Crain's Detroit Business, December 12, 2022, issue

As usual, there was no shortage of things to cover in Detroit and suburban commercial real estate in 2022.

In Detroit and the surrounding suburbs, a dwindling demand for ofce space has pushed some companies to get creative about reusing spaces. Some major developers ar-

CEO Andrew Sereno of Glacial Farms

during the COVID-19 pandemic driven by supply chain woes, labor issues and increased materials costs. See some of the top stories and trends in the region from the last 12 months on Page 28.

Complexity is the key to Michigan Medicine’s planned acquisition of Lansing-based Sparrow Health.

Sure, integrating the six-hospital system and 7,500 employees into the University of Michigan’s system isn’t going to be easy, but the

e ort will be worth it when it allows for greater capacity for treating patients, said Marschall Runge, CEO of Michigan Medicine and dean of the UM Medical School.

“We get referrals from all over the state and we just don’t have the capacity to increase referrals to Ann Arbor,” Runge told Crain’s. “We’ve learned through our a liations we can improve care locally, not just in

See SPARROW on Page 29

in Manchester

 BORGWARNER TO SPIN OFF 2 UNITS

THE NEWS: Auto supplier BorgWarner Inc. announced it plans to spin o its fuel systems and aftermarket segments into a separate, publicly traded company. After the spin-o , the legacy BorgWarner would consist of two units, its electric propulsion and drivetrain division and air management segments. It’s unclear whether the legacy unit or the new unit will move from its Auburn Hills headquarters. e combined company employs roughly 49,000 in 22 countries.

WHY IT MATTERS: e move is designed

Corrections

 A pro le in the Dec. 5 Notable Women in Nonpro ts inaccurately described Stephanie Osterland’s role at her previous organization. Osterland helped lead Habitat for Humanity Oakland County.

 A pro le in the Dec. 5 Notable Women in Nonpro ts inaccurately described Elana Rugh’s role with Detroit 67: Perspectives. She made the

to untether the company’s legacy internal combustion engine units from the growing electric vehicle segment as automakers continue to double down on an EV future.

 NEW JUDGE CONFIRMED FOR MICHIGAN’S EASTERN DISTRICT

THE NEWS: Genesee County Circuit Judge Frances Kay Behm was conrmed Tuesday by the U.S. Senate to become the newest federal judge in Michigan’s Eastern District. Behm, 53, was nominated by President Joe Biden in June. She was con rmed 4947, with three Republicans joining Democrats in support.

WHY IT MATTERS: With Behm’s con rmation for a lifetime term, Michigan now has three federal judgeship vacancies. Biden has nominated U.S. Magistrate Judge Jonathan Grey after Judge Denise Page Hood took senior status in May.

 HOUR MEDIA BUYS MAGAZINE, SELLS ANOTHER

THE NEWS: Troy-based Hour Media, publisher of Hour Magazine and other city-focused publications, sold Los Angeles Magazine to a new company called Engine Vision Media, owned by prominent attorneys Mark Geragos and Ben Meiselas, the magazine reported last week. Hour had acquired Los Angeles magazine along with three other publications from Indianapolis-based Emmis Communications in 2017. Hour also said that a subsidiary purchased Indianapolis Monthly magazine from Emmis. Terms of the deals were not disclosed.

WHY IT MATTERS: Hour’s holdings include more than 150 magazines and custom titles, and it says it is the largest publisher of city magazines in the country. Locally, it publishes Hour Magazine and DBusiness.

EVENTS

Grand Rapids’ ArtPrize 2.0 announces dates for 2023

ArtPrize has announced dates for its 2023 event, a day after getting the go-ahead to carry on under a new management structure.

e Grand Rapids City Commission on Tuesday adopted a memorandum of understanding between three new leadership entities tasked with governing ArtPrize after the nonpro t disbanded in October. e 2023 competition will take place Sept. 14-Oct. 1

e MOU puts the long-running public art competition — now renamed ArtPrize 2.0. — in the hands of Downtown Grand Rapids Inc., Ferris State University’s Kendall College of Art and Design, and the city of Grand Rapids. Each has been a key partner of ArtPrize since the open international art competition was established in 2009.

Downtown Grand Rapids Inc. will serve as the operating entity, duciary, employer of record and nonpro t entity for purposes of sponsorship and donations.

e MOU also establishes a nine-person board of directors, with initial members including Rick Winn, president of AHC Hospitality; Tara McCrackin, president of Kendall College; Natalie Stewart, vice president of government and public a airs at Switch; Washington; Grand Rapids Mayor Rosalyn Bliss; David Leonard, Corewell Health chief legal o cer; and Michael Verhulst, Acrisure Bene ts Group executive vice president of strategic growth.

award-winning exhibit a permanent part of the museum.

 A pro le in the Dec. 5 Notable Women in Nonpro ts incorrectly stated that Celia omas is a member of Baker College’s advisory board.

 A pro le in the Dec. 5 Notable Women in Nonpro ts gave an incorrect last name and role for Tara Tomcsik-Husak. She serves on the Troy DDA, the

CEO Action Committee for Diversity and Inclusion and as co-chair of the Oakland County Chamber Network. Tomcsik-Husak also is founder and CEO of Feline Fund, which provides funds toward veterinary care for cats.

 Kristen Holt's pro le was mistakenly omitted from the Dec. 5 Notable Women in Nonpro ts. Her pro le is now online.

Everyone’s “why” is different. And

want to hear all about

because the answer gets to the heart of everything that’s important in life. Asking why can lead you to your ultimate purpose, the reason for working so hard, for protecting what’s valuable, and for passing on what you’ve achieved. We’ll work with you on the how. You just tell us, what’s your why?

An intern installs an ArtPrize entry at City Hall in downtown Grand Rapids earlier this fall.

| BRYAN ESLER FOR ARTPRIZE

‘Memorable is the best way to go’

Heirloom Hospitality’s new restaurant gets ready to open in Midtown

JAY DAVIS

Since launching in 2010, Heirloom Hospitality has left its mark on the metro Detroit restaurant scene with Townhouse locations in downtown Detroit and Birmingham, as well as Prime + Proper and Cash Only Supper Club in downtown.

Heirloom founder and CEO Jeremy Sasson, though, calls the restaurant group’s newest venture its most ambitious yet.

It is investing $3 million into Mad Nice, an Italian restaurant and bar planned to open in January in a 10,500-square-foot space at 4120 Second Ave. in the former Will’s Leather Goods space in Midtown Detroit.

Mad Nice will o er modern Italian specialties, including woodred pizza, with a focus on directfrom-the-farm and fermented ingredients. e menu will feature 25 items, including beef and seafood dishes, fresh pasta made on site and various types of gelato.

A retail space called Mad Nice Goods in the rear of the building will sell Mad Nice-branded merchandise and pieces from other local vendors, according to Sasson.

at 900-square-foot space will also o er prepared and packaged foods, and include a co ee and cocktails bar featuring lattes, espresso martinis and fresh pastries. Breakfast and lunch will be available in the retail portion, too, along with a scaled-down version

of the dinner menu.

Mad Nice will o er seating for 185 guests, including at a bar in the center of the dining room and two private dining spaces on the south side of the restaurant. ere will also be some seating near two wood- red pizza ovens close to a prep area of the open kitchen.

e restaurant features tiered seating: bar height seating around the bar, counter height just o the bar and table seating throughout the dining room. A “drinking counter “just o the bar will serve as what Sasson calls a socialized waiting area. e private dining spaces will include large round tables for big parties.

MERGERS & ACQUISITIONS

Blue Cross faces lawsuits over vaccine mandate

Cases allege religious discrimination

DUSTIN WALSH

Dozens of former Blue Cross Blue Shield of Michigan employees have sued the state’s largest insurer over its COVID-19 vaccine mandate.

At least 49 former employees have led suit in recent weeks in district courts in Detroit, Grand Rapids and Wisconsin. All the plainti s allege religious discrimination by the Detroit insurer after it denied religious exemptions from receiving the vaccine and terminated their employment on Jan. 5 this year.

All 49 plainti s are represented by Hurwitz Law PLLC in Ann Arbor.

Noah Hurwitz, principal, said his law rm represents 215 former BCBSM employees and anticipates ling a lawsuit for each individual, stating that because the denied exemptions were tailored to each individual, they cannot be led as a class action lawsuit.

e lawsuits follow approval from the Equal Employment Opportunity Commission, which must sign o on complaints before an individual can le a lawsuit alleging discrimination based on race, sex or religion. Hurwitz said the approvals are trickling in from the EEOC, hence why only 49 of the planned 215 lawsuits have been led.

BCBSM said in a statement it anticipated the lawsuits.

“Like other companies that have enacted vaccine requirements, we had an expectation that a lawsuit could be led,” BCBSM said in a statement sent to Crain’s. “As an employer, we enacted a vaccine requirement for the health and safety of our employees. We did not arrive at this decision lightly. We value and respect all our employees and recognize there are strong and diverse views on the issue of the vaccine. We also recognize our responsibility to do our part as a health care leader to address COVID-19 in our communities.”

Michigan restoration company has big plans with acquisition

ARIELLE KASS

DRYmedic Restoration Services was born from a spreadsheet.

Carlos Hesano, the Bloom eld Township company’s CEO and president of the board, said he took a “very disciplined approach to the business,” which he founded in 2014 and sold last month to Authority Brands for an undisclosed price. e umbrella company has plans to franchise the home restoration business, making it a national player in a popular industry.

“Michigan is one of the most competitive restoration markets in the country,” Hesano said. “A lot of stars are born out of this market.”

Michelle Blevins, publisher of the

Rochester Hills-based Cleaning & Restoration Magazine, concurred. She said Michigan doesn’t have more extreme weather than many other parts of the country, which can keep business booming, but that local companies are able to keep “quite busy.”

“ ere’s kind of a joke that there’s a restoration company on every corner,” she said.

ere’s been a lot of merger and acquisition activity in the industry over the past few years, she said, with activity picking up in the last 18 months. at’s because the industry, which helps people recover from oods and res, is recession-proof. People continue to have insurance on their homes and businesses to

fund recovery work, Blevins said, and disasters continue to happen.

A report the magazine published last week says more than 60 percent of the almost 150 businesses that responded to its survey had been approached by a potential buyer in the past two years. It also says most restoration companies expect revenues to increase next year.

e plans for DRYmedic are ambitious, and Hesano said he expects “very aggressive growth” in 2023.

“Our intention is that we become one of the top three restoration companies in the country in the next decade,” he said.

Mad Nice will o er seating for 185 guests. The restaurant will feature a large bar in the center of the dining area. HEIRLOOM HOSPITALITY

“This space gives us a chance to transform Midtown to how we view hospitality,” Heirloom Hospitality CEO Jeremy Sasson says of the new home of Mad Nice in Detroit. | JAY DAVIS/CRAIN’S DETROIT BUSINESS

DRYmedic was started in 2014 and sold last month to Authority Brands for an undisclosed price. The umbrella company has plans to franchise the home restoration business, making it a national player in a popular industry. | DRYMEDIC

Gilbert swaps o ce brokerage rms for Hudson’s site project

Dan Gilbert has swapped out his previous o ce brokerage team on the Hudson’s site development.

e billionaire’s Bedrock LLC real estate company has hired the local ofce of New York City-based brokerage house Newmark to lure a tenant or tenants to the o ce space being built on the northern portion of the 2.3-acre site at Woodward and East Grand River avenues downtown.

Bedrock had previously retained the New York City o ces of JLL, based in Chicago, for that work.

“Bedrock has enlisted the expertise and support of Newmark to lead Hudson’s commercial leasing e orts. is is an especially exciting partnership as the development project progresses, and we look forward to working together during this next phase,” Bedrock said in an emailed statement.

“While JLL’s New York-based team was initially involved in Hudson’s commercial leasing, we mutually decided to part ways, and Bedrock then

RETAIL

selected Newmark to collaborate on the project, moving forward.”

It’s a coveted listing for Daniel Canvasser, executive managing director for Newmark.

e $1.4 billion Hudson’s site project, in the works for years and now coming out of the ground after a December 2017 groundbreaking ceremony and several construction delays, is perhaps the largest and highest-pro le in the city in recent memory.

It represents some of the rst major spec o ce space in the city in the last decade or so, coupled with a new building the Ilitch family developed at 2715 Woodward Ave. that Boston Consulting Group and Warner Norcross + Judd took space in. ( e Ilitches also built a new Little Caesars Pizza headquarters, although that was build-to-suit, and the new Huntington Bank headquarters is generally BTS as well, although some of the space was going to be occupied by other users).

But of course, in a choppy o ce environment, it’s not without its challenges.

e market has been battered by the COVID-19 pandemic, with companies generally shrinking their ofce space as many workers have shifted to a hybrid schedule.

No o ce landlord has been immune to that.

Deloitte LLP has ed the Renaissance Center, opting for a footprint about a third of its previous size in WeWork space in a Gilbert-owned high-rise on Woodward. (No, WeWork hasn’t been immune either, shedding a large Cass Avenue presence in TechTown last month.) Meridian Health put two large blocks of space on the market, both in the Bedrock-owned One Campus Martius building as well as the Southeld-based Redico LLC-owned One Kennedy Square. Compuware Corp., one of the companies that helped usher in a renewed interest in downtown o ce space, has bolted for South eld from OCM, the building it built two decades ago.

With some 400,000 square feet of new-build o ce space to ll up at the Hudson’s site, we’ll see how this progresses.

Canvasser has represented tenants like Flagstar Bank and Wells Fargo and landlords like Time Equities Inc. and Kojaian Management Corp., among others, according to Newmark’s website.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

New grocery-focused Meijer stores to open

BY JAY DAVIS

Two Meijer Grocery stores, smaller than a supercenter but bigger than its small-format neighborhood markets, are set to open Jan. 26 in Macomb and Orion townships.

e Walker-based retailer announced the opening dates last week.

Meijer Grocery is a new model for Meijer. e 75,000- to 90,000-squarefoot stores are designed with convenience and ease in mind. For example,

parking will wrap around a single corner entrance to maximize the number of parking spaces near the door.

e new concept is Meijer’s latest since introducing the smaller neighborhood market concept in August 2018. Meijer operates four of those stores in Royal Oak, Detroit, Grand Rapids and Lansing.

e rollout comes as grocers have had to o er increasing conveniences to shoppers, including delivery and curbside pickup.

“Our customers’ needs are always evolving, and we’re committed to meeting them where they are,” Meijer President and CEO Rick Keyes said.

e Meijer Grocery stores will feature local brands across all departments, like Ann Arbor-based Zingerman’s Bakehouse and desserts from Chester eld Township-based Achatz Handmade Pie Co.

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

The Hudson’s site tower construction continues downtown. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

Crain’s

Margaret Trimer, Vice President of Strategic Partnerships at Delta Dental

Kirk PINHO

New Rocket program to pay $500 directly to Detroiters who save

Rocket Community Fund to help residents improve credit scores, enhance savings and drive systemic change

ARIELLE KASS

Detroit has been selected as one of four cities where the Rocket Community Fund plans to invest millions of dollars in an e ort to help residents improve credit scores and save money toward emergency funds, homes or other large purchases.

e $2 million fund will be divvied up between Detroit, Cleveland, Milwaukee and Atlanta, and will go to residents in the city limits who are trying to enhance their savings. e impetus of the program, called the Rocket Wealth Accelerator, is to help “drive systemic change” for minority families in particular who have systemic barriers to accumulating generational wealth, said Laura Grannemann, the vice president of the Rocket Community Fund. e community fund is the philanthropic partner of Rocket Companies.

“We truly, deeply understand the power of a stable home,” she said. “Our stable home is the foundation of everything else that we do.” e program will match up to $500 in savings for large purchases, or $300 in savings for emergency savings goals. Additionally, it will provide clients with coaches who can help them take steps to improve their credit scores or make other changes to improve their nancial situations.

Participants also will receive a free three-month subscription to Rocket Money, a program that manages subscriptions, helps people budget and lowers their bills.

How does it work?

Luke Londo, a spokesperson for the community fund, said the accelerator is meant to be a “proactive solution” to help people improve their nancial standing, instead of waiting until someone is denied a loan before they begin a remedial credit-building program.

“ at intervention is too little, too late,” he said.

e funds and coaching are not immediately available and Londo said it would take several months before the program was up and running. Many details of the program are still in the works, including how matched funds will be handled and when people will have access to the money, but Grannemann said the hopes are that it reaches nearly 3,000 families with coaching over the three years it will be funded, with the intention that 80 percent are people of color. e goals include increasing the credit scores of 500 clients, increasing the short-term savings of 750 clients — including increasing savings by at least 25 percent for more than half of those participants — and creating savings goals and spending plans for 1,000 clients.

e program will be administered with the Local Initiatives Support Corporation, and will be o ered in Detroit by SER-Metro Detroit, the Wayne Metro Community Action Agency and International Institute of Metropolitan Detroit.

“ is allows us to take a step forward and be more proactive before they get that denial, before they get that sense of defeat,” Grannemann said of participants in the program.

While there are no speci c income or race requirements, Rocket said it speci cally aims to increase Black wealth; Black Americans are twice as likely as white Americans to be denied for credit, a statement announcing the program said. It added that more than 40 percent of Black households have no emergency savings and almost 45 percent have less than

a month of income saved.

Detroit Mayor Mike Duggan said in a period of rising wages and decreasing unemployment, there is “more opportunity than ever” in the city, though some people are still paying more in rent than they would be on a mortgage in Detroit. He said the program could help increase Detroit’s homeownership rate and make things easier for people who continue to “su er a hangover from the recession.”

“We’ve moved a lot of people from poverty to the middle class,” he said.

e fund will provide opportunities for economic mobility in the city, said Seung Kim, senior vice president of National Programs for LISC.

Laura D’Alessandro, director ofnancial health for LISC, said she expected the program to connect and reconnect with people as needs emerged. While she said there are no income requirements for the program, the median income of people who connect with LISC is $10,400.

She said that, sometimes, it helps people who have a mental block against saving to begin to participate

in a program like this. Londo said the fund was a purely philanthropic endeavor and Rocket Companies didn’t stand to bene t from an increase in people saving for homeownership.

Rob Lockett said the goal is to get participants who are “outside the funnel” to consider saving. e program is considered a pilot, he said, and, if successful, could be expanded elsewhere in the country.

Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

Grannemann

Danger abounds if tight labor market continues

There’s perhaps never been a more bittersweet economy for businesses. anks to trillions of dollars in government stimulus, the economy grew at the fastest pace in more than 80 years, the result of which was near-record pro ts across the board coming out of early pandemic lockdowns. Business enjoyed an overall 22.6 percent rise in corporate pro ts in 2021.

But that stimulus also made the labor market incredibly tight, and wage power swung squarely into the hands of employees. Wages have continued to grow alongside in ation, threatening a wage-price spiral, where paying more for workers requires raising prices. It’s all coming to a head now.

Corporate pro ts sank 1.1 percent in the third quarter of this year, compared with a 4.6 percent gain in the second quarter. is is largely due to that sustained and continued wage growth. Wages rose by 0.6 percent — double estimates — while 12-month average hourly earnings rose by 5.1 percent, well above the 4.6 percent forecast.

And companies continue to hire. Payrolls grew by 263,000 in November, well ahead of the 200,000 Dow Jones estimate for the month, as companies continue to catch up to pent-up demand from the pandemic. In fact, Michigan manufacturing jobs are nearly back to pre-pandemic levels.

e U.S. Federal Reserve isn’t handing the business sector any favors with sustained in-

terest rate hikes in an attempt to slow down in ation. e Fed hoped more slack would enter the labor market with workers, now more comfortable with COVID-19 exposure and the drying out of stimulus, coming back to the workforce.

But that’s just not happening.

November’s labor force participation rate of 62.1 percent is barely ahead of where we started the year. Nationally, the rate remains 1.3 percentage points below where it was before the pandemic, meaning some 3.4 million people remain out of the workforce.

Michigan’s labor force is missing more than 100,000 workers with a participation rate of just 60 percent, the lowest it’s been since the Great Recession more than a decade ago.

“We’ve learned that there were a lot of people that didn’t want to go back to work,” said Hoyt Bleakley, a labor economist at the University of Michigan. “ ere is a strange phenomenon, the number of people who actually work is more malleable than you might imagine. ... We have more job openings than people looking for work, and that hasn’t happened since the ’40s. So under that environment, rises in unemployment take a longer time to recover because of weak labor force attachment.”

COMMENTARY

It’s time to eliminate the sales tax on motor fuel

ith a large revenue windfall at its disposal, the state should move to implement an often-discussed tax reform to generate more revenue for Michigan’s roads. Michigan’s road funding e orts are hampered in part by a tax policy that includes motor fuel purchases in the base of the state’s sales tax. As a result, a signicant amount of tax revenue on fuel sales goes not to road maintenance but to other areas of the state budget.

Our research suggests one speci c mechanism for boosting road funding would be to exempt motor fuel from the state’s sales tax and then increase the motor fuel tax rate to generate an equivalent amount of revenue. is keeps gas prices unchanged; motorists pay less sales tax and more motor fuel tax. is concept has received support from both political parties in the past, and the public has generally expressed support for ensuring that all taxes paid at the pump go to road maintenance.

However, a perennial challenge to implementing such a shift has been the budget tradeo s that come with it. About 73 percent of sales tax revenue is distributed to the state’s School Aid Fund which primarily supports K-12 schools. Another 10 percent is distributed to local governments as part of state revenue sharing. Most of the rest falls to the state’s General Fund to support other state programs. e creation of “budget holes” makes this approach more di cult unless state revenue is available to back ll those holes.

e governor has signaled she does not intend to resurrect the motor fuel tax proposal introduced at the beginning of her rst term. Instead, she wants to pursue broader change that recognizes long-term challenges related to the transition from gas-powered to electric vehicles, such as charging motorists based on travel miles.

Forward-looking consideration of funding changes is wise, especially if it is combined with reforms to the state’s road funding distri-

bution formula to ensure that scarce state resources are deployed most e ciently to the highest-need roads. However, Michigan’s roads have immediate needs.

WFortunately, the state is in an unprecedentedly good position to facilitate that back ll. e state has $6 billion in reserve: $2.8 billion in discretionary General Fund/General Purpose revenue and another $3.2 billion in School Aid Fund revenue.

With expected surpluses next year, there’s room for a combined $2.5 billion in some combination of new ongoing spending or permanent tax relief.

is ongoing revenue surplus can aid the state in addressing the budget holes that would otherwise be generated by a revenue-neutral shift of the sales tax on motor fuel to an o setting increase in the motor fuel tax rate.

We estimate that eliminating the sales tax on motor fuel at current gas prices would reduce tax revenue by around $1.15 billion: around $840 million would hit the School Aid Fund, while $142 million would come out of GF/GP revenue and $115 million would re ect reduced revenue sharing payments.

e state’s ongoing revenue surplus is more than su cient to provide a permanent back ll for this revenue loss.

With each penny of motor fuel taxes raising about $53 million, the state could then raise the motor fuel tax rate by about 21-22 cents per gallon without impacting pump prices. e $1.15 billion foregone from the sales tax would be replaced by an equal amount in motor fuel tax revenue owing into the Michigan Transportation Fund.

e tax shift would:

 Generate over a billion dollars in new dedicated transportation funding while back lling budget holes with the existing revenue surplus. 

Boost funding to local agencies that were left out of the Rebuilding Michigan bonding plan. 

Leave a su cient general fund revenue balance to cover the governor’s tax relief proposals related to retirement income and the Earned Income Tax Credit. 

Leave another $3.5 billion in one-time revenue in reserve for potential one-time priorities like economic development incentives or retaining a recession bu er.

If xing the damn roads is still priority No. 1 for Michigan, the governor and Legislature should move to implement this tax policy change without delay.

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

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.

DANIEL SAAD/CRAIN’S

DETROIT BUSINESS

ROBERT SCHNEIDER

Robert Schneider is a research associate with Citizens Research Council of Michigan.

JENNY JOHNSTON/AJAX PAVING

COMMENTARY

Dustin WALSH

Common Ground to transfer homeless youth programs to Lighthouse

BY SHERRI WELCH

Nonpro t Common Ground is transferring the Sanctuary shelter in Royal Oak and other homeless youth programs it has operated for nearly 25 years to Lighthouse to give its full attention to mental health crisis services.

Lighthouse, which operates emergency food and shelter programs, in addition to providing housing assistance and developing a ordable housing, will take on the homeless youth programs in February.

e two are negotiating a no-cost, three-year lease for Lighthouse to assume operation of the shelter for runaways and homeless youth ages 10-16, said Lighthouse President and CEO Ryan Hertz.

An 18-month transitional housing program for youth ages 16-18 and a two-year transitional housing program for youth up to age 25 will also transfer to Lighthouse as part of the deal. e programs, which serve about 150 youth each year, will add about $1.5 million to Lighthouse’s $14 million budget for scal 2023, Hertz said.

“It de nitely was a di cult decision, but I think it was the right one,” said Common Ground President and CEO Heather Rae.

Common Ground has signi cantly expanded mental health crisis services, which are taking the bulk of its sta and nancial resources, she said.

Sta and people served by the homeless youth programs it had operated since 1998 after merging with former nonpro t Sanctuary, “were getting less and less of our attention, and that wasn’t fair,” she said.

“ rough our strategic planning, we decided we wanted to see these programs thrive and become part of an organization that has that expertise.”

e bulk of Common Ground’s programs, $30 million budget and 400+ employees are engaged in mental health crisis services, Rae said.

“ is will allow us to focus on those services.”

e homeless youth programs t neatly into Lighthouse programs around housing and stability, while giving it the new ability to serve un-

accompanied youth, Hertz said. Having the ability to operate the programs will serve as a prevention measure of sorts.

“To the degree that we are able to help unaccompanied, unsheltered youth, we’re more likely to see less recidivism ... and need to serve those (same people) down the line,” he said.

Providing a safe home

Lighthouse operates a shelter for adults and families on its main campus in Pontiac and through nearby hotel rooms. In 2021, the most recent year for which data is available, it served about 550 people across its shelter and transitional housing programs, the majority — 425 — in its shelter programs, Hertz said.

Lighthouse also provides supportive housing, emergency food distribution, eviction and homelessness prevention, short- and long-term rapid rehousing and develops a ordable housing.

e transfer brings legacy programs from three Oakland County organizations, Common Ground, Lighthouse and the nonpro t it merged with in 2019, South Oakland Shelter, under one roof, Lighthouse COO Jenny Poma said.

As it takes on administration of the homeless youth programs, Lighthouse will bring on about 20 sta , predominantly from Common Ground, said Hertz, who got his start in social work through a placement at the Sanctuary shelter before its merger with Common Ground in 1998.

His relationship with the late CEO of Common Ground, Tony Rothchild, and his oversight of the merger with Sanctuary at that time “was a big part of why I felt called to respond when we were asked if I had an interest in

taking this on,” Hertz said.

Mental health services

Priorities changed for Common Ground earlier this year when the nonpro t took on a $10 million state contract to answer calls made to the Michigan Crisis and Access Line, which extended to the 988 national mental health hotline that launched in July. About 7,000 calls are coming in each month through 988, Rae said.

It’s also serving as a national backup center for text and chat to the crisis hotline through a $1.4 million contract with Lifeline (formerly known as the National Suicide Prevention Hotline.)

At the same time, Common Ground in early summer launched a virtual urgent care for crisis therapy

and medicine management that has served 380 people so far. It is negotiating with insurers to ensure services provided are covered and building out the back-o ce systems needed for that and a brick-and-mortar urgent care it plans in Oakland County.

“Every week we are serving more and more people. We expect it to continue to rise because the virtual behavioral health urgent care is easy to access — no appointment is necessary, you don’t have to drive anywhere. You can be in the UP and get help,” Rae said.

It’s likely to be a year before Common Ground resumes its search for a physical location for the mental health urgent care, she said.

“We have looked at a few locations, but we’ve put the brakes on the physical location to focus on continuing

to expand the virtual. What we’re nding is people all over the state are trying to access services.”

Amid it all, Common Ground also opened a “resiliency center” in September in Oxford to provide free counseling to help the community cope in the wake of the shooting at Oxford High School in 2021. With the one-year anniversary of the shooting in late November, over 300 people came to the center for help, Rae said.

Funded with about $750,000 each year in federal dollars passed through the state, the center will remain open for the next three to four years, she said.

Common Ground served about 170,000 people last year.

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

Financial challenges? We’re here for you!

Common Ground’s Sanctuary shelter in Royal Oak serves runaways and other unaccompanied youth. CCOMMON GROUND

Hertz Rae

Couple bets on creating a space for Black entrepreneurs

Husband and wife team Gerrard and Racheal Allen have a strong understanding of how rewarding entrepreneurship can be. Both have spent years working as entrepreneurs and with

rators of Black Excellence, a nonpro t that annually produces the

South eld that attracts more than 2,000 participants. Racheal is an operations

School, an agency that works with entrepreneurs to scale their businesses’

40 honoree, opened her own Farmers Insurance agency when she was 21 years old and later established three more startups. Put both the Allens together and you get Centric Place — a meeting and retreat space in Farmington Hills that also serves as a hub for arts, culture and entrepreneurship.

Centric Place was born out of a simple idea. As second-generation Black entrepreneurs who watched their parents leave traditional roles to establish their own businesses, Gerrard and Racheal have discussed starting a small business incubator, accelerator and event space since they started dating in 2015. Centric Place — in a two-level, 10,000-square-foot space on 12 tree-lined, secluded acres at 36216 Freedom Road — was born out of those discussions. Centric Place opened on Nov. 18.

e business focuses on Black creatives and entrepreneurs, who often lack the capital or connections necessary to sustain successful entrepreneurial ventures.

“Racheal’s grandfather and mother were always entrepreneurs. Same for my dad, who left a traditional job to go into business for himself,” Gerrard Allen said. “ at gave him the freedom to hire family

and establish things the way he wanted. We have a chance to honor them with this place.”

“ is space started out as a space for my businesses and an events space for Gerrard,” Racheal Allen said. “I was transitioning out of my full-time role, a highly visible role. We’ve always had full-time jobs and side hustles. e decision to transition into entrepreneurship full time was a bet on ourselves.”

To focus on the venture, Racheal Allen left her role as COO of the Marygrove Conservancy in northwest Detroit, where she managed a $50 million endowment by the Kresge Foundation and oversaw the Marygrove College campus operations, community engagement e orts and partnerships. While at Marygrove, Racheal worked with a variety of people interested in entrepreneurship.

Entrepreneurial team Ti any Gri n, left, and LaToye Morris brainstorm ideas for their business, Mahogany Manor, on Nov. 30 at Centric Place. Gri n and Morris are members at the Farmington Hills co-working space, which caters to Black creatives and entrepreneurs.

aspiring entrepreneurs. Gerrard’s passion is events. He co-founded Cu-

Juneteenth Family Reunion, an intergenerational celebration in

guru. She is CEO and principal strategist for Operations

operational capacity. Racheal, a 2020 Crain’s 40 under

Racheal and Gerrard Allen opened Centric Place in November in Farmington Hills. Centric Place o ers co-working and event spaces for Black creatives and entrepreneurs. | TBOYDSTON PHOTOGRAPHY

| JAY DAVIS/CRAIN’S DETROIT BUSINESS

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At Centric Place, where the Allens are heavily involved in management and day-to-day operations, Gerrard focuses on working with emerging Black artists to curate art experiences, poetry, spoken word and bespoke events. at’s evident by the dozens of pieces of art on display throughout the facility from artists who previously had not had their work displayed publicly. Racheal leads entrepreneurial training, workshops and membership experiences.

“I’ve been in the small business ecosystem now for a number of years as a consultant and with Operation School. What we’ve seen is there are not enough physical spaces dedicated to Black folks and the needs of Black small business communities,” Racheal Allen said. “I worked to create spaces like that at Marygrove, but there were still restrictions.

“We wanted to create an unapologetically Black space. Even the premise of that sounded controversial, but we still wondered why no places like this existed. We have over 100 vintage Ebony magazines on the wall. ose are iconic Black faces we grew up with. at symbolizes to people that this is a safe, Black space. Most co-working environments are sterile, and (Black people) tend to be the minority in membership. We wanted people to know this is a safe, Black space.”

at’s not to say there are no other options available. Detroit-based Bamboo and WeWork are among those that o er a variety of co-working spaces, available to anyone who opts to use them. Centric Place offers a more personalized experience.

No place like home

At Centric Place, much emphasis is placed on comfort and feeling at home.

Walk into the glass doors and you notice a wall covered with rst edition prints of Ebony magazine featuring the likes of Diana Ross, Willie Mays and Muhammad Ali in all their glory. e magazines, installed by consulting rm Detroit Art Specialists, were inherited by the Allens following the death of a family member. e decor, in a space designed by Detroit-based Bucky Willis, is set to remind members and guests of their grandmother’s home. ere’s even a listening station featuring a vintage record player and a selection of 45s. e space includes 12 o ces, a classroom, boardroom, kitchenette and full kitchen, and event space on the lower level.

Day passes are available for $25. Monthly memberships run $100 and give members access to co-working spaces and the kitchenette. Private o ces are available for $400 a month. Spaces in the lower level, which are named in honor of Gerrard and Racheal’s family, are available for $15$125 an hour.

e Allens, who hold a ve-year lease with an option to renew, put about $50,000 of their own money into getting the space ready to go.

“In the build-out, we pulled this o in less than 90 days,” Gerrard Allen said. “It’s just the drive we have to make this work. Once we both recognized the opportunity, nothing between the two of us ever pulled us back. We knew this was the opportunity of a lifetime. None of this was o

a whim. We truly put together what we’ve been talking about for years.”

ere seems to be a demand for the space, too.

Open just a few weeks, Centric Place is already just about booked solid. Nine of the 12 private o ces are spoken for. e remaining three rooms will be kept available for daily drop-ins, Racheal Allen said. e more than 500-member Metro Detroit Black Business Association on Nov. 28 hosted a strategic planning session at the venue.

In January, Centric Place will begin o ering small business management courses, in a program called operation school, for entrepreneurs at various points in their journey.

e Allens expect to bring in about $500,000 in revenue in 2023 from a combination of memberships and events.

“We know we’re a few steps ahead

of a lot of people on our entrepreneurial path, so we want to provide others with the tools and knowledge they need to either be successful entrepreneurs or scale up their current businesses,” Racheal Allen said. “We know there are a lot of places where you can go to start a business. ere aren’t nearly as many places that teach you how to successfully operate a business.”

e courses are necessary, as the number of Black-owned businesses continues to grow. e most recent U.S. Census Annual Business Survey Program found that the number of Black-owned businesses in the U.S. grew by 8 percent from 2018 to 2019. But studies continue to nd that Black businesses close at a much higher rate than businesses owned by those in other ethnic groups. ose two facts are a major reason the Allens choose to focus on assist-

ing and working with Black entrepreneurs and creatives.

“Entrepreneurship is an equalizer for Black people,” Racheal Allen said. “No one can tell us how to work. It creates opportunities traditional jobs can’t give you. You get satisfaction and ful llment from knowing you’re helping your community. It generates money and freedom. e only place you can really get all those things, I think, is from entrepreneurship. is place is for people who’ve seen success and tasted it, but also been denied in other places.”

‘This was the place for us’

Centric Place speaks to entrepreneurs LaToye Morris and Ti any Gri n. e duo owns and operates e Mahogany Manor, which they established in 2019. e Mahogany Manor

is billed as a modern-day country club with a twist, and is speci cally focused on Black women and giving them a place to relax, relate and release.

Morris, a South eld resident, and Gri n, from Farmington Hills, have a relationship with Racheal Allen that dates back to Marygrove. When it came time for Morris and Gri n to nd a home for their small business, going with Centric Place was a no-brainer.

“We started with Racheal at Marygrove. When she and Gerrard got this place, they gave us a call, said they loved what we were doing and thought Centric Place would be great for us,” Gri n said.

Shortly after the opening of Centric Place, Gri n and Morris hosted a Sistersgiving event that brought 60 women together — many of whom have inquired about becoming members at Centric Place.

“ ere’s no space like this specically dedicated to our goals and needs,” Morris said. “ is is a place where we can do it ugly and make our business grow. In any kind of co-working space, you want it to be relatable and meaningful. We know there are other places that do great things. is is just the right t for us.”

Knowing they’re providing a space people have been searching for is the icing on the cake for the Allens.

ey ensure Centric Place is pristine for members and guests, and can even be seen performing housekeeping duties before and after events.

