Crain's Detroit Business, May 4, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 18

MAY 5 – 11, 2014

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ISTOCK PHOTO

Auto supplier’s new business plan is locked and loaded

43 The percentage of Michigan residents – in more than 120 communities and covering 1,079 square miles – who live in the area served by the Detroit Water and Sewerage Department

Drip by drip: Region’s water challenges

50 Local soccer owner gets a leg up on Britain’s big leagues New crowdfunding rules: Social media won’t like it

This Just In Tecumseh stock up after shareholders OK recap plan Tecumseh Products Co.’s new shares closed up almost 28 percent Friday after shareholders at an annual meeting voted to approve a recapitalization plan that consolidated its two classes of stock. Shareholders of Tecumseh’s former Class A stock and Class B stock last week approved the consolidation, with 1.5 million shares of B shares voting against the proposal and just over 580,000 of Class A shares voting against it. Tecumseh (Nasdaq: TECU) is an Ann Arbor-based manufacturer of compressors for the commercial refrigeration and residential and specialty air-conditioning industries. Former CEO Todd Herrick, the nonprofit Herrick Foundation and Herrick family trusts owned about 33 percent of the Class B shares. And Todd’s son, Kent Herrick, was chairman of the board until his resignation in January 2013. The company said in a filing with the U.S. Securities and Exchange Commission that Todd Herrick expressed concerns about a perceived deterioration of the company generally since his son’s departure; he opposed the stock plan. Shares of Tecumseh closed at $7.74 on Friday, up $1.67 from Thursday. — Chad Halcom

Roughly the percentage of total customer accounts that are delinquent, including residences and some large municipalities and organizations such as Detroit Public Schools

$142.5 The amount, in millions, of the total unpaid balance from delinquent accounts of residents and businesses in the city of Detroit

Bad bonds, late bills among DWSD problems BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

an federal mediators, or the state, help broker a deal to create a regional water authority for Southeast Michigan? U.S. District Judge Sean Cox held separate meetings with negotiators for Oakland, Macomb and Wayne counties last week. Detroit officials expect to have their own mediator meeting this week. The talks, court-ordered mediation as part of bankruptcy proceedings, are confidential. But suburban concerns have been aired long before U.S. Bankruptcy Judge Steven

Rhodes made the April 17 mediation order. “No deal is better than a bad deal,” Oakland County Executive L. Brooks Patterson said in marketing materials. Crain’s reviewed hundreds of pages of documents and interviewed a half-dozen suburban leaders to identify the chief concerns over a proposed 40-year deal for a new regional Great Lakes Water Authority to manage the Detroit Water and Sewerage Department. Some highlights: The system’s bonds are now junk status, its infrastructure is in tatters and it’s shipping about 50 percent of the city consumer water that flowed just 15 years ago.

See Water, Page 30

DIA to stage Rivera-Kahlo exhibit of their time in Detroit BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

A year from now, the Detroit Institute of Arts plans to launch a major exhibit that no other museum could stage. And other museums and private collectors are stepping up to help. The exhibition will highlight the time Diego Rivera and his wife and fellow artist Frida Kahlo spent here while Rivera created the venerable “Detroit Industry” murals on four courtyard walls at the DIA — and Kahlo pursued her own art. Rivera’s preparatory drawings for “Detroit Industry,” which have

not been shown for 30 years, will be the centerpiece of the exhibition. And many of the works Kahlo created while living here will be shown for the first time in Detroit, DIA Director Graham Beal said. That creative period, from April 1932 through March 1933, was a pivotal time for both artists. “When Rivera was here, he was regarded as one of the most important artists in the world of western art at that time,” Beal said. Edsel Ford paid for the murals, which wound up costing just less than $21,000 at the time, according to the DIA. See DIA, Page 29

COURTESY OF DETROIT INSTITUTE OF ARTS

While Diego Rivera was doing preliminary drawings of Detroit Industry (above), his wife, Frida Kahlo, was in Detroit working on her own art.

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS A biz plan for fashion crisis: What to do with gowns after graduation If you’ve ever pondered how to get a second wearing out of a wedding gown or prom dress, consider the challenge presented by the graduation gown. MLive.com reported last week on a Grand Rapids businessman’s ambition to send 1 million gowns back to school, in a manner of speaking. Seth Yon founded Greener Grads to “recover, reuse and repurpose graduation gowns through partnerships with Goodwill Industries and a growing number of universities.” More than 5 million gowns are worn every year — presumably all by students, given the apparent limitations with accessorizing. Yon notes that the gowns are made mostly of polyester and are not biodegradable. The recycled gowns would be sold for $20 to $30.

MICH-CELLANEOUS 䡲 The Right Place Inc., the Grand Rapids area’s economic development organization, announced three business expansions last week that it said would bring 446 jobs and $52.1 million in new investment over the next four years: INglass, an Italian parts supplier, which would be new to the area; a new location for NOVO 1 Inc., a Texas-based call center operator, which plans to move; and Ionia

Design: It’s more than just a pretty face – it’s jobs “If you ask me, ‘Do you think a designer is more important than an engineer?’ the answer is yes.” That’s a bold statement coming from George Erickcek, senior regional analyst at the Kalamazoo-based W.E. Upjohn Institute for Employment Research. But he studies West Michigan’s economy, so hear him out. “I see designers as a means to keep manufacturing here,” Erickcek said in a MiBiz report. In the global economy, manufacturers cannot base their businesses on competing on price alone, he said. Having strong design capabilities is a way to hedge against becoming just another commodity producer. “Your product has to be wanted by the customer,

and design is about meeting the needs of the customer. The more you do that, the more you’re able to increase your margin on the price and make a profit,” Erickcek said. The ability of design thinking to bolster West Michigan’s manufacturing sector has more economic development groups paying attention to design, he said, citing The Right Place Inc.’s recent inclusion of design as a foundation of the region in its strategic plan. Southwest Michigan First in Kalamazoo also leveraged the region’s design strengths to attract Newell Rubbermaid Inc. to locate its design center at Western Michigan University’s Business and Technology Research Park.

CORRECTIONS 䡲 Because of incorrect information provided to Crain’s, an April 28 People item should have said Betty Chu, M.D., is a former associate professor of obstetrics and gynecology at the Oakland University William Beaumont School of Medicine in Rochester Hills. 䡲 A story on Page 1 of the April 28 issue, “Biz tied to Libya wins airport deal,” should have said Alfred Glancy III, chairman of the Wayne County Airport Authority, abstained from a vote that awarded a landscaping care contract to Rentokil Initial PLC. The story said he voted against the contract. 䡲 The age for John Bommarito, a finalist for the General and InHouse Counsel Awards in the category of $10 million to $100 million, should have been given as 36. 䡲 A story on Page 7 of the April 28 issue should have said Dalton & Tomich PLC is based in Detroit, not Bloomfield Hills. County-based Herbruck’s Poultry Ranch, the state’s largest egg producer, which plans to open an op-

eration in Saranac near Grand Rapids. 䡲 Four Michigan companies

made The Build 100 list of sustained-growth companies as compiled by Inc. Magazine: Transnation Title Agency of Michigan and Open Systems Technologies Inc., both based in Grand Rapids; Lansingbased SWAT Environmental; and Ann Arbor-based Underground Printing. The Inc. list honors companies of 85-999 employees that have expanded employment in each of the past five years. 䡲 The Ella Sharp Museum of Art and History, with help from the Michigan Department of Corrections, plans to create a prison museum within a portion of the Southern Michigan Correctional Facility that closed in 2007, the Jackson Citizen Patriot reported. 䡲 The board of directors of the Battle Creek-based Kellogg Co. vot-

ed to make President and CEO John Bryant the new board chairman, succeeding James Jenness, beginning July 1. Jenness will stay on the board as a nonexecutive director. 䡲 Grand Valley State University estimates that it has an annual economic impact of $730.1 million on Kent, Ottawa and Muskegon counties, according to an annual report issued last week during a meeting of the board of trustees. 䡲 The antitrust division of the U.S. Justice Department cleared Oklahoma City-based Chesapeake Energy Corp. and Calgary, Albertabased Encana Corp., two of the nation’s largest natural gas producers, of trying to cheat the state during shale drilling auctions, Bloomberg News reported. The state is proceeding ahead with bidrigging charges against both companies. 䡲 U.S. News & World Report last week said Kalamazoo is one of eight cities with underrated beer scenes. The magazine cited the six breweries that were added in 2013 and the city’s being the home of Bell’s Brewery Inc. Then there’s the obvious reason: The news media like to rank beer. Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for Crain's Michigan Business e-newsletter at crains detroit.com/emailsignup.

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A foot in the door to England’s big leagues Derby County in playoffs, may score a windfall

Derby County players (black shorts) — owned by a U.S. consortium headed by a Rochester businessman — have a shot at making it to the elite Premier League.

BY BILL SHEA CRAIN’S DETROIT BUSINESS

Three playoff matches are all that stand between Derby County and a guaranteed $200 million revenue windfall. The English professional soccer team in the East Midlands, owned since 2008 by a U.S. consortium headed by Rochester sports entre-

COURTESY OF GENERAL SPORTS AND ENTERTAINMENT LLC

preneur Andy Appleby, has secured third place in the second-tier Football League Championship. And that means a shot at promotion to

the elite Premier League and its lucrative global television revenues. Derby will begin a playoff for the final promotion slot on Thurs-

day (televised at 2:30 p.m. in the U.S. by BEin Sports), and could earn it by winning the final at Wembley Stadium in London on May 24. “The winning club is guaranteed over $200 million in contractually obligated income,” said Appleby, a former Detroit Pistons executive who is Derby County F.C. Ltd.’s chairman. He fronted the group that paid $100 million — and assumed $25 million in debt — for the club six years ago. Being on the cusp of possible Premier League promotion validates the investment and on-field turnaround plan made by the own-

Inside

What it’s like to live in a blighted neighborhood, Page 8

See England, Page 32

Company index

New crowdfunding rules muddy biz use of social media

Matt and Arnot Heller of Detroit Gun Works

Two brothers acquire the family auto supply business and realize they need a higher-caliber business plan, so they take aim at guns

BY CHRIS GAUTZ CAPITOL CORRESPONDENT

PROPOSED SEC RULES

Up in arms BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

hen Matt and Arnot Heller acquired the family auto supply business from their father in 2010, the business needed to adjust its sights. Then Detroit-based Central Screw Products Co. Inc. started off, and still operates, as a supplier of machined suspension parts to the heavy truck industry. The industry was going through an evolution, putting the screws to the supply chain. Costs were tight, and getting tighter. The brothers Heller needed a new business plan with some bankable firepower. They found one in guns. First, they needed to learn the lingo, learn about the gun manufacturing process and introduce themselves to key customers. Part of the equation: outsourced labor. The Hellers continued a previous plan to transition a large portion of their truck parts machining to newfound partners in China and spent nearly two years launching a new division.

BUSINESS DIARY . . . . . . . . . . . . . . . . 27 CALENDAR . . . . . . . . . . . . . . . . . . . . 28 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 6 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8

See Guns, Page 33 Video: Learn more about how a supplier of parts for heavy trucks developed a niche in the gun industry, crainsdetroit.com/video

See Crowd, Page 33

THIS WEEK @ WWW.CRAINSDETROIT.COM

5 Lakes Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 AgriSight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 AT&T Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Business Leaders for Michigan . . . . . . . . . . . . . . . 24 Central Screw Products . . . . . . . . . . . . . . . . . . . . . 3 Clean Energy Now . . . . . . . . . . . . . . . . . . . . . . . . . 25 Clean Water Action . . . . . . . . . . . . . . . . . . . . . . . . 25 Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . 21 Detroit Blight Authority . . . . . . . . . . . . . . . . . . . . . . 9 Detroit Gun Works . . . . . . . . . . . . . . . . . . . . . . . . 33 Detroit Institute of Arts . . . . . . . . . . . . . . . . . . . . . . 1 Detroit Land Bank Authority . . . . . . . . . . . . . . . . . 15 Double Action Indoor Shooting Center & Gun Shop . 33 Draper Triangle Ventures . . . . . . . . . . . . . . . . . . . . 7 DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 25 Engage Michigan . . . . . . . . . . . . . . . . . . . . . . . . . 25 First Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Flash Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 FoodLab Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Foster, Swift, Collins & Smith . . . . . . . . . . . . . . . . 33 General Sports and Entertainment . . . . . . . . . . . . 32 GM Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Gibraltar Trade Center . . . . . . . . . . . . . . . . . . . . . 22 Harbour Results . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Henry Ford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Herman Miller . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Howard & Howard Attorneys . . . . . . . . . . . . . . . . . 20 Infused PR & Events . . . . . . . . . . . . . . . . . . . . . . . 15 Jack Martin Worldwide . . . . . . . . . . . . . . . . . . . . . 13 JGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Loveland Technologies . . . . . . . . . . . . . . . . . . . . . 14 Michigan Competitive Workforce Coalition . . . . . . 24 Michigan Consumers for Healthcare . . . . . . . . . . . 23 Michigan Small Business Development Center . . . 33 Michigan Venture Capital Association . . . . . . . . . . 7 MiQuest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Orfin Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 PishPosh TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Plastipak Holdings . . . . . . . . . . . . . . . . . . . . . . . . 19 Pure Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Revision Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Right Choice Insurance Agency . . . . . . . . . . . . . . . 17 Rock Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Roco Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . 12 SkySpecs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Talmer Bank and Trust . . . . . . . . . . . . . . . . . . . . . 12 Tecumseh Brewing . . . . . . . . . . . . . . . . . . . . . . . . 33 VerifyValid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 WDET 101.9 FM . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Weapons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Department index

State police ... or police state? Tom Henderson weighs in on the new era of law enforcement on Belle Isle. Read his and other staff blogs at crainsdetroit.com/blogs. DAVID HALL/CDB

PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28 ISTOCK PHOTO

Crowdfunding was seen as a way to marry the worlds of social media and venture capital, but the U.S. Securities and Exchange Commission has issued new guidelines that largely ban social media from the relationship. Michigan businesses that were planning to use sites like Facebook and Twitter to inexpensively get the word out that they are looking to raise capital for expansion projects or to get off the ground are now con䡲 Companies sulting with attorneys and taking part in trying to figure out their crowdfunding next steps. must be U.S.“It’s going to extremely based. 䡲 Businesses are limit, if not completely close, the ability for busiadvised not to nesses to use social media,” solicit for investors on said Thomas Coke, an attorsocial media sites ney who works in business because it could development for Grand open the door to Rapids-based VerifyValid, an SEC probe over which runs a business-toinvestment that business payment service. crosses state In 2012, President Barack lines. Obama signed the JOBS A company 䡲 Act, which created the poscould raise a sibility for equity crowdmaximum of $1 million through funding, which opens up incrowdfunding in a vestment opportunities for 12-month period. those who previously were not allowed to receive a re䡲 Securities purchased could quest to invest — their annot be resold for nual income or net worth one year. was not considered large 䡲 The issuer has enough to be considered an to file an annual accredited investor. report with the The SEC defines an acSEC and provide credited investor as someit to investors. one with a net worth of at least $1 million, or who has income of more than $200,000 in the previous two years. An unaccredited investor falls below those financial thresholds. But because the commission has been slow to enact the rules to allow crowdfunding to begin,

These companies have significant mention in this week’s Crain’s Detroit Business:

RUMBLINGS . . . . . . . . . . . . . . . . . . . 34 WEEK ON THE WEB . . . . . . . . . . . . . . 34

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2 Troy office buildings sell for $19.4M BY KIRK PINHO CRAIN’S DETROIT BUSINESS

A New York City-based real estate investment trust has more than doubled the size of its Troy office portfolio with the $19.4 million purchase of two buildings totaling 184,000 square feet last week. It’s one of the largest office sales in metro Detroit so far this year. Johns Creek, Ga.-based Piedmont Office Realty Trust Inc. sold the buildings to New York-based Sovereign Partners LLC, said Bill Harvey, senior vice president of office brokerage in the Farmington Hills office of Chicago-based Transwestern Investment Co., which represented Piedmont. Sovereign’s new 77,000-squarefoot building at 4685 Investment Drive, south of West Long Lake Road and west of Crooks Road, sold for $11 million, according to Washington, D.C.-based real estate information service CoStar Group Inc. Piedmont bought the building in August for $10 million, according to a company property investment activity re-

