employees as work returns. Szantner said about half of the firm’s revenue comes from domestic work while the other half comes from work overseas, in an effort to weather countercyclical economic patterns. But with the outbreak of the virus, it “was like a tap just turned off.” “It really kind of decimated us because not only international work but domestic work stopped for a year,” he said, although “the last six, eight months, it’s starting to build back up again.”

Minoru Yamasaki at the groundbreaking for McGregor Memorial on Wayne State University’s campus on Dec. 17, 1956. | WALTER P. REUTHER LIBRARY, ARCHIVES OF LABOR AND URBAN AFFAIRS, WAYNE STATE UNIVERSITY

Trail of lawsuits

The global pandemic may have hurt the company, but more than a decade ago, its predecessor completely evaporated. At the end of 2009, it laid off its last employees, culminating a tumultuous period in which some former employees alleged they hadn’t been paid for months. In the end, what was then the Michigan Department of Energy, Labor & Economic Growth and the state Unemployment Insurance Agency filed lawsuits over unpaid employee taxes, ultimately prompting an Oakland County judge to put the company into receivership. In addition, contractors and conForging bonds sultants filed other lawsuits claiming Several years after the 9/11 terror- they were collectively owed more ist attacks, Szantner found himself on than $2.5 million, Crain’s reported at a date farm in Qatar, working for the time. The firm’s former CEO, Ted Ayoub, years on the $1 billion Qatar National Convention Centre, which opened in sued Szantner in a case that was ulti2011. mately tossed out by the Michigan He had worked on the project Court of Appeals. Ayoub alleged while at Yamasaki, but he left the firm fraud and that Szantner left with Yain April 2009 as its legal and financial masaki’s largest client. woes were mounting, and finished To this day, Szantner won’t say the project under a separate compa- Ayoub’s name. He said he spent north of $150,000 ny. in legal fees fighting frivolous lawsuits. “IN YOUR CAREER, YOU HAVE MAYBE Szantner bought THESE HANDFUL OF OPPORTUNITIES the firm’s intellectual property after settling TO REALLY DO SOMETHING SPECIAL, the firm’s outstandAND THAT WAS ONE OF THEM.” ing bills with creditors at a March 2010 — Robert Szantner, Yamasaki president auction held by OakAll in, the project took some 5 1/2 land County, which seized the office years to design and build and is one for unpaid taxes. The state has 15,000 transparenof the firm’s most celebrated projects cies and slides of Yamasaki’s designs of late. “That was a hell of an experience,” dating back to 1949, some original drawings and some personal effects Szantner said. “It’s something you’d never expect. like Yamasaki’s drawing compass. It was a once in a lifetime kind of thing. With the Trade Center, people Yamasaki’s legacy in the office that lived through the Trade Center design and construcThe work of the late architect — tion project, they had kind of this who as a Japanese American enbond going through that experience dured racism and criticism before, and it was the same with the conven- during and after the Twin Towers tion center. In your career, you have were built — can be found both in maybe these handful of opportuni- and around Detroit. ties to really do something special, In particular, he designed Temple and that was one of them.” Beth El, the former Michigan ConsolIt turned out to be good practice. idated Gas Co. building (now known During that time, in an effort to re- as Fifth Third Bank at One Woodduce travel of international partners ward) and four buildings on Wayne on the project, Szantner took part in State University’s campus. extensive video conferencing and, a In addition, his work included the 18 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

University professor and Yamasaki scholar. The property had become rife with crime, high vacancy rates and poor living conditions. “During Yamasaki’s lifetime, he overcame a lot of discrimination and prejudice to build a successful firm and successful career, not just locally successful but also internationally successful,” said Rebecca Binno Savage, a member of the Wayne State University Yamasaki Advisory Committee. “When you think back to World War II and the discrimination against Asian Americans, he really overcame all of that. His design work was really innovative and creative and unique to his own vision, and there aren’t that many firms that can say that, that they made an impact with their own design style that’s their own.” Gyure said in an email: “First of all, Yamasaki should be celebrated as an Asian-American outsider who reached the peak of his profession despite rampant prejudice. Beyond that, he provided an example of an architect (who) emphasized people and their experiences over theoretical considerations. Yamasaki believed that ‘serenity, surprise, and delight’ lay at the foundation of all the best architecture throughout human history, and that it was the job of the architect in a modern world dominated by rapid technological innovation and unprecedented new materials to hold fast to these qualities. In his buildings he tried to harmonize elements of historical styles with the postwar techno-functional orientation, at a time when it was more acceptable to reject historical architecture as passé or unsophisticated. Yamasaki was one of the few prominent architects of the 1950s and 1960s who openly held a place for beauty in modern design.”