“ ere’s a certain pride that comes with all this because we know what we’re providing,” Gerrard Allen said. “It’s not so much having a place for Black people to be. We’re putting a certain level of pride in it by ensuring it’s a clean space we feel like we deserve to work in.

“We feel like this is kind of our life’s work. We want this to be a jump-o point for some very successful people and we’re going to do all we can to make that a reality.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

Guests check out Centric Place during a Nov. 18 grand opening event. Centric Place, located in Farmington Hills, is a space dedicated to Black creatives and entrepreneurs. Centric Place features an open co-working area, 12 private o ces, an events space, and a classroom that in January will o er courses on sustaining a small business. | TBOYDSTON PHOTOGRAPHY

Walk into Centric Place and the rst thing you see are the strategically placed, rst-run Ebony magazines featuring some of the most famous Black faces from the last 60 years. “We wanted the magazines to be the focus of the space,” says Centric Place co-founder Racheal Allen. TBOYDSTON PHOTOGRAPHY

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Traverse City converts downtown road to attract new businesses.

CRAIN’S MICHIGAN BUSINESS | DEVELOPMENT

ON THE WATERFRONT

Research center to bring freshwater-related innovations to Traverse City

BY

TOM HENDERSON

Houghton-based Michigan Technological University and four Traverse City organizations recently embarked on phase 1 of their recently announced Freshwater Research and Innovation Center.

e 60,000- to 70,000-square-foot space will be on the current site of Traverse City’s Discovery Center, located on West Grand Traverse Bay. To bring the center to life, Michigan Tech is partnering with Discovery Center and Pier, a rotaries charity; Northwestern Michigan College, which o ers two and four-year degrees; 20Fathoms, a business and technology incubator; and Traverse Connect, the city’s chamber of commerce.

e Freshwater center, which an unnamed principal said would cost at least $60 million, will have conference rooms, wet labs, large garage facilities and classrooms.

Phase 1 of the project includes applying for funding, expanding the marina, site renderings and renovating the Discovery Center’s pier, which was built in the 1930s for ships carrying coal to unload their cargo.

Jay Meldrum, Michigan Tech’s executive director of Traverse City operations, said the facility could be operational in two or three years.

First-class research institution in the making

NMC president Nick Nissley said their vision is to build the Woods Hole of freshwater research. “Woods Hole is seen as the premier oceanographic institution,” Nissley said, referring to the Woods Hole Oceanographic Institution, a non-

pro t in Falmouth, Mass. He said the freshwater project builds on the strengths of both educational institutions. “NMC is focused on the application of technology, to take that basic research and say ‘What can you do with that?’ en you throw in the folks at 20Fathoms and their expertise in commercializing technology and what Traverse Connect can bring with its business connections.”

Like other community colleges, NMC primarily o ers two-year associate’s degrees. However, it also o ers two bachelor’s degree programs. One is in maritime technology through its Great Lakes Maritime Academy, one of six state maritime academies in the country.



Research center to bring freshwater-related innovations to Traverse City. THIS PAGE 

Fish Pass project to study, protect marine life back on track PAGE 14 

Tech veteran Eric Roberts bolsters incubator, drives new Traverse City projects PAGE 15 

Traverse City converts downtown road to attract new businesses. PAGE 17 

Michigan Tech works to bring business, opportunities to Traverse City PAGE 17

“YOU COUPLE WHAT WE ARE DOING WITH THE WORKFORCE DEVELOPMENT NMC IS DOING, (AND) THIS IS A WIN-WIN. ”

Timothy Havens, director, Great Lakes Research

Northwestern Michigan College students work on a freshwater project. NMC o ers degrees in engineering technology, freshwater studies and a new degree in water quality and environmental technology

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Learn more at jaffelaw.com.

Fish Pass project to study, protect marine life back on track

Plan to remove last of four old dams on Boardman River to move forward after court ruling

HENDERSON

The Fish Pass project to remove the last of four old dams on the Boardman River between the city of Kalkaska and West Grand Traverse Bay is back on track after the Michigan Court of Appeals issued a unanimous ruling on Oct. 20 that frees Traverse City to move forward.

The Boardman River flows more than 28 miles. The dams were built for the timber industry that boomed in Michigan in the late 1800s and early 1900s and were later used for electric power generation.

A city resident sued to block the project, saying the city charter required a vote because it involved parkland. Construction on the fish pass was to begin in January 2021, but the month before, Judge Thomas Power of the 13th Circuit Court in Grand Traverse County blocked the project. With the support of Michigan Attorney General Dana Nessel, the city appealed the decision.

e appeals court ruled that the project “does not transform the park into something other than a park. Moreover, engaging in environmental research concerning the habitat of species found in the area has a

natural connection to the property’s purpose and use as a park... e project will result in a net gain of parkland and more public use.”

The project includes removing the earthen Union Street Dam in downtown Traverse City, which was deemed a hazard, to implement a variety of fish-sorting techniques and technologies — including facial recognition — to monitor fish moving upstream to spawn and divert invasive species such as lamprey eel and carp out of the river using things like screens, grates and traps. That will involve building a fish-passage channel about 400 feet long and 30 feet wide on the north side of the river. The more harmful species, like lampreys, would be killed. Lampreys eat an estimated 40 pounds of native fish a year.

The city would replace the earthen dam with an 8-foot high metal barrier engineered to withstand a 200-year flooding event, add a building for research and education, a bridge over the river near the new dam and increase green space along the river.

Restoration of the Boardman River has been in the works for 20 years.

TOM

Dan Zielinski, principal engineer and scientist for the project with the Great Lakes Fisheries Commission, standing on the earthen Union Street Dam. TOM HENDERSON/CRAIN’S DETROIT BUSINESS See FISH

Tech veteran bolsters incubator, drives new projects

After long career, Eric Roberts energizes 20Fathoms, freshwater center in Traverse City

BY TOM HENDERSON

After a long career in tech, much of it in Silicon Valley, Eric Roberts wanted to retire somewhere special. In 2019, he and his wife, Christine, visited Traverse City and decided that’s where their new home would be. ey moved from the West Coast in July 2021.

e Robertses are Michigan natives who earned engineering degrees from Michigan Technological University. ey always knew they’d return to the state. “We’re boomerangs,” Eric Roberts said. “Coming here was a heart issue for me.”

ough they found their retirement home, neither was ready to retire.

Christine Roberts is a senior vice president of software and services for HP Inc. In September 2021, Eric Roberts replaced Lauren Bigelow as executive director of 20Fathoms, Traverse City’s business and tech incubator. e 20Fathoms name is derived from the fathoms of visibility in Lake Michigan’s east and west bays that form the city’s shoreline, six feet per fathom.

Bigelow, who had a brief and starcrossed tenure at 20Fathoms, was a longtime xture in the entrepreneurial ecosystem in southeastern Michigan.

From 2010-2016, she was executive director of the Accelerate Michigan Innovation event in Detroit, which annually awarded $500,000 to the winning early-stage company in the biggest pitch event in the state.

Bigelow joined 20Fathoms in January 2021, two months before COVID-19 hit and sent the incubator’s tenants home to work remotely. In September of that year, illness in her family forced her to leave the organization and return to southeastern Michigan.

When Bigelow announced she was leaving 20Fathoms, board Chair Kristin Rockwood asked Roberts if he wanted the job.

Previously, Roberts served as vice president of revenue operations at Saba Software in Dublin, Calif. Before that, he was a vice president at BlackBerry and a vice president of Good Technology before BlackBerry purchased it for $425 million in 2015. Roberts also held various executive positions for Motorola Mobility, a subsidiary of Google in Libertyville, Ill., including leading software development and services for the Android smartphone.

Knowing he wanted to stay active as an investor and consultant, he joined Northern Michigan Angels in December 2020.

“I tried to soak up as much as possible around the business ecosystem and be able to o er a new-guy perspective. I liked how active it was here. It wasn’t just another sleepy Midwest scene. It was a whole lot easier to have an impact here as head of 20Fathoms,” he said.

“Eric has stabilized and re-energized the organization post-COVID. He has introduced new events and gatherings and has his sta fully and purposefully engaged. He has aggressively reached out into the com-

munity as a leader and put an energetic, can-do face on 20Fathoms,” said Casey Cowell, founder of Traverse City-based Boomerang Catapult LLC, a funder of startup tech companies. In 2018, Cowell, members of the Northern Michigan Angels and others raised $500,000 to launch 20Fathoms downtown.

The Roberts In uence

Cowell credited Roberts as the driving force behind the recently proposed Freshwater Research and Innovation Center on West Grand Traverse Bay. e center is the result of a partnership between Michigan Technological University, Northwestern Michigan College, 20Fathoms, local chamber of commerce Traverse Connect and the Discovery Center and Pier northwest of downtown where the center will be built.

“Eric has taken the bus driver role in the Freshwater Research initiative. He leads the bi-weekly meetings, articulating strategy development,” said Cowell. (See related story, Page 12.)

Freshwater partners also credit Roberts with jumpstarting the project.

“It was Eric who said, ‘Let’s look at getting a building,’” said Jay Meldrum, the executive director of Michigan Tech’s Traverse City operations

Roberts said he has aggressive goals for job creation and startups.

“To hit those goals, we have to have larger projects and bring university research to Traverse City. And turn that research into techbased businesses and jobs,” he said. “ e amount of economic development that will come out of the Freshwater Research project will be transformative for Traverse City.”

In growth mode

20Fathoms has been rapidly growing with Roberts at the helm.

Since November 2021, membership has grown from 83 to full capacity of 121, with 24 renting private ofces and 97 sharing general co-working space, according to Keri Amlotte, the incubator’s director of marketing. e incubator also o ers day passes and conference-room rentals, popular during the summer tourist season when people vacationing in the area need to catch up on work.

Regular monthly meetings at 20Fathoms include the Women in Tech Meetups, a social gathering, and the Tech Career Discovery Series, a collection of panel discussions with area tech professionals on various topics. e space has also hosted meetings on how to start and scale a business and social/networking events.

20Fathoms is a partner in the annual Northern Michigan Startup Week, which it bills as a celebration of entrepreneurship, innovation and the growing startup community in the area. e 2023 event will take place May 5-11.

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

LARRY BURNS

DAVE COULTER Oakland County Executive

ANDREW STEIN Incoming President & CEO The Children’s Foundation

DR. MATT LACASSE

Child and Adolescent Psychiatrist Children’s Hospital of Michigan

Eric Roberts of 20Fathoms, inside the incubator with views behind him of West Grand Traverse Bay. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

The commission first announced the project in 2016.

Then in 2019, the Great Lakes Fishery Commission, a bilateral commission involving the U.S. and Canada, unveiled the final design for the fish pass project, which was overseen by the U.S. Army Corps of Engineers.

According to the commission, more than 180 invasive aquatic species have been introduced into the Great Lakes over the years. Most did not have a noticeable impact on the ecosystems, and many did not survive. But others, including lamprey, alewife, round gobies, grass carp, the spiny water flea and zebra and quagga mussels, have had significant negative impacts. The commission says such species eliminated 18 native species of fish from a least one of the Great Lakes.

In October 2020, the Corps of Engineers awarded a $19.3 million contract to Spence Brothers Construction of Traverse City for the project. Given inflation and the supply chain issues, Spence Brothers will be negotiating a higher price, according to Dan Zielinski, principal engineer and scientist with the Great Lakes Fisheries Commission and for the fish pass.

e project is funded primarily through the Great Lakes Restoration Initiative. Partners include Traverse City, the Grand Traverse Band of Ottawa and Chippewa Indians, Michigan Department of Natural Resources, Army Corps of Engineers, U.S. Fish and Wildlife Service, U.S. Geological Survey, U.S. Environmental Protection Agency and Fisheries and Oceans Canada.

Work is expected to start next spring with completion in 2025. At that point, a 10-year study period will determine the best fish sorting techniques and whether to continue barring salmon from heading upstream. Not nearly as invasive as lampreys, salmon interfere with native river species like brown and brook trout because of the mass of their bodies decaying after spawning.

Zielinski said current methods for sorting fish include using environmental stimulation like bub-

bles, sound, light and pheromones to herd them by detecting density, size, shape, color and migratory patterns. For example, lampreys spawn in the spring and generally swim up river at night. And some fish prefer swimming at the bottom of a river, along the river edges or in the middle.

The fish pass would use image-recognition technology to refine the sorting process for species of similar characteristics.

Zielinski said they hope the trial period will result in permanent changes to how fisheries are managed in the Great Lakes basin and across the U.S.

“This decision was what we expected all along,” said Martin Colburn, Traverse City’s city manager, of the appeals court ruling. “We were ready to go two years ago. The delay was unfortunate.”

“When you understand what the sh pass brings to the health of the river, well, the river’s voice was heard, nally,” said Jean Derenzy, CEO of Traverse City’s Downtown Development Authority. “And the voices of the Grand Traverse Band of Ottawa and Chippewa Indians were heard, too.”

Eric Roberts, the executive director of 20Fathoms, Traverse City’s tech and business incubator, said the fish pass is a perfect example of freshwater research.

“We can export technologies that come out of it. And businesses will come out of it,” said Roberts, referring to the Freshwater Research and Innovation Center project announced on Nov. 1.

The center is being developed by partners 20Fathoms, Houghton-based Michigan Technological University, Northern Michigan College, Traverse Connect and the Discovery Center and Pier, a campus and waterfront area northwest of downtown where the center will be built.

Fish pass and Freshwater Research officials envision collaborating on projects.

“It can be part of the work at our research center here,” said Jay Meldrum, executive director of Michigan Tech’s operations in Traverse City. “The facial recognition of fish is a very interesting area of study, how to recognize a trout from an eel.”

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

CENTER

From Page 12

rough data collection, analysis and application courses, students learn to map the oor of Lake Michigan and operate $300,000 remote-operated underwater vehicles. e program trains deck and engineering o cers for the commercial shipping industry, with graduates becoming the crew members that keep engines running, pilot the vessels and run the decks for large commercial shipping companies worldwide.

e second B.A. program o ers degrees in engineering technology, freshwater studies and a new degree in water quality and environmental technology through the school’s Great Lakes Water Studies Institute.

Potentially life-saving work

Meldrum has a long history of securing large grants, getting government and private-sector contracts and commercializing technology.

He is optimistic the center will receive signi cant funding for research that will lead to early detection and some remediation of synthetic per uoroalkyl and poly uoroalkyl substances, or PFAS. e so-called forever chemicals have chain-linked carbon and uorine atoms and do not degrade easily in the environment. In part, they are used to keep food from sticking to packaging or cookware, make clothes and carpets stain-resistant and create e ective re ghting foam.

Meldrum said possible funders for PFAS initiatives include the National Science Foundation, U.S. Environmental Protection Agency, Michigan Strategic Fund, Michigan Economic Development Corp. and Michigan Department of Environment, Great Lakes, and Energy. Another grant target is the U.S. Department of Commerce’s National Oceanic and Atmospheric Administration.

Before taking his current job in July, Meldrum directed Michigan Tech’s Keweenaw Research Center, which helped develop autonomous, robotic and remote-control operations of large vehicles for the U.S. Army and alternative energy solutions for vehicles. He also plans to approach foundations for funding and seek corporate sponsorships.

Traverse Connect President and CEO Warren Call spoke with some Michigan representatives in Congress

and is optimistic about receiving funding earmarks in the next budget, he said.

“ e development of the Freshwater Research and Innovation Center will ensure that the Grand Traverse region is well-positioned to be the global epicenter for freshwater research, industry and innovation,” he said.

A credible research partner

A planned working relationship with the Great Lakes Research Center, a 55,000-square-foot Michigan Tech facility on the banks of the Portage Canal in Houghton, could help the Freshwater Center quickly gain credibility and access to funding.

e center is a soft-funded research institution, meaning it gets no direct funding from Michigan Tech, said Great Lakes Research Director Timothy Havens. Its estimated $10 million annual budget for scientists and engineers comes from external sources, such as the U.S. Army and Navy, the NSF, NOAA and the U.S. Defense Advanced Research Projects Agency.

Current projects include:  Developing clean electri cation for ferries and commercial shipping in the Straits of Mackinac;  Studying how microbial life in Lake Superior survives and thrives under the ice; 

Converting microplastics in waterways into food for humans and  Using high-frequency shore-based radar to map the speed and direction of lake currents near the surface to direct search and recovery e orts, inform ships and smaller vessels of currents and guide people to the best shing sites.

“You couple what we are doing with the workforce development NMC is doing, (and) this is a win-win. It pushes the envelope,” said Havens. “ ere’s a trifecta that exists between research at Michigan Tech, workforce development at the college and the innovation culture in Traverse City, especially with 20Fathoms. It’s a ashpoint.”

Havens’ center will work with NMC’s Maritime Academy on various technologies that will power the next generation of Great Lakes freighters, which will be largely autonomous.

“ e big carriers are not going to

have big crews anymore. ey’ll have skeleton crews,” he said. “I can envision one captain sitting in an o ce in New York running ve ships remotely.”

Havens said that research could very easily involve the Freshwater Center after it is up and running.

Another possible area of research, according to Jason Slade, NMC’s vice president of strategic studies, is how to reduce the impact of quagga mussels, an invasive species that arrived in the ballast of ocean freighters and was rst detected in the Great Lakes Basin in Lake St. Clair in 1988.

“ ere are quadrillions of quagga mussels in Lake Michigan, and each one lters a liter of water a day,” he said. “ at means the whole lake gets ltered in ve days.”

at is good for water clarity, he said, but the cleaner the water, the less nutrients are available for other species.

“ ey’re everywhere. You can go down 700 feet and nd them,” he said. “ e bottom of Lake Huron is a carpet of quagga muscles. You have a lot of people trying to gure out how to deal with them.”

Freshwater Center site

e Discovery Center and Pier is currently home to several nonpro ts and businesses: the Great Lakes Children’s Museum; the Maritime Heritage Alliance, which builds and restores wooden ships and has programming for at-risk youth; and the Inland Seas Education Association, which annually provides educational programming to more than 3,000 students from Michigan, northern Indiana and northern Ohio.

Some of the organizations will need to move, but they were already prepared for the change. e Children’s Museum has been crammed into a 4,200-square-foot building and is looking to buy or build a 30,000-square-foot space, said Discovery Center CEO Matt McDonough.