First Martin to build Residence Inn in Ann Arbor

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First Martin Corp.’s first hotel development will be a Residence Inn by Marriott in downtown Ann Arbor. The 110-room hotel, whose flag was announced last week, would be the anchor for a $20 million mixed-use project at 116-120 W. Huron St., between North Ashley and North Main streets. The project is proposed by the Ann Arborbased real estate company. The extended-stay hotel, expected to open in the summer of 2015, will include studio and one- and two-bedroom suites. Ann Arbor Planning Commission and Ann Arbor City Council approvals are still needed, said Mike Martin, vice president of First Martin. Planning Commission site plan approval is expected this month. City Council site plan approval is expected in June, Martin said. Retail frontage would be along Huron Street, while the main entrance would be along Ashley. The site is home to the Greyhound Bus Depot and the Ann Arbor Area Convention and Visitors Bureau. Both will relocate. In addition to about 6,000 square feet of retail and possible restaurant or bar space, the first floor would also include the hotel lobby, meeting rooms, office space, an exercise room, patio, pool and kitchen and laundry space. The Ann Arbor office of Colliers International Inc. will market the retail space to tenants. First Martin was founded by former University of Michigan Athletic Director Bill Martin, Mike Martin’s father, and has more than 1 million square feet of office and retail space and 400 apartment units under ownership and management. — Kirk Pinho

port current through March 31. The Class A building was built in 2000 and is fully leased to Continental Automotive Systems Inc., according to CoStar, which did not list asking rental rate information. The second building, a 107,000square-foot Class B building at 1441 W. Long Lake, between Coolidge Highway and Crooks, sold for $8.4 million. The Long Lake Road building is 84 percent leased. The largest tenants are Travelers Insurance Co. (28,000 square feet); Rockwell Automation Inc. (25,000 square feet) and Integrated Design Solutions LLC (16,000 square feet). The average rent is $18.75 per square foot, according to CoStar. The building was built in 1999 to be leased to Delphi Corp. Both buildings were built by Denver-based The Pauls Corp. The Troy sale is one of the largest office purchases, in terms of price, in metro Detroit so far this year. In February, the threebuilding, 223,000-square-foot Northeast Corporate Center office

complex in Ann Arbor sold to Ann Arbor-based Oxford Cos. LLC for $21.5 million. Sovereign also owns the 171,000square-foot Long Lake Crossings office building at 1301 W. Long Lake between Coolidge and Crooks. Sovereign bought that building in 2009 from Chicagobased Pearlmark Real Estate Partners LLC for $12.3 million, according to CoStar. Piedmont also owns the 493,000square-foot building at 150 W. Jefferson Ave. in Detroit, and two buildings in Auburn Hills: the 120,000-square-foot Auburn Hills Corporate Center at 900 N. Squirrel Road and the 210,000-squarefoot building at 1075 W. Entrance Drive. The company owns 20.5 million square feet of office space in 17 markets across the U.S. Its portfolio is valued at $5.2 billion, according to a Piedmont corporate brochure. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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Word ‘tax’ a hurdle for PPT reform ballot proposal Ballot proposal language can be confusing. And when it involves taxes, the voters’ inclination is often to just vote “no.” If for no other reason, the “no” vote means they will not accidently vote for a tax increase. But a ballot proposal to create the funding stream for local communities following the repeal of Michigan’s industrial personal property tax is not a tax increase. If you keep in mind only this one point, then that is what supporters want you to remember, aside from voting “yes” on the proposal on the Aug. 5 primary ballot. The problem facing the cam-

paign supporters is that the wording of the proposal, written by state lawmakers, includes the words “tax” or “taxes” eight times. It also doesn’t inChris Gautz clude the phrase “personal property tax,” which is what those familiar with the issue most associate the proposal. The state revenue being lost

Capitol B r i e fi ng s

With no organized opposition to the ballot proposal, it’s just the inclination to vote “no” that supporters have to combat. with the phase-out of the PPT is to be covered with a redirection of the use tax, expiring tax credits, and a special assessment that only manufacturers receiving a PPT reduction pay. With no organized opposition to the ballot proposal, it’s just the inclination to vote “no” that supporters have to combat. The Michigan

Citizens for Strong and Safe Communities — the group of business, labor and community organizations supporting the ballot measure — has raised more than $5.6 million, according to campaign finance statements filed with the state last month. That money will be used to fund direct mail pieces and cable televi-

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sion ad buys in support of the ballot measure, and voters could soon begin to see those ads. While August still seems a ways away, absentee ballots will be sent to voters next month, and supporters of the measure want to make sure those voters can start to see the clunky and confusing language and become familiar with it, before they ever see it on the ballot. That is important, because in a typical August primary, between 40 and 44 percent of the votes are cast in the form of absentee ballots, said Kelly Rossman-McKinney, CEO and principal of strategies communications firm Truscott Rossman, who is working on behalf of the coalition. There are about 700 members in the coalition, she said. And those organizations and businesses began last week sending out email blasts to their members and employees to inform them on the issue. This campaign will be much different than a typical statewide ballot measure, Rossman-McKinney said, because in order for it to be successful, voters will have to see and hear from their local officials and local business owners about the positives of removing the double taxation on businesses. Having local police and fire chiefs explain to voters in their community that they will not lose out on any revenue from the repeal of the tax will go much further than having some well-known figure to whom voters have no connection — and may not trust — make that case. So the coalition is doing a lot of grass-roots work, and talking with local chambers of commerce to help spread the message. They also are working on ways to target senior citizens, since about 50 percent of primary voters are age 65 and older. While primary voters are seen as more committed voters than in a general election, having to vote on a statewide ballot measure is still something rare for them, also adding to the uphill climb the coalition faces. Not since 2002 has there been such a proposal on an August primary ballot, and that year, there were two of them. One was to allow the Natural Resources Trust Fund to invest in the stock market. The second was to have lawmakers vote to approve any pay increases for themselves. Both of those measures passed. Ballot measures in general elections don’t always fare as well. In November 2012, all five constitutional amendments on the state ballot were defeated. The PPT replacement tax system proposal does not amend the constitution, something voters have proven leery of doing. This November, there could be as many as eight statewide ballot measures. Supporters are hoping the decision to have this measure go it alone in August will improve its chances. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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Entrepreneurship growing in Michigan, reports find BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Michigan’s ranks of entrepreneurs have flourished in recent years, according to two reports issued Monday: a yearly report by the Ann Arbor-based Michigan Venture Capital Association and the 10th annual Michigan entrepreneurial scorecard compiled by MiQuest, a Lansing-based nonprofit affiliated with the Small Business Association of Michigan. Both reports point to building momentum in Michigan’s ability to attract and fund fledgling entrepreneurs. According to MiQuest, which used 137 metrics to analyze data from 2012, Michigan ranks sixth nationally in entrepreneurial climate and first in the Midwest — a sharp turnaround from its ranking of 41st in 2007 and 2008.

‘It’s an exciting time’ MiQuest’s 156-page, in-depth scorecard analyzed national data from 2002 to 2012. MiQuest was formed in January after a merger between Ann Arbor-based Great Lakes Entrepreneur’s Quest, a nonprofit that mentors would-be entrepreneurs and holds awards programs for startup and emerging companies, and the Lansing-based Small Business Foundation of Michigan. It has 13,000 members, including more than 5,000 second-stage businesses. “I have been feeling in the last few years that the entrepreneurial ecosystem is growing and is more active. This scorecard really substantiates that,” said MiQuest President Diane Durance. “What’s really notable to me is we moved up so far in the last five years while everyone else was also focused on entrepreneurship. It’s not like we were the only one on the ball. Everyone else was trying to improve their programs, too. It’s an exciting time.” Highlights of the MiQuest report: In 2012, Michigan improved its 2011 rankings in every major metric, including the number of new businesses, the five-year survival rate of new businesses, the number of business incubators, funding from U.S. Small Business Innovative Research grants, gross domestic product, building permits and the state’s business tax structure. Credited for gains in those areas were the state’s research and technology base, abundant and relatively low-cost energy, aggressive debt deleveraging, positive migration into the state after years of population outflow, natural resources and extensive growth in global trade. After years of decline, Michigan began experiencing economic growth in 2010, with private employment growth exceeding national and Midwest averages in 2011 and 2012. In addition, gross domestic product per capita exceeded national and Midwest averages in 2011 and 2012. After years of being in the bottom 10 states in three categories — the growth in one-year

survival rate for new businesses, the growth of businesses adding jobs and in expanding exports — Michigan is now in the top 10 in all three. Michigan is third in employment in high-tech manufacturing and fourth in employment in physical sciences and engineering. The report wasn’t all sunshine and roses. The state was ranked 36th in 2012 in the growth of the number of small businesses and 37th in the availability of commercial and industrial lending.

Funding growth Venture capital entrepreneurship is certainly up in Michigan. More than $120 million was invested in 40 companies in the state last year, the highest number of deals in a single year since the MVCA was created in 2002. There are 103 VC-backed companies in Michigan, an increase of 66 percent in the past five years. And there are 116 companies that have received funding from angel investors, an increase of 137 percent over five years. Another record was set by the number of venture capital firms either headquartered here or with an office in Michigan: 33. This marks an increase of 50 percent during the last five years. One of them is Pittsburghbased Draper Triangle Ventures,

crease of 45 percent in the last five years. Investments in life sciences companies accounted for more deals than any others in Michigan; of all investments, 45 percent were in life science companies. Forty percent of the companies that received investment in 2013 were in IT. In the last five years, the number of venture capital investment professionals increased by 84 percent in Michigan to 81, compared to a 13 percent decrease in investment professionals nationally to 5,891. And while the number of VC firms nationally declined from 883 to 874 last year, the number headquartered in Michigan increased from 20 to 23. There are more angel funders, who tend to invest smaller amounts at an earlier stage in a company’s life cycle, than venture capitalists. In 2013, 36 Michigan companies received nearly $9.9 million in angel and pre-seed funding, and raised more than five times this amount in additional funding from other sources. To read the VC report, visit michiganvca.org. To read the complete MiQuest scorecard, go to www.miquest.org.

What’s really notable is ... we “moved up so far in the last five years while everyone else was also focused on entrepreneurship.

”

Diane Durance, MiQuest

which moved into an office in the Kerrytown district in downtown Ann Arbor last Thursday and also shares space in the Madison Building in downtown Detroit, courtesy of Detroit Venture Partners. The move into Ann Arbor office space follows the firm’s participation in an investment round in March of $2.7 million in Ann Arbor-based Amplifinity Inc., a customer loyalty and marketing firm. “Michigan has made a concerted effort to nurture both early-stage local VC funds and out-of-state funds that have a presence or visit frequently,” said Jonathan Murray, who will manage the Ann Arbor office. “Both are important, because instate funds are necessary to lead early investment rounds and provide nearby support, and out-ofstate funds are needed to provide growth capital and larger networks of customers, talent, strate-

gic partners and advice,” he said. Carrie Jones, the Michigan Venture Capital Association’s executive director, said that group’s report shows the sharp progress made in five years. “The growth is really incredible,” she said. “Last year was a year of biggest ‘evers’: The most number of deals, the most angel investing, the highest number of tech companies started in the state. All of these speak to our progress.” An investment last month sets up the state for another strong year this year. Plymouth Township-based ProNAi Therapeutics Inc. announced an investment round of $59.5 million, which is believed by the MVCA to be the largest single VC investment in state history. Highlights of the association’s annual report: Michigan-based VC firms have $1.6 billion under management, the highest ever and an in-

Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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OPINION

Whole state benefits Pontiac’s battle with blight by helping Detroit begins with this old house D

etroit’s quest for financial equilibrium has many stakeholders. Michigan — the entire state — is one of them. That’s lost on some lawmakers who see any assistance — especially financial — as rewarding decades of what they consider to be poor management. But allowing Detroit to fall will cost far more than the state dollars on the table to resolve the city pension issue through the so-called “grand bargain.” That sum is either $199 million in a lump sum or $350 million over 20 years. Lawmakers should approve that state contribution, preferably in the lump sum form. Beyond that, the state can play a positive role in resolving issues that are blocking a proposed regional water and sewer authority. Architects of the city’s bankruptcy plan want to leverage the water department as a source of ongoing revenue to support city operations outside of the water department, a tactic that suburban leaders, most notably Oakland County Executive L. Brooks Patterson, are resisting. Mediators are meeting with those leaders. But as Chad Halcom reports on Page 1, state intervention — without making big financial commitments — could help resolve several key obstacles, including: Delinquent accounts: Nearly $112 million in residential and commercial accounts in the city are more than 60 days overdue. Solution: Create a plan to directly pay water bills from the public assistance payments Michigan now funnels directly to landlords for housing assistance. Investing in the aging system: When city water managers proposed a 4 percent rate increase for services, Oakland County’s representative voted “no.” Not because he thought the increase was too high but because it was too low. This is a system that needs reinvestment. In one sewage “interceptor” serving Oakland and Macomb, only one of six pumps were actually working. Some suburban leaders fear that millions of capital investments will be required for the system. If state law were amended to allow the state of Michigan to lend its credit rating to the authority as a voting or nonvoting member — it serves 40 percent of the state’s residents — it could bring with it lower bonding costs and help ensure more money is spent on infrastructure versus interest payments. Ultimately, though, Southeast Michigan needs a regional system that is sustainable. State government can help resolve some critically important issues here without expending a lot of state cash.

“Tear that (expletive) down. Tear all these (expletives) down.” When I pulled up to the blighted house at 70 Thorpe St. in southwest Pontiac last week, that’s what a man who was talking on his cellphone and puffing a cigarette next to the house said to me. That’s exactly what Bill Pulte, the city of Pontiac and Oakland County plan to do, using at least $4.2 million in Community Development Block Grant and Neighborhood Stabilization Program funds, according to Kirk Pinho Oakland County Commissioner Mattie McKinney Hatchett. This home at 70 Thorpe will be demolished as part of an effort to remove blight in Pontiac. I don’t have to go out of my way to drive by 70 Thorpe — north of West Huron Street (M-59) and west of North Johnson Avenue — to snap the photo that accompanies this story. I live just one street over and drive past it every day on my way home. I have no intention of leaving the neighborhood anytime soon. But I’m happy to see a safety hazard face the wrecking ball. And more homes in the area do need to come down.

Real

Estate

A house that was a home On the 10th anniversary of Sept. 11, 2001, I moved into my two-story house, which was built in 1931. It was perfect, except for a couple of deficiencies — one of them being the blighted and vacant home next door, which remains blighted and vacant to this day. I didn’t expect to fall in love with my house, but I did — all 1,300 square feet of it. I moved to Pontiac

KIRK PINHO/CRAIN’S DETROIT BUSINESS

This home at 70 Thorpe in Pontiac was demolished last week as part of an effort to remove blight in the city.

from Waterford Township because my girlfriend at the time had a pit bull and the city was either too broke to meaningfully enforce an existing pit bull ban or didn’t have one on the books. I also didn’t expect to become a father here, but I did. My newborn daughter came home swaddled like a bean burrito in September 2012. It’s where she spent the first 14 months of her life. It’s where she smiled for the first time and took her first steps across

a massive foam alphabet floor covering. It’s where she wailed at night in her purple-trimmed nursery, where she first laughed, where her first tooth poked through her gum like a groundhog looking for its shadow. I live in what is, for me, the House of All the Firsts. And it is perfect. Even though she and her mother no longer live here and the daily commute to and from downtown See Next Page

KEITH CRAIN: We need lots of new business in our city I got a note the other day from someone telling me about the success of their new business. It wasn’t big — like hoping Toyota would move 6,000 people into Detroit. Just a small business that started in Detroit and is alive and well. We need to figure out a way to encourage hundreds — no, thousands — of small entrepreneurs to think of Detroit as the startup capital of the nation. When the emergency manager has done his job and Detroit has a balance sheet that is the envy of

the nation, we’ll still have too many unemployed Detroiters. It’s getting better, but we still need more reasons and attractions for people to want to start or move their business to Detroit. It’s time that we get our mayor a frequentflier ticket to hit the road and work on business attraction. Our governor travels the world to attract business to the state. And

New York has an ad campaign that makes that state look attractive. Business attraction should be up at the top of the mayor’s priority list. Yes, if we want to attract businesses, we have to get rid of the blight. We need streetlights that work everywhere. We need smooth roads without potholes. We need to be sure every potential business execu-

tive understands that Detroit is a safe environment in which to run a business. These are tall orders for our city, but that’s what we need if we want to attract startups and other businesses to move here. We need a thousand new companies. But it all starts with a single new business. And then another and another. It’s good that the executive in charge of “jobs and economy” sits next to the mayor’s office. Without new jobs, we face the daunting task of maintaining the work that

is being done today on righting the financial ship. We have to put the pieces together to encourage business. Perhaps the biggest challenge is to keep the businesses that we have in the city and to encourage their expansion here — and not in a far-away state. The companies here today are the foundation for tomorrow. This city is on the right road. Still too many potholes, but the right direction. There is still plenty of work — and lots of balancing of priorities — to be done.

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From Previous Page

Detroit is hellish at best, I won’t move in the foreseeable future. The rush-hour trips are small prices to pay to keep living in the House of All the Firsts, even if it is within a stone’s throw of another property that I’ll call the House of Disrepair.