Future vision A World Trade Center model is pictured in the Yamasaki office at the Fisher Building in Detroit. | NIC ANTAYA, SPECIAL TO CRAIN’S DETROIT

The World Trade Center and lower Manhattan are seen from New York Harbor before 9/11. | GETTY IMAGES/ISTOCK PHOTO

Brookfield Office Park in Farmington Hills — one of his last projects before he died — developed in the mid 1980s by Etkin LLC, Crain’s reported several years ago. Yamasaki was hired as the World Trade Center architect in September 1962 and the project was dedicated April 4, 1973. Some other notable non-local works included the Pruitt-Igoe public housing project in St. Louis, Century Plaza complex in Los Angeles, the

Lambert-St. Louis Municipal Air Terminal, the U.S. Consulate in Japan, the Federal Science Pavilion at the Century 21 Exhibition in Seattle and the Civil Air Terminal in Dhahran, Saudi Arabia. But by the 1970s, Yamasaki’s reputation had been diminished in part because of the Pruitt-Igoe complex, which was demolished starting in 1972 less than 20 years after Yamasaki designed it, wrote Dale Allen Gyure, a Lawrence Technological

These days, the company’s website boasts of its work in Detroit, the suburbs, west Michigan and in the Middle East and Asia. Recently, the firm designed the funky redevelopment of a squat building next to the Guardian Building, known as 511 Woodward. That property is now home to Capital One Café. It also did work in the early stages on what is known as the Lafayette West development in the city's Lafayette Park neighborhood. Mark Bennett, one of the developers on the project, said Yamasaki designed a 12-story residential tower that had been initially planned, but that component was scrapped over a year ago and the firm is no longer working on the development, which is planned for a 5.2 acre site that once housed Shapero Hall, a former Wayne State pharmacy school building. “We do so much work overseas, sometimes locally we don’t get involved in these things and that was really great to participate in something like that because Detroit does have a great architectural legacy,” Szantner said. There are pages devoted to other projects past, present and future, domestic and international, such as the Qatar National Convention Centre, a trio of 20-story senior residential towers in Seoul, South Korea, and the 60-story Burj Dubai residential tower in the United Arab Emirates. Conspicuously absent: the World Trade Center. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

Antibody therapy for COVID-19 expands at local health systems BY DUSTIN WALSH

COVID-19 is spreading faster throughout the state thanks to the delta variant. And with more than 2.7 million Michigan adults 16 years and older yet to be vaccinated, the most effective treatment regimen for preventing serious illness and death is also expanding. The U.S. Food and Drug Administration approved emergency use authorization for monoclonal antibody therapy in November 2020 and hospitals have been rushing to use it ever since. Henry Ford Health System has administered 2,567 doses of the intravenous infusions since Nov. 21. U.S. Centers for Disease Control and Prevention data indicates the antibody therapy reduces hospitalization and death by 70 percent for high-risk individuals. “For every 10 infusions, you save one hospitalization,” said Bruce Muma, CEO of the Henry Ford Physician Network and head of the health system’s monoclonal therapy program. “For every 50 infusions, you save a life.” By that math, Henry Ford has prevented about 257 hospitalizations and 51 deaths using the therapy. The others either healed without the therapy or succumbed to the illness, but it’s not known at the time who will and won’t recover. On Aug. 10, the FDA expanded its emergency use authorization for Regen-Cov, the drugs casirivimab and imdevimab administered together, for use as a preventative treatment for those 12 years and older who have been exposed to COVID-19 and are at high risk of the disease being potentially fatal. Experts say, for now, the monoclonal antibody therapy is the best stopgap available to prevent hospitals from overflowing during this current surge as more and more people find their way to the vaccines. “It’s an antidote to overcrowding in our hospital,” Muma said.

mAb, huh? Monoclonal antibodies are laboratory-made proteins that mimic the natural immune system response and attack pathogens like viruses. There are roughly 100 monoclonal antibody therapies approved by the FDA, most commonly used to battle autoim-

VACCINE

From Page 1

concerned about the supply chain of testing for employees who choose to remain unvaccinated. Alpha employs a total of 135 and Lawrence did not immediately disclose how many of those were unvaccinated. “Will there be enough tests in the marketplace to comply, and how much will it cost?” Lawrence said. The U.S. Centers for Disease Control and Prevention warned last week of a shortage of rapid test kits and recommended the use of laboratory testing when possible. Rapid test kits costs in the range of $20 to $25 at retail locations. Ford said in a statement that it "continues to strongly encourage all employees who are eligible to get vaccinated." "We believe the vaccine plays a critical role in combating the virus