“Almost all our buildings are past their useful life, and probably all of them will be demolished,” he said. One of them is an old blue house that is used as storage.

e Inland Seas Education Association already has a bigger campus in Sutton’s Bay and will move its Discovery operations there.

“ e Maritime Heritage is the only one who wants to stay, and we’ll work that out,” said McDonough.

Matt McDonough, CEO of the Discovery Center. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Traverse City City Manager Martin Colburn standing upstream from the dam. | TOM HENDERSON/CRAIN’S DETROIT

Meldrum

Traverse City converts downtown road to attract businesses

Experiment aims to increase foot and bicycle tra c

TOM HENDERSON

On Nov. 9, Traverse City converted four blocks of State Street, one of its busiest downtown streets, from a oneway to a two-way street. e conversion is a two-year experiment that development o cials hope will slow down vehicles and result in more foot tra c, bicycles and retail businesses.

Front Street often is jammed with pedestrians and lined with thriving small retailers. Just a block south, however, State Street has only a few businesses and ample surface parking and serves mostly as a quick way to get from the west side of downtown to the east side.

“We want to encourage private investment on State Street,” said Jean Derenzy, the CEO of the Downtown Development Authority.

She said the process that proceeded the change included answering several questions: “How can we make State Street better and make small retail opportunities more readily available?

How can we make State Street better and make small retail opportunities more readily available? How can we slow tra c on State Street? How can we make for a better pedestrian experience? How can we make State Street part of the downtown grid system instead of being a through street?”

e conversion of downtown oneway streets to two-way streets is a recent and growing trend across the country. Such conversions have been implemented or are planned in Chattanooga, Tenn.; Cincinnati; Austin, Texas; Louisville, Ky.; Palo Alto, Sacramento and San Jose, Calif.; Seattle; Tampa, Fla.; Berkeley, Calif. and Cambridge, Mass.

Traverse City o cials also plan to convert one block on Pine Street at the west end of State and one block of Boardman Street at the east end into

two-way streets to allow easier access to and exit from State.

e change to a two-way street resulted from a year and a half of planning and community input. It dovetails with a DDA-commissioned planning study called Moving Downtown Forward. Progressive Urban Management Associates of Denver, Colo., a nationally known consulting rm, created the Moving Downtown Forward plan, the nal version of which is scheduled to be unveiled in December. e DDA paid for the $100,000 plan through its tax-increment- nancing authority.

“We want the community to embrace what a city can bring,” Derenzy said.

Future projects include building an

amphitheater and increasing green space along the Boardman River, where it ows between Front Street, the main downtown street and Grandview Parkway, the highway that runs along West Grand Traverse Bay. Other projects, according to a draft of the plan released in October, include:

 A public parking structure on the west end of downtown.

 A civic square for year-round events.

 Supporting the development of more a ordable housing, the lack of which has long been a problem in and near downtown Traverse City.

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

Michigan Tech works to bring business, opportunities to Traverse City

BY TOM HENDERSON

e Freshwater Research and Innovation Center that Michigan Technological University is building is the latest in a series of projects involving collaborations between the Upper Peninsula-based university and Traverse City-based institutions.

e university is partnering with Northwestern Michigan College, a Traverse City community college; 20Fathoms, a business and tech incubator; and Traverse Connect, the city’s downtown chamber of commerce, to build the center on West Grand Traverse Bay at the current site of the Discovery Center. (See related story, Page 12).

e project is the latest step by Houghton-based Michigan Tech to broaden its footprint, help establish the Grand Traverse region as a hub for freshwater research and technology, expand course o erings at the community college, spin o new companies and create jobs.

Michigan Tech has been notably

expanding its reach for more than four years. E orts include:

 Holding a Grand Traverse Region day on campus in 2018 to teach its students about career opportunities in what many might think of as just a tourist town. e university partnered with the Grand Traverse Area Manufacturing Council and Traverse Connect to bring 20 Traverse area businesses representatives to the event.

 Announcing a three-year memorandum of understanding in March

2019 to explore collaborations with the business community and establish programs with NMC, located just east of Traverse City’s downtown.

 Launching a “2+2 agreement” with NMC in August 2019 to make it easier for its engineering students to transfer to Michigan Tech with junior status after completing two years of required course work.

“We have really been working on building enrollment, which was not helped by the pandemic, and those e orts are just starting to pay o in

terms of interest in the program,” said James Smith, an engineering instructor at NMC, speaking of the 2+2 agreement. He said up to 30 students a year have taken advantage of the program but hopes that number will increase.

e two schools expanded their relationship with a plan announced in September 2020 to jointly develop marine technologies and partner on freshwater science and research projects. Also, this year, Michigan Tech began allowing NMC students

to enroll in the university’s master of business administration program. Students can take in-person classes in Houghton, work remotely from their homes or use the Michigan Tech facilities in the Traverse Connect building.

Additionally, the university opened an o ce and research workspace — its rst in the Lower Peninsula — in Traverse Connect’s headquarters in the city’s downtown last year.

Earlier this year, representatives from the Michigan Tech O ce of Innovation and Commercialization visited the region to discuss ongoing commercialization projects — 3D printing, renewable energy, plastics recycling and advanced batteries — with tech businesses, service providers and investors. Now the school is partnering with 20Fathoms to turn research initiatives on campus into northern Michigan-based startup businesses.

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

Northwestern Michigan College’s Great Lakes campus. TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Jean Derenzy, CEO of the Traverse City Downtown Development Authority, in front of a new stop sign on State Street downtown. | TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Rendering of proposed improvements from Traverse City moving downtown forward plan. | TRAVERSE CITY DOWNTOWN DEVELOPMENT AUTHORITY

PAGE 20

PAGE 21

A REEFER RECESSION?

Three years after start of state-licensed recreational marijuana, oversupply among businesses’ growing pains |

Glacial Farms, a medium-sized marijuana grow operation in the middle of corn eld country between Jackson and Ann Arbor in the village of Manchester, is in a battle — against viscous market forces and unrelenting competition.

Product oversupply has collapsed marijuana prices from $494.77 per ounce of ower in February 2020 to just $102.65 per ounce in October this year.

Simply put, there’s too much weed being grown and not enough places to sell it and not enough consumers, potentially, to consume it.

e result is a market freefall.

e Michigan Cannabis Regulatory Agency is cracking down on illicit market marijuana making its way into the regulated market — some retailers and growers are cheating the system by selling unregulated marijuana, avoiding testing requirements,

labor and fees, to boost margins.

e big operations are vertically integrating, buying up distressed retailers to ship product direct and enjoy the shrinking margins on both sides of the grow retail coin.

Glacial Farms, which currently operates a sole 15,000-square-foot grow facility and sells weed wholesale under the Glacier Cannabis brand, is looking for additional grow space to simply maintain its current margins. e company is nearing a deal to lease an additional 8,000 square feet of grow space.

“Competition is erce,” said Andrew Sereno, CEO of Glacial Farms. “Right now, it comes down to how strong your brand is and whether your product is in demand. We’re seeing the market collapse on itself a little. ere are cultivators and processors already falling o ine. e writing is on the wall. You either need to be e cient or get out.”

BY DUSTIN WALSH

Michigan adult-use marijuana sales and prices

INSIDE: What Michigan needs to do to improve the social equity program in the cannabis industry.

INSIDE: The biggest threat to marijuana businesses is illegal product and ‘wild west’ attitudes.

CEO Andrew Sereno of Glacial Farms in Manchester says sti competition is forcing companies to be e cient to survive. NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

e Michigan Cannabis Manufacturers Association, which represents some of the largest growers and retailers in the state, is pushing for a temporary license moratorium, eliminating new entrants into the market to stymie supply and raise prices.

at move would require a three-quarters vote in the Legislature. But a weed recession is on the horizon and whether the free market or policy interventions can stop it is unknown.

“People were coming in and built business upon the fact that marijuana was $2,500 a pound,” said Doug Mains, a partner at Detroit law rm Honigman LLP and co-writer of the original adult-use recreation ballot language. “Now it’s down to $500 and they are hemorrhaging, wondering what happened. But this is how the market was set up here. ere was going to be competition and that’s what we’re seeing play out. You either have to survive low prices or have better product than your competitors.”

Grow to survive

Sereno expects the bolt on leased space to double its grow operation — the 8,000 square feet is two-tiered, e ectively making it 16,000 square feet of grow space. But the additional overhead isn’t going to result in twice the revenue. Sereno said the addition will improve revenue from $5 million this year to $7.5 million in 2023 and will do almost nothing for its pro ts.

“We’re only doing this to maintain our pro ts,” he said. “It’s a low capital expenditure because it’s already built out and we can use our existing team

to leverage the administrative and labor costs.”

Glacial Farms is taking over for a defunct grower, one that couldn’t

make the math work with depressed prices.

Jonathan Kirkland, an attorney for Detroit law rm Butzel Long, said the

industry is forecasting a recession that may spur mass consolidation that pushes out smaller operators.

“ ere’s already consolidation in the space, we’re seeing lots of M&A (mergers and acquisitions),” Kirkland said. “ e next one to ve years will be challenging for mom-andpop growers, provisioning centers and adult-use retailers. Some will go out of business and others will be bought out by larger operators.”

Andrew Livingston, director of economics and research for Denver-based cannabis law rm Vicente Sederberg LLP, said the ease in which cultivators could get licenses in the early days of legalization has led to this “musical chairs” moment in the market. E ectively, independent growers are being pushed out by the retail consolidation of vertically integrated operations.

“ ere are more independent cultivators than independent retailers,” Livingston said. “ e vertically integrated companies come to the dance with their own date or multiple dates. is puts the squeeze on the independent cultivators, leaving them to have to nd the limited independent retailers who are already being bought up by the vertically integrated companies. ere’s simply not enough chairs and cultivators are ghting for the last chair by dropping prices to make sure their products get to market and so everyone lowers prices, making the problem even worse.”

"RIGHT NOW, IT COMES DOWN TO HOW STRONG YOUR BRAND IS AND WHETHER YOUR PRODUCT IS IN DEMAND. ... YOU EITHER NEED TO BE EFFICIENT OR GET OUT."

—Andrew Sereno of Glacial Farms

Workers including Samantha Wilder, left, trim cannabis at Glacial Farms. The company will be expanding its grow operation in an e ort to maintain its pro ts. NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

One of the largest operators in the state, Marshall-based Common Citizen, is seizing that consolidation opportunity from those low prices.

“Vertical integration is the key to … surviving,” said Mike Elias, president and CEO. “We knew there would be a day of reckoning, so as everybody is selling, we’re buying. We started our company as predominantly a provider of wholesale product with a lot of manufacturing capability. We wanted reach, for our brands to get exposure. … Now to hedge against the price decline, it’s time to go vertical. e advantage is instead of selling wholesale for $2,000 a pound, I can sell it for $4,000 a pound in the retail space and enjoy the whole of the margins on both sides. e way to secure your market share it to get more retail and maintain a chokehold on the wholesale market.”

Common Citizen is considering selling its Battle Creek and Flint dispensary locations but, in July, it acquired LIV Cannabis, a retailer in Ferndale. Common Citizen is “stamping and repeating” the LIV stores in other locations, such as Lapeer and Buchanan.

“Everyone is calling me to sell,” Elias said. “It’s perfect. It’s exactly what our business model was designed to do. We’re blessed to have a lot of backing from wonderful investors who want to put their capital to work today. Distress in the market is a great opportunity to get these entities at a discount.”

Tangled up in weed

Common Citizen distributes its product from a 200,000-square-foot grow operation in Marshall. But it’s utilizing only one-sixth of its license capacity to grow plants.

e state issues di erent grow licenses with di ering caps on the number of plants that may be grown at one location. A Class C grower license allows for 2,000 marijuana plants per location and they can be “stacked” for up to ve licenses per location or a maximum of 10,000 plants.

It’s likely Common Citizen will look to boost how much it grows to feed into its current retail operations

and future acquisitions.

Glacial Farms’ doubling of its grow operations also means more marijuana on the market. Glacial is now selling wholesale packaged products by the ounce containing a chillum (a small pipe for smoking) called a “Snowpack” to boost margins.

“We can pass di erent discounts through at a higher volume,” Sereno said. “Maybe someone has $20 burning a hole in their pocket, but what if they have $100? We can capture that

person and move more product at a better margin.”

All of this posturing to enhance market share and margins likely leads to more marijuana being grown and exacerbates the oversupply problem that has collapsed prices.

“Operators are trying to reduce their variable costs by getting bigger,” Livingston said. “ e only way to stay in business is to increase your size, allowing you to drop your wholesale costs and put more product onto the

market, which dampens prices even more. Controlling that price spiral is di cult.”

Distilling a solution

e industry has, for the past year or so, tried to sidestep the oversupply issue by pointing to illegal marijuana making it into the legal market.

e theory is that mass amounts of distillate, used in making vapes and edibles, is being shipped in from out of state at a steep discount and nding its way to store shelves. e other gripe is that marijuana grown by individuals is nding its way into retailers and growers without being entered into the state’s tracking system.

ere’s evidence this could be true.

e number of active marijuana plants being grown in the licensed market grew 120 percent between August 2021 and August 2022, just above sales growth of 103 percent. Yet licensed market inventory, by pounds, grew more than 400 percent during the same 12 months.

at’s a major discrepancy between plants coming online and the inventory on shelves.

Industry pressure on the CRA to take enforcement more seriously led

CRA founding executive director Andrew Brisbo to resign from the post this year. He was quickly replaced by a Michigan State Police crime analyst favored by the industry.

Director Brian Hanna has made it clear he plans to clean up the market. Last month, the agency cracked down on Green Culture in Flint, alleging the retailer was selling pre-roll joints of the strain ACF Moonrock Acai Haze that were not tested by a regulated lab or entered into the state's marijuana tracking system. e CRA is seeking to permanently suspend the retailer’s operating license.

Draft legislation is also being kicked around in Lansing to create a temporary moratorium on the CRA issuing grower licenses in an attempt to reduce supply and raise prices. It’s unclear whether that legislation gets introduced during the lame-duck session in Lansing this year.

Livingston, however, challenges whether that’s a solution to the oversupply problem.

“A lot of the questions on a moratorium have less to do with the existing supply and more to do with eliminating new competitors in the market,” Livingston said. “ e state should instead look to the allocated and underutilized capacity in the market before they determine not allowing a new entrepreneur to realize their dreams.”

Currently, the CRA does not force a license holder to grow a certain percentage of the plants it's allotted before applying and receiving another license.

Hanna said the CRA simply doesn’t have the authority at this time to limit licenses in this way.

“We can facilitate conversations, but we can’t limit licenses in any way,” Hanna said. “At the end of the day, it’s in the legislators’ hands.”

ere’s no clear evidence anyone is calling for current operators to stymie their growing allotments — a move Livingston said will lead to a race to the bottom paved with the corpses of smaller operators.

“In the cannabis market, it’s the survival of the richest,” Livingston said. “ e operators that last will be because their investors have the deepest pockets.”

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Michigan’s marijuana social equity program — a provision in the licensing regulations to lower the barrier of entry for residents impacted by marijuana laws — is broken.

ree years into the legal selling of adult recreational-use marijuana in the state, there are only 155 social equity license holders of the roughly 3,100 licenses issued to date. e Cannabis Regulatory Agency issued 122 regular adult-use licenses in September alone.

And who quali es for a social equity license is pretty ubiquitous. e state, which leaves the actual licensing to municipalities, has a criteria for equity applicants to receive up to a 75 percent discount of state application and license fees, which range from $1,000 to $24,000 per license.

An applicant must at least meet one of three criteria: Be a resident in a community for at least ve cumulative years that was disproportionately impacted by marijuana laws (25 percent reduction in fees); be convicted of a marijuana-related o ense (25 percent reduction for misdemeanor, 40 percent reduction for felony); and/or be registered as a primary caregiver under the Michigan Medical Marihuana Act for at least two years between 2008 and 2017 (10 percent reduction in fees).

Under the state’s de nition, a “disproportionately impacted community” is any municipality where marijuana-related convictions are greater than the state median and 20 percent or more of the population is living below the federal poverty level. at totals roughly 184 communities

statewide, according to MJBizDaily.

Anyone living in most of the state’s college towns like East Lansing, Allendale or Marquette can be an equity applicant, for instance.

e reality is fee discounts don’t do much in terms of getting applicants across the nish line to opening a cultivation or retail operation. A grower is required to have a security system that can cost a quarter of a million dollars, for instance. at’s not to mention the cost of securing real estate, which are exorbitant due to limited zoning permissions.

e Detroit o ce of appraisal rm BBG analyzed same-asset sales before and after approval of marijuana-related uses and those prices have gone up by multiples between three and nine.

Without any doubt, marijuana is a

rich person’s game. Owning a marijuana operation of any kind requires the kind of access to capital that only the already wealthy or those connected to wealthy investors and resources have in their repertoires.

Frankly, a lower- or lower-middle class applicant from Detroit or Flint or Tecumseh with a felony drug charge stands little chance of actually succeeding in opening a marijuana operation. With prices collapsing to just $102.65 per an ounce of marijuana ower, any new entrant in the market needs deep, deep pockets to survive rapid consolidation and failures plaguing the industry right now.

So, who are the social equity applicants? Some examples are an orthopedic spine surgeon, a former county commissioner board chair and president of an international logistics rm.

Other states have worked to use at least a portion of tax revenue generated from marijuana sales to provide loans and grants to social equity applicants.

Illinois, for instance, allocated 25 percent of cannabis tax revenue to violence prevention and economic development. A portion of that fund goes to equity businesses in economically distressed areas.

e state also o ers low-interest loans from its Social Equity Cannabis Business Development Fund.

Until the state gets serious about creating a low-interest loan or grant program, its cannabis social equity program will remain among the worst in the U.S.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Cannabis in a grow room at Glacial Farms, which is buying a defunct space to expand. | PHOTOS BY NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

Glacial Farms will double its operations and put more supply into the market.

DUSTIN WALSH

Taking the ‘wild west’ out of the cannabis industry

We idealize the “wild west,” romanticizing classic tales of cowboys and lawmen portrayed by the John Waynes and Clint Eastwoods of Hollywood. But even the most committed Western enthusiast would hesitate before agreeing to go back and live in the wild west. Why? Because it was dangerous. It was chaotic. People didn’t play by the rules.