That House of Disrepair Homes on this street in Pontiac will be razed as part of a new effort to remove blight in the city. The House of Disrepair’s garage is practically collapsed. The house’s windows are gone. There is garbage strewn in the backyard. A broken basketball hoop. A rocking horse. A mangled fence. Playground toys. Two-by-fours. Massive tree limbs from a storm. Just last month, there were stray dogs howling from its basement. My new housemate called the Oakland County Sheriff’s Department about the dogs and, as far as I know, they are doing OK. But what if my daughter had been outside playing when they made their way into the house, probably looking only for food and warmth? Oakland County Treasurer Andy Meisner put that blighted house for sale in a tax foreclosure auction, but it didn’t sell. Go figure. This was in 2012. There are two other blighted homes across the street that will be razed, I’ve been told by utility workers shutting off the lines. Those houses are boarded up, awaiting a wrecking ball, but the House of Disrepair remains. I’d like to see it added to the demo list. Pontiac has hundreds of houses just like the ones next to and across the street from mine. Hatchett said there are about 550, all homes that need to be demolished. But my little story isn’t mine only. It is not a unique little snowflake. Thousands, or hundreds of thousands, of people of Detroit or Grand Rapids or Pontiac or Flint or Saginaw or Kalamazoo have their own Houses of Disrepair nearby. And, next door or a few doors down, they have their Houses of All the Firsts.

Blight removal efforts in Pontiac For someone, I’m betting that 70 Thorpe was the House of All the Firsts. But today, it is a House of Disrepair. And it needs to go. This is why it will be exciting to hear more about Pulte’s blight demolition efforts in Pontiac. More people need to come to the city, and one of the first ways of attracting more people is getting rid of blight. Every day, there are children playing on the sidewalks in front of these run-down, vacant houses. They play basketball or toss a football across the street, even as cars dart underneath. What if they were to encounter feral dogs? County and Pontiac officials last week held a news conference, where we learned at least two more homes on Thorpe would be torn down. Pulte is working on raising more funds to expand the effort beyond the initial grants. Pulte’s nonprofit, the Detroit Blight Authority, of which he is founder and chairman, had been

focusing on structural blight removal until Detroit officials said “Thanks, but no thanks” and started taking on the blight removal efforts themselves. It had focused on large-scale demolition in contiguous areas of Detroit like those near the Eastern Market district and in Brightmoor on the city’s northwest side. From what I can tell, Pontiac’s blight demolition isn’t the same animal as Detroit’s. It’s pervasive, but less so than in Detroit, and each block has to be evaluated on its merits. I haven’t seen many large areas consumed by decrepit houses that seem to need razing in one fell swoop. Still, there is a need for an organized strategy. In June, the U.S. Department of Treasury granted Michigan ap-

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We will have to increase (the “federal funding for Pontiac blight), and I expect Bill (Pulte) to carry the ball from there.

”

L. Brooks Patterson, Oakland County executive

proval of $100 million in federal funds for blight removal in Detroit, Pontiac, Flint, Saginaw and Grand Rapids. Those funds were repurposed from the Hardest Hit Fund, part of the federal Troubled Asset Relief Program. Of the $100 million, Pontiac received $3.7 million. Detroit received $52.3 million; Flint, $20.1 million; Saginaw, $11.2 million;

and Grand Rapids, $2.5 million. The Michigan State Housing Development Authority estimated that more than 7,000 residential buildings would be razed with those funds. Hatchett said it’s not known whether the $3.7 million for Pontiac will be used in Pulte’s blight removal efforts. The Detroit Blight Authority — which started last year by razing a

large area of blighted homes near the Eastern Market district in a 10day period last year — was founded by Pulte, the grandson of Bloomfield Hills-based PulteGroup Inc. founder William J. Pulte and managing partner of Bloomfield Hills-based Pulte Capital Partners LLC. But this new effort in Pontiac starts with 70 Thorpe. Oakland County Executive L. Brooks Patterson said recently that it will take more than $4.2 million to eliminate Pontiac’s blight. “We will have to increase that, and I expect Bill to carry the ball from there,” he said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB. Read his blog at crainsdetroit.com/section/blogKir kPinho

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you, and the personalized service they provide, are still the same. So is our strong commitment to this community. In fact, the name “Talmer” is a tribute by the Bank’s two principals to their grandfathers (named Talmage and Merzon), who both dedicated their lives to community service. What’s more, Talmer Bank, just like First Place, is a Midwest-based community bank—and one with demonstrated ﬁnancial strength. So you can count on us to take care of your business needs for many years to come. Please stop by soon. You’ll quickly discover that we’re now an even greater asset to your community.

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One change can change everything Change is happening in big ways and small. Middle market companies are searching for the next disruptive innovations, looking to cloud-based solutions, eyeing foreign markets, considering M&A transactions. At Deloitte Growth Enterprise Services, we’re right there with you. Providing knowledge, insight, and services tailored to the changes you see in the world. And your company. To learn more about Deloitte Growth Enterprise Services, contact Mark Davidoff at +1 313 396 3000 or email us at dges@deloitte.com Gain insight with Perspectives, our series of reports, webcasts, and events for mid-market and privately held companies at www.deloitte.com/us/dges

As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, and Deloitte Tax LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2014 Deloitte Development LLC. All rights reserved. 36 USC 220506 Member of Deloitte Touche Tohmatsu Limited

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twenty twen y in their Crain’s 2014 class of emerging leaders

220s

Crain’s 20 in their 20s awards honor success at a young age. Some of our winners see success as up-and-coming entrepreneurs; others find it by making an outsized impact in a large organization. Still others are shaping the future of our cities and nonprofits. Regardless of how you define success, these young men and women excel at it.

Meet the Want to know more about them? Visit crainsdetroit.com/20s for winners more stories, more interviews, more photos, more video… Celebrate this year’s more, more, more! class of 20s on June 12 inside Midtown Detroit’s new Garden Theater. We’ll fete them from 5 to 9 p.m. For ticket info and more, visit crainsdetroit.com/events.

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Why he won: Bryan Barnhill went from “paper passer outer”on a 2009 Detroit City Council campaign to running Mayor Mike Duggan’s winning bid to lead the city.

Chief talent officer, City of Detroit Bryan Barnhill had every reason to flee Detroit. He grew up in the desolate City Airport neighborhood, but he excelled academically and attended Harvard University. After graduation in 2008, he accepted a job at a New York City real estate firm. His ticket was punched. Then he decided to come home. “It was around the time that President Obama was elected, and I was really in-

spired and started talking to some friends,” Barnhill said. “We all decided it was time to come home. Coming back in a time of crisis made us feel that we would have the most amazing developmental experience.” It took Barnhill a while to reconnect, even spending some time unemployed. But in 2009 he began volunteering with Charles Pugh, who was running for Detroit City Council, and eventually came to the attention of Mike Duggan, who would tap Barnhill to run his mayoral campaign. That worked out well for everyone. After the campaign, Duggan named Barnhill the city’s chief talent officer, responsible for finding everyone from top hires to board appointees. — Amy Haimerl

Why he won: David Colman left a highpowered NYC job to start Roco Real Estate with his brother and partner, building a $250 million portfolio in just two years. Principal, Roco Real Estate Inc., Bloomfield Hills In one year, Roco Real Estate Inc. grew by 150 percent. In 2013, its portfolio of apartment complexes was worth $100 million; today, it has nearly 5,000 units valued at more than $250 million. Overseeing that growth is David Colman, who heads investor rela-

Why he won: Timothy Bassett is an investment strategist at Michigan’s fastestgrowing bank, advising a portfolio worth about $400 million.

Managing director, asset management and investment services, Talmer Bank and Trust,Troy When Timothy Bassett was offered a position at Talmer Bank and Trust two years ago, he didn’t see it as a move from thriving Chicago to dying Detroit. It was, he says, “a decision of opportunity and growth and not simply relocation. … I

believe a period of stress affords tremendous opportunity.” Talmer was then a bank riding a sharp growth curve, and Bassett saw the chance to put some big numbers on the board. In two years, he grew his group’s revenue by 165 percent and is now an investment strategist on a portfolio worth about $400 million. Talmer, which went public in March, has grown, too, from $90 million in assets in 2010 to almost $5 billion today. And it intends to keep a 29-year-old at the helm of asset management and investment services. “Tim has a different energy level that really resonates with my customers,” said David Provost, Talmer’s president and CEO. “Older customers can be leery at having a manager so young, but he can jump that divide with older customers.” — Tom Henderson

tions and day-to-day operations at the 2-year-old company. He and his partners — his brother Michael, and Tyler Ross — specialize in buying apartment buildings that the industry considers undervalued. Most recently, the company closed on a four-property portfolio deal in mid-March with Farmington Hillsbased RHP Properties valued at $30 million. “There are a lot of other deals in the pipeline,” Colman said. “We will continue to grow our presence.” By the end of the year, he expects to have 7,500 units worth $330 million. — Kirk Pinho

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Why she won: Jessica Daniel is growing Detroit’s local food economy by helping small businesses go from startup to success. She’s also a killer chef. Executive director, FoodLab Detroit, Detroit Jessica Daniel thinks she has the best job in all of Detroit. “Basically,” she said, “I get to hang out with a diverse group of passionate, thoughtful people who often feed me very delicious food.” As the executive director of FoodLab, Daniel advocates for the local food industry, helping new companies start up and existing ones thrive. FoodLab is an outgrowth of Daniel’s own experience starting a pop-up noodle shop, Neighbor-

Why he won: Daniel Ellis raised $500,000,built a prototype drone and scored a major client. Now he just needs FAA approval. CEO, SkySpecs LLC, Ann Arbor Drone flight may be grounded for commercial manufacturers, but SkySpecs is ready to take off. It just needs the Federal Aviation Administration to approve drones for commercial use. CEO Daniel Ellis and a team of engineering students launched the company in 2012 at the University of Michigan. They have since

raised seed capital to build drones for inspecting the structural integrity of bridges, buildings and other hard-to-access infrastructure. “SkySpecs won’t replace the human eye, but instead of doing a close-up visual inspection once a year, we can do it much more frequently,” said Dave Peachey, vice president of engineering at San Diegobased UpWind Solutions Inc., which will use SkySpecs’ drones to inspect large wind turbine farms. Ellis has raised $500,000 in seed funding, including winning $50,000 in the Michigan Clean Energy Venture Challenge hosted by UM and DTE Energy Co. He is raising an additional $250,000, which he said would prime a major infusion of venture capital. — Tom Henderson

Why she won: Erika Eraqi went from newbie to director of JMW’s Cadillac account in six years, with oversight of all facets of promoting GM’s premier brand. Senior account director, Jack Morton Worldwide, Detroit Seldom would the Detroit office of Jack Morton Worldwide promote a 20-something to director of its Cadillac account. But it did for Erika Eraqi. “Her instincts are right on,” said Jack Morton General Manager Sherry Foust.

hood Noodle, after moving to Detroit in 2010. As she met other food producers, they started casually gathering around kitchen tables to discuss questions about business practices, city licensing and more. Eventually the circle grew to nearly 300 members. Today, FoodLab is a formal membership organization that is seeking its own nonprofit status. Last year, FoodLab and Eastern Market Corp. launched Detroit Kitchen Connect, which pairs startup food businesses with low-cost commercial kitchen space. “The food industry is sort of the place where we are rethinking our relationships to the environment, to business, rethinking our relationships to one another,” Daniel said. “That’s what keeps me working in food.” — Amy Haimerl

Eraqi went from an entry-level employee to a senior account director in just six years. Now, as the head of the Cadillac account, she supervises a multimillion-dollar budget and directs nine employees. She also orchestrates events for Cadillac customers, scoring them personalized golf instruction from David Leadbetter and letting them drive the legendary Laguna Seca racetrack. “I’ve always believed that it’s my responsibility to create the conditions for my success,” she said. Eraqi credits her parents for instilling an unstoppable work ethic. Her mother escaped Communist Slovakia, and her dad came from Egypt. Together they raised three children, each achieving advanced degrees. Eraqi’s is in business administration. — Maureen McDonald

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Why he won: Michael Evans invented “blexting” — the technology powering a citywide blight survey — runs a side business and teaches.Tired yet? Senior developer, Loveland Technologies LLC; founder, PishPosh TV LLC, Detroit Last year, Loveland Technologies scored a lucrative contract with the Detroit

Blight Task Force to survey and catalog all 380,217 city parcels in just two months. The secret? Michael Evans. The college dropout was the mind behind Loveland’s blexting app, which allowed teams armed with tablets to photograph every parcel, answer a few questions and send the data back to mission control in real time. “Blight” + “texting” = “blexting.” Not bad for a self-taught technologist. “I’ve worked with awesome startup talent in New York and San Francisco, but I had to go to Detroit to find the kind of awesome Mike is,” said Jerry Paffendorf, CEO of Loveland. But technology isn’t Evan’s

true love. That is reserved for teaching others, whether leading programming courses at Grand Circus Detroit or producing how-to shows at his video-content site, PishPosh TV. Topics range from technology to politics. Evans views the site as a way to teach people, whether that is about technology or politics. “Loveland is something that is going to be huge and lets me get my programming chops going, but PishPosh, in terms of being able to reach people and produce content, is my big true love,” Evans said. — Amy Haimerl

Howard & Howard is proud to

Congratulate

Why he won: Adam Finkel has built an investment firm that funds deals alongside such industry heavyweights as Amazon’s Jeff Bezos. Partner, Orfin Ventures LLC, Bloomfield Hills In just two years, Adam Finkel built Orfin Ventures into an investment firm that does deals alongside such industry heavyweights as Amazon founder Jeff Bezos, Google Executive Chairman Eric Schmidt and Silicon Valley venture firms Accel Partners and Google Ventures. There are eight firms in Orfin’s portfolio, which targets early-

stage tech companies involved in cloud computing, data, finance and health care, regardless of sector or location. “I built this venture platform from scratch, sourcing and reviewing several hundred propriety opportunities over the past two years,” he said. Orfin Ventures is based out of O2 Investment Partners LLC, which specializes in private equity and real estate investments. The firm wanted to expand into technology deals though, so Gregg Orley, a partner at O2, invited Finkel to create Orfin as an offshoot of the firm. (Orfin is a combination of the two men’s last names.) “I concluded after 18 months of inviting Adam to my office and exploring ideas, that someone of his temperament and vision, he’s a fascinating person to do this with,” Orley said. — Gary Anglebrandt

Q&A Evonne Xu

on her inclusion in the 2014 class of

“Twenty in their 20’s”

248.723.0449 EXu@HowardandHoward.com 450 West Fourth Street Royal Oak, Michigan 48067

www.howardandhoward.com 248.645.1483 Ann Arbor, MI

Detroit, MI

Chicago, IL

Peoria, IL

Las Vegas, NV

What advice do you have for newcomers? I would encourage newcomers to do things that make the community feel smaller for them. For example, joining a gym or sports league with Come Play Detroit can help a newcomer expand their social circle and feel more at home. Volunteering with a program like Summer in the City and the Detroit Food & Entrepreneurship Academy can help someone give of their time in a meaningful and enriching capacity. Getting involved with the Michigan Corps Social Entrepreneurship Challenge and Challenge Detroit can open doors to grants and mentorship that can be game-changers for social entrepreneurs. If someone sees an issue or challenge, try to think of a creative solution and seek out supporters who can work together to improve the greater Detroit area. What is your favorite local place to visit for creative inspiration? I love to bike in and around Cranbrook. The area has a unique history, culture and landscape. It’s also an excellent place to observe the seasonality of our region.

ON THE WEB: More Q&As from Adam Finkel and other 20 in their 20s winners: crainsdetroit.com/20s

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Why she won: Tatiana Grant started with a ramennoodle budget and sports star clients but broke out with the Belle Isle Conservancy and Mayor Mike Duggan’s campaign.