A nurse checks on a patient Aug. 4 in the ICU COVID ward at NEA Baptist Memorial Hospital in Jonesboro, Ark. | HOUSTON COFIELD/ BLOOMBERG

mune diseases such as rheumatoid arthritis and multiple sclerosis. Last summer, drug companies Regeneron and Eli Lilly began conducting clinical trials on two monoclonal antibody cocktails for bridge treatment of COVID-19. On Nov. 21, the FDA issued emergency use authorization for the IV therapy for high-risk patients who tested positive for the virus but were not yet hospitalized or receiving oxygen. Paul Chittick, physician and section head of infectious diseases and international medicine at Beaumont Health, said outside of the vaccine the therapy has been the best tool in the fight against COVID-19. “(Antibody therapy) has provided the best data we’ve seen so far,” Chittick said. “It drops the risk of death from 4 percent to 6 percent down to 1 percent. That’s a pretty substantial reduction.” Beaumont has performed upward of 2,000 IV antibody therapy infusions since last November. The Regeneron one remains effective against the delta variant that is plaguing all 50 states in the U.S., said Muma. “We have certainty that it’s effective against the variant we’re seeing,”

Muma said. “The challenge is the antibodies might not work for the new variant that might be coming in two or three months. We have to be careful assuming this is the answer to our problem.” But the results have been so successful in COVID-positive patients, the FDA expanded the emergency authorization to include high-risk adults and children over 12 years old that have been knowingly exposed to the virus as a prophylactic treatment. The therapy is limited by the FDA to those with a high risk for progression to severe COVID-19 — specifically, those who are not fully vaccinated or people with immunocompromising conditions, those who have been exposed to an individual infected, or those who are at high risk of exposure to an individual infected such as nursing homes and prisons. To broaden its reach with the therapy, Henry Ford Health is deploying paramedics to distribute the therapy in patient homes. Going to patient homes also limits the spread of the disease at clinics as patients qualify for the therapy when they are most contagious, prior to severe symptoms. “We think it’s the ideal way to go,”

Muma said. “We have worked our system to identify as meeting the criteria for high risk. If they agree to get the infusion, we activate the paramedic service. They schedule a visit.” The therapy is increasingly more important, especially as many scientists and health experts are resigning to the idea that COVID-19 is more than a pandemic, but an endemic as only 52 percent of the population nationwide is vaccinated.

and have already designated some roles where we require the vaccine. We will be assessing the new executive actions to determine what adjustments need to be made to our current vaccination policy as we continue to prioritize the safety of our employees." Representatives from Lear Corp., United Wholesale Mortgage did not immediately provide comment on the upcoming rule. If, for example, 25 percent of UWM’s roughly 8,800 employees were not vaccinated and it offered weekly testing, the rule would cost the employer as much as $25,000 per week or $1.3 million annually at retail prices. Rocket Cos. implemented a weekly testing regimen for its unvaccinated employees on August 23. The Detroit-based company declined to provide specific data about number of vaccinated employees or number of tests performed.

Biden’s announcement also did not contain any details on whether the government would help fund the testing or how it would be enforced. Sean Crotty, partner and chair of the labor and employment department at Detroit law firm Honigman LLP, said the labor department would likely tailor the rule through the Occupational Safety and Health Administration (OSHA) as it has done for health care-related COVID-19 rules. While there is no direct legal precedent for the federal government dictating employers mandate a vaccine, OSHA has required adjacent rules, Crotty said. For instance, OSHA requires employers who have employees working in close proximity to blood to make the Hepatitis B vaccine available. It does not, however, require the employer to mandate the vaccine. OSHA rules do come with relatively steep penalties — as much as $14,000 per violation, per individual. So an

employer not complying with the rule with 50 unvaccinated employees could face a theoretical fine as high as $700,000. The new COVID-19 OSHA rule is likely to be filed as an emergency temporary standard, Crotty said, to expedite its enactment, sidestepping public comment. But that doesn’t mean it’ll be fast. The last COVID-19 related OSHA rule took about six months to go into effect. The popularity, or lackthereof, of Biden’s plan remains to seen. But Sandy Baruah, president and CEO of the Detroit Regional Chamber, questions the rule’s impact on small business. “The chamber strongly supports vaccinations and businesses that encourage or even mandate vaccinations,” Baruah said in an email to Crain’s. “However, a government mandate that encompasses businesses as small as 100 seems problematic from a political and logistical stand-

Problematic solution Pino Colone, physician and president of the Michigan State Medical Society, said monoclonal antibody therapy for COVID-19 will continue to expand throughout the U.S. but that it does not replace the most effective tool against the virus — vaccines. “It’s not the end all be all; it’s a rescue therapy,” Colone said. “Vaccination to eradicate or to better control the infection is the solution. Antibody therapy is still limited in its use to the immunocompromised, elderly, pregnant or those with other serious underlying factors. This is not going to replace vaccinations or how we ultimately want to get rid of the coronavirus pandemic.”