Much of the same can be said about what we’ve seen in Michigan’s cannabis industry.

Cannabis is an incredibly regulated market, and it should be. We have to con rm what we’re selling, and what people consume, is safe. at it is what it’s advertised to be. is is why everything you see at your local licensed cannabis store has been through rigorous testing procedures, ensuring the pre-roll or pack of gummies you take home is free from any contaminants and lists accurate and consistent potency information. But without proper enforcement, these safety measures are about as useful as glass hammer.

e Cannabis Regulatory Agency (CRA) has largely ignored Michigan’s cannabis black market. It was never a top priority for those in charge. at is until Brian Hanna was named the acting director this September. I was happy to see him step into the position; someone with his background in law enforcement and criminal in-

telligence is who we need leading the CRA. He’s Clint Eastwood, rolling into town to clean up the lawlessness and restore order, transforming the “wild west” cannabis market a normal industry like any other.

You’d be surprised to learn what some places have been getting away with throughout the past few years. Inspections would be done, violations found and no enforcement would come from it. During a surprise inspection at one location in Detroit, a CRA inspector found backpacks and du el bags full of cannabis without any tracking identi cation numbers. If you want to sell cannabis in Michigan it needs go through METRC; the state uses this system to keep track of cannabis at every stage, from seed to sale, including all that rigorous testing. Without these tracking numbers, there’s no way to tell where the cannabis came from, how potent it was or whether it was even tested at all. is violation occurred in May 2021. Nothing was done until recently, less than a month after the CRA’s change in leadership. In one of the CRA’s rst enforcement actions under Hanna, the location was ned $75,000 and had its license suspended.

is is the kind of leadership the cannabis industry needs if it wants to see healthy, sustained growth.

We play by the rules at the Greenhouse of Walled Lake. We’re incredi-

bly serious about following proper protocols and making certain we operate within the parameters of the CRA. We do this because it’s the right way to run a cannabis business; it’s better for us, better for our customers and better for the industry as a whole. Frankly, I’m sick of people coming into this industry and treating it like the wild west. Anyone trying to sneak illegal product into the legal market is only undermining the values of those of us playing by the rules and giving the entire industry a bad name. I got into the cannabis business 15 years ago — at the very start of the state’s medical marijuana program — to help people. It’s why I’m still here today. And I’m con dent that the new CRA, by introducing an atmosphere of proper enforcement and penalization, will help to uphold those values.

ough the CRA is headed in the right direction with its new leader-

ship, there’s still progress to be made.

On top of consistent enforcement, it’s important that the enforcement makes sense. One of the problems the industry runs into now is that the rules are set up to incentivize noncompliance.

All cannabis companies are required to maintain 30 days of surveillance footage and provide it to the CRA upon request. But the penalties for failing to do so are comparatively small; if the CRA suspects a location of introducing illegal cannabis into the market, which comes with large penalties, it’s worth it for the location to simply delete its surveillance history and accept that ne to avoid the larger ne associated with selling illegal products.

I’m excited for the future of the

cannabis industry. When I rst got into this it really was like the wild west; the rules were vague, most people didn’t know what they were doing, enforcement was almost nonexistent. And only recently are we seeing that begin to change. But I’ve always believed if you do things the right way, you’ll be around longer than those who try to cut corners.

With the right people in charge, and through prioritizing enforcement, Michigan’s cannabis industry is poised for incredible growth.

Industry’s biggest threat comes from illegal products

Michigan’s regulated cannabis industry has evolved dramatically in just three years with hundreds of new businesses, thousands of jobs and skyrocketing demand to show for it. is new and burgeoning industry also faces immense challenges, including a massive illicit market and growing market saturation.

First, the good news.

Michigan’s cannabis market reached nearly $3.2 billion by 2020, just one year after legal adult-use cannabis was rst available, according to a recent Anderson Economic Group study. is was encouraging to cannabis manufacturers, who have invested nearly $1 billion in the industry and hired thousands of employees.

Michigan had the third-highest number of cannabis jobs nation-

wide as of January 2022, according to Lea y’s 2022 jobs report. Michigan’s 31,152 full-time cannabis jobs was exceeded only by California’s 83,607 jobs and Colorado’s 38,337 jobs.

It’s worth noting that in three years Michigan is nearing cannabis job creation in Colorado, which has had legal adult-use cannabis since 2012.

Last year, the Legislature passed and Gov. Gretchen Whitmer signed into law bipartisan legislation requiring Cannabis Regulatory Agency regulation of hemp-based Delta-8 THC and other products that mimic a cannabis high. While there is much more work to be done to help ensure product and consumer safety, this was a major step forward in terms of keeping marijuana patients and consumers safe. But there are many challenges, obstacles and

hazards that still remain.

e No. 1 threat to Michigan’s regulated cannabis industry remains a massive illicit market that is destabilizing and undermining the licensed regulated market. at’s why so many in the cannabis industry at every level have called for the need to ramp up enforcement.

Nearly two-thirds of all cannabis in Michigan is from illicit sources, according to the Anderson Economic Group study. is cannabis hasn’t been tested or held to the rigorous standards of the regulated market, creating an immediate threat to public health. Making matters worse, we continue to see licensed cannabis operators providing illicit or untested product, further threatening to destabilize the regulated market.

For our industry to continue to thrive, we must ramp up enforcement to address the illicit market that also robs our communities of critical tax revenue. Fortunately,

CRA Executive Director Brian Hanna has made enforcement his top priority. Brian’s years of experience in CRA eld investigations and law enforcement, in particular, will be a major asset in tackling this problem. Not long after taking the helm of the CRA, Director Hanna has already initiated several major enforcement actions that are sending shockwaves through the industry and sending a message that everyone must follow the law and play by the rules.

An expanded market with more local governments participating would help shrink reliance on illicit cannabis and address growing market saturation. at also means a stabilizing of massive price drops that have sparked layo s, closures and consolidation.

e number of grow licenses has far exceeded the number of municipalities with ordinances allowing adult-use sales. As of Oct. 31, there were 704 active Class C adult-use grow licenses across Michigan, ac-

cording to CRA data. At the same time, only 126 municipalities statewide had opted in to adult-use sales, while 1,382 municipalities had opted out of adult-use sales. at means access to safe, quality cannabis and a potential in ux of tax revenue for police, re and EMS services, senior services, school funding and more remains restricted to select communities.

Despite many challenges, I believe Michigan can and should be a national leader in cannabis safety, innovation and entrepreneurship. To realize our full potential, we must uphold and respect the laws and regulations underpinning the licensed cannabis market and crack down on illicit cannabis undermining our industry.

All of us in the cannabis industry need to support Director Hanna, Gov. Whitmer and the new Legislature to help ensure a regulated market with consumer safety as our guiding light.

ANYONE TRYING TO SNEAK ILLEGAL PRODUCT INTO THE LEGAL MARKET IS ONLY UNDERMINING THOSE PLAYING BY THE RULES AND GIVING THE INDUSTRY A BAD NAME.

Jerry Millen owns Greenhouse of Walled Lake, a marijuana dispensary.

Shelly Edgerton is board chair of the Michigan Cannabis Manufacturers Association.

My law enforcement and military background has been well publicized, but there’s more to my story. I am the son of two very hard-working parents. My father was born as a dual citizen in Syria and came to Michigan as a young teenager, where he learned how to speak English and he eventually retired as a U.S. Government teacher from Romulus High School. My mother was born on a farm in Ohio, and she retired as a nurse working in the Oakwood Health System in Michigan.

I was born in Dearborn, I grew up in Belleville, and I started my career in Kalamazoo. Growing up in a multi-ethnic household, I experienced rst-hand cross-cultural interactions. My parents’ hard-working values helped shape the person I have become.

In 2017, I came to the Cannabis Regulatory Agency (CRA) — although we went by a di erent name back then — as an inspections and investigations manager for the Enforcement Division. I was one of the

founding members of this agency in 2017, and I came on board before we took in our very rst medical marijuana facility application.

And I’ll tell you, I immediately saw the potential of the licensed environment.

is industry brings job opportunities, community engagement, safe access to product for patients and consumers; these are important to all of us, including me. I’ll let you in on something to, I am a combat vet and I do have PTSD from my combat experience in Afghanistan. e support this industry provides for all who su er from some traumatic event in their lives, it’s invaluable. For that, I say thank you to the industry.

Over the last three months, the CRA made progress on the goals I established for my rst 90 days.

My rst goal remains the most important one — listen to stakeholders in the industry to gure out what is, and what isn’t, currently working.

We are looking for areas to make improvements as quickly as possible while keeping a holistic-minded

approach for the industry. My sta and I continue to regularly meet with various groups, social equity proponents, other state departments, consumers, other cannabis regulators, and more. We value each stakeholder’s opinions and feedback, because at the end of the day, we are all in this together.

We have been busy gathering feedback on what options exist to continue to advance our mission forward, which leads me to my second goal. e industry indicated there is illicit product in the regulated market, and we are now nding it. Our plan is to continue to discover these illicit materials, expose the activity we uncovered and make those responsible known to the public. It is not acceptable to have unregulated cannabis in the regulated market — the testing and safety regulations exist for a reason, and it is our job to ensure public safety and provide consumers the condence that they are purchasing safe products.

e CRA also takes value in supporting those that do the right things and follow the rules, and we want to support them.

With an increase of $2 million

to our 2023 scal year budget, the CRA will soon have a stronger physical presence at marijuana businesses.

To make this happen as quickly as possible, we are in the process of hiring six additional regulation agents (investigators), two regulation o cers (inspectors), two legal analysts and a laboratory scientist.

ese additional sta will help the CRA increase the number of unannounced inspections that are currently conducted and planned for in the near future.

In December 2023, the CRA will also release an RFP to conduct an analysis of tax reporting, collection and compliance of the regulated market. e totality of these e orts will serve the second goal to identify and

deter illicit market activity within the regulated markets.

My commitment to the CRA, and its many stakeholders, is to stay laser focused on these two goals and do my best to help ensure healthy compliant practices in businesses across the state. It’s the CRA’s responsibility to ensure there is a clear and consistent application of the laws and rules to support this legitimate industry. This is an important duty, and I am honored to serve the residents of Michigan in this role.

Brian Hanna is executive director of Michigan's Cannabis Regulatory Agency.

Power Home Solar bankruptcy hits Michigan businesses, residents

Solar panel company has up to $500 million in liabilities

BY KURT NAGL

e investigation and bankruptcy proceedings of Power Home Solar LLC is shining a light on how exposed Michigan businesses and residents are to the company’s implosion.

e solar panel company, whose CEO Jayson Waller at one time lived a lavish life in Birmingham, has up to $500 million in liabilities and owes millions of dollars to Michigan businesses.

ose debts are laid out in the company’s Chapter 7 bankruptcy ling in the Western District of North Carolina, where the company is based.

Power Home Solar, which recently changed its name to Pink Energy, led for bankruptcy protection a month ago, shortly after laying o all of its employees, including more than 300 in Troy.

Michigan Attorney General Dana Nessel joined eight other attorneys general in the U.S. last week urging lenders to suspend loan payments and interest accrual for customers who nanced their purchase of Power Home Solar panels, according to a news release. e Michigan AG’s ofce and others are also conducting investigations of the company.

“ ese consumers, many of whom reside in Michigan, received substandard systems and have not realized the energy cost savings that were promised,” Nessel said in the release. “Now that the company is under investigation and has declared bankruptcy, many customers are left with little or no recourse.”

e company’s 3,200-page bankruptcy le details how it left more than 25,000 creditors in the dark. Many are based in Michigan.

e Sussman Agency, an advertising rm based in South eld, is among the largest creditors with $773,929.58 outstanding. Sterling Heights-based Sutton Leasing isn’t far behind with an unpaid tab of $717,361.21. e solar company also owes $2,000 to the Detroit Athletic Club.

e only secured creditor in the case is JPMorgan Chase with a claim of $80.6 million.

Pleasant St. in Birmingham with a full University of Michigan-themed basketball court, built-in pool, tennis court, built-in trampoline and 50yard gridiron. It sold for $6 million last year, according to property records.

Waller was featured in a 2020 “Best Dressed” list by Hour Detroit, rocking a bright red-and-black coat while sitting in a blue Lamborghini. He promoted a “rags to riches” podcast on social media, where he remains active.

He maintains that the company’s failure is the result of bad components from Waukesha, Wis.-based supplier Generac Holdings Inc.

Between promoting podcasts, such as a recent one titled “How to Unf*** Yourself with Jayson Waller,” his Facebook account has posts blaming Generac, which it sued in early August, alleging breach of contract and negligence.

them money like they were promised and some have even reported panels catching re.

Waller said his company was not without its mistakes but was consumed by customer complaints after a “ rmware update” early this year beyond its control.

“I assure you we did not forget to sell or install solar the correct way,” he said in the email. “Yes we have made some mistakes and some systems aren’t a Generac issue (sic) it would be a pink issue but that percentage of the issues is very small.”

Power Home Solar has between $100 million and $500 million in assets, according to court records. Waller said he hopes customers are made whole.

“My only hope now is each and every customer with an issue or a claim will le a claim in this Bankruptcy and that in this bankruptcy the trustee doesn’t settle early and wins this case Vs Generac for several hundred million dollars to pay each customer and vendor with a claim,” he said.

Power Home Solar had a bright start. Founded by Waller, it began installing solar panels on houses in Michigan in 2017 and grew rapidly to around $350 million in annual revenue as of 2020.

It drummed up headlines with splashy sponsor campaigns with NFL great Barry Sanders and the Detroit Lions, which signed a sponsor deal involving installation of some solar panels at Ford Field.

It is not clear if the panels or sponsorship are still in place at the arena. Crain’s contacted the Lions for comment.

Meanwhile, Waller was soaking in the limelight. He owned an 8,700-square-foot mansion at 793

“Unfortunately I wish there was more we could have done,” Waller said in an email to Crain’s that mirrors a recent Facebook post. “I assure you we tried and fought hard to stay open.”

For Generac’s part, spokeswoman Tami Kou told Crain’s that the lawsuit is a tool to “distract” from the solar company’s implosion.

e Michigan AG’s o ce said it has received 75 complaints about Power Home Solar, while the Better Business Bureau has logged more than 1,000 complaints.

e company has also been the subject of hundreds of negative reviews on Google. Customers have said the solar panels are not saving

Following are other Michigan-based creditors in the case:  Marshall-based Sinclair Designs & Engineering — $486,895.70  Detroit-based DLI Properties LLC — $283,750.00 

South eld-based Best Edit Studios LLC — $107,600.00  Detroit-based MacAllister Rentals — $77,584.11 

Birmingham-based Troy 500 Stephenson Investors LLC — $97,441.98  Detroit-based Kendall Electric Inc. — $35,459.52 

Sterling Heights-based Pro Leasing Services LLC — $31,897.68  Ferndale-based ACI Transport — $16,425.00

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

Power Home Solar, which changed its name to Pink Energy in April, is suing Generac Power Systems, a manufacturer of power generation products for residential and commercial markets, over what is says are problems with its solar panel systems. | POWER

HOME SOLAR

Jayson Waller, the CEO of Power Home Solar, which changed its name to Pink Energy in April at one time lived a lavish life in Birmingham. | VIA FACEBOOK

—Dana Nessel, Michigan Attorney General

Small businesses think for the long term on holiday hiring

JAY DAVIS

No matter the state of the economy, Toyology Toys founder Nori Klar always hires additional sta for the holiday shopping season, but not so much this year.

at additional sta — at least three or four employees per store — is vital for Klar’s stores in Royal Oak, West Bloom eld and Bloom eld Hills. About 50 percent of Toyology’s revenue comes from sales in September through December.

is year, though, Klar said she believes her stores will be OK with current sta , as sales are down due to a variety of factors, including in ation.

“We’re known for our personal service and outstanding customer service and we want to keep our reputation,” Klar said. “We were struggling all year nding employees. We had a lot of applicants but it seemed like nobody really wanted to work. We had a mission to nd employees early before the holiday season so we really were all set by September.”

e pressure to nd enough workers to meet demand and build revenue is not unique to Klar’s chain of toy stores.

With most retailers in Michigan expecting holiday sales to increase or stay the same through January, according to the November Michigan Retail Index survey released Tuesday, small businesses are eager to lock in their sta ng.

Zingerman’s Mail Order in Ann Arbor, which ships holiday gifts and baskets featuring meats, cheeses, breads, olive oils and more, aims to hire an additional 400 seasonal workers, according to Brad Hedeman, marketing and product selection lead. e seasonal hires are in addition to its 100 full-time employees.

“We can’t do the things we do without people,” Hedeman said. “Half of our annual revenues come in

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SERVICES

Spray Foam Genie

Kevin Longe has been appointed to CEO of Spray Foam Genie, a Phoenix Franchise Brands company. Longe comes to Spray Foam Genie with a vast background in industrial packaging sales, for both fortune 100 and 500 companies, where he rose to the top. In addition to his duties at SFG, Kevin is the VP of home services and marketing Chief. Longe is a graduate of North Wood University where he received his undergrad in entrepreneurial management, his MBA, and lettered three years in football.

November and December and half of that comes in that week before Christmas. If we don’t get people in, we can’t hit those numbers.”

In a typical year, Zingerman’s Mail Order sees about a 2 percent increase in revenue. But the company saw its annual revenue of about $17 million jump to around $27 million during the COVID-19 pandemic — and that took lots of extra help.

Zingerman’s Mail Order operates as a 24-hour warehouse after adding an overnight shift. With just a few weeks left in the holiday season, it’s still looking to ll some positions, Hedeman said.

Overnight jobs start at $16.50 an hour, with day and weekend shifts starting at $15.50 an hour. Workers are rewarded with meals while on the clock.

Growth for Zingerman’s Mail Order has made sta ng a bit di cult, according to Hedeman. In previous years, the company has had all of its seasonal positions lled by November. is year, in order to ll all the extra spots, it is o ering holiday season hires help with bus schedules and rides to work.

“A big function of that di culty is how we grew during the pandemic,” Hedeman said. “When everything shut down, we were the only way for a while for people to get the things they wanted from Zingerman’s. e growth we’ve seen over the last couple years would’ve normally taken 10 years.

“ e number of people we need every year keeps creeping up and we struggle with that a bit. Now if you get an interview, we’re most likely going to bring you on. We really value the people. We do a lot of business during the holidays. We spend the other 10 months of the year getting ready for the holidays.”