President/co-owner, Infused PR & Events/ Flash Delivery, Farmington Hills When Tatiana Grant started Infused PR & Events, nearly all of her clients were sports stars, including University of Michigan’s football darling, Braylon Edwards. She fielded calls night and day from media when her clients encountered end runs with the law, from speeding tickets to altercations. “I was paid a lot of money, but it took

Why he won: Ryan Hooper changed Pure Detroit and rooted it in the shop-local movement, drawing American Express to feature the shop and city in a national campaign. Creative director, Pure Detroit, Detroit Ryan Hooper skipped college, but that hasn’t slowed his career. He’s at the center of Detroit’s shop-local movement. Hooper started at Pure Detroit in 2009, when the owners put him in charge of a dozen employees, managing inventory, handling marketing and acting as spokesman. Along the way, he’s

Why he won: Gregory Holman is the mind behind executing Detroit’s blight removal plans. Plus, he got the Hantz Farms deal done. Data and assets manager, Detroit Land Bank Authority, Detroit Gregory Holman is helping bankrupt and blight-ridden Detroit demolish thousands of abandoned houses, thanks in part to a well-timed career move. In December, Holman left the city’s Planning and Development Department to join the Detroit Land Bank Authority. Among his new duties is clearing titles to more than 700 properties ready for demolition — properties he identified

before leaving the city. “One of the last things I did over there was I threw the football to myself and caught it on the other side,” he said. Demolition is expected to begin in May, and houses are scheduled to come down at a pace of 300 per month, thanks to a budget of $52 million in federal funds. Holman also helped John Hantz complete his plan to build the nation’s largest urban tree farm on Detroit’s near-east side. It took five years, but Holman shepherded Hantz’s purchase of 1,350 cityowned properties through the Detroit City Council last year. “What is great about Greg is that he has a stick-to-it-iveness,” said Mike Score, president of Hantz Farms. — Chad Halcom

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a huge toll,” Grant said. So Grant stepped back and finished her graduate degree in PR from Michigan State University, expelling a few clients so she could focus on organizations that ignited her passion for Detroit. She and four staffers now promote the Belle Isle Conservancy, Michigan Diversity Council, Cornerstone School and Charles H. Wright Museum of African American History. She also produced all the major campaign events for Mayor Mike Duggan. “Tatiana is a little ball of fabulous fire,” said Michele Hodges, president of the Belle Isle Conservancy. “She knew how to deeply connect with our demographic.” And her ball of fire isn’t dimming: Last year, she co-founded a second business, Flash Delivery, which aims to bring restaurant delivery service to downtown Detroit’s high-rise tenants. — Maureen McDonald

helped grow the company from just a Tshirt shop into a business that also hosts architectural tours and is involved in civic projects, such as the “All in for Belle Isle” campaign. For the holidays, Hooper developed the Detroit Small Business Passport, which offered shoppers discounts at 18 Midtown and downtown businesses. That caught the attention of American Express, which filmed a video segment about Pure Detroit and the city’s resurgence for its Small Business Saturday campaign. “That’s one thing I latch onto: helping people understand what it means to be a small business in the community. A small business can be an impactful entity that helps make the community better,” Hooper said. — Gary Anglebrandt

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Why he won: Sean Jackson was given a seemingly impossible task: Survey every Detroit property and parcel in just nine weeks.The Marine did it. Executive associate, Rock Ventures LLC, Detroit During this winter’s long polar vortex, Sean Jackson had the epic task of surveying Detroit’s

380,217 parcels of land in just nine weeks. Dan Gilbert had volunteered his employee to oversee the project for the Blight Removal Task Force, on which he sits. Though the record cold weather threatened the ambitious timeline, Jackson recruited, hired and coordinated 117 Detroit residents, 67 Rock Ventures employees and a host of institutional partners, such as Loveland Technologies and Data Driven Detroit, to execute on time and under the $1.5 million budget. “Every day was different,” he said. “One hour working with the mayor’s office to coordinate with

city departments, the next helping a survey team dig their car out of the snow, finally returning to Mission Control to help plan the phasing of our survey.” As the most comprehensive data set on Detroit property and vacancy, the survey will provide policymakers with the opportunity to make precision-point decisions. It’s all of a piece for this Marine Reserve sergeant, who specializes in collecting information and figuring out how to put it in action. — Anna Clark

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What advice do you have for newcomers? Advice is so silly, especially because our generation came into a really bad economy and the world is changing so much. I think you make your path by walking. I focus instead on what I can do really well today, and hopefully one day when I get up, I’ll find I’m in a great place. What is the best piece of advice — business or personal — you have received? Always ask questions, because there are things that even really smart people don’t know. Be a scientist in whatever kind of work you are doing. Figure things out and solve problems. What is your favorite local place to visit for creative inspiration? The Department of Alternatives at the Claridge House on Washington Avenue. A lot of social startups are there — Dandelion, the Detroit Bus Co. — businesses that care about social problems. It’s visually beautiful, but the most value I’ve gotten is just hanging around on the couch after work and talking with people. Tell us one thing people would be surprised to know about you. I did cotillion. I fence. I’m not a very coordinated person, so that surprises people.

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Why he won: David James started The Right Choice Insurance Agency at 18, growing it to 30 employees and $2 million in revenue in just five years. CEO,The Right Choice Insurance Agency, Shelby Township David James dreamed of becoming a professional golfer in California. But when those dreams fizzled, he realized he had a Michigan dream: Build his own business and create jobs in his community. So in January 2009, James moved back to metro Detroit and started The

Why he won: Brent Ott started his career as a busboy at The Henry Ford’s Eagle Tavern and is now the cultural attraction’s CFO, overseeing a $55 million budget. CFO,The Henry Ford, Dearborn When Brent Ott took a summer job as a busboy at The Henry Ford’s Eagle Tavern at age 16, he never dreamed that he’d become CFO of the Dearborn attraction, which includes Greenfield Village and the Henry Ford Museum. But that’s exactly what happened.

Why she won: Alisyn Malek put the spark in the Chevy Spark; now she’s hunting the best auto-tech deals for GM Ventures. And she owns an art gallery. Investment manager, GM Ventures LLC, Detroit Alisyn Malek is looking for the next best thing in automotive technology. As an investment manager at the investment arm of General Motors Co., it’s her job to hunt down deals. It’s a new role — she started three months ago — but a familiar landscape:

She previously worked for GM testing the technology that gave the Chevy Spark its electric charging capability. “We try to find people with a technical background because our investments are with advanced technology companies,” said Jon Lauckner, president of GM Ventures. “She had that background, plus she has an entrepreneurial streak that maps well with what we do.” That streak is on display at Corktown Studios, the artist collective that Malek opened in 2011. It hosts about 10 shows a year — and sells several pieces from each. “We just shipped a piece to Oakland, California,” said Malek, herself an artist. “So from a business development standpoint, I want to get Detroit artwork out into the broader world.” — Kristin Bull

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Right Choice Insurance Agency. He was just 18. The agency now has 30 employees, 12,500 active policies and revenue of $2 million per year. James learned much of his business acumen from his father, who is a financial planner. “He was able to pass a lot of his knowledge and insight down to me as I was growing up,” James said. Auto and home insurance are the agency’s core products, accounting for about 65 percent of revenue. But last year, James added a commercial line of business, serving small-business owners in the auto repair and manufacturing industries. As a result, he hopes to add another 10 positions this year, mostly in sales. — Jay Greene

He rose through the institution’s restaurant ranks and later its financial ranks, catching the eye of then-CFO Denise Thal. She began grooming him so that when she left last fall he was ready to step into the CFO role at age 29. “When our previous CFO (Denise Thal), who had been with us for 18 years, started grooming Brent, I was like, ‘Oh, my gosh, he is so young,’ ” said Patricia Mooradian, president of The Henry Ford. “But she groomed him for years, so when she left, there was no question in my mind that he could take over.” Ott now oversees The Henry Ford’s $55 million budget and works with the president and executive team to make finance-based decisions on matters such as new hires and where to add new resources. — Sherri Welch

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Q&A What do you love about living in Detroit? I would definitely say the people. The energy that this city has is so unique. I live downtown, so for me, I’m looking forward to the summer and being downtown and on the RiverWalk, all of the outdoor events. What advice do you have for newcomers? Always believe in yourself. Once you find out your passion, do whatever you need to do for that vision. What is the best piece of advice — business or personal — you have received? Never let fear stop you. People — even some of the most famous and wealthy people — have self-doubt and fear. So don’t let negative self-talk stop you from anything. What is your favorite local place to visit for creative inspiration? The Dequindre Cut. I like the art, the uniqueness of it. That was desolate, and now they have all this art all on the walls, and it is just beautiful. It shows how unique our city is.

Why she won: Mary Sheffield is the youngest person elected to the Detroit City Council and the first to represent the city’s newly created 5th District. Member of Detroit City Council, Detroit Mary Sheffield stands on the shoulders of great men — her father is the Rev. Horace Sheffield, and her grandfather founded the Detroit Trade Union Labor Council — who taught her about public service, community organizing and standing up for the voiceless. “They are fighters for the people,” said Sheffield. “They fight for the betterment of the city of Detroit. They were big on bringing people together.” Last fall, Sheffield decided to take up that fight and run for Detroit City Council’s 5th District seat. Sheffield won with 53 percent of the vote and became the youngest member ever elected to council. Some of her top issues include improving city services and nurturing leadership skills in young people. “I’ve always had a passion for serving people,” she said. “And I thought it was time for a young woman to step up. There is a need for young leaders to step up to motivate and inspire other

young leaders.” Before joining the council, Sheffield ran a mentoring program for young women. She intends to create a task force to continue that work, guiding the city’s youth on issues of education, health and self-image. — Amy Haimerl

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Why she won: Michelle Srbinovich rose to co-GM last summer after beefing up online fundraising and growing individual giving by 55 percent in four years. Co-general manager, WDET 101.9 FM, Detroit Michelle Srbinovich has put WDET 101.9 FM’s digital fundraising and marketing efforts into hyperdrive since joining the Wayne State University public radio station in December 2009. Under her direction, individual giving increased 55 percent, to $1.4 million, from 2009 to 2013. Web-based donations are also on the rise, comprising 60 percent of gifts during on-air fundraisers. When she arrived, WDET was still in the infancy of online campaigning. “We did-

Why he won: Jesse Vollmar has attracted $5 million from Silicon Valley investors interested in how his technology could change the future of farming. Co-founder and CEO, AgriSight Inc., Ann Arbor Jesse Vollmar sees FarmLogs, the technology at the heart of the company he co-founded, as the software that will change farming. Vollmar grew up on a farm east of Saginaw, where he saw that the technology available to farmers was antiquated. “It was so far behind with what technology can do,” he said.

Why she won: Daniela Tomatti created and runs her own division of Plastipak Holdings Inc., a $2.3 billion company, served in the U.S. Army and speaks three languages. Director of internal audit and compliance, Plastipak Holdings Inc., Plymouth A year into the job as a senior financial analyst at Plastipak Holdings Inc., Daniela Tomatti was sent to Brazil on a special project. The Plymouth-based packaging maker asked her to look at the company’s three manufacturing sites and identify areas of risk expo-

sure and ways to improve processes. She was so successful that CFO Michael Plotzke asked her to create and direct a new compliance and audit division for the $2.3 billion-a-year company. “What impressed me most was her drive, her independence,” Plotzke said. “I was struck by her poise and maturity at such a young age. I always tell her, ‘You are going to sit in this chair some day.’ ” It didn’t hurt that she speaks three languages — Spanish, English and Portuguese — and served as a sergeant in the U.S. Army, working in supply chain and logistics. “As stressed as I may get at times in the corporate world, I just think back to bombs landing in Iraq, and that puts things in perspective,” Tomatti said. — Gary Anglebrandt

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n’t have an actual strategy for online fundraising,” she said. She crafted that strategy, which involved overhauling WDET.com, developing a new app and retooling traditional fundraising methods, such as direct mail. That work persuaded station leadership to make her interim co-general manager, along with talk show host Craig Fahle. Srbinovich is also vice chairwoman of the Belle Isle Conservancy Emerging Patrons Council, and in 2010 co-founded a local chapter of the national nonprofit Girl Develop It, whose mission is to teach women to code. — Bill Shea

So in 2012, Vollmar and partner Brad Koch founded AgriSight Inc. at the influential Silicon Valley accelerator Y Combinator. After the program, they moved the company to Ann Arbor to be close to Midwestern farms and talent. FarmLogs soaks up publicly available data on market prices, rainfall, crop rotations and inventory and delivers it to farmers in easy-to-view mobile displays. Farmers can access the cloud-based system from the field, allowing them to better manage operations. The company has raised $5 million in two rounds of investment, with Huron River Ventures in Ann Arbor, Hyde Park Venture Partners and Hyde Park Angels in Chicago and Drive Capital in Columbus, Ohio, participating. The company has 10 full-time employees. — Gary Anglebrandt

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C O N G R A T U L A T I O N S

Timothy A. Bassett CERTIFIED FINANCIAL PL ANNER™ Managing Director Asset Management and Investment Services

We congratulate Tim on being recognized as a Crain’s “20 in their 20s” honoree. Both our company and

Why she won: H&H hired Evonne Xu to boost dealmaking with Chinese companies,and she delivered with a joint venture worth $64 million.

our clients have beneﬁted from Tim’s leadership, talent, and energy, and we’re proud that he’s a member of the Talmer Bank and Trust team.

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Attorney and counselor, Howard & Howard Attorneys PLLC, Royal Oak Evonne Xu has been with Howard & Howard less than two years, but already she’s had a big impact. She’s facilitated dozens of corporate deals between U.S. and China, including helping a Pitts-

burgh-based automotive company to complete a $64 million joint venture in China. “My understanding of China’s culture and law helped facilitate the transaction,” Xu said. “There are simply too many laws in China for U.S. companies to understand without someone like me to assist them.” She also advises clients on how to avoid cultural pitfalls. One U.S. company, for example, nearly had its Chinese plant shut down by the local government over a miscommunication. “Both countries are so large and different, it’s easy to get lost in their global presence,” Xu said. “Understanding both sides in each language has really helped them reach an agreement.” — Dustin Walsh

Q&A What do you love about living in metro Detroit? Detroit offered me the best opportunity, including New York, Shanghai and Hong Kong. I can, and am, contributing to the economic landscape here in ways I couldn’t have done in other cities. What advice do you have for newcomers? Detroit has always had a culture for immigrants, and that continues to evolve. Don’t assume the worst about Detroit; you can have a successful career and have a family at low cost. What is your favorite local place to visit for creative inspiration? The Detroit Athletic Club because there are so many young professional events. They are very energetic and contributing their best efforts to make Detroit. Tell us one thing people would be surprised to know about you. I took six months off from college in China and came to the U.S. to work as a tour guide at Walt Disney World. It was this nonlaw-related, but “where dreams come true” experience in Florida that made me decide to pursue my education in this country.

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State group expected to suggest solar growth; will utilities comply? Julie Baldwin, the commission’s to hit its 10 percent renewable goal renewable energy section manager, by 2015. He said DTE is currently at said the work group’s conclusions 9.5 percent renewable production. A solar power work group in will not bind the utilities into But Brad Klein, senior attorney Michigan is making progress dis- changing their renewable energy with Chicago-based Environmental cussing the possibility of expand- plans, which are approved by the Law & Policy Center, who is a meming the current utility-sponsored Public Service Commission. ber of the work group, said DTE solar incentive program for cus“Most people have a concern has accumulated $15 million in customers and whether to recom- that DTE’s SolarCurrents pro- tomer fees from its renewable enermend establishing a community gram has not been big enough,” gy surcharge that could be used to solar program, say participants in Baldwin said. “When DTE makes expand its SolarCurrents program. the Michigan Public Service Commis- solar capacity available, they have “I’d like (the work group report) sion-led group. more people to make a strong recommendation By most accounts, apply to par- that utilities take immediate steps the group is expected ticipate than to expand and improve their solar to recommend an exthey have ca- programs using monies they have pansion of pacity. There already collected to support rethe existing have been newable energy in Michigan,” solar power suggestions Klein said. programs ofto make the Baldwin said prices have fered by DTE program dropped for solar panel installaEnergy Co. larger.” tion to less than $4 per watt from and ConA draft of more than $10 per watt. sumers Enerthe work “DTE and Consumers can allogy Co. and to group’s re- cate that money to making more embark on a port, which solar rebates available to cuscommunity some group tomers,” Klein said. “The money solar program in members say can be used to more cost-effectivewhich customers, inhas begun, is ly fund the program. Right now, Julie Baldwin, vestors or utilities in- Michigan Public Service Commission expected to (solar installation) companies vest in a large solar be completed have to spend a lot of money helppanel array and share by mid-June, ing customers get the incentives.” power generation and cost sav- when comments will be accepted. Baldwin said several solar inings. A final report will be released in stallers told the work group that But the real question is whether July, Baldwin said. DTE’s lottery system — which the DTE and Consumers will volunUnder the commission’s DTE utility uses to narrow down the tarily expand their programs — as order last year, the work group is number of customers for its Solarenvironmentalists, manufactur- charged with determining ways to Currents program — makes it very ers and solar installers have been “improve DTE Electric’s cus- difficult for them to do business. asking the state to require for job tomer-owned SolarCurrents pro“We are hoping to improve on creation and public health rea- gram, including means for incor- this,” Baldwin said. “The installers sons — before the programs ex- porating community solar into the spend a lot of time working with pire in 2015. program.” customers, answering questions, In 2009, when Michigan’s reBaldwin said the group is dis- filling out the application, only to newable energy and efficiency leg- cussing three ways to design a find out one or two months later islation (Public Act 295) went into community solar program. Con- were picked. Sometimes customers effect, DTE began developing its sumers and DTE could voluntari- lose interest and drop out.” SolarCurrents program and Con- ly fund company-owned communiDoug Jester, a principal with 5 sumers had its Experimental Ad- ty solar projects; customers could Lakes Energy LLC, a Lansing-based vanced Renewable Program. Both invest in a joint solar panel pro- energy consulting firm, said the programs provide financial incen- ject; or a thirdwork group also tives for residential and business party company has discussed fucustomers to build and install pho- could create a ture ways to anatovoltaic systems. community solar lyze the value of DTE officials said the utility project, take cussolar from a plans to produce nearly 2 percent tomer investprice, quality-ofof its 10 percent renewable energy ments and sell solife and job-crerequired production from solar lar energy to DTE ation standpoint. through its company-owned or Consumers, “The discusplants and residential and busi- she said. sions (also) have ness programs. Consumers plans David Harfocused on … to produce 0.7 percent from its res- wood, DTE’s dihow to change idential and business-only pro- rector of renewthe utility solar gram, the company said. able energy, said programs to get State legislators have begun DTE has been rid of the lotterhearings on extending Michigan’s supportive of the ies and other renewable energy law. work group, and things that preMichigan Gov. Rick Snyder has its five meetings vent customers said he would support legislation so far have been from doing soincreasing the state’s 10 percent productive. lar,” Jester said. David Harwood, DTE renewable energy mandate to pos“A lot of stakeJester agreed sibly 20 percent over 10 years. He holders just want that the success has not specifically addressed so- more solar, but they don’t have of the work group hinges on lar power other than to say that in- the background to understand whether the utilities put the reccreasing Michigan-based renew- how rates are developed with the ommendations into action. able energy jobs is an important Public Service Commission,” said “We won’t know whether they byproduct of his plan. Harwood, who is a work group are actually going to do anything Last year, the Public Service member. differently until some uncertain Commission approved DTE’s twoHarwood said the group’s charge time after the staff report is finyear renewable energy plan. How- to improve DTE’s SolarCurrents ished,” Jester said. “I remain cauever, it ordered the Detroit-based “doesn’t mean increase” the compa- tiously optimistic that this will be utility to participate in the work ny’s solar pilot program. He said modestly productive, but don’t exgroup. Jackson-based Consumers the work group is trying to “figure pect anything revolutionary.” Jay Greene: (313) 446-0325, Energy, which is awaiting a hearing out ways to make the program more jgreene@crain.com. Twitter: on its next renewable energy plan, efficient, fair or accessible.” Harwood said DTE fully intends @jaybgreene voluntarily agreed to participate.