The reason the antibody therapy is limited to those with underlying risk conditions is because, frankly, the therapy isn’t needed in healthy individuals. “We don’t have great data yet, but we’re not seeing any huge benefit in those without other risk factors, such as obesity,” Chittick said. “One study looked at people over 65 that were morbidly obese. The therapy cut their hospitalization rate from 15 percent to 6 percent. Which is great, but it also means that 85 percent of those people were going to be fine anyway.” Another problem is the therapy logistics. For those COVID positive, the treatment is an IV infusion that requires an hour of monitoring afterward. Patients qualifying for the prophylaxis treatment receive four subcutaneous injections in the stomach. “It’s just not ideal, logistically,” Chattick said. “This is not a homebased treatment yet.” Another issue is costs. An IV infusion is roughly $750 before the cost of the drugs in the therapy, Muma said. Currently, the treatment is covered by the federal government under emergency authorization but once fully FDA approved, costs to health systems and, in turn, patients will rise quickly. An estimate from October 2020 estimated a single treatment of Regen-Cov could cost as much as $6,500. The effective therapy isn’t more widely used because patients simply don’t know to seek it out. “We don’t have shortages,” Muma said. “The limiting factor is the awareness of the treatment among patients in particular. We need patients to understand there is a treatment.” Ultimately, a new treatment will likely replace or supplement the antibody therapy. Chattick believes an oral medication will come to market, much like Tamiflu is used for influenza. “(Tamiflu) is not a great drug in the grand scheme of things; it’s not penicillin,” Chattick said. “ But it’s simple and convenient. There are multiple oral antiviral drugs in the pipeline. We’re looking for the simple answer for people to contain the disease before they ever get really sick.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh point.” Crotty, however, said the Biden order provides cover to businesses while accomplishing a goal they wanted — getting workers vaccinated. “Lot of clients are getting more comfortable with the notion of mandating the vaccine,” Crotty said. “This will push some that are on the fence to join the mandatory vaccine camp.” Lawrence, who fears some workers may leave due to a mandate, is thankful the rule encompasses smaller businesses as well. “If it remains for employers over 100 (employees), alternate employment options for exiting employees would be limited and hopefully quell any exodus,” Lawrence said. “This would accomplish the higher vaccination rates the country requires while protecting employers from negative employee reaction or fallout.” — Crain's Detroit Business reporter Nick Manes contributed to this story.

SEPTEMBER 13, 2021 | CRAIN’S DETROIT BUSINESS | 19

Mark Sellers, who founded HopCat, now runs a restaurant called Max’s South Seas Hideaway in Grand Rapids. | KURT NAGL/CRAIN’S DETROIT BUSINESS

HOPCAT

From Page 3

But don’t anticipate that HopCat restaurants will be popping up outside of Michigan again anytime soon. That’s something Sellers — who now runs one restaurant Lidvall called Max’s South Seas Hideaway in Grand Rapids — acknowledged was a fatal error in the previous iteration. Sellers said that in the heyday of the brand’s growth, Michigan locations would immediately become profitable upon opening, but stores in locations like Madison, Wis., and Port St. Lucie, Fla., now closed, failed to attract the same reception. “The mistake that I made, as the guy running the company, was to expand outside of Michigan, using debt to do it,” Sellers told Crain’s during an interview earlier this month. “I was under the false assumption that because the brand was so wildly popular in Michigan and would very easily translate to other states. And what we found is that in other states, we were just seen as any other chain. Whereas in Michigan we were considered a hometown hero, like Bob Seger.” At the time of the bankruptcy filing in June of 2020, after the COVID pandemic had begun to wreak havoc

JAMES

From Page 3

He remains chairman of JGI but has already set in motion a succession plan that includes giving the Detroit-based logistics units of the business to his adult children, Lorron, John Jr. and Keri. The James children have formed a new company, James Group Inc., with Lorron as CEO and John Jr. as president. John E. James Jr., who ran unsuccessfully for the U.S. Senate in 2018 and 2020, is CEO of one of the company’s main subsidiaries, Renaissance Global Logistics or RGL, which handles export logistics for Ford, GM and Stellantis (the automaker formerly known as Fiat Chrysler Automobiles). James’ daughter retains a ownership stake and board seat in the new parent company. Last November, Keri James became head of the new John A. James Foundation, carrying out her family’s philanthropic efforts.

with the economy, especially in the service sector, BarFly said it had between $1 million and $10 million in assets and liabilities of between $10 million and $50 million. A number of landlords had begun to sue the company over failure to pay rent, as Crain’s reported at the time.