While the mail order business is booming, some recent studies found that the number of holiday jobs elsewhere is down this year.

Hiring Lab, an economic research team from jobs site Indeed, found that the share of job seeker searches for seasonal work increased 33 per-

cent as of Sept. 30 compared with the year before as interest in seasonal jobs rebounded to its highest level since 2019. Seasonal job postings, though, were down more than 8 percent during that same time period due to fears of a recession, the Hiring Lab report found.

Even big companies are seeing a shift.

Walmart in September announced it would hire 40,000 seasonal workers, down from 150,000 in 2021. UPS, though, is on the opposite end of that spectrum, and the shipping and delivery company this holiday season aims to hire more than 100,000 seasonal employees to meet increased consumer demand, similar to its 2021 total. Nearly 80 percent of those holiday jobs don’t require an interview, according to a UPS news release.

One Macomb County-based family-owned business is having trouble lling holiday jobs due to what one of the co-owners calls a demographic shift.

As recently as Monday, Whistle Stop Hobby & Toy in St. Clair Shores held interviews for daytime cashier and store associate jobs. Store co-owner Julie Everitt told Crain’s she’s had to place ads on social media to entice potential hires.

“On occasion, I get some people who come in and ask if we’re hiring,” said Everitt, who co-owns the store with her brother and one other sister. “It’s been hard, I think, because we pay minimum wage. My brother, sister and I are always wondering where everybody is. People have to work.”

Everitt said the 53-year-old Whistle Stop now relies more heavily on 15- and 16-year-olds to sta the store. Prior to the pandemic, the retailer’s sta consisted mostly of college students.

“Since COVID, it feels like there’s been a shift. I think the money from the government kind of hurt us with college kids,” Everitt said. “We have more high school students, but they’re fantastic. e downside is a lot of them have school. at’s why we’re looking for day shift help.” at seasonal help in a lot of cases is let go following the holidays. Everitt said none of her business’ handful of holiday hires has inquired about staying on past the holidays.

With January and February typically being slow months for retailers and restaurants, Klar nds any way she can to keep sta ers.

“If they still want to work for us, we may just cut hours down,” she said. “Or while it’s slow, they can get some projects done, clean the stores, do inventory.”

Tactics taken by small businesses — hiring younger sta , o ering transportation and post-holiday work — shows just how important the holiday season is for them.

“Everybody who owns or operates a small business knows how vital this time of year is,” Zingerman’s Hedeman said. “A lot of us are o ering shipping now. We know the more boxes we get out of the door, the more revenue we’ll have. We can’t do any of that without people, so we’ll always keep pushing to bring the right people on because if we don’t hit our holiday numbers, a lot of us won’t make it.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

HEALTHCARE

Advertising Section

From left, Rachel Palmer of St. Clair Shores shops with her daughter, Melody Palmer, 7, and niece, Arianna Wolfe, 6, of Grosse Pointe at Whistle Stop Hobby & Toy in St. Clair Shores. Whistle Stop co-owner Julie Everitt told Crain’s the family-owned business is having trouble lling some seasonal job openings. NIC ANTAYA/CRAIN’S DETROIT BUSINESS

Retailers like Toyology Toys rely heavily on holiday sales for revenue. The holiday season calls for retailers and restaurants to add sta to meet increased demand. | TOYOLOGY TOYS

Sasson had his eye on Midtown for some time. He said talks of Heirloom taking over the Second Avenue space began in 2018 and he signed a lease in 2019. Originally, it was to be a pizzeria called Sauce Detroit, which was announced in early 2020. But the coronavirus pandemic delayed the opening and the concept evolved into Mad Nice.

“We weren’t in Midtown as a restaurant group,” Sasson said. “We’re used to restaurants with size and scale. We needed a larger space for some of the things we try to accomplish. I came in here and it just clicked. is space gives us a chance to transform Midtown to how we view hospitality.

“It’s a great spot for restaurants. Look at our neighbors. Selden Standard for the last decade set the standard in Midtown. Over the last 50 years, Mario’s has done the same thing. Midtown has a lot of great food and great history. We’re going to add to it. ere’s a lost art of sit-down pizza culture. Everything shouldn’t be grab and go. We’re going to do with pizza what we try to do with steaks and Prime + Proper.”

Sasson envisions Mad Nice as a popular gathering spot. e space, designed by Detroit-based Parini Design, is wide open with tall ceilings and no columns to divide the main dining room. e two private dining spaces can be combined to one for large groups.

“We’ve made a lot of e ort to scale down the design so it doesn’t feel like a gym,” Sasson said.

e bar will feature a 15 x 15 foot oor lamp. Nine trees will be imported to add to the ambiance, according to Sasson.

“ ere’s a lot of natural light in the space. Hopefully it’ll give you a sense that you don’t know where you are, while you know you’re in Detroit,” Sasson said.

Detroit and Michigan will be featured throughout the restaurant.

Mad Nice executive chef and native Detroiter Myles McVay, who helped open Otus Supply in Ferndale, has created a Mad Nice menu that will feature handmade pastas, housemade breads, farm fresh vegetable share plates, wood- red and rotisserie cooked proteins, fresh

spun gelato and pastries.

e Mad Nice beverage menu, put together by general manager Justin Campbell, will feature drinks made with ingredients from local farms and farmers markets. Drink o erings will vary by the season. Michigan beers and liquors will be prominent, along with wines from California

vineyards.

Fully sta ed, Mad Nice will have about 140 employees, according to Sasson. Mad Nice is actively hiring, according to Joel Halperin, an Heirloom partner and director of operations.

It takes a special employee to earn a position at an Heirloom property,

Halperin said in an email. “We’re looking for (employees) who are enthusiastic about cultivating relationships and experiences as is our priority and this takes a special individual,” Halperin said. “ e job market has undoubtedly changed after the pandemic but we have been fortunate to be a place where profes-

sionals seek us out for the opportunities to practice their craft of service to others on an exceptional stage. While many in our industry have shifted towards convenience we have doubled down on the experience we provide our guests.”

at experience is at the heart of Heirloom’s mission, said Sasson, who did not disclose revenue for Heirloom Hospitality as a whole or projections for Mad Nice.

Part of that experience includes a trolley featuring seasonal items that accompanies pizza to a table. e trolley features items such as seasonal cheeses, oils and fermented condiments.

“Memorable is the best way to go,” Sasson said. “I want pizza to not live in a box. We’re not about volume here. We’re about the experience. We don’t even cut the pizza. at’s a part of the experience. People with an interest in that will love it here. I hope people love the idea as much as I do.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

e plainti s allege BCBSM permitted religious exemptions for hundreds of other workers but denied their requests on an arbitrary basis.

“(BCBSM) conducted a series of ambush-style interrogations with employees who submitted religious and medical accommodation requests,” said a lawsuit by Ryan Romano, a former health care manager at BCBSM, led in Eastern District Court in Detroit on Nov. 30.

e lawsuit alleges BCBSM asked whether those seeking a religious exemption took aspirin, Sudafed, Tums or Tylenol to prove their “sincerely-held religious belief” didn’t hold up.

e mRNA vaccines from P zer and Moderna were tested using embryonic kidney cells. Acetaminophen is also tested on those same line of cells pulled from aborted fetuses in the 1970s.

Many religious exemption requests during the pandemic came from people involved in certain sects

of Catholicism or other religions that morally object to the use of embryonic stem cells in any fashion.

e Vatican publicly supported the use of COVID-19 vaccines but has said the choice to vaccinate should be voluntary.

Under Title VII of the Civil Rights Act, employers only have to accom-

modate religious beliefs that are sincerely held. at de nition is broad and it’s generally accepted that employers that all sought religious exemptions are valid, given the very broad de nition in Title VII.

But under the EEOC, companies are allowed to question those beliefs if the employee has behaved in a

manner in opposition to those beliefs or if exemption is sought for secular reasons. Companies can also ask for appropriate documentation from the employees’ religious leaders.

Hurwitz said the employees have a case because BCBSM allowed for some religious accommodations and not others.

“ ey conducted 10- to 15-minute interviews in a totally arbitrary way,” Hurwitz said. “We’ve listened to interviews of those granted accommodations and those denied, and we can’t gure out why the company granted some and not others. e whole process is devoid of any real formula and metric.”

COVID vaccine mandate lawsuits have spiked in recent months as the EEOC approvals come streaming in — the process can take up to 10 months — after most employer-led mandates went into e ect in late 2021.

As of September, there were more than 750 mandate lawsuits against employers, according to e National Law Review. Vaccine lawsuits, however, have rarely been successful. ere

are no known successful lawsuits yet over COVID vaccine mandates.

Some employers have settled out of court, however. In August, NorthShore University Health System agreed to pay a $10.3 million settlement to end a class-action lawsuit by 14 employees who were denied a religious exemption to the system’s vaccine policy.

Some lawsuits against employers’ u vaccine requirements have succeeded in the past.

In 2016, Saint Vincent Health Center in Pennsylvania was ordered to pay $300,000 in back pay and compensatory damages to six former employees that were denied religious exemptions to the u vaccine.

e EEOC alleged the health center denied all religious exemptions but allowed for medical exemptions, violating Title VII.

All of the cases against BCBSM are in the early stages of litigation, and it’s unclear when an outcome would be reached.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Mad Nice will feature a retail space, Mad Nice Goods, that will o er Mad Nice-branded items and wares from local vendors. The 900-square-foot space will also include a bar separate from the restaurant, and will o er breakfast and lunch items. | HEIRLOOM HOSPITALITY

Heirloom Hospitality’s latest concept Mad Nice is planned for a January 2023 opening on Second Avenue in Midtown. | JAY DAVIS/CRAIN’S DETROIT BUSINESS

RESTORATION

ere are already three franchisees in the sales process, said Mark Dawson, the executive vice president for trade brands for Authority Brands. ey’re in Phoenix, outside of Houston and in middle Tennessee. e company’s franchise disclosure documents have been approved in 36 states and are in the works elsewhere, too. Dawson said he intends to create a national brand from the company and hopes to start with 20 locations next year.

“I’m excited for the opportunity and growth,” he said.

Maryland-based Authority Brands also holds a dozen other home service brands including

include classroom and eld time; the company is planning to expand its headquarters, which now houses 70 people, and build a training center.

Hesano said DRYmedic di ers from other companies in the space because of its use of technology. It uses work ows to help people navigate through a loss, he said, and to ensure that communication is clear and tracked. Blevins said businesses that emphasize “soft skills” are most likely to succeed in an industry where employees are “working with people on literally the worst day of their lives” following a loss or disaster. In addition to helping people clean and dry out their space, the company also removes, stores and cleans items affected by the incident, salvaging what it can.

Second Nature Brands buys Brownie Brittle as part of acquisition push

JAY DAVIS

Second Nature Brands, the Madison Heights-based parent company of Kar’s snacks and Sanders goodies, has acquired another snack brand, Brownie Brittle, in its quest to dominate that market.

Second Nature Brands, owned by London-based private equity rm CapVest Partners LLP, announced the transaction with San Francisco-based PE investment rm Encore Consumer Capital on Tuesday morning.

Second Nature Brands CEO Victor Mehren declined to disclose the terms of the deal.

After CapVest bought Second Nature Brands earlier this year, it stated its intention to grow by buying up more snack makers and turning the company’s locally beloved brands into national snack food staples. e deal with Brownie Brittle is Second Nature’s rst since being acquired by CapVest.

Acquiring West Palm Beach, Fla.based Brownie Brittle allows Second Nature to enter another area of the snacks market, Mehren told Crain’s on Tuesday.

Mile Road. e majority of the company’s 385 employees are based in metro Detroit, Mehren said. It has production facilities in Madison Heights and Clinton Township.

Brownie Brittle’s sta of 20, along with CEO Jan Grywczynski, will stay on following the acquisition. Brownie Brittle will continue to use contract manufacturers, according to Mehren.

thrilled to support Second Nature Brands in their next phase of growth and to work with the team to expand their portfolio into adjacent and complimentary snacking categories.”

STOP Restoration and Benjamin Frankin Plumbing. Blevins said the latter could be a natural referral source for DRYmedic business.

Buying into the franchise costs $102,700 on the low end, Hesano said, and $219,000 for more trucks and more equipment. Franchisees will have a 12-day training program at the company’s Bloom eld Township headquarters that will

Hesano said he’s aware of the challenges. He touts the company’s number of ve-star reviews as compared to competitors, saying that he believes if he puts the client rst, the money will follow.

“We absolutely have a conviction that we can continue to make a big impact in the industry,” Hesano said. “We think that we are going to make a big splash.”

Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

“Second Nature Brands is really a portfolio of snack and treat brands. We currently have a position in trail mix with Kar’s and a deal with Sanders confectionery and chocolate,” Mehren said. “We’re looking for other snack and treat brands to complement those. Brownie Brittle ts that perfectly because it’s a baked (snack) product, which is an area we’re not in today. It’s not really clear if it’s a snack or a treat, but consumers like it either way.”

Mehren would not share revenue gures or projections for Second Nature or Brownie Brittle.

He said Second Nature is in talks to acquire other brands in other sectors of the snacks and treats market, but would not disclose any speci cs.

Second Nature will remain based in Madison Heights, at 1200 E. 14

Brownie Brittle, founded in 2012, has an expanding list of retail relationships across all formats and merchandising positions, including club stores, grocery, mass market retailers, convenience stores, specialty retail and airlines, the release stated.

Second Nature Brands, whose local roots go back more than 140 years, is a leader in the fast-growing snacks and treats market. Its brands comprise Kar’s Nuts, the No. 1 branded trail mix and best known for its Sweet ‘N Salty Mix; Second Nature Snacks, which makes healthy, premium snacks; and Sanders, a leading maker of sea salt caramels, hot fudge sauce, Bumpy Cake and more.

“Brownie Brittle is a fantastic addition to the Second Nature Brands portfolio and a great rst step in our plan to transform the business into a highly diversi ed U.S. snacking platform,” Othmane Khelladi, partner at CapVest, said in the release. “We are

Grywczynski in the release said: “Second Nature Brands was attracted by the incredible growth that Brownie Brittle has demonstrated historically, as well as strong brand value and great product quality. We are very excited about this new chapter for Brownie Brittle, as part of the Second Nature Brands family, and look forward to working with Victor and the rest of the Second Nature team to accelerate our growth as a leader in thin, sweet, permissibly indulgent snacking.”

Kar Nut Products Co. was founded in 1933 by Sue Kar, who sold home-roasted peanuts outside Tiger Stadium in Detroit. It was sold to the Nicolay family in the 1960s and moved to Madison Heights in 2004. In 2017, Kar sold a majority stake to an a liated private equity fund of Palladium Equity Partners LLC. In 2018, Palladium acquired Sanders owner Morley Candy, with the aim of making it “America’s confectioner” by ramping up its presence in grocery and retail stores.

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

Butzel expands into Grand Rapids with Silver & Van Essen hires

RACHEL WATSON

GRAND RAPIDS — Detroit-based Butzel is expanding into West Michigan with the addition of a Grand Rapids law o ce.

e rm said last week it is hiring three of the four attorneys at Silver & Van Essen P.C. and taking over its lease at 300 Ottawa Ave. NW, in an ofce building situated between the state and federal courthouses in downtown Grand Rapids.

On Jan. 1, Silver & Van Essen co-founder Lee Silver and attorney Michael Gutierrez will join Butzel as co-managing shareholders of the Grand Rapids o ce. J. Terrance “Terry” Dillon will join as an attorney.

Silver & Van Essen’s other co-founder, Doug Van Essen, will continue in solo practice from the shared o ce but won’t join Butzel.

Incoming Butzel CEO Paul Mersino, whose promotion was announced recently, said the decision for Van Essen not to join the rm was made based on “what’s best for him and his profes-

moment.”

Van Essen, who started the rm with Silver in 2000, said he prefers the great-

er independence of a boutique rm.

“I’ve worked in a 60-person rm, a 30-person rm, and I don’t want to go backward to a larger rm again. I like

working in a small setting,” he said. Van Essen’s practice will operate as Legacy Litigation Group.

Butzel leadership said the new o ce will expand the rm’s services, particularly in the areas of business litigation, mediation and arbitration. e rm is in negotiations to hire additional attorneys and grow into a full-service law o ce in the near future.

Silver is a longtime trial lawyer who served on the legal team of former Michigan State University President Lou Anna K. Simon amid charges related to the Larry Nassar scandal, which were dismissed. He also has handled complex commercial litigation in federal and state courts in Michigan and over a dozen other states, representing Fortune 500 companies, nancial institutions, manufacturers and a variety of closely held companies.

He said in a news release that he is “extremely excited” to begin a new chapter with Butzel.

“Becoming the Grand Rapids o ce of an excellent rm like Butzel will offer immediate bene ts to our clients,”

Silver said in the release. “ is move will allow us to continue providing the same quality representation, personal service and cost-e ective solutions that our clients have been accustomed to receiving from us for decades, while also giving us a deeper bench, additional resources and access to the multidisciplinary expertise that Butzel provides.”

Gutierrez regularly represents manufacturers in supply chain litigation involving stop-shipment situations, requests for injunctive relief, volume and pricing disputes, and other “terms and conditions” negotiations, a skillset that dovetails with Butzel’s focus on handling disputes among automotive suppliers.

Dillon is a former assistant U.S. attorney for the Western District of Michigan, where he handled numerous criminal prosecutions involving tax evasion and fraud by government contractors.

Contact: rachel.watson@crain.com (989) 533-9685; @RachelWatson86

From Page 3

Founded by Carlos Hesano and Benjamin Gergis in 2014, DRYmedic helps bring families and businesses back to life after disaster. CRAIN’S DETROIT BUSINESS

The Brownie Brittle brand is joining the metro Detroit-based snack food family that includes Kar’s, Second Nature and Sanders brands. SECOND NATURE FOODS

sional and personal circumstances at this

“WE ABSOLUTELY HAVE A CONVICTION THAT WE CAN CONTINUE TO MAKE A BIG IMPACT IN THE INDUSTRY. WE THINK THAT WE ARE GOING TO MAKE A BIG SPLASH.”