BY JAY GREENE

CRAIN’S DETROIT BUSINESS

people have “ Mosta concern that

DTE’s SolarCurrents program has not been big enough.

”

A lot of “ stakeholders just

want more solar. They don’t ... understand how rates are developed with the Public Service Commission.

”

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State of IT in Detroit? It needs to call help desk

IS YOUR TEMPORARY LABOR PROVIDER CHARGING YOU A FAIR RATE?

The White House released its re- Niblock in February. Before comport on the state of Detroit’s IT sys- ing to the Motor City, she was the tems last week. CIO for Louisville and was on the It was much more forward-look- White House task force providing ing than the scathing indictment assistance to Detroit following its that many of us would bankruptcy filing. have expected. After all, So what else does the about the only thing you White House think Decan do easily on the city’s troit needs to do? Here is website is pay a parking the list — with my transticket. (They go up to $45 lation from policy-think on June 1, by the way.) to real words: Want to find the minEvaluate IT infrastrucutes to City Council meetture: Identify opportuniings? Not there. ties for streamlining What to start a busigovernment processes ness? The info is laughand realizing cost-savably inadequate and out ings in city spending, inAmy Haimerl of date. cluding areas such as Need a permit? Well, standardizing software you might get a PDF to an ancient applications and consolidating version of the document. You can’t data centers and servers. even fill out the form online. Translation: Just make it work Want to challenge your property better. tax assessment? Good luck finding the relevant information. Promote civic innovation in Detroit: Want to know which parks are Leverage the knowledge and exbeing maintained? Nope. pertise of Detroit’s lively, diverse Generally, just no. And I’m not civic innovation ecosystem of sotalking about this from an ad- cial and civic entrepreneurs, founvanced technical perspective; I’m dations and business owners to dejust talking about the basics. Is the velop tools and technologies to information easy to find, up to date benefit the city and local residents. and with current working links? Translation: You have smart tech So what did the White House people in Detroit; put their knowlfind about the city’s IT infrastruc- edge to work. Let them solve some ture? Well, it focused on big-think problems. They are dying to fix recommendations based on best your website and back-end syspractices from cities such as tems. Boston, Chicago, New Orleans, Louisville, Ky., and Raleigh, N.C. Open government data: Make First and foremost, the report freely available government data suggests Detroit get a CIO. Well more open and accessible to fuel that, at least, is check and check. entrepreneurship, innovation and Mayor Mike Duggan hired Beth economic growth while ensuring

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privacy and security. Translation: It’s open, public data. Give it to the residents. Other cities do it. It will be all right, we promise. Create a 311 system: Improve citizen-relationship management and decrease nonemergency-related service requests to emergency lines such as 911. Translation: Just do it. Improve enterprise geographic information system (GIS): Facilitate the build-out of a citywide enterprise geographic information system. Translation: Maps. Online. We can do it. It is 2014. Ask Loveland Technologies. Enable online permitting: Develop and provide the capability for local residents to apply and pay for business, safety, building and other permits online. Translation: OK. We’re starting with the basics here. The good news is that the city does seem to be taking its IT problems seriously. Not only did it hire Niblock, the city has green-lighted a deputy director for technological community engagement. Basically, this person will help coordinate all of these recommendations with the talent in Detroit just waiting to go solve problems. Can we please add to the to-do list to fix the parking meters? The White House report on Detroit IT can be found at www.white house.gov or via Amy Haimerl’s blog at crainsdetroit.com.

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The 80-acre Gibraltar Trade Center site in Taylor could be the home of the next metro Detroit Menards home improvement store, according to sources. Gibraltar officials confirmed last week they had entered into a purchase agreement with a buyer. Sources confirmed that the buyer is Menards, which recently has been expanding in Southeast Michigan. The sale would result in the consolidation of Gibraltar’s Taylor and Mt. Clemens operations into one weekend shop in Mt. Clemens, according to a news release. The Taylor center is expected to remain open throughout 2014. Prior to redevelopment, the site will be razed, said Karl Ziomek, communications and marketing director for the city of Taylor. The property sale price has not been disclosed, and there is a 270day due diligence period on the sale, according to the release. Gibraltar officials declined further comment last week, and Menards declined to comment.

Taylor Planning Director Lora Fell said Menards has not yet brought a site plan to the city. Most of the property is already zoned for commercial use and wouldn’t require rezoning if a Menards were located there, Fell said. A small portion of the site, however, is zoned for industrial. “That area right in there is seeing a lot of rebuilds, remodels,” Fell said. Vendors at the Taylor Gibraltar are being offered relocation to Mt. Clemens as part of the company’s consolidation. In a statement, Robert Koester, owner and president of Gibraltar Trade Center, said focusing on one location makes business sense. “Since my father opened the doors of the original Gibraltar Trade Center in 1980, we have had the support of our customers and vendors alike, so it is difficult to announce the closing of the Taylor location,” he said. “But at the same time, we are very excited about the prospects of a newly consolidated market with a strong vendor base, additional product variety, strong attendance and an excitement and buzz in the market reminiscent of earlier days.”

The Taylor site, meanwhile, adds to that city’s retail offerings for home improvement and general merchandise goods. Eau Claire, Wis.-based Menards has moved into the metro Detroit market over the past year and a half, opening Menards hardware and housewares stores in Chesterfield Township and Livonia. It’s also been making plans for stores in Warren and Wixom. Fell said the Taylor location near Southland Center makes sense. Typically, Menards establishes a footprint for its stores and sells adjacent out-lots to gas stations, restaurants and other retailers to bring more customers to the site. Ken Nisch, chairman of the Southfield-based retail consulting firm JGA Inc. has described Menards stores as “the love child of Meijer and Home Depot,” where consumers can buy not only home maintenance products but consumer and household goods. Menards operates more than 280 stores in 14 states. Farmington Hills-based Friedman Integrated Real Estate Solutions LLC is the broker on the Taylor property sale.

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Michigan 8th in nation in signups for Obamacare, federal report says BY JAY GREENE CRAIN’S DETROIT BUSINESS

Michigan was the eighth most prolific state in enrolling people under the Affordable Care Act from Oct. 1 through April 19, officials with the U.S. Department of Health and Human Services said last week in a telephone news conference with reporters. The rankings are based on the 36 states that participate in HHS’ healthcare.gov website and those 15 states managing their own exchanges, also called marketplaces. Of the 5.4 million people who signed up on healthcare.gov, 272,539 were Michiganders. More than 970,000 Floridians signed up, the highest number of any state. Texas was next at 733,000, followed by North Carolina with 357,000, Pennsylvania with 318,000 and Georgia with 316,000, the report says. Michigan also is below two of the states that run their own exchanges, California with 1.4 million and New York with 370,000 signees. Dizzy Warren, statewide community outreach manager with Michigan Consumers for Healthcare, said the large number of Michigan residents who signed up for Obamacare health policies is a tribute to the hundreds of people who assisted Warren the uninsured with the application process. “It is a fitting tribute to the hard work of navigators, assisters, health care providers, and many other community partners statewide,” said Warren, who also is state director of Enroll Michigan. Warren said Enroll Michigan has worked with hundreds of organizations, including the city of Detroit, Detroit Medical Center, Michigan Primary Care Association, Michigan Health & Hospital Association, St. John Providence Health System, St. Joseph Mercy Health System, Beaumont Health System and Oakwood Healthcare. More than 1,400 events were held over the past several months to reach more than 111,000 people, Warren said. Outgoing HHS Secretary Kathleen Sebelius said she was happy with the overall numbers of Americans gaining health insurance. She said many now have security with the knowledge their policy won’t be canceled due to a pre-existing condition. During the first six months of Obamacare enrollment, nearly 13 million people signed up for coverage overall, including 5.4 million on healthcare.gov, 2.6 million through state exchanges and 4.8 million through Medicaid and the Children’s Health Insurance Program. “Americans continue to sign up for Medicaid coverage,” she said. “We hope more states come on board.” Some 19 states have rejected Medicaid expansion under the Affordable Care Act.

However, HHS still has no idea how many of these insurance enrollees actually paid their premiums. Moreover, HHS did not say how many of the newly enrolled were previously uninsured. A Gallup poll last month showed that the percentage of uninsured Americans dropped to 16 percent at the end of March from 17.1 percent in the fourth quarter of 2013. Beyond the exchanges, another 3 million Americans under 26 years old are covered under their parents’ plans, and estimates show an additional 5 million people have purchased coverage in the private market. It is not clear how many of those people were forced to purchase health insurance because their previous policy, which was noncompliant with the Affordable Care Act, was cancelled. President Obama has asked insurers to reinstate some of the older policies, which do not include all the 10 essential health benefits, and some have, including Health Alliance Plan and Blue Cross Blue Shield of Michigan. Insurers are

considering further options. Another interesting statistic is that 28 percent of those who signed up are between ages 18 and 34, the so-called “young invincibles.” Insurance companies were worried not enough younger people would participate in the marketplace to balance out actuarial risks of older people who use physician and hospital services more often. Eighty-five percent of Obamacare marketplace applicants also sought federal subsidies to help pay for coverage, the report said. About twothirds selected “silver” plans, while another 20 percent chose the lowercost “bronze” policies. Among federal marketplace applicants who reported their race, 63 percent were white versus 16.7 percent who were black, 10.7 percent Latino and 7.9 percent Asian. One-third of applicants did not identify their racial background. The next enrollment period begins Nov. 15 for coverage that starts Jan. 1. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

IS YOUR WORKPLACE COOL? THEN NOMINATE IT Crain’s biennial Cool Places to Work in Michigan awards returns this year, and once again Crain’s is working with Best Companies Group of Harrisburg, Pa. The competition has one questionnaire for employers, another for employees. The results will determine who qualifies for Cool Places designation. Best Companies supplies all participating companies — regardless of whether they win the Cool Places recognition — with a Best Companies Group employee feedback report based on employee responses to the 72question survey. The report can help company executives identify strengths and weaknesses in their company culture and practices. To be considered for Cool Places to Work in Michigan, companies must register at www.coolplacestoworkmi.com by May 23. Other important dates, samples of the surveys and other information are on the website. Once registered, companies will be invited to participate in the surveys. Businesses and nonprofits can apply. Applicants must have a minimum of 15 employees working in Michigan and have been in business at least one year, among other criteria. Companies pay a fee based on company size to Best Companies to cover survey costs. The cost ranges from $610 to $895 for online surveying, and $765 to $1,660 for paper surveying.

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Major employers push state to back ban on LGBT discrimination BY CHRIS GAUTZ CAPITOL CORRESPONDENT

A coalition of businesses in Michigan is coming together to ask lawmakers to add sexual orientation and gender identity to the state’s civil rights act. The Michigan Competitive Workforce Coalition wants to make Michigan the 22nd state to do so, so that it no longer will be legal for an employee to be fired or not hired solely because he or she is gay. Jim Murray, president of AT&T Michigan and co-chair of the coalition, said he often hears from the Legislature that it does not want to put more regulations or restrictions on businesses. But this is a case in which the busiMurray ness community is uniting to make it clear it supports such a change, he said. “It’s important for job retention and attraction,” Murray said. Along with AT&T, the coalition

includes Blue Cross Blue Shield of Michigan, Consumers Energy, Dow Chemical Co., Google Inc., Herman Miller Inc., Padnos, Steelcase Inc., Strategic Staffing Solutions and Whirlpool Corp. AT&T instituted an internal policy about sexual orientation and gender identity in 1975, Murray said. Many coalition members also have had similar internal policies for years, as have a number of communities. “The big, national companies have long recognized this as a way to attract job talent,” he said. It’s not about attracting gay employees, Murray said, but about being a state that welcomes diversity and one in which younger employees want to work and create businesses. Business Leaders for Michigan also has called for the law to be changed and included it in the group’s updated Michigan Turnaround Plan, released last month. “Simply put, Michigan needs to grow its population — and people have many choices in a global economy where to live and work,” said Kelly Chesney, Business Leaders’ vice president of marketing and communications. “We don’t want our policies to prevent them from choosing Michigan.” Murray said the public view on this issue has evolved immensely in the past five years, and he hopes lawmakers will act during this legislative session. Republican leaders have indicated they are open to discussing the issue. But Gov. Rick Snyder has been unwilling to take a position, saying only he would look at it if the Legislature presented it to him. Murray said he doesn’t see that as an unreasonable position. “It’s our job to put it on his radar screen, and that’s what we’re doing,” he said. Murray has been talking with lawmakers from both sides of the aisle this past year, and he said he is encouraged that no one has closed the door on allowing such a bill to move forward. Murray said he also plans to have an event at the Detroit Regional Chamber’s Mackinac Policy Conference this month to encourage support for the issue. Serving as co-chairs of the coalition along with Murray are Kary Moss, executive director of the American Civil Liberties Union of Michigan, and Brian Walker, CEO of Herman Miller. Murray credited the ACLU with doing a lot of the groundwork on building the coalition and said he then began calling friends in the business community to join. “Working alongside our state policymakers,” Walker said, “leaders in Michigan’s business community know that updating the Elliott-Larsen Civil Rights Act is the right thing to do, it is the smart thing to do, and now is the right time to do it.” Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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DTE meeting: Earnings up; clean energy groups protest BY JAY GREENE CRAIN’S DETROIT BUSINESS

DTE Energy Co. shareholders at the company’s annual meeting, at a private resort last week in Pennsylvania, were greeted by good financial news but also by environmental protesters who called for the state’s largest utility to double down on its green energy investment. DTE (NYSE: DTE) reported firstquarter net income of $326 million, or $1.84 per share, compared with net income of $234 million, or $1.34 per share, for the same period in 2013. Operating revenue for the first quarter was $3.9 billion compared with $2.5 billion for the same period in 2013. The company said cold weather meant customers used more energy, resulting in the uptick. DTE’s revenue and net income has been on the rise during the past two years. For example, DTE reported net income of $661 million in fiscal 2013 on operating revenue of $9.7 billion compared with 2012 net income of $610 million on $8.8 billion in operating revenue. “Extremely cold weather in the first quarter drove exceptionally high energy demand, which in turn, shaped our financial result compared with last year,” said Gerry Anderson, DTE Energy chairman and CEO, in a statement. But lining the road up to the meeting at The Lodge at Woodloch in

Marissa Luna of Engage Michigan said DTE should invest more into solar and other renewable energy sources. Hawley, Pa., were five protesters with signs that called for DTE to “Make the Switch” and “Go Clean.” “We’re primarily objecting to DTE’s decision to continue shutting the public and ratepayers out of the decision-making process, as well as urging them to do more than the bare minimum when it comes to investing in clean energy technologies,” said Marissa Luna, new media specialist at Engage Michigan, which represents the Clean Energy Now coalition. The coalition, which lodged a similar protest last year, includes the Sierra Club, Clean Water Action, Environmental Law and Policy Center, Michigan Land Use Institute, Union of Concerned Scientists and Michigan Environmental Council. Alejandro Bodipo-Memba, DTE’s manager of media relations, said DTE has invested the most of any utility company in Michigan in renewable energy. DTE now produces 9.5 percent of its energy from wind, solar and other renewable sources. “We are continuing to work in that space and add more, primarily in wind,” Bodipo-Memba said.