Headwinds aplenty HopCat had begun to shutter locations even before the bankruptcy, in locations like Chicago’s Lincoln Park neighborhood, and in Royal Oak, which closed in May of last year after negotiations with its landlord fell through, as Crain’s reported at the time. For Travis Baldwin, co-founder and principal of Dallas-based investment firm Congruent Investment Partners LLC, the mistakes acknowledged by Sellers were also apparent. “Mistakes were made,” Baldwin told Crain’s. “(HopCat) grew too far out of state, (and) grew too far from the bread and butter that they were targeting.” HopCat has kept open two locations outside of Michigan, in Indianapolis and Lincoln, Neb. To be sure, HopCat and the other BarFly restaurants that were acquired out of bankruptcy — Stella’s Lounge and Grand Rapids Brewing Company, both in downtown Grand Rapids — were already facing massive headwinds. Michigan restaurants were faced with over 460 days “of closure, capacity restrictions and elevated regulatoJames Group is the 18th-largest minority-owned business in metro Detroit, with revenue of $117 million in 2020, according to the Crain’s Data Center. The elder John James said he decided to give the “majority portion of my total portfolio” to his children now instead of after he dies to watch them grow the business. “I’m so much older than my kids ... that I’m just fortunate to have been around this long,” James said. “So, I’m not going to press my luck. I’m going to go ahead and do it right now while I’m still semi-sane. “And I can be here to assist in any way, but they’re doing a good job of growing the business themselves.” John James Sr. has retained his real estate holdings in Detroit through O-J Land Development Company LLC as well as Magnolia Automotive Services LLC, which does sub-assembly, inventory management and parts sequencing for Toyota Tsusho America and other Japanese automakers in Huntsville, Ala. and Tupelo, Miss.

20 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

HopCat’s location on Woodward Avenue in Midtown Detroit. The chain seeks to open additional locations in the region.

ry scrutiny that forced more than one in six Michigan restaurants to close their doors for good,” according to a June statement from Justin Winslow, president and CEO of the Lansing-based Michigan Restaurant and Lodging Association. Lidvall, a restaurant industry veteran who was named CEO of the BarFly company after it was bought out of bankruptcy, acknowledged those headwinds, but noted that employee morale at the restaurants has remained high despite all the uncertainty. Like many other industries are experiencing, Lidvall pointed to supply chain “disruption” and the tight labor market as the most severe chal-

lenges the company faces now. On the former point, Lidvall said prices are creeping up for commodities and supplies, and the labor squeeze is particularly acute on the west side of the state near HopCat’s base of operations. On the flip side of the coin, Lidvall said the pandemic forced the company to expand more into off-premise options, which it’s held onto even as restaurants have reopened without restrictions these past several months. “So, there are pros and cons, but it’s certainly one of the more disruptive markets and environments that I’ve seen,” said Lidvall. “We’re all facing it, so we all have to … react. It’s

been challenging, but I think it’s kind of the new normal.” Lidvall declined to provide a revenue figure for the brand at this time, citing the difficulty of providing a relevant comparable figure due to closures over the last 18 months. He did say sales have nearly returned to preCOVID levels and expects a full rebound by the end of the year.

A changing landscape HopCat also faces a vastly different craft beer market than when the first location opened in Grand Rapids in January of 2008 with dozens of taps of local microbrews. Baldwin notes that now basically

John A. James Sr., founder and chairman of James Group International, points to aerial photos of the Fort Street site where JGI built its warehouse terminal and headquarters in 1998 in partnership with Ford Motor Co. The site was a dumping ground in the 1980s and early 1990s and was originally the site of a Rockwell International auto parts plant for Studebaker cars in the 1920s. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

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FINANCE

Waiting for the shoe to drop: Corporate bankruptcies are expected to tick up

NICK MANES/CRAIN’S DETROIT

BY NICK MANES

every restaurant has multiple handles of craft beer, and therefore increased focus has been put on the food menu. Sellers, however, noted that he believes the brand could benefit by doubling down on craft beer and re-establishing HopCat as an “expert” in the sector, something he felt the chain drifted away from in his later years running the company. Despite the explosive growth of craft beer over the last several years, it still makes up just over 12 percent of the overall beer market, and sales last year declined by 9.3 percent, faster than the 2.9 percent decline in the overall beer market, according to 2020 sales data from the Brewers Associa-

tion, a craft beer trade association. Lidvall said the HopCat brand is ready to once again grow, and new locations, especially in Southeast Michigan, are in the planning stages, although specific locations were not provided. HopCat currently has locations in Ann Arbor and Detroit’s Midtown neighborhood. “We’re going to grow in our heritage market,” said Lidvall. “We’re looking hard in Detroit right now, because we’re under-penetrated there with really just two locations in the Metroplex.”

Lorron James runs the Magnolia division under the umbrella of James Group International. RGL falls under the James Group Inc. umbrella. John James Sr.’s succession plan comes five decades after he barely got into the business of moving freight to begin with. He’s long since sold off his fleet of trucks from O-J Transport after that company went through a bankruptcy reorganization in 2000. In the mid1990s, James began to shift his business from solely to trucks to the logistics, warehousing and parts-sequencing end of the auto industry. But building a logistics warehouse and headquarters in Southwest Detroit in the late 1990s came only decades after those initial years struggling to get past the ICC, a powerful regulator that James viewed as a gatekeeper for competition in the trucking industry. “The Interstate Commerce Commission was not, as I had initially thought, some impartial government agency that looked at the thing and

“...THERE WERE NOT A LOT OF BLACK BUSINESSES, BUT THE FEW OF US THAT THERE WERE, BANKS WEREN’T LENDING US MONEY, EITHER.”