— Carlos Hesano, CEO and president of the board, DRYmedic Restoration Services

Butzel Long is expanding to Grand Rapids with a new o ce at 300 Ottawa Ave. NW, between the federal and state courthouses in downtown Grand Rapids. IMAGE VIA GOOGLE STREET VIEW

MSU shortens teacher prep program in bid to lower costs, attract more students

Michigan State University is shortening its teacher preparation program from ve years to four years in a move aimed at cutting the costs of the program and attracting more students to it.

e shift, which takes e ect in fall 2023, will double count teacher prep courses that ll general studies requirements, saving teacher preparation program students at the East Lansing university an estimated $16,700 in tuition and thousands more in travel and living expenses.

In comparison to other institutions that have o ered four-year, teacher-prep tracks, the cost of MSU’s program was a nancial challenge for many, MSU said in a posting on its website.

e change will also help address the teacher-shortage trend, MSU said.

“ e new Teacher Preparation Program is attentive to our college’s commitment to accessible, equitable and high-quality education and to the growing teacher shortage,” Jerlando Jackson, dean of the College of Education, said in the post. “We want to be both responsive to needs in our community and of our students, and to also continue our legacy of producing outstanding, well-prepared educators who are ready to lead in K-12 classrooms.”

MSU has been thinking about making the shift for some time, recognizing the ve-year teacher prep model is a nancial strain for students going into a eld like teaching that generally starts out with lower pay, said Tonya Bartell, associate director of elementary programs and associate professor of mathematics education at MSU.

“We also are working hard to make our program more accessible in an e ort to widen the diversity of folks going into education,” she said.

To shorten the program while maintaining the quality of teacher preparation of elementary school teachers through grade six, about 16 credits of teacher prep classes will be

WALSH

Without more workers entering the market, there’s little hope wages will stop their ascent. is does, however, put the greater economy at risk of entering a wage-price spiral where to afford labor, companies keep raising prices to the point where consumers either can’t a ord the products or won’t a ord the products.

e country is walking a ne line between rapid growth and a recession. If demand slows, companies slow down hiring and the economy stabilizes. If demand continues to remain high with the tight labor market, well, you’re looking at even higher in ation.

But relief for companies may be on the horizon. New unemployment claims ticked up the week ending Dec. 3 in Michigan to 9,195 from 7,425 the week prior. ere are nearly 44,000 in the state on unemployment insurance, the highest level in more than 10 months, which may translate that people are taking a longer time to nd work.

double-counted (through a ve-year pilot) to also meet general university requirements in integrated studies in social studies and arts and humanities, Bartell said.

e four-year program will maintain a yearlong internship in the nal (now fourth) year, while also increasing the overall time students spend in classrooms by including supervised time in classrooms in the sophomore and junior years as a structured part of the program rather than as part of di erent courses.

For students in secondary education tracks (grades 7-12), the new four-year program reduces four intensive teacher preparation semesters to three and reduces student teaching to about 20 weeks from 35, which is still twice what is required by state law, said Kyle Greenwalt, associate director of teacher preparation and association professor in the MSU Department of Teacher Education.

Secondary teacher prep majors earn bachelor’s degrees in speci c areas such as mathematics, science or English and a teaching certi cate.

e secondary education track will continue a yearlong internship but with reduced clinical hours “so that we can get our candidates out into the schools a year earlier,” after meeting rigorous exit standards, Green-

walt said in an email.

Shortening the program “is a response to the number of candidates we lose prior to student teaching and to those who don’t ever apply as they see the program as too expensive,” he said. “It is a response to the teacher shortage and the student loan crisis, on the broadest level.”

Current rst- and second-year students are eligible to transition to the new model in spring 2023. Incoming students for fall 2023 will enter the four-year model.

For the 2022-23 academic year, 560 students are enrolled in MSU’s elementary teacher prep programs across all majors, Bartell said. Another 180 are enrolled in special education major tracks, and 183 are in internships in their nal year.

She could not immediately provide comparative enrollment data for prior years.

“Ten years ago, our numbers were de nitely higher, as they were across the state and the nation,” Bartell said.

Over the last few years, “we’ve been holding steady,” she said.

Enrollment numbers for secondary teacher prep programs were not immediately available.

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

Jeweler Kendra Scott to open retail store in Troy

A well-known jewelry and watch retailer featuring items named after the company founder is set to expand in Michigan.

Kendra Scott on Friday announced its newest store, which will open at 9 a.m. Dec. 17 at Somerset Collection.

e 1,200-square-foot store will o er Kendra Scott’s current collections, including men’s collection Scott Bros. by Kendra Scott, and e Watch Collection by Kendra Scott. e store will also feature the brand’s Kendra Scott Color Bar, which gives shoppers an interactive experience to create customized jewelry and exit the store with the piece.

Worn by celebrities including Hailey Bieber, Camilla Cabelo, Mindy Kaling, Zendaya and Kelly Clarkson, Kendra Scott’s collections are known for their custom-created stone shapes, genuine materials and innovative design details.

e store, at 2800 W. Big Beaver Road Suite 216, will be Scott’s third in Michigan, following locations in Ann Arbor and Novi. e store will be located in a space previously occupied by hair care product retailer Madison Reed on the second level of Somerset Collection North near Macy’s.

As part of its philanthropic work, Kendra Scott in its opening week will host Kendra Gives Back events, and

the company will donate a percentage of its pro ts to a variety of causes.

From 11 a.m.-1 p.m. Dec. 17, Kendra Sott Troy will donate 20 percent of sales to the Junior League of Birmingham to support social activism-focused projects, according to a news release.

From 1-3 p.m. Dec. 17, the store will donate 20 percent of its sales to the Zonta Club of Troy-South Oakland to help provide scholarships for women and girls, along with food and clothing to families in need, and support for women’s programs.

From 11 a.m. -1 p.m. Dec. 18, the store will donate 20 percent of its sales to the Autism Alliance of Michigan. At 2 p.m. Dec. 20, the store will donate 20 percent of its sales to the Boys & Girls Club of Troy, following a ribbon-cutting ceremony.

Founded in 2002 by Scott, Kendra Scott LLC o ers clothing, jewelry, watches, home accessories and a men’s collection. e company, with more than 2,500 employees, also has more than 850 boutiques.

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

at gloomier picture may be a sign of a softening labor market, which will inevitably slow down consumer spending and in ation. How much is anyone’s guess.

“In spite of all these comments about business, lack of business condence, there’s still a vigorous demand for labor out there,” Bleakley said. “ e big unknown is whether this stabilizes or we get into a spiral

where prices and wages rise in lockstep, pushing toward a recession.” e economy is already slowing, even if no one has told the labor market. Unless more people jump back into the employment pool, we’re talking stag ation. And that’s not a pretty picture for anybody.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Michigan State University is shortening its teacher preparation program from ve years to four years in a move aimed at cutting the costs of the program and attracting more students to it. MSU TODAY

JAY DAVIS

Scott

THE 10 BIGGEST STORIES IN COMMERCIAL REAL ESTATE

The emergence of Stephen Ross in the District Detroit

Less than a year ago, the Ilitch family and billionaire development mogul Stephen Ross formally announced that they were teaming up in an e ort to build the Detroit Center for Innovation, a University of Michigan graduate school satellite campus to be located in the District Detroit area.

Since then, there have been a urry of announcements and revelations about the broader e ort to reignite development in the area largely controlled by the Ilitches that has lagged behind a grand vision that was unveiled in July 2014 but didn’t materialize at the scale anticipated then.

No construction has yet started on the renewed e ort — and it’s well within the realm of possibility that the plans as currently discussed take shape in part, in whole or not at all.

Currently, there are 10 projects on the drawing boards outside of the DCI, ranging from business incubator space to new o ce and residential towers and hotel space, including converting the Fox O ce Building into 177 rooms and building a new 14-story hotel tower south of Little Caesars Arena.

In all, some $1.5 billion in projects are envisioned in that e ort, not including the DCI, which would cost $250 million — and is being funded with a $100 million earmark tucked into the state budget earlier this year.

It’s not just the grad school that’s getting taxpayer dollars. e development team is also going after socalled “transformational brown eld” funding that could reach into the hundreds of millions of dollars, not to mention local incentives.

Some malls in ux

ere was no shortage of shopping mall news, ranging from Eastland Center in Harper Woods coming down to make way for industrial/ warehouse development to announced plans to tear down Lakeside Mall in Sterling Heights to create a $1 billion mixed-use suburban town center area o of Hall Road/M-59.

Northland Center in South eld is also being redeveloped.

Others changed hands, including Fairlane Town Center in Dearborn, which was sold to a Dallas-based developer called Centennial Real Estate, and Oakland Mall in Troy, which ended up in the hands of Mario Kiezi, a young investor who has made a

Downtown Detroit’s o ce market in disarray

Like core downtown o ce markets around the country, Detroit’s has been battered by the COVID-19 pandemic, which prompted governments to mandate people to work from home in many instances, leaving large blocks of o ce space empty.

at’s because many workers and

companies have adopted hybrid work models, where they are only in the o ce a few days a week.

at, in turn, is allowing rms to downsize their space — such as Deloitte LLP — or put large blocks of it on the market for sublease, like Meridian did. Others, like Compuware Corp.,

name for himself on social media.

Others remain on the ropes, including Southland Center in Taylor, which is nearly underwater on its $78.5 million commercial mortgage-backed securities loan, and e Mall at Partridge Creek in Clinton Township, which has defaulted on its CMBS and is in the hands of a receiver.

Hudson’s site developments

Downtown’s largest development continued to take shape at the corner of Woodward and East Grand River avenues as Dan Gilbert’s Bedrock LLC topped out the so-called “block” component and continued to raise oors for the 685-foot skyscraper on the southern portion of the former J.L. Hudson’s department store site.

But the project faced headwinds, as well, as the Detroit City Council pushed back on a $60.3 million tax break that was ultimately approved after Bedrock agreed to some sweeteners to grease the skids — including a new a ordable housing agreement that was more bark than bite.

In addition, the project owner’s representative was replaced, without an explanation from the real estate company as to why.

Construction costs for the project swelled to an estimated $1.4 billion and word got out that a luxury Edition hotel by a co-founder of Studio 54 is in the works. Bedrock’s website later con rmed Edition as the ag, but shortly after we reported on it, removed the hotel’s name.

Suburban o ce market also in ux

It’s not just downtown where the o ce market has been tough. Look north of Eight Mile and you’ll nd plenty of examples of users pulling back on space.

Credit Acceptance Corp. is looking to seriously downsize its Southeld footprint, putting three buildings up for sale with the potential for almost entirely vacating its space there. Bank of America is leaving its Troy regional headquarters on Big Beaver Road, an iconic building with a remarkable history.

And even though Comerica Bank is leasing a huge swath of space — 340,000 square feet in Farmington Hills in the old Mercedes-Benz Financial Services buildings — it marks an overall reduction in its o ce footprint.

are moving out of the city for substantially smaller space in suburbs like South eld (more on that next).

In addition, co-working space company WeWork has shuttered its Cass Avenue location, leaving a large chunk of space in the TechTown area without an occupant.

ose are just the really large examples; without a doubt, there are others that are putting o ce landlords in a di cult position. Some are wondering what the future of their buildings will be — including Plante Moran, which recently sold one of its old Southeld buildings that is set to become self-storage space.

A rendering of the proposed hotel at Little Caesar’s Arena. COURTESY OF RELATED COS

The Hudson’s site tower construction. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

Out of the Box Ventures is proposing to tear down most of Lakeside Mall in Sterling Heights for a $1.06 billion mixed-use project. |

CITY OF STERLING HEIGHTS

The South eld Town Center. | COSTAR GROUP

The quiet redevelopment of the JLA site

e Joe Louis Arena site project is probably the strangest one I have encountered.

at’s not because of its components — a residential tower under construction as we speak, plus potentially an o ce tower and a large hotel or two.

It’s because it started, and continues, so ... quietly.

ere was no groundbreaking ceremony. No announcement. Just ... bam.

As far as I can tell, the only public remarks about the project from the team working on it came during a Board of Zoning Appeals hearing in May.

And that was from the general contractor, not the developer, Detroit-based Sterling Group.

Everything else we’ve learned about it has been from sources speaking on the condition of anonymity, or people not directly involved.

LIFTBuild technology emerges

One of the more interesting things to emerge in 2022: e LIFTBuild technology, which is hoisting, quite literally, a new residential building in Greektown.

e Exchange, as the 16-story building is called, is considered a proofof-concept for LIFTBuild, which raises entire oors, starting at the top and working its way down, to construct buildings.

Assuming all goes well, look to see this technology by South eld-based general contractor Barton Malow Co. deployed elsewhere, not just in Detroit but around the state and country.

Industrial surge continues

Industrial and warehouse development in Detroit and its suburbs continues to be a hot commodity, with projects at the former Cadillac Stamping Plant property, the Warren Transmission Plant site, the Eastland Center site in Harper Woods and the former Ford Motor Co. Wixom Assembly Plant all taking shape — just to name a few.

The Packard Plant saga

Packard Plant owner Fernando Palazuelo has faced hit after hit in the last several years, and ultimately the city began demolishing a portion of the plant this fall.

In 2022 alone, he lost control of a large swath of his property to foreclosure, with the 30 or so parcels ultimately reverting to city ownership.

Detroit also began tearing down a chunk of the plant and a court ordered that he start demolishing it (although he missed a deadline to begin doing so).

In his eight or so years of owning the plant, Palazuelo wracked up hundreds of thousands in unpaid property tax and water bills.

Although he lost many of his properties to foreclosure this year, in a shrewd real estate maneuver, Palazuelo redeemed a series of them west along the Norfolk Southern rail line and along the northern part of East Grand Boulevard that for now would make a possible redevelopment north of the boulevard di cult — a move that could require buying him out at perhaps a costly price.

Downtown Detroit retail

Others, like the former American Motors Corp. property on Detroit’s west side, are being eyed by General Motors when it gets out of the ground.

Case in point: ere was some 8.7 million square feet of space under construction in the third quarter — more than 2 million more than the 6.5 million square feet under construction in the third quarter last year, according to a market report from the local o ces of New York City-based brokerage house Newmark.

SPARROW

Ann Arbor. So ve years down the road, we want to increasingly take care of the most ill and most complicated patients in the state.”

On ursday, UM’s Board of Regents approved the deal to buy the struggling system, which is the eighth-largest in the state.

Under terms of the deal, which is expected to close in the rst half of 2023, Michigan Medicine will invest $800 million into Sparrow Health System, which will be funded through facility projects, operations, and strategic investments over eight years.

It’s all part of Michigan Medicine’s plans to o er “long-term vision of a statewide system of highly coordinated care,” Runge said ursday.

Comprehensive care

The combined health system will become a $7 billion health system that operates more than 200 locations. It’s unclear when the deal is expected to close.

One in three adults lives with at least two medical conditions that require treatment. Health systems are building more ambulatory care settings to care for common ailments and surgeries, thus freeing up specialists to deal with those complex patients.

Michigan Medicine’s Ann Arbor hospital already is known as a destination hospital, and it’s looking to disperse more complicated, and often higher margin, patients away from its main hospital.

Runge said roughly two-thirds of the investments will be in facility improvements and the last third will go to “substantive” capital investments, such as new buildings and large technology investments.

“(These investments) will allow Sparrow to proceed more rapidly (to treat complicated patients) by making some of these changes,” Runge said.

This is also the impetus for the Ann Arbor system to spend nearly $1 billion on a new 12-story, 264bed hospital adjacent to its existing hospital in Ann Arbor. The system on Thursday received one of the state’s largest philanthropic gifts: $50 million to rename the hospital to the D. Dan and Betty Kahn Health Care Pavilion, expected to be completed in 2025.

Michigan Medicine has rapidly increased its affiliations in recent years — largely through its pediatric services.

The Ann Arbor system signed a master affiliation agreement in 2012 with the country’s fifth larg -

est health system, Livonia-based Trinity Health, to bring more pediatric services across the state. The latest move included opening pediatric urology and orthopedic clinics in November at Trinity Health Oakland Hospital in Pontiac as well as a surgery clinic coming online in January.

The partnerships between the systems include a joint venture to run Chelsea Hospital and joint operating agreements to bring UM Health cancer and cardiovascular services to Trinity’s operations on the west side of Michigan.

Other moves set the stage

e deal for Sparrow is a copy of a previous transaction.

In 2009, Michigan Medicine signed an a liation agreement with Metro Health Corp. in Wyoming near Grand Rapids. First came UM Health oncology services then pediatric cardiology and endocrinology.

In 2016, Metro merged into Michigan Medicine and was renamed University of Michigan Health-West with a 208-bed hospital and 30 ambulatory and outpatient centers in West Michigan.

Michigan began its relationship with Sparrow in 2019 with an a liation agreement to o er pediatric services.

“ at collaboration has been really successful,” Runge said. “Our approaches to care t really well together. So we began to have conversations about expanding care just a few months ago. It’s been a quick evolution after it looked like an opportunity that would achieve our goals.”

For Sparrow, the sale comes at a di cult time. In September, the health system announced plans to lay o hundreds of workers after recording a $90 million loss during the rst six months of the year, even as it struggled with worker shortages. It said rising costs had left it no choice but to part with sta mostly in leadership and nonpatient care roles. Some eliminations were planned for clinical roles where patient volumes have declined.

e deal also marks the second major health system merger this year.

In February, Spectrum Health in Grand Rapids merged with Southeld-based Beaumont Health to create the state’s largest health system with more than 60,000 employees and 22 hospitals. e merged system renamed itself Corewell Health in October.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

It’s been an up and down year for downtown’s retail scene.

Several stores along Woodward Avenue closed up shop, including Madewell, Détroit is the New Black, Le Labo and Under Armor.

But downtown also landed a new Gucci store as well as an incoming bricks-and-mortar location for Rihanna’s Savage X Fenty lingerie line.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

The Exchange building is being built in Greektown. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

Demolition begins at a Packard Plant buildings. KIRK PINHO/CRAIN’S DETROIT

The former American Motors Corp. headquarters. | COSTAR GROUP

Construction continues on the Joe Louis Arena site tower. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

Lansing-based Sparrow Health will be acquired by Michigan Medicine. | ELIZABETH COUCH/CRAIN’S DETROIT BUSINESS

Jeanette Abraham re ects on 50 years in the auto industry and mentoring leaders

JMA Global LLC founder, President and CEO Jeanette Abraham, 70, entered the automotive industry in 1968 and never left — though it wasn’t necessarily easy to get there. Growing up on the west side of Detroit, she recalled taking nine buses a day to get to school and then her co-op at the General Motors Technical Center in Warren. She stayed with GM for 32 years before taking over a supplier business and forming her own logistics company, JMA, which is pacing for $8.5 million in revenue this year and at least 10 percent growth in 2023. Key to her success, she said, were mentors she met along the way. As chair of the National Association of Black Suppliers Scholarship Fund, she is determined to be that person for the next generation of Black women with big dreams. The following conversation has been condensed and lightly edited for clarity.