By 2015, DTE expects to invest about $1.3 billion to achieve its state-mandated 10 percent goal. Luna said DTE historically has held its shareholder meetings in Detroit. Last year, however, DTE moved its meeting to New York City and this year to the Pennsylvania resort town. Bodipo-Memba said DTE located its meeting in Pennsylvania this year because it wanted to show its board of directors the company’s investment in the Bluestone Pipeline operations. “The meeting went very well, and we certainly don’t view it as a protest,” said Bodipo-Memba, noting that Sierra Club members spoke at the meeting. “The evening before, a couple of members of the Sierra Club met with management and had a productive conversation.” Last week, the Clean Energy Now coalition delivered a letter with more than 150 signatures from small-business owners and environmental groups that expressed support for more renewable energy and energy efficiency to DTE’s headquarters in Detroit

and Ann Arbor, Luna said. Bodipo-Memba said DTE is formulating a response to the letter. He said DTE has engaged in discussions with many environmental groups in the past over its energy policy. “Investing more in clean energy technologies will attract more businesses to our state and create jobs while acting as a safeguard in protecting the Great Lakes and public health,” said Eric Keller, campaigns director at Michigan Clean Water Action, in a statement to Crain’s. “DTE’s investments in renewable energy and energy efficiency have proven to be cost effective and profitable, which is a win-win for shareholders and ratepayers,” Keller said. By 2015, DTE plans to generate a total of 22 megawatts of solar power, which includes 15 megawatts from utility-owned plants and 7 megawatts from customer-owned projects. But Luna said DTE should invest more into solar and other renewable energy sources. She said DTE has one of the most coal-dependent energy portfolios of any utility in the country. Public health experts have said pollution from coal-fired power plants can cause asthma, respiratory illnesses and cardiovascular disease, among other conditions. But it is not just DTE’s 11 coalfired plants. Michigan has a total of

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23 power plants fueled by coal and owned by Consumers Energy Co., DTE, Lansing Board of Power and Light, Holland Board of Public Works, We Energies and Michigan State University that supplies about 65 percent of the state’s total energy production. Renewable supplies about 8 percent, which is on track to hit 10 percent by 2015, according to the state’s renewable energy mandate. Over the last 40 years, DTE has reduced annual particulate matter emissions by 95 percent, sulfur dioxide emissions 78 percent and nitrogen oxide emissions 77 percent below 1974 levels. During this same period, total annual generation increased 16 percent, DTE said. From a financial standpoint, DTE is projecting strong earnings. This fiscal year, for example, DTE said it is projecting operating earning share prices at $4.20 to $4.40 per share. “We are off to a good start financially, as well as operationally, in the first quarter,” said Peter Oleksiak, DTE Energy senior vice president and chief financial officer, in a statement. “DTE Energy will continue to focus on maintaining solid earnings and cash flow along with a strong balance sheet, while providing our customers with clean, safe and reliable energy at an affordable price.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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35% of state hospitals merit ‘A’ grades, Leapfrog Group’s safety report says CRAIN NEWS SERVICE

A leading hospital quality survey has found 35 percent of Michigan hospitals are rated “A” when it comes to quality metrics such as how well hospitals avoid errors and patient harm. Twenty-eight of 80 in the state were rated “A,” the highest rating available in The Leapfrog Group safety scores. Nationwide, Leapfrog found nearly a third of the nation’s hospitals surveyed improved their performance at least 10 percent since 2012. Maine hospitals scored the highest, with 74 percent, or 14 of 19 hospitals with an A rating, said the Leapfrog report. The letter grades — A through F — from the Leapfrog Group, a Washington, D.C.-based not-forprofit organization that represents large employers and other health care purchasers, have been a source of frustration for hospitals that don’t do well, whose leaders argue that the scores unfairly portray the quality of care at their facilities. The Hospital Safety Score has been issued twice a year based on an analysis of publicly available safety data from Centers for Medicare & Medicaid Services’ Hospital Compare, the American Hospital Association and the Leapfrog Group’s annual hospital survey. In the latest report card, 804 hospitals received an A, 668 hospitals received a B, 878 hospitals received a C, 150 received a D, and 22 hospitals received an F.

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a safe environment,” Leapfrog President and CEO Leah Binder said. Despite the progress, Binder said, hospitals must remain vigilant in their efforts to reduce medical errors, which are estimated to result in more than 400,000 patient deaths a year, according to a study published last September in the Journal of Patient Safety. Critics of the safety rating program, including the authors of an article published in the Journal of Hospital Medicine in January, argue that Leapfrog’s scoring system is biased against the nearly half of the more than 2,500 hospitals that chose not to participate in Leapfrog’s survey. “Leapfrog is one of numerous organizations that provide reports and rankings of hospital performance,” Nancy Foster, the American Hospital Association’s vice president of quality and patient safety policy, said in an email. “These organizations use different quality measures, performance data and methodologies to calculate scores, some of which are more reliable than others. Hospitals are using the reliable quality measurement data that is available to drive improvement and that has resulted in decreases in readmissions, decreases in early elective deliveries, decreases in infection rates and other significant improvements.” See www.hospitalsafetyscore.org for the report. Reporting by Jay Greene of Crain’s Detroit Business and Steven Ross Johnson of Modern Healthcare

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In Michigan, 28 hospitals received an A, 21 hospitals scored B, 26 scored C, and five scored D. No Michigan hospitals received an F. Botsford Hospital in Farmington Hills and four of Detroit Medical Center’s hospitals were among those receiving A scores by Leapfrog. “Botsford Hospital nurses, physicians and other clinicians work in partnership continually to improve safety and quality for our patients,” said Botsford CEO Paul LaCasse, D.O., in a statement. DMC hospitals receiving A’s were DMC Harper/Hutzel, DMC Huron Valley-Sinai, DMC Detroit Receiving and DMC Sinai-Grace. “We are committed to continually monitoring and improving the care we provide. Patient safety is the top focus for us — one that requires diligence with every patient, every day,” said DMC CEO Joe Mullany in a statement. Other Southeast Michigan hospitals receiving A’s include Beaumont Hospital, Troy; Chelsea Community Hospital; Mercy Memorial Hospital System, Monroe; Providence Hospital in Southfield; St. John Hospital and Medical Center, Detroit; St. Joseph Mercy Hospital, Ann Arbor; St. Joseph Mercy Oakland, Pontiac; St. Mary Mercy Hospital, Livonia; and the University of Michigan Hospitals and Health Centers, Ann Arbor. The average (mean) hospital performance improved 6.3 percent since the score was launched in June 2012. “The data tells us that more hospitals are working harder to create

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BUSINESS DIARY ACQUISITIONS & MERGERS The Powers That Be, Detroit, a social media agency, and Driven Solutions Inc., Ferndale, an advertising and marketing firm, merged to form Driven + The Powers That Be, a branding and social media agency, 320 W. Nine Mile Road, Suite B, Ferndale. Websites: tptbagency.com, drivensolution sinc.com.

CONTRACTS ITeknik Holding Corp., Commerce Township, a provider of wholesale and retail telecommunications services and products through its Send Global subsidiary, signed a stock purchase agreement to sell a majority of its outstanding stock to Axiologix Inc., Atlanta, a technology and services organization. The transaction is expected to close by June 7. Websites: iteknik.com, axiologix.net. Con-way Freight, Ann Arbor, a lessthan-truckload carrier and subsidiary of Con-way Inc., contracted with Wabash Composites, a division of Wabash National Corp., Lafayette, Ind., to retrofit Conway’s line haul trailer fleet with Wabash’s DuraPlate AeroSkirts to increase fleet fuel efficiency and reduce carbon emissions. Installation is expected to be completed by August. Website: con-way.com. Franco Public Relations Group, Detroit, added clients Grow Michigan LLC, Plymouth, an investment firm; Brooks Kushman PC, Southfield and Los Angeles, an intellectual property and technology law firm; The Oakland Art Novelty Co., Ferndale, a craft cocktail bar; Vinology, Ann Arbor, a wine bar and restaurant; and The Bird & the Bread restaurant, Birmingham. Website: franco.com TRW Automotive Holdings Corp., Livonia, will supply its belt drive electric power steering system to a next-generation midsize SUV being launched by Chinese automaker Great Wall Motor Co. in 2015. Website: trwauto.com.

Michigan Health & Hospital Keystone Center, Okemos, is using RegistryMetrix by ArborMetrix Inc., Ann Arbor, to measure clinical performance in obstetrics for improving patient safety and quality of care at 60 hospitals in the state. Websites: arbormetrix.com, mhakeystonecenter.org. Signature Associates Inc., Southfield, was named the exclusive real estate representative for Black Rock Bar and Grill, Novi and Hartland. Websites: signatureassociates.com, blackrock sizzlingsteakhouse.com. Altair Engineering Inc., Troy, a provider of computer-aided engineering and high-performance computing software and services, announced that automotive manufacturer Tower International Inc., Livonia, selected Altair’s Compute Manager to streamline access to distributed resources. Websites: altair.com, towerinternational.com. ProQuest LLC, Ann Arbor, announced that Cooperating Libraries in Consortium, St. Paul, Minn., has subscribed to Intota, ProQuest’s cloud-based library services platform. CLIC is implementing it in phases, beginning with the Summon discovery service. Website: proquest.com.

EXPANSIONS SRG Global Inc., Warren, a Guardian Industries Corp. company and manu-

DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Use any Business Diary item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

facturer of chrome-plated plastic parts, is adding 215,000 square feet to its 205,000-square-foot production plant in Irapuato, Mexico. The expansion, expected to be operational by 2015, is expected to provide complete part production capability, including injection molding, chrome plating and assembly. Website: srgglobal.com.

Towne Square, Southfield. Website: firstmerit.com.

MOVES

The Rochester Regional Chamber of Commerce, Rochester, with the Michigan Small Business Development Center, Grand Rapids, launched the Busi-

NAME CHANGES Lippitt O’Keefe PLLC, Birmingham, changed its name to Lippitt O’Keefe Gornbein PLLC.

NEW PRODUCTS FirstMerit Corp. Michigan moved its Michigan headquarters from 28001 Cabot Drive, Suite 250, Novi, to Two

ness Fitness Check Up, a tool to assess the needs of small-business members and connect them to local resources. Website: rrc-mi.com. 2XL Co. Inc., Auburn Hills, a marketing, advertising and public relations company, introduced a marketing program for lawyers and law firms. Elements include analysis of competitive marketing campaigns and prospective client wants and needs, and the definition of target markets based on the kind of work in which the individual lawyer specializes. Website: 2xlcompany.com.

NEW SERVICES Gameplans LLC, Rochester Hills, a human resources firm, launched a new website to highlight its expanding services at gameplansllc.com. Domino’s Pizza Inc., Ann Arbor, is integrating Google Wallet with its Android ordering app so Domino’s customers who have an Android device can pay for their online orders using Google’s free mobile payment system. Domino’s customers can set up an account within Domino’s mobile app or at google.com/wallet.

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PEOPLE FINANCE

MANUFACTURING Marc Gorski to director of engineering operations, Quality Metalcraft Inc., Livonia, from director of engineering, Radar Industries Inc., Warren.

MARKETING

Deligiannis

Buttrick

William Deligiannis to first vice president and director of fair lending,

Flagstar Bank, Troy, from director of client services, Thomas Compliance Associates Inc., Chicago; also Tony Buttrick to executive vice president and chief information officer, from senior vice president, global technology and operations, Bank of America Corp., Charlotte, N.C.

Cunningham

Hutson

HEALTH CARE

Edmunds

Gawley

Chris Cunningham to director, strategic services, Carbon Media Group LLC, Bingham Farms, from vice presiSwanson

Tadian

Karen Swanson, M.D., to chief medical officer, The Physician Alliance, St. Clair Shores, from physician, Berkley Primary Care PLC, Huntington Woods. Judy Tadian to senior marketing representative, Americare Medical Inc., Troy, from sales manager, Detroit Oxygen & Medical Equipment Co., Warren.

dent, digital portfolio management, Universal McCann, Birmingham; also Linde Hutson to vice president, account solutions, from client business partner, Universal McCann, Birmingham; and Rachel Edmunds and Michelle Gawley to account director, from client services manager, Organic Inc., Troy. Rudy Pokorny to art director, The Quell Group, Troy, from presentation de-

SERVICES

IN THE SPOTLIGHT Angela Hospice Home Care Inc., Livonia, has named Mary Beth Prochnow Moning its acting president and CEO. She succeeds Sister Mary Giovanni Monge, who had been CEO since founding Angela Hospice in 1985. Giovanni is stepping into Moning the role of CEO emeritus and will continue to be active in the organization. Moning, 53, has managed daily operations for the past eight years as executive director and has worked with Giovanni since 1993 in positions of progressive responsibility. Moning earned a Bachelor of Science in psychology from Madonna University, Livonia. She holds a nursing home administrator’s license, as well as hospice and palliative care administrator certification.

Wallis

Prell

Eric Wallis to senior consultant, Great Lakes operations team, Goldner Associates Inc., Wixom, from groundwater program director, Waste Management Inc., Wixom. Also, Dawn Prell to senior project compliance specialist, from senior project geologist, NTH Consultants Ltd., Northville.

Hiltz

Mobley

Susan Hiltz to director of public affairs, AAA Michigan, Dearborn, from

NONPROFITS

regional managing director, central region, Advertising Council Inc., Warren.

Children’s Hospital of Michigan Foundation, Detroit, from director of development, Affirmations Lesbian Gay Community Center Inc., Ferndale.

vice president, retail network solutions sales for North America and global strategic account executive, MSX International Inc., Detroit, from senior vice president of manufacturer relations, Coyle Penske Automotive Group Inc., Bloomfield Hills. Roger Scott to new-vehicle sales representative, Detroit Custom Coach, Oak Park, from sales representative, Better Business Bureau of Southeast Michigan, Southfield. Trevor Schleicher to health care division director, Arrow Strategies LLC, Bingham Farms, from vice president, Preferred Solutions Inc., Northville. Elizabeth Bock to senior general manager, Life Time Athletic, Bloomfield Township, from senior general manager, Life Time Fitness, Rochester Hills.

PEOPLE GUIDELINES

signer, McCann Worldgroup’s Commonwealth, Detroit.

George Westerman to associate director of individual and estate giving,

Shawn Coyle to

Keith Mobley to director of corporate contributions and community relations, Auto Club Group, Dearborn, from claim manager, AAA Michigan, Dearborn.

Announcements are limited to management positions. Email them to cdbdepartments@crain.com or mail notices to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Releases must contain the person’s name, new title, company, city in which the person will work, former title, former company (if not promoted from within) and former city in which the person worked. Photos are welcome, but we cannot guarantee they will be used.

CALENDAR TUESDAY

THURSDAY

MAY 6

MAY 8

Re-Shoring: Can Mid-Market Companies Bring Manufacturing Back Home?

2014 Michigan Infrastructure Conference. 7:30 a.m.-4 p.m. American Coun-

11 a.m.-1:45 p.m. Canada U.S. Business Association. With Kevin Barrentine, director, Deloitte CRG. College for Creative Studies, A. Alfred Taubman Center for Design Education, Detroit. $50 CUSBA members, $65 nonmembers. Contact: Mark High, (313) 223-3650; email: mhigh@dickinsonwright.com; website: cusbaonline.com.

cil of Engineering Companies of Michigan, Urban Land Institute Michigan, American Society of Civil Engineers Michigan. Focus is on the connection between infrastructure improvements and business attraction/redevelopment opportunities in the state. With keynote speaker Lt. Gov. Brian Calley; Kirk Steudle, director, Michigan Department of Transportation; Liam Kelly, principal and partner, KPMG LLP; Michael Horst, senior vice president, Urban Land Institute Robert Larson Leadership Initiative; others. Kellogg Center, Michigan State University, East Lansing. $85 government agency representatives, $175 members of the hosting organizations, $250 nonmembers. Contact: (517) 332-2066; website: acecmi.org.

Deal Incubator. 4-6 p.m. Hertz Schram PC. For entrepreneurs and investors. Moderated by Ken Silver, partner, Hertz Schram PC. Grand Circus, Detroit. Free. Contact: Ken Silver, (248) 335-5000; email: ksilver@hertzschram .com; website: hertzschram.com.

WEDNESDAY MAY 7 2014 Tigers

UPCOMING EVENTS Detroit Outlook.

11:30 a.m.-1:35 p.m. Detroit Economic Club. With David Dombrowski, president, CEO and general manager, Detroit Tigers; and Brad Ausmus, Tigers manager. Other players and coaches are schedDombrowski uled to attend. Presiding officer: Christopher Ilitch, president and CEO, Ilitch Holdings Inc. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 members’ guests, $75 nonmembers. 11:30 a.m. speaker reception open only to board, life and gold members. Contact: Detroit Economic Club, (313) 963-8547; email: info@econclub.org; website: econclub.org.