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

— John James Sr.

adjudicated it to do what’s right,” James said. “They were really advocates for the trucking industry.” For the first four years of its existence, O-J Transport had to apply for 90-day emergency permits to haul Schlitz beer and other products, James said. Outlaw and James’ first truck was a used 1967 Ford diesel tractor with a trailer built by the former Fruehauf Trailer Co. in Detroit. Outlaw was a diesel mechanic at Hertz Corp. truck rental and handled the mechanical maintenance of the truck, while James put his administrative skills to work trying to navi-

The Paycheck Protection Program and other forms of government stimulus have been roundly criticized for all manner of reasons, but they’ve been incredibly successful at keeping companies out of bankruptcy. Despite a pandemic that brought the U.S. and global economies to a standstill in the spring of 2020, which then began to show signs of life in the following months and is now in something of a sputtering mode, corporate bankruptcies have been slow to materialize. But as stimulus money dries up and economic headwinds continue to cause havoc in supply chains, it’s all but assured that the current conditions won’t last, say corporate turnaround and bankruptcy experts. “Everybody in the insolvency business has been thinking the other shoe is gonna drop, the shoe is gonna drop, and it never does,” said Pat O’Keefe, founder and CEO of Bloomfield Hills-based consulting and restructuring firm O’Keefe & Associates Inc. “I would tell you, the (rise) of inflation, lack of liquidity in terms of PPP money, and a potential downturn in the economy in the next 12 months has got to mean that there’s going to be people that are not going to be able to survive. Now what sector that is, I think, remains to be seen.” Since the start of the COVID-19 pandemic last year, the overall bankruptcy market has fallen off by more than 20 percent, according to Epiq Global, which tracks global bankruptcy filings. In Michigan last year, as the economy took a beating from the pandemic and business closures were rampant, there were just 104 filings for Chapter 11 protection, which is most frequently used by businesses for purposes of restructuring, according to figures from the American Bankruptcy Institute. Nationwide, through August, there were 2,676 Chapter 11 filings, gate the government bureaucracy that tightly regulated who could do business in the trucking industry. James regularly met with aides to then-President Gerald Ford and members of Michigan’s congressional delegation, including the late U.S. Sen. Robert Griffin, to advocate for reforms to the trucking industry regulations. The 90-day permits, which they had to repeatedly renew, did not make it easy to get financing to grow the company in the early years, James said. “Banks weren’t too friendly to trucking companies back then,” James said. “And in Detroit, there were not a lot of Black businesses, but the few of us that there were, banks weren’t lending us money, either.” It took O-J Transport four years to get a hearing in front of a three-judge panel of the ICC. The hearing was held in Chicago instead of the hometown turf of O-J Transport’s customers. Other trucking companies put up a

O’Keefe

Wybo

compared with 7,129 in all of 2020 and 5,519 in 2019, according to data from Epiq. Michigan saw 104 filings in 2020. That’s a far cry from the Great Recession years such as 2008 and 2009, when there were 250 and 259 filings, respectively, according to ABI figures. Whereas in those years, the state’s auto-reliant economy was the Achilles’ heel, it’s now what’s helping keep bankruptcies at bay, according to Steve Wybo, senior managing director in the Birmingham office of turnaround firm Riveron Consulting LLC. “If you think about Michigan and automotive, it’s mainly a middle-market business. You’ve got the OEMs and the Magnas, but for the most part it’s a couple thousand suppliers with under $1 billion in revenue,” said Wybo. “So if you think about an average middle-market industrial company, the government has really propped that up for the last 18 months.” Federal legislation passed just before COVID-19 slammed the U.S., as well as provisions in the CARES Act, passed in the wake of the pandemic, have also helped keep corporate bankruptcies at bay, according to Marc Swanson, a principal and bankruptcy group leader in the Detroit-based law firm of Miller Canfield Paddock & Stone PLC. But Swanson and others in the bankruptcy space acknowledge it’s unlikely to remain this quiet for much longer. “It seems inevitable that more companies will have to turn to bankruptcy to reorganize and shore up their balance sheets,” said Swanson. fight to block O-J Transport from getting into the business, especially the lucrative work of hauling auto parts for the Big Three. James and Outlaw prevailed in their hearing, but the ruling was overturned on appeal, setting off a series of court battles. It wasn’t until 1978 and the beginning of deregulation of the ICC under President Jimmy Carter that O-J Transport was granted authority to compete for trucking contracts with the automakers and other companies, James said. In many ways, James said, 1978 was the year his fortunes changed for the better. Outlaw and James bought the former Hertz truck rental terminal on Gratiot Avenue where Outlaw used to work fixing freight trucks. They used their contacts at Ford to purchase 23 used trucks and greatly expand their fleet, prompting James to quit his day job at Chrysler and go full time in the trucking business. He also married Sharon, his wife of 43 years, that year.