BY | KURT NAGL

I was going to Pershing High School in Detroit, and so every school had a co-op program, but most schools were sending their students to insurance companies, things of the like, but my opportunity was at General Motors … It was daunting to think of it quite frankly because I lived on the west side of Detroit — my parents had moved on the other side of town — and I was at Pershing High School at Seven Mile and Ryan, so I picked up three buses to get to school. And then this job that was o ered to me was at the Warren tech center, and I took three more buses. And then after I got out of work, I took three more buses to get back to the west side. So yeah, count them. There were nine buses. But I knew that I must have had a lot of strength in my mind and heart to be able to do that because it was a wonderful opportunity.

 What were your roles at GM?

My HR director said that “listen, you can go ahead and get your education,” because when they o ered the job I said, “I want to go to college.” No one in my family had a college education. I wanted one. And so I did accept the o er, and I did end up going to school in the evening, and they paid for my undergrad and graduate degree. And so, I worked in purchasing for a buyer, and I was just his assistant, and I learned purchasing. I did everything, I did his letters, I did shorthand. And after my pro ciency was noticed, I left purchasing and I ended up being in production control. Now mind you, I had learned a lot in the last couple of years there. So even though I was really, really knowledgeable because I had a lot of good information, I was always a student and always learning.

RUMBLINGS

fastener company (Detroit Heading) … With my due diligence, I came up with the fact that, OK, I can do this, and so I ended up leaving GM and started being the president in July of 2000.

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That must have been a big change. This manufacturing plant was in the same neighborhood that I went to middle school, so I was like, who would have imagined that a Black girl from the city of Detroit could own a company, and the value of the company at the time was $30 million. It’s abbergasting. It just made me feel like, wow, what a responsibility you have to the community and to mentor people.



 So, you eventually sold your interest in the manufacturing company and still run JMA. Can you tell me about that business?

We take fasteners from China and Taiwan and do all the quality control and value add and ship directly to the OEM … The volume shipped year to date on fasteners is approximately 30 million pieces.

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MEMBERSHIPS



How long did you stay with the automaker?

32 years. 

How did you branch out on your own?

While working at General Motors and being in procurement, I was part of their management team, and I managed a group of suppliers. So, I mentored minority companies as part of my job. So, I went to a company one day, and I said “listen, one of my initiatives is growing and helping minority companies, and I have a minority company that does exactly what you do but less, so all the pricing

and everything else that you get they can bene t from. And so, I’m wondering if you would be interested in taking a look at their books.” And so, he said, “I’d be happy to take a look at it for you,” and he did, and within one week, he says, “yes, we can do it and I’ll be happy to do it for you,” and so they went and they became the 49 percent partner. And so that lasted two years, maybe three, and the minority CEO had cancer, didn’t know he did, got ill and he passed away. So unbeknownst to me, the majority company was looking for a minority partner to put into that place. And I had no idea they were looking at me … This was a



What challenges have you faced as a Black woman in the industry?

My life was just kind of easy navigating in and out of situations with people, and it kind of carried on to my entrepreneurship, where I was able to do the things that I needed to do in order to get to the next step, not with maliciousness, but with curiosity and with care and concern and wanting to learn things and o ering a di erent approach… But I didn’t get anything special. I always told people that I run a wonderful facility that I own, and I happen to be a Black female, but you could paint my face any color and you’ll get the same good results.

Little Caesars goes after Detroit-style pizza competitors

Behind a deep dish of Motor City Pride, pizza chain Little Caesars in a new campaign is going after competitors serving what it considers inauthentic “Detroit-Style” pizza, including Pizza Hut.

With the newest ads, created in partnership with ad agency McKinney, Little Caesars is playfully aiming its wrath toward chain competitors who have aped the style, particularly one based in Plano, Texas (Little Caesars won’t say who that is, but Pizza Hut matches the description). Jet’s Pizza, another chain with a menu that includes Detroit-style pies, is based much closer to Detroit, in Sterling Heights.

e e ort — which includes a pledge to give Little Caesars cou-

pons to people who have tried versions from other chains — comes as Detroit-style pizza gains acclaim around the country. Unlike its better-known regional siblings from

New York and Chicago, Detroit pizza is a rectangular, deep-dish pizza known for its chewy crust, and crunchy, caramelized cheese edges. It is said to have originated in 1946 by Buddy’s Pizza in Detroit behind a pizza chef using Sicilian-style dough originally baked in an automotive drip pan.

“ e biggest question is why has it been a secret for so long. Here in Detroit, it’s been around for decades,” Little Caesars’ Chief Marketing Ocer Greg Hamilton said in an interview. Little Caesars has o ered its take since 2013, the longest among national pizza chains, Hamilton said. e style has been a focus of several recent marketing e orts, which come as Little Caesars con-

tinues to emphasize quality and authenticity in its products.

Buddy’s Pizza has always laid claim to being the originator of Detroit-style pizza. It takes great pride in that and is attered by the style’s growing popularity, Buddy’s Chief Brand O cer Wes Pikula said in an email to Crain’s on Tuesday.

e new Little Caesars spots spoof personal-injury lawyer commercials. An excitable attorney speaks directly to the camera encouraging those who bought Detroit-style pizza anywhere but from Little Caesars to “seek compensation” in the form of a discount from Little Caesars in exchange for uploaded receipts for deep-dish pizzas purchased at other chains.

CLASSIC $169/yr. (Can/Mex: $210, International: $340), ENHANCED $399/yr. (Can/Mex: $499, International: $799), PREMIER $1,299/yr. (Can/Mex/International: $1,299). To become a member visit www.crainsdetroit.com/ membership or call (877) 824-9374

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 How did you get into the industry at such a young age?

Little Caesars in a new campaign is going after competitors serving what it considers inauthentic “Detroit-Style” pizza, including Pizza Hut. | LITTLE CAESARS

Jeanette Abraham is president and CEO of JMA Global LLC.

Hello,

Thank you so much for taking the time to read this important Executive Insight. The Children’s Foundation and Crain’s Detroit Business, through its Crain’s Content Studio division, have an ongoing partnership to promote The Foundation’s monthly radio show, Caring for Kids, featuring impressive and impactful guests who share what they are doing to help our community.

As part of our Crain’s partnership, we also share important information about relevant topics through special inserts. In this Executive Insight we feature a new program for The Children’s Foundation, the Detroit Philanthropic Youth Council (DPYC).

This initiative is something that I have wanted to begin over the last several years and as with many other plans, the pandemic got in the way. But now we have of cially launched DPYC, and I am excited to share more about it with you.

This council is designed to educate high school students about the importance of philanthropy in our communities. We have partnered with the Catholic Foundation of Michigan

and the Pulte Family Charitable Foundation, working with students at Cristo Rey High School, Loyola High School, and the Jalen Rose Leadership Academy.

The Children’s Foundation and Catholic Foundation of Michigan are dedicating $25,000 each so our inaugural group of students will allocate to worthy nonpro ts in the community at the end of the program.

Throughout this academic year we have a very robust syllabus all leading up to the eventual granting of the total of $50,000.

The Children’s Foundation is dedicated to helping children, adolescents, young adults and families, and part of that is to educate our future leaders on the importance of philanthropy and community engagement.

Thank you,

Lawrence J. Burns President & CEO The Children’s Foundation

DPYC members and partners gather for their rst in-person meeting together at e Children’s Foundation in the New Center neighborhood of Detroit.

DPYC meetings are like a Philanthropy 101 course. Nonpro t experts teach members about topics such as fundraising, community-need assessment, grant applications and grant making.

THE NEWLY FORMED DETROIT PHILANTHROPIC YOUTH COUNCIL CONNECTS TEENS TO THE POWER OF GIVING

By Karen Dybis Crain’s Content Studio

Photography by Armon Babridge

Generation Z is de ned by its members’ independence, resiliency and technological adaptiveness. What the world might not know about this generation — born between 1996 and 2014 — is its openness, generosity and curiosity about philanthropy.

Another key characteristic of Gen Z is they want their voices heard, whether it is

through action-orientated social movements or donating their time to solve cultural issues. Tapping into that resolve to create change, three Metro Detroit foundations have partnered with area high schools to develop a new way for this generation to approach philanthropy, both in terms of personal involvement and career potential.

The Detroit Philanthropic Youth Council (DPYC) launched in September 2022 as a collaboration between The Children’s Foundation, Catholic Foundation of Michigan

and the Pulte Family Charitable Foundation. Their goal is to teach high school students about philanthropy and to create real, substantial community impact, organizers say.

The DPYC’s inaugural class includes students from three city high schools: Detroit Cristo Rey High School, Loyola High School and Jalen Rose Leadership Academy. These Gen Z students have committed to the council for a year,

“We have a great group of youngsters in our inaugural class. ... is will develop future leaders and it might even encourage some people to go into philanthropy. ... I’m sure there will be some stars that rise out of the alumni.”

-Lawrence J. Burns, President and CEO, e Children’s Foundation

meeting in nine monthly sessions in person and virtually.

A REAL EXPERIENCE WITH REAL IMPACT

What makes the DPYC a standout opportunity for these students as well as the Metro Detroit community is its short and long-term impact, said Lawrence J. Burns, President and CEO of The Children’s Foundation and one of the co-creators of this council.

In terms of short-term impact, Burns said The Children’s Foundation and the Catholic Foundation of Michigan have donated $25,000 each for a total $50,000 grant opportunity. The DPYC members will

discuss, debate, and, at the year’s end, distribute grants to quali ed organizations the students identify as helping solve some of Metro Detroit’s key issues.

“It gives them hands-on, real experience,” Burns said. “I’m excited to see what they pick to fund, whether it is mental health or nutrition and wellness—all things of real interest to them.”

Council meetings are like a Philanthropy 101 course. Nonpro t experts go

over key topics including fundraising, communityneed assessment, grant applications, as well as grantmaking. Afterward, the council gets time for roundtable discussions as well as role-playing scenarios where students learn practical knowledge through games that tackle real-life scenarios.

A recent meeting illustrated how effective this role-playing can be. Several DPYC staff and leaders played community

members, nonpro t groups and businesses seeking funds from a simulated nonpro t foundation. The DPYC student members were the grantmaking members of this foundation, listening to the grantees’ pitches and deciding collectively who should receive funding and why. Think of it as a “Shark Tank” for do-gooders.

The local bakery that needed a new oven? The DPYC students said a polite “no,” explaining

“We need to be intentional about listening to these teens. If we do, our philanthropy is only going to get stronger. It will be more impactful. … It opens our ears and our understanding.”

-Angela Moloney, President

and

CEO, Catholic

Foundation of Michigan

DPYC members work together on a simulated exercise where they get to decide which individuals and groups should receive grant funding.

that the for-pro t bakery likely needed to seek a bank loan. But the church that wanted to build a community pantry? They got a resounding “yes,” for the church’s nonpro t status but also for its mission of giving back to the people it serves.

For Freddie Jimenez, a junior at Detroit Cristo Rey High School, activities like this are why he wanted to

join the council. Jimenez lives in Southwest Detroit, and he hopes to bring what he knows about his community to the table.

“Philanthropy is giving back to the community and helping people in need,”Jimenez said. “I’m a representative of the community, and I want people to listen to what I have to say about what the community really needs.”

Ja’Breya Horn, a junior at the Jalen Rose Leadership Academy, agrees. “It’s about teens listening to teens. But it’s also about adults listening to what we have to say.”

BUILDING COMMUNICATION AND CONNECTIONS

best practices from its experiences educating high school students about philanthropy.

Then, as Burns and The Foundation started to ramp up their plans, the coronavirus pandemic hit in March 2020. Hopes of an in-person program were put on hold, Burns said. Fatefully, as discussions around revamping the idea started, Burns met with a potential partner: the Catholic Foundation of Michigan.

Launched in 2017, the Catholic Foundation also sought out ways to connect with young adults, said Angela Moloney, president and CEO. It, too, wanted to initiate a youth philanthropy council, but Moloney said it needed a dynamic partner to get its idea off of the ground.

- Chris Burkes, junior, Loyola High School, Detroit

The DPYC started as an idea Burns had as part of the The Children’s Foundation’s overall mission to engage directly with their constituents: Metro Detroit’s children. Burns said he knew of the youth philanthropy group at the Bloom eld Hillsbased Jewish Federation of Metropolitan Detroit, and he worked with that group to learn its

So, when Burns met Moloney, a plan was set in motion. They recruited students from the three high schools and set a goal-orientated agenda: The DPYC could help its student members identify local community challenges, evaluate possible solutions, and create actual change and impact with the allocation of the $50,000 stipend the two foundations donated to the effort.

Getting the program started took perseverance — teens today have packed schedules, and they often have strong opinions. After a few meetings lled with exercises and humorous ice-breaking activities, DPYC members have

As part of the Detroit Philanthropic Youth Council, local high school students Ja’Breya Horn, Shaniyah urmand, Breyonna Roland and Kylah Kiel are meeting each month to learn more about what it takes to be a philanthropist.

“What I like about the (Detroit Philanthropic Youth Council) is how involved we are and how we’re being exposed to philanthropy at a young age.”

formed deep connections with one another, organizers agree.

“There are a lot of unique personalities in this group, and what we’ve noticed is the students knew of one another’s schools but didn’t know each other. The DPYC allows for a platform for these kids to engage with one another,” something that is

more meaningful given the isolation these teens may have felt in the early months of the pandemic, Moloney said.

‘THESE KIDS HAVE ALL THE ANSWERS.’

One of the council’s main purposes — to help students “ nd their why” in terms of giving back to their communities —

FOCUS AREAS

The students involved in the inaugural Detroit Philanthropic Youth Council class will focus on the following areas for their giving.

These also mirror The Children’s Foundation’s focus areas for its work supporting pediatric research, education, community bene t programs, and other initiatives that improve the health of children in Michigan.

NUTRITIONAL WELLNESS

One in three kids in the U.S. is considered overweight; one in four is obese. Besides leading to lifelong health problems putting them at heightened risk for stroke, cardiovascular disease, diabetes, and some cancers, it can also lead to depression, behavioral and learning problems, and lower self-con dence.

INJURY PREVENTION

There is nothing more tragic than the preventable death of a baby or young child, and that’s why children’s injury prevention is a top priority. Sleep-related death is a leading cause of mortality among babies less than a year old.

ABUSE & NEGLECT

Nearly 3 million cases of child abuse and neglect that involve over 5 million children are reported each year. The goal is to provide early intervention options to help improve child development.

MENTAL HEALTH

The goals are to support programs to help understand, discuss and bring awareness to the growing need and concerns about the stigma surrounding mental illness.

YOUTH DEVELOPMENT

Youth from under-resourced communities bene t from opportunities to connect with mentors, explore their interests, and to develop skills and con dence to realize their full potential and to positively impact their families, communities, and society.

PEDIATRIC RESEARCH

With the young voices guiding the giving process, the goal is that they will fund projects that have real impact to their lives. “I wantpeople to listen to what I have to say about what the community really needs,” says DPYC member Freddie Jimenez.

Research is critical when it comes to battling hard-to-treat childhood cancers and pediatric cardiovascular disease.

also developed in these meetings, Moloney said. Most of these students have participated in a variety of fundraising activities, whether it is for their schools or for extracurricular activities. But knowing why they give was something else they needed to understand.

“In one of our icebreakers in September, we asked students to tell us their favorite gift that they’ve ever given to someone,” Moloney said. “The responses were so personal, like the art that they made for their moms or gifts that were so meaningful to the giver. They maybe weren’t the most expensive things they’ve ever given, but they were thoughtful and intentional. This is about the feeling you receive when you give. These kids have all of the answers; it just needed to be drawn out.”

Both Burns and Moloney agree their personal devotion to philanthropy as well as their professional lives within their organization has grown alongside that of the student

council members. “When we hear the voices of young people in our communities, we’re really the ones who are going to bene t here. It’s about opening up our understanding,” Moloney said.

For Burns, who is transitioning from The Children’s Foundation in January 2023, the DPYC strengthens The Foundation as well as his legacy in helping youth and giving them a voice to advocate for themselves.

“To me, this is the beginning,” Burns said. “This is something where we could add more high schools and duplicate this in other parts of the state. We’re excited about the impact of granting money, but also, more importantly, we’re excited about the impact on these kids.”

For more information on how to support The Children’s Foundation and its mission, visit YourChildrensFoundation.org.

GENEROUS GENERATIONS

Millennials and Gen Z – those born after 1981 or after the later 1990s – are the next generation of donors and philanthropists.

Researchers say younger donors are drawn to social causes and motivated to give. Here’s a snapshot:

TECH-SUPPORTED DONORS

Both millennial and Gen Z generations, aided by digital methods of giving, gave more than any other generation during the pandemic, according to payment app Zelle’s Consumer Payment Behaviors report in 2020.

MISSION DRIVEN-GIVING

Millennials are most likely to give when they feel inspired by an organization, data from The Case Foundation’s “The Millennial Impact Report” suggests. What drives them? 90% of those surveyed stated a compelling mission motivates them, but they would stop giving if they had reason to distrust an organization.

‘GENERATION IMPACT’

Younger donors want to see the direct impact of their philanthropic involvement, according to authors Sharna Goldseker and Michael Moody in their book, “Generation Impact.” Young donors want to see their dollars move the needle for issues they care about.

As part of the DPYC, youth will have hands-on, real-world experiences as budding philanthropists, including the chance to ask tough questions and make big decisions about the programs they will fund.

Focus Areas

A Foundation on the move.

Improving the health and wellness of children in Michigan and beyond.

The Children’s Foundation is the largest funder dedicated solely to advancing the health and wellness of children and families in the state of Michigan and beyond. The Foundation is on the move and continues to evolve and grow as it broadens its e orts in the community and expand their geographical footprint.

a greater impact for children, young adults and families.

The Children’s Foundation

For more information on how to get involved or to donate, visit YourChildrensFoundation.org