Complying With U.S. Export Controls and the Export Control Reforms. 7:30 a.m.-6 p.m. May 13-14. 7:30 a.m.-4 p.m. May 15. East Michigan District Export Council. Workshop on export control issues directed toward exporters, compliance officers, intellectual property lawyers, financial service providers and accountants involved in international business, logistics professionals and others. With Bonnie Carr-Hill, export administration specialist, Bureau of Industry and Security; Sean Kline, economic statistician, Bureau of the Census; Sharon Ginyard, sanctions licensing officer, U.S. Department of Treasury; others. Gem Theatre, Detroit. $175-$510; threeday or partial registration available. No refunds after May 6. Deadline for payment by check is May 6. Online registration deadline is May 9. Contact: Troy Brownrigg, (248) 421-9876;

MICHIGAN HISPANIC CHAMBER’S 2014 ECONOMIC FORUM Join the Michigan Hispanic Chamber of Commerce 8-10 a.m. May 16 at the Detroit Athletic Club, Detroit, for the 2014 Economic Forum, with the theme “Hispanic Business Trends: Local and Global Market Reach.” Appearing at the breakfast event will be Sandy Baruah, president and CEO of the Detroit Regional Chamber, and Ellen HughesCromwick, chief global economist, Ford Motor Co. Registration begins at 7:30 a.m. Tickets are $75 for members, $100 for nonmembers. Sponsorship levels are $1,500$5,000. RSVPs must be made by May 12. For information, call Barbara Lange at (248) 792-2763, ext. 101, email her at blange@mhcc.org or visit mhcc.org. email: info@eastmichigandec.org; website: eastmichigandec.org.

Crain’s 2014 General and In-House Counsel Summit. 2-7:30 p.m. May 13. Crain’s Detroit Business; Association of Corporate Counsel, Michigan chapter; State Bar of Michigan-Business Law Section In-House Counsel Committee; Oakland County Bar Association. Attendees can learn about opportunities with practical applications, and general and in-house counsel can meet and discuss common issues and strategies. With keynote speaker Mary Ann Hynes, senior counsel, Dentons. Westin Book Cadillac, Detroit. $100 per person ($90 if purchased in groups of 10 or more). Preregistration closes at 5 p.m. May 8. If possible, walk-in

registration will be $120 per person. Contact: Kacey Anderson, (313) 4460300; email: cdbevents@crain.com; website: crainsdetroit.com/events.

Ambassadors’ Dialogue 2014: Update on U.S.-Republic of Korea Economic Relations. 11:30 a.m.-1:30 p.m. May 15. Detroit Economic Club. With Ahn HoYoung, Republic of Korea ambassador to the United States, and Sung Kim, U.S. ambassador to the Republic of Korea. Cobo Center, Detroit. $45 DEC members, $55 members’ guests, $75 nonmembers. 11:30 a.m. speaker reception open only to board, life and gold members. Contact: Detroit Economic Club, (313) 963-8547; email: info@econ club.org; website: econclub.org.

Business Law: Learning From the Past, Navigating the Future. 1-5 p.m. May 15, 8 a.m.-noon May 16. Michigan Defense Trial Counsel. Including sessions on the Michigan Arbitration Act, the Telephone Consumer Protection Act, the impact of Detroit’s bankruptcy, employment and business law updates, business succession planning and data security breaches. With MDTC President Raymond Morganti, senior shareholder, Siemion Huckabay PC; Jason Bank, leader of bankruptcy and restructuring practice, Kerr Russell and Weber PLC; Kurt Heise, state representative, R-Plymouth; and others. Atheneum Suite Hotel, Detroit. Registration fees range $75-$395; other fees apply to optional activities. Contact: (800) 772-2323; website: mdtc.org.

Matrix Awards Celebration. 5:30-9 p.m. May 15. The Association for Women in Communications, Detroit chapter. Platinum-level sponsor: Crain’s Detroit Business. AWC Detroit will honor three women or organizations that make significant differences in people’s lives through a communications medium. With keynote speaker Anne

Doyle, consultant, Anne Doyle Strategies for Leaders, and author of Powering Up: How America’s Women Achievers Become Leaders. The Dearborn Inn, Dearborn. $50 members, $60 nonmembers, $35 full-time students. Contact: (866) 385-1784; email: info@womcomdetroit.org; website: womcomdetroit.org.

Spring Health Care Conference. 8:30 a.m.-3 p.m. May 16. Michigan Society for Healthcare Planning and Marketing. Focus on developing strategies using data analytics to increase patients and profitability; maximizing growth through public and private exchanges; and creating distinction in patient experience. Targeting health care marketers and strategists who work with physician groups, hospitals and health plans. Sheraton Detroit Novi Hotel, Novi. $75 members, $120 nonmembers. Contact: Liz Conlin, (734) 327-6606; email: liz.conlin@re group.us; website: mshpm.org.

CALENDAR GUIDELINES If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Detroit Events” in the red bar near the top of the page. Then, click “Submit Your Entries” from the dropdown menu that will appear and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event” button at the bottom of the page. That’s all there is to it. More Calendar items can be found at www.crainsdetroit.com.

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DIA: Upcoming exhibit to showcase Rivera, Kahlo in Detroit ■ From Page 1

Rivera, seen as one of the greatest muralists of his time, was a very important influence on the artists who became abstract expressionists, Beal said. And Kahlo’s development as an artist took place when she was here in Detroit. Renowned as not only a portrait artist but as a symbol of feminist strength, Kahlo’s works range in style from folk art to surrealist. “That was the period of when she went from being a beginning artist to an artist with a recognizable style,” Beal said. The DIA doesn’t yet have attendance projections for the exhibition, which will be titled “Diego RivBeal era and Frida Kahlo in Detroit,” but it expects strong interest. “We hope that the fact that it can only be in Detroit will bring people in from across the country,” Beal said. To help attract patrons from across the U.S., the DIA is encouraging other major arts and cultural organizations to plan complementary programming. The Detroit Symphony Orchestra, Music Hall Center for the Performing Arts and Michigan Opera Theatre — in partnership with the Macomb Center for the Performing Arts — are among those planning to host related events during the exhibition’s March 15-July 12, 2015 run. A tribute to the city’s manufacturing base and labor force of the 1930s, the “Detroit Industry” murals were designated by the National Park Service as a national historic landmark last month. They are considered the country’s finest modern monumental artwork devoted to industry and are considered by many scholars to be Rivera’s greatest extant work, the national organization said in a news release. The couple’s relationship was famously tumultuous; they were married and divorced, and remarried. The murals in Detroit became even more significant after the controversial artist’s mural project in Rockefeller Center in New York City was called off and destroyed in 1934. Last year, newspapers in Mexico City had been expressing great concerns about the future of the Rivera murals at the DIA, given alarmist rumors about the extent to which they were vulnerable as other artwork at the museum was being appraised, Beal said. He met with the consul general for Mexico last fall to assuage concerns. Despite the recent politics and turmoil surrounding the DIA and the sanctity of the museum’s artwork amid Detroit’s bankruptcy, the museum has been successful in securing the loan of pieces by both artists, including some painted in other locations. Those works include a 1931 Kahlo portrait of herself and Rivera as newlyweds, which will be on loan from the San Francisco Museum of Modern Art, and Rivera’s “Flowered Barge,” from the Museo Dolores Olmedo in Mexico City.

Far left: “Cartoon of Manufacture of Poisonous Gas Bombs” (Detroit Industry north wall), 1932, charcoal. Detroit Institute of Arts Near left: Frida (Frieda) Kahlo, “Frieda and Diego Rivera,” 1931, oil on canvas

COURTESY OF SAN FRANCISCO MUSEUM OF MODERN ART

COURTESY OF DETROIT INSTITUTE OF ARTS

ART THAT DRAWS The Detroit Institute of Arts expects the “Diego Rivera and Frida Kahlo in Detroit” exhibit it’s planning for March 15-July 12, 2015, to draw large crowds from around the country. Some of the museum’s recent exhibitions, listed by attendance records: 䡲 “Rembrandt and the Face of Jesus” Nov. 20, 2011-Feb. 12, 2012: 116,392 䡲 “Fabergé: The Rise and Fall” Oct. 14, 2012-Jan. 21, 2013: 86,977 䡲 “American Chronicles: The Art of Norman Rockwell” March 8-May 31, 2009: 86,472 䡲 “Monet to Dalí: Modern Masters From the Cleveland Museum of Art” Oct. 12, 2008-Jan. 18, 2009: 83,753 Along with approximately 80 works of art, the exhibition will include supporting materials related to Depression-era economic conditions, the industrial life of Detroit and its workers and the controversy surrounding the murals. Photographs of the two artists at work and at play will accompany the exhibit. While the Mexican museum viewed its loan of a Rivera piece as an opportunity to get more exposure for the man it sees as the greatest artist of modern Mexico, the loan from the San Francisco Museum went beyond gaining exposure for Kahlo, who is now held in higher esteem in the U.S. and Europe than Rivera, Beal said. “We got the San Francisco Museum loan as a specific response to our current situation,” he said. The West Coast museum building is closed for several years for a building expansion, Beal said, and typically museums suspend loans of artwork when they go into a re-

building process. The director of the San Francisco Museum of Modern Art, however, “loaned this art to show solidarity,” Beal said. Planning for the exhibit began several years ago, before the concept of selling any of the city-owned museum’s artwork to pay Detroit’s debts was even a thought. So it’s a happy coincidence that, according to the DIA, none of the art planned for the exhibition is on the list of city-purchased art that was appraised by New York City-based Christie’s Appraisals Inc. It’s completely protected from any controversy. Beal said he paid personal visits to potential lenders in Mexico City to secure loans of a handful of pieces, but most in the exhibition are from U.S. museums — which ask only for fees to cover the costs of moving and caring for the art — and private collections in the U.S., he said. All told, the Rivera and Kahlo in Detroit exhibition, when completed, will be a seven-figure investment for the DIA, Beal said. That cost is funded from a restricted fund meant to support major exhibitions — a fund that is separate from the museum’s operating budget, which is $31 million this year. Every year, the museum plans two major exhibitions, but even within that category there are variations on the number of people who will attend. “To us, the major exhibition is the form, shape and amount of time it takes to put it together,” Beal said. Among the museum’s major exhibits in recent years, “Rembrandt and the Face of Jesus,” which ran November 2011 to February 2012, was the top draw with 116,392 people, according to the DIA. And “Fabergé: The Rise and Fall,” which was shown October 2012 to January 2013 and showcased imperial Russian treasures made by the House of Fabergé, at-

tracted just shy of 87,000 people. “American Chronicles: The Art of Norman Rockwell,” hosted in 2009, drew nearly that many people, and “Monet to Dalí: Modern Masters From the Cleveland Museum of Art,” which ran October 2008 to January 2009, wasn’t far behind. The DIA’s current exhibition, “Samurai: Beyond the Sword,” which it also counts as a major ex-

hibition, isn’t expected to reach the same attendance as Fabergé, Beal said. That exhibition, which runs March 9 to June 1, features suits of armor and meticulously crafted sword blades, as well as paintings of nature and finely crafted tea ceremony objects. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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CRAIN’S DETROIT BUSINESS

Water: Drip by drip, DWSD and region have many challenges ■ From Page 1 Both Patterson and Macomb County Executive Mark Hackel believe the proposed regional authority plan is constructed more to funnel operating cash to Detroit than it is to run, improve and manage the water operations that require millions of dollars in investment. Emergency Manager Kevyn Orr, meanwhile, contends a regional authority is the best scenario in Detroit’s restructuring efforts, but he’ll consider others if he must. Here are nine of the talking points on regional water — and the difficulties in resolving them — that will likely resurface in mediation:

delinquents are due to abandoned properties? About 70,000 homes — or nearly 20 percent of the city’s housing inventory — are believed to be abandoned. DWSD policy is to shut off water service when bills are 45 days past due. So tens of thousands of those accounts could represent vacant homes that are no longer connected to the system, and a majority of residential balances are 180 days old or more, according to the report. Orr has said in the past that David Tawil, Maglan Capital Detroit was losing an average 24,000 residents per year between would be redeemed or refinanced 2000 and 2010. Suburban negotiators have dis- under the city’s adjustment plan in cussed using public assistance pro- bankruptcy court, presumably at grams to make water payments on better interest rates that yield some When the water department’s behalf of low-income city families savings and improve the balance regional Board of Water Commis- to reduce unpaid bills. One option: sheet. But the department has racked sioners voted in March on a pro- The state Housing Choice Voucher posed 4 percent inprogram that up $1.5 billion in such losses over crease for water makes direct the past seven years and its bond and sewer billing payments to rating is in junk territory. Fitch Ratrates for the fiscal landlords of ings Ltd. recently downgraded its year starting July An average 4 percent increase low-income ten- rating on some DWSD bonds to 1, only Oakland among suburban communities ants could also BB+ while Standard & Poor’s has givCounty board rep- can’t cover the investment and make direct en the department a CCC bond ratrepairs the system needs. Oakland resentative and payments for ing, both with a negative outlook. County contends that the water The city also had about $11.1 milDickinson Wright department needs to raise rates water. Or state lion of unreserved cash and about PLLC partner J. an additional 13.3 percent for the income taxpayBryan Williams water fund and 23.2 percent in the ers could make $50 million in balances owed to venvoted “no.” an optional con- dors at the end of fiscal 2013, accordsewer fund to eliminate those A chief subur- funds’ operating losses. tribution to ing to a draft financial statement. ban assertion: Denonprofits, like troit’s rate strucThe Heat and ture is flawed. Warmth Fund, that help cover such All of this may be why Macomb An average 4 percent increase bills. But the state would have to County officials think Detroit’s among suburban communities administer such a payment procan’t cover the investment and re- gram, and is not currently part of amended plan of adjustment filed March 31 in bankruptcy court is too pairs the system needs, says Oak- the authority talks. In addition to the residential optimistic in its projections for the land County Water Resources Comdelinquencies, more than $20 mil- current fiscal year. missioner Jim Nash. An income statement projection Oakland County claims DWSD lion is past due on city commercial for 2014 calls for the department to needs to raise rates another 13.3 and industrial accounts, another increase its net assets by $13.7 milpercent for the water fund and 23.2 $3.8 million was lion — even percent in the sewer fund to elimi- owed by Detroit though net assets Public Schools, nate those funds’ operating losses. were depleted by than Meanwhile, after talks broke more a combined $147 An income statement projection for was down in March, the city put out a $200,000 2014 calls for the department to million the preowed by Wayne request for information to private increase net assets by $13.7 ceding year — becompanies interested in taking State University million — even though net assets tween the departand more than $6 over DWSD operations, asking for were depleted by a combined ment’s water and bids that keep rate increases at or million was owed $147 million the preceding year — sewer funds. The on municipal acbetween the department’s water below 4 percent through 2023. city, in an appenand sewer funds. The counties are concerned that counts. dix to the March either scenario isn’t workable long31 adjustment term. Both Oakland and Macomb plan, uses that 2014 result as a base officials have said the rate strucyear for projecting future revenue Interest expenses, investment tures wouldn’t cover DWSD’s ongoand operating income, operating ing budget deficits without exorbi- losses and other non-operating and maintenance expenses and othcosts have put the city’s water and er costs through 2023. tant future rate hikes. sewer funds into the red. In June Macomb officials note that if 2014 2008, financial statements showed budget estimates turn out to be combined net assets of $1.05 bil- flawed, then every future year of Too many Detroit residents and lion; by mid-2013, those assets had projections that are pegged to it as a businesses aren’t paying their bills. dropped to just $20 million. base year are likely flawed as well. Net assets, a measure of equity, Oakland calls the expected return Or aren’t around to pay their bills. As of Feb. 3, Detroit carried could affect DWSD’s future ability to asset growth this year “remarkabout a $142.5 million total unpaid to borrow money either for the de- able, or more likely, not realistic.” partment or for a balance from Orr’s office declined to respond future authority, on this issue while mediation is delinquent busiparticularly ness and residenunderway. since the departtial accounts In addition to delinquencies in ment already carwithin the city residential accounts, more than ries more than limits — includ- $20 million is past due on city $5.5 billion in ing nearly $112 commercial and industrial If the state were to be a member of bond debt. million more accounts, $3.8 million was owed a new regional water authority, it The city com- could lend its own bond rating to the than 60 days past by the Detroit Public Schools, more putes net assets new authority, saving the authority due. About than $200,000 was owed by by weighing rev- millions of dollars in interest pay153,200 of the Wayne State University and more enues, property, ments. Michigan has maintained a 162,400 delin- than $6 million was owed on cash in liquid ac- rating of AA from Fitch, AA- from quent accounts municipal accounts. counts and other Standard & Poor’s and Aa2 from are city residential properties, accounting for just assets against interest, deprecia- Moody’s in recent months. Local officials differ on the value over half the unpaid sum, accord- tion and other liabilities — though ing to an accounts receivable re- it does not include unfunded pen- of this, but Lansing would need to port from Deputy Director Darryl sion liability or retiree health pass enabling legislation for the state costs. to raise bonds on its behalf through Latimer. The department’s bond debt the Michigan Finance Authority. How much of the residential

Really no one “ could know what

will happen to the authority’s rating until the market has a chance to test it.

”

Rate structure not sustainable

RATES

Optimistic budgeting

BUDGETING

$1 billion in lost value

Delinquencies

DELINQUENCIES

A seat for the state?