Indeed, ongoing disruptions in supply chains — sometimes called the “bullwhip effect” — coupled with rising inflation means that companies all Swanson but assured to begin feeling pressure on their balance sheets and turn toward restructuring, said Wybo, who said he’s not expecting a flood like was seen a decade ago, but still expects a substantial uptick in the coming months. So what happens, should the uptick begin to take effect? To be sure, some companies will file for Chapter 7 bankruptcy, liquidate and simply go out of business. Many will likely take the Chapter 11 route, restructure, shave off debt and emerge a company with a healthier balance sheet. Additionally, some companies entering bankruptcy could be seen as bargains to be acquired in an otherwise frothy M&A market, which is likely to be an attractive option for some, notes Wybo, who said that again, there’s a distinction from the Great Recession years. “A lot of these companies are good companies and unlike the Great Recession when we had a lot of not great companies. We had too much capacity,” said Wybo. “If you file for bankruptcy, it doesn’t mean you’re a bad company. You just didn’t have a strong enough balance sheet to weather this volatility and margin compression,” Wybo added. “So the short answer is ‘yes.’ I think (private equity is) chomping at the bit. There hasn’t been a lot of M&A activity in the distressed world. There are lots of distressed funds … that are focused on this kind of thing, and frankly, they haven’t had much to do the last couple of years.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes “I quit my job, got married, bought my first house, bought my first terminal, bought my first fleet of trucks — all in 1978,” James said. In deciding to leave Chrysler, James quit just a few months shy of his 10-year anniversary with the company, when he would have been vested in the automaker’s pension system. He had been trying to reach the 10year mark to secure that benefit later in life — just in case his nascent freight-hauling enterprise didn’t pan out — but he made the jump anyway. Now, looking back, he’s glad he didn’t hang onto the paycheck from Chrysler. “It was one of the best decisions I ever made — a decision which puts me here where I am now,” James said in the board room of James Group’s Fort Street headquarters. “That’s just kind of how you think because you don’t know what’s out there and you haven’t thought your way through it.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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

THE CONVERSATION

David Foltyn on balancing where lawyers work amid firm’s growth Honigman LLP: David Foltyn is in his 13th year as CEO and chairman of the board of Honigman LLP — and the job of managing a 325-attorney business law firm has never been so complex. The coronavirus pandemic has upended some of the daily culture of a law firm founded in the 1940s, forcing lawyers assigned to Honigman’s eight offices to soldier on remotely without daily in-person interactions. Foltyn sat down with Crain’s Senior Editor Chad Livengood in the office once occupied by the firm’s co-founder, Jason Honigman to talk about the firm’s growth through talent and expansion into Chicago and Washington, D.C. — and where it may open another office to be more flexible for attorneys seeking a different life-work balance in Michigan. | BY CHAD LIVENGOOD `How did you get this ornate office? The tradition in the firm is the CEO gets (Jason) Honigman’s office. The furniture and the floors change, but the paneling is the original Honigman paneling. Honigman was here in the ’20s and ’30s, but the firm was formed here in ’48. Honigman and (Milton) Miller were partners and then Alan (E. Schwartz) came back to town from New York (in 1954). `So the firm just opened a Washington, D.C., office? During the pandemic. How’s that for timing? `How did you pull that together? We’ve been very strategic in our growth and our growth in other offices is always talent-based. We opened a Chicago office about five years ago. And the reason we opened the Chicago office is that we have a booming M&A, private equity business. In PitchBook, we rank second, third, fifth and first by quarter (last year) in number of deals done among American law firms. It’s staggering. I think we had 400-some M&A deals. And we have a thriving intellectual property practice and a thriving corporate practice, and we just were unable to recruit enough talent into Michigan. So the Chicago office was founded largely to recruit that kind of talent into the firm. It’s been a remarkable success. It’s up to 50-some lawyers. `What was the biggest surprise trying to hang a shingle in D.C. during the shutdowns? All Zoom. We’re now looking for real physical space. But we took out a conference room. But for most of it, it was all Zoom because nobody was going anywhere. `But you can’t do that forever. No. But we’re struggling with that. I’m sure you guys are as well, because there are real advantages to the flexibility of working remotely. No question about it.

And our business is such that we were pretty flexible before the pandemic. Nobody knows if I’m at my kid’s soccer game or at a client (meeting). So we always had some ability to be flexible. And we had some lawyers, for family reasons or where they lived, working remotely, generally. But like your business, there’s a lot of creative stuff that goes on in law. And it’s very hard to be creative totally remotely. You’ve got to sit in a room together every now and then to brainstorm. `How so? In my career, I would go to a (transaction) closing with a partner. And on the drive back or walk back, the partner would tell me why he chose to do this or why he chose to do that. And if I got lucky, we stopped for lunch or had a drink and I learned. Today, if it’s a Zoom call, the associate has to call the partner and say, ‘Hey can I have a 15-minute appointment? I’d love to know why you did what you did.’ It’s just not the same. Our job will be to balance the ability to work remotely — which is unquestionably the case — against the values and the culture. It’s a very personal business. That’s going to be our balance — to get the best out of both worlds. `What are you doing to encourage going to the office? We have free bag lunches — good lunches. Tuesday’s Taco Tuesday or whatever. We’ll have practice group meetings. Today, I knew we were going to be meeting here, so I invited a colleague to go to lunch with me and I said, ‘Pick me up in my office.’ That person hadn’t been here for a couple of years — she was thrilled to come in. Will she be back for a couple of weeks? I don’t know. But we’re looking for ways to get together and be together. `If a lawyer says I’m tired of living in Oak Park, I want to go live in Traverse City and if you don’t do let me do this,

I’ll just go to some law firm based in Kansas City that will let me live in Traverse City? We just had that happen, in fact. We have a partner whose husband took a job in Traverse City, so she’ll be working from home. Interestingly, we’re recruiting a guy who’s not from here who’s going to go to Traverse City. Traverse City is a couple of hours from the Grand Rapids office. So maybe every once or twice a month, she’ll go down to Grand Rapids to see the folks she works with, we’ll end up having some events. It’s not a long drive. She’ll come down for an event, go back up. What we’ll try to do is make it work. But in her case, she wants to see us, too. And frankly, if enough folks end up in Traverse City, we’ll open an office there.

`And also in the Lansing office, you hired Mark Burton (former chief strategist for Gov. Gretchen Whitmer) Great guy. High-integrity guy just like Matthew (Schneider). ... Mark is very important in our strategic work with our clients on (tax) incentives. And (veteran Lansing lobbyist) Peter Ruddell is already there. And Dennis Muchmore (former chief of staff to ex-Gov. Rick Snyder) is still in the office.

REPORTERS

David Foltyn, CEO and chairman, Honigman LLP

`You’ve made a series of recent hires. Richard Zuckerman came back to the firm from D.C. Richard is a tax lawyer, he’s a white-collar specialist, a former U.S. attorney. He actually was involved in the Hoffa investigation years ago. That dates him a little bit.

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`Well, who wasn’t involved in the Hoffa investigation? (Laughing). I was a kid! But we’ve always had a white-collar practice. He was our lead white-collar lawyer. He went to work (in Washington, D.C.) running the tax enforcement division for the Justice Department. Right around the time Matthew Schneider left the U.S. Attorney’s Office to come here — a great addition for the firm — we looked at our white-collar group and Richard became available. So we welcomed him back, and he’s got a great Rolodex.

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RUMBLINGS

Big Rock Chophouse to end operations later this year

Birmimgham’s Big Rock Chophouse will close at the end of the year, the owners announced Wednesday. | FACEBOOK/BIG ROCK CHOPHOUSE

22 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 13, 2021

Jason Davis, small and emerging businesses. (313) 446-1612 or Jason.davis@crain.com Annalise Frank, city of Detroit. (313) 446-0416 or afrank@crain.com Arielle Kass, residential real estate, (313) 446-6774 or arielle.kass@crain.com Nick Manes, finance and technology. (313) 446-1626 or nmanes@crain.com Kurt Nagl, manufacturing. (313) 446-0337 or knagl@crain.com Kirk Pinho, senior reporter, real estate. (313) 446-0412 or kpinho@crain.com Dustin Walsh, senior reporter, health care. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com MEMBERSHIPS

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THE OWNERS OF BIRMINGHAM’S Big Rock Chophouse on Wednesday announced the restaurant would permanently close on New Year’s Eve this year. Owners Norman and Bonnie LePage, in the restaurant business since 1969, announced the closure via press release. It is unknown what is planned for the property following the closure. Norman LePage, who also owns Griffin Claw Brewing Co. and Lumen Detroit, in the release said it’s time for a changing of the guard. “We’re hoping all of our valued customers will want to enjoy dinner with us a few more times before we

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close,” Norman LePage said in a statement. “Our entire loyal and dedicated staff are planning on staying with us until the end. We will be working on placing them at some of our other restaurant locations, including Lumen Detroit and Griffin Claw Brewing Co.” Big Rock, located at 245 S. Eton St. in the Birmingham Train Station, was born in 1997 as a rebrand of another LePage property, Norman’s Eton Street Station, which opened in 1984. Big Rock Chophouse and Got Rocks, its upstairs cigar lounge, will operate 4:30-10 p.m. Tuesday through Thursday and 4:30-11 p.m. Friday and Saturday.

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