Oakland County officials have Detroit are tied to its decision to said they’ve tried to make a case impair or reduce the payout on waseveral times for state member- ter-sewer bonds under its plan of ship and assistance since regional adjustment in court. And creditors, experts say, have a long memnegotiations began last June. Detroit’s water and sewer sys- ory about past sins in the bond tem covers a 1,079 square-mile wa- market. So a bond rating of A or ter service area covering about 43 better could be years away, and percent of the state population in some costly infrastructure repair more than 120 communities, projects might not keep that long. The DWSD, or a post-bankruptwhich Oakland contends gives the state a compelling interest to take cy authority, already must complete a new biosolids dryer facility part in its oversight. on land across But the Michithe street from gan Department of its treatment Treasury has been plant along West noncommittal on Interest expenses, investment Jefferson, in that proposal, of- losses and other nonoperating time to comply ficials said; Orr’s costs have put water and sewer with new federal request for a $350 funds into the red. In June 2008, air quality regumillion state con- financial statements showed lations that take tribution to shore combined net assets of $1.05 effect in March up city retiree billion; by mid-2013, those assets 2016. pensions may be had dropped to just $20 million. The Michigan divisive enough Net assets, a measure of equity, could affect DWSD’s future ability Finance Authority in Lansing this to borrow money either for the is expected to iscoming week, department or for a future sue about $150 without adding authority, particularly since the million in new another legisla- department already carries more bonds on tive request. than $5.5 billion in bond debt. DWSD’s behalf Terry Stanton, in June. The public information officer for Treasury, said he bonds will finance several construcwas unaware of any discussions on tion projects including the new state involvement on the authority. biosolids plant, which is under contract with Massachusetts-based New England Fertilizer Co.

ASSETS

Bond rating pipe dreams

Suburban negotiators also can’t help noticing that the interest rate behind Detroit’s capital program As Crain’s first reported March financing is about 4.63 percent, a 10, Detroit’s adjustment plan calls rate that would suggest a post- for DWSD to make a $675 million bankruptcy bond rating of an A+ contribution to the city’s General Reor possibly AA-. That’s a far cry tirement System pension plan for refrom the deep-junk bond status of tired non-uniform city employees today, and suburban negotiators by 2023. That’s not just for its own think it could take a new regional employees, but for everyone in the authority years to build that kind pension plan. of a rating. The city’s request for proposals However, suburban customers to private sector contractors in accounted for about 64.5 percent of late March also calls for any intertotal department revenues in fiscal ested businesses to include a simi2013, according to draft financial lar pre-funding contribution to statements from the city. Bonding GRS by 2023, or to carve out the for a new intergovernmental au- DWSD’s share of pension assets thority with less of a connection to and its unfunded liabilities, in subDetroit could be a different propo- mitting their own bids. sition entirely. Either way, that revenue stream “It does make sense that — to the is expected to help free up money degree there are in the embattled additional deeper city’s general pockets in the fund budget for makeup of the much-needed new governing Suburban negotiators note that the capital improveinterest rate behind Detroit’s body — from a capital program financing is about ments like vehicreditor/shared cles and new 4.63 percent, suggesting a postobligation status bankruptcy bond rating of an A+ or technology. that affects confi- possibly AA-. That’s a far cry from The city exdence and a will- the deep-junk bond status of pects to spend ingness to lend. A today, and suburban negotiators $148 million on lot of other factors think it could take a new regional various IT upauthority years to build that kind of would be tied into grades, another a rating. that,” said David $447 million on Tawil, co-founder infrastructure and portfolio manager of New York and capital programs, including at City-based Maglan Capital, a hedge least $123 million for buildings and fund that invests in distressed as- fleet vehicles in the police, fire and sets including some risky govern- recreation departments, and at ment bonds. least $520 million on blight re“But that number (4.63 percent) moval, all by June 2023. does sound particularly aggressive But if the DWSD locks in some or optimistic, and the regional rate stability for city residents, and counties are right to question it. shoulders general employee pen“Really no one could know what sions, a post-bankruptcy authority will happen to the authority’s rat- could have limited ability to cover ing until the market has a chance that budget without leaning heavily to test it.” on suburban customers. Even if investors view a regionOakland County, in an April real authority differently than a city port, estimates the elevated pension enterprise, Macomb County officials say the bond downgrades for See Next Page

Pre-funding pensions

BOND RATING

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May 5, 2014 From Previous Page

contribution alone could require a 6.2 percent rate increase, although the city’s own projections suggest the increased contribution would be gradual for the first few years.

Stopping the exodus? Even robust rate hikes to shore up the financial statement may get offset in part by falling volumes of water consumption. A February report from Kansasbased The Foster Group LLC estimates the water flow to city retail customers (residential customers, some agencies, and some customer groups like small businesses) in the city is about half what it was 15 years ago. The department puts about 610 million gallons from its treatment plants into its network of pipes every day, but of that, about 63.2 million gallons end up at metered locations for retail customers within Detroit, compared with 125.8 million gallons per day back in 1999. The city in its adjustment plan assumes a decline of 6.3 percent in retail volume between next year and 2023, or less than 1 percent per year on average, while the wholesale consumption in the suburbs falls about 2 percent over the same period and sewer usage stays flat. Flint, meanwhile, exits the DWSD system in 2017 to join the recently formed Karegnondi Water Authority, which should serve 250,000 customers in that area starting in

FALLING CONSUMPTION The water department puts about 610 million gallons from its treatment plants into its network of pipes every day, But of that, about 63.2 million gallons ends up at metered locations for retail customers within Detroit, compared with 125.8 million gallons per day back in 1999. about two years. The departure of those customers has been previously estimated to shave more than 12 percent off DWSD revenue.

Unchartered waters For years, the DWSD has also been able to defer costly environmental improvements to comply with the federal Clean Water Act, and could continue to do so through 2017. That’s because federal guidelines allow the state to defer improvements on water system quality improvements if the upgrades would force the cost of water or sewer bills to exceed 2 percent of the median resident’s income. Since the DWSD is a city-owned system, that cap is currently pegged to 2 percent cap of a median Detroiter’s income. Officials have estimated current water system cost is about 1.84 percent of that figure, and sewer costs are about 2.6 percent. Under an authority, however, the 2 percent cap on the median Southeast Michigan income could become a very different proposi-

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tion. The state could possibly help out by continuing to defer those improvements through 2022, local officials said, but after that the authority may be legally required to make some or all of them. The question, then, could be what kind of bond rating the regional authority has by 2022. Will it have improved the system’s finances enough to fund those project costs in the bond markets? That’s a tough question, and one of the possible topics of this week’s round of mediation. Detroit and the three counties also might not get the mediation table all to themselves, either. On Friday, the Southeastern Oakland County Water Authority, which makes wholesale water purchases from DWSD for Berkley, Beverly Hills, Birmingham, Southfield, Royal Oak, Pleasant Ridge, Lathrup Village, Huntington Woods and Southfield Township, brought a request to intervene in the bankruptcy and get authorization to participate in the mediation process. The separate Western Townships Utility Authority of Canton, Northville and Plymouth townships also supports that request. But with no date set for all parties to gather, and the state’s attention turned instead toward an expected package of bills to support the city pension funding contribution this week, perhaps one seat at the mediation table will remain conspicuously empty. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

Peters pushes funding for customs plaza for new border bridge BY ANJANA SCHROEDER SPECIAL TO CRAIN’S DETROIT BUSINESS

U.S. Rep. Gary Peters said Friday he was confident that when it comes time to build a customs plaza on the Detroit side of a planned second bridge to Canada, the federal funding for the plaza would be available. Peters, a candidate for U.S. Senate, joined Homeland Security Secretary Jeh Johnson in a tour of border operations Friday. Johnson’s visit was intended to raise awareness of the funding needs at northern border crossings. Land acquisition for the $3.5 billion New International Trade Crossing project could begin this summer. Bridge construction is scheduled to start in 2016 and be finished in 2020. Canada will cover $2.3 billion of the $3.5 billion NITC project, including $550 million in infrastructure costs on the Michigan side. But President Barack Obama’s proposed $3.9 trillion budget for the 2015 fiscal year did not include the $250 million cost of the plaza.

Peters, D-Bloomfield Township, recently introduced the Customs Plaza Construction Act of 2014, which prioritizes funding for trade crossings around the country based on trade volume — exports and imports. The legislation is pending in the subcommittee on border and maritime security. Also joining Peters and Johnson at the Detroit Regional Chamber on Friday for a roundtable discussion were U.S. Sen. Debbie Stabenow; U.S. Reps. John Dingell, D-Dearborn, and John Conyers, D-Detroit; and Douglas George, the consul general of Canada. Johnson said he is “looking for ways to expand lawful trade and travel” and noted that the lineup at the roundtable shows the importance of the Detroit plaza to regional stakeholders. “The northern border and trade crossings in the state of Michigan have the potential to make our region a transportation and logistics hub in the Midwest if we make the necessary infrastructure investments now,” Peters said.

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England: How football team (no, not that one) turned it around ■ From Page 3

ership group, said Appleby, who launched Rochester-based General Sports and Entertainment LLC in 1998. “It’s been an incredible turnaround,” said Appleby, who orchestrated the purchase. As of Friday, Derby had 25 wins, nine draws and 11 losses with one final regular-season game scheduled for Saturday (at Leeds United). The rebuilding plan wasn’t unique: Shed underperforming talent for better players and seek new ways to create revenue from games and from the deep affinity fans have for the team. The plan’s endgame was simple, too: Return to the lucrative Premier League, in which Derby last played in 2007-08. There was one enormous problem that added years to the turnaround effort, however. The group bought the team as the global recession became endemic, and the club was in the middle of the worst season ever recorded by a Premier League team. “When we were restructuring, the financial crisis hit. If there was a crystal ball, no one would have bought a team in January 2008,” Appleby said. “Derby County was hurt perhaps even more because we were coming down from the PreAppleby mier League at that very moment.” Derby won a single game during that 2007-08 season, and the new owners understood it was headed to the second-tier, money-barren Championship league — which also is why they were able to buy the club at a discount.

Hard times Because of how European soccer clubs acquire players, a turnaround was even more difficult during the recession. Rather than trades, most players are bought and sold between clubs as assets in the summer and in January, called transfer periods. Teams pay transfer fees to buy players — Spain’s Real Madrid paid a world record $143 million to buy Gareth Bale from the Premier League’s Tottenham Hotspur last year. Some players are signed as free agents, similar to those in American pro sports leagues, and some players are loaned up or down the levels of soccer, as well. Derby had 50 players, and the plan was to sell off many of them to get the roster and payroll in line with what is typical for Championship league clubs, Appleby said. “You don’t have a tremendous depth chart at that level. The revenues are not there to support it,” he said. But with the recession, few teams were buying. “In most cases, we were not able to sell those players, and in many cases we had to write checks to those players to have them go,” Appleby said. “It probably set us back four years. (This season) is where I envisioned us after Year Two.” As the economy improved, Derby was able to sort out its roster. It

English soccer rewards results The hierarchical English football league system rewards and punishes teams with promotion or relegation based on their final record every season. The 24-club Football League Championship is English soccer’s second-tier professional league, and its top three teams every year are promoted to the elite 20team Premier League. The top two teams are promoted automatically, while the next four enter a playoff for the third promotion slot. At stake are $100 million in automatic new revenue, almost all of which comes from the Premier League’s lucrative broadcast rights deals that are shared among the clubs. Conversely, the worst three Premier League clubs are relegated to the Championship league — and are provided another $100 million over four years to cushion the financial blow. There are 24 levels to the English football league system, and it uses a mixture of automatic berths and playoffs to promote teams. The number of clubs promoted and relegated varies also made an initially controversial coaching change this season. Manager Nigel Clough was fired in September after a poor start. He was replaced with Steve McClaren. The Clough name is iconic in English soccer. Clough’s father, Brian, led Derby to championships in the Second Division and First Division (forerunner to the Championship league and Premier League, respectively), and there’s a statue of him outside of Derby’s stadium. The change appears to have been the right one. Since taking over, McClaren led the club to 22 wins, six draws and eight losses. Derby’s 84 points in the standings are tied for the most in team history. McClaren was on the coaching staff of the Queens Park Rangers prior to coming to Derby, where he’d been an assistant manager from 1995-99. He managed teams in the Premier League, clubs in Germany and Holland, and the English national team. “(Changing managers) was a good decision for a number of reasons, not the least of which was that we seemed to start winning and created that wonderful chemistry you’ve seen in all sports at various times,” Appleby said. There was briefly an outcry when Clough was fired — and antiownership criticism at various times since Appleby’s group took over as the team struggled. In Derby’s first five seasons in the Championship league this time around, it finished 18th, 14th, 19th, 12th and 10th, respectively, in the standings. This year’s third-place finish is its best since 2006-07. Fans have showed their faith with their pocketbooks: Derby already has sales or commitments for 20,000 season tickets for next season, Appleby said. Derby has averaged 25,000 fans per game this season at 33,597-seat iPro Stadium, good for second in the

season before being downgraded. While it is stressful on owners and investors, Appleby is a fan of the promotion-relegation system because it’s based on performance. “It’s a wonderful system they’ve created. It’s the ultimate meritocracy,” he said.

The money GENERAL SPORTS AND ENTERTAINMENT LLC

Finish atop the Football League Championship, and you get promoted to the Premier League, plus $100 million in new revenue.

among the levels. Clubs are eligible for different single-elimination competitions, such as the FA Cup, depending on which league a team is in. The Premier League is its own business entity, and was created in 1992. The top level of English soccer was previously called the First Division. The Football Championship League, and the two leagues beneath it, are collectively The Football League. The 92 teams of Premier League and The Football League are pro clubs. Teams in lower divisions, which are more regional, are a mix of pro and semi-pro clubs. At the lower end of the organizational pyramid, the teams are amateur. — Bill Shea league. Premier League teams this season averaged 36,456 per game. Derby, founded in 1984 and nicknamed the Rams, plays a 46-game schedule. The Rams’ only top-level championships were in 1972 and 1975. It lost the top-tier championship matches in 1896, 1930 and 1936.

Going down, painfully Relegation can be financially devastating for clubs because Championship league shared revenues are a fraction of what teams in the Premier League. Derby has about $95 million in revenue in its 2007-08 Premier League season, and total revenue the following season in the Championship league fell 36 percent, according to an analysis of relegated teams by SportingIntelligence.com. The average first-year revenue drop for clubs relegated to the Championship over the past 10 years is $33 million. “(Relegation) can have a dramatic effect on the value of that team and the value of contractual income that the team gets,” Appleby said. He estimated that Championship league teams get in the low singledigit millions in shared revenue. Hence, the “parachute payments” of $100 million spread over four years. “It’s a very rough transition to the second division. It’s not easy to restructure all those player contracts,” Appleby said. “The feeling was, you needed some of that money available to offset those losses and keep your team together to come back up again.” It’s also not uncommon for promoted teams to quickly find themselves back in the Championship league: Thirteen of the 30 teams promoted to the Premier League over the past 10 years have lasted one

Like American pro sports teams, the majority of Premier League revenue that second-tier clubs seek is derived from contracts with TV networks for the rights to broadcast games to more than 600 million people in more than 200 countries. Two recent TV deals have inflated the annual payments that Derby is seeking by promotion. The Premier League sold its live TV broadcast rights for its games in Britain in June 2012 for a combined $5 billion to British Sky Broadcasting Group plc (usually called BSkyB) and BT Group plc. The deals run through the 2015-16 season. In the United States, the Premier League signed a three-year, $250 million deal with NBC Sports Group in August 2013 to air games on NBCSN. The matches are produced by Sky Sports, BT Sport or the league. The deal replaces Fox Soccer and ESPN as the league’s U.S. broadcasters as the game’s popularity is rising in the U.S. — and in Detroit as several groups are interested in bringing soccer to the city. Local revenues in English soccer also are akin to American cash sources: single-game and season ticket sales, merchandise, concessions and parking. Derby got a revenue boost in December when it signed a 10-year, $11.8 million naming-rights deal with new British sports drink manufacturer iPro to put its name on the team’s 33,597-seat Pride Park Stadium.

The spending Getting the TV money is the grail quest in the Championship league because nearly every team operates at a loss. In the Championship, player wages consume 90 percent of revenue, according to an annual report in June 2013 from Deloitte’s Sports Business Group in the UK. It’s 70 percent in the Premier League. “For many years, the division has struggled financially — the combination of clubs adjusting to the impact of relegation from Premier League and others aspiring to achieve promotion, has now delivered almost a decade of ever-increasing operation losses,” the report said. “Championship clubs continue to spend 30 percent more than they generate — a clearly unsustainable position without owner benefaction, a source of funds upon which the Football League is trying to reduce its member clubs’ dependence.” Unlike American pro football, basketball and hockey, English soccer hasn’t had the cost controls of a salary cap. Hence, the financial losses every year. That is changing. Under a new cost-control system, known as Financial Fair Play, teams must limit monetary losses

to certain amounts or be embargoed from player transfers and fined. This season, the maximum allowable loss is $13.5 million. That drops to $10.1 million next year. Derby’s financial disclosures show it has lost $13.4 million, $13 million and $12 million in the three seasons prior to 2013-14. Over the years, General Sports has loaned Derby approximately $48 million to cover expenses, all of which have been converted to equity, according to a statement from the club in March. The successful 2013-14 campaign is expected to further reduce Derby’s losses. The club is predicting $4 million in new revenue for this season, club President and CEO Sam Rush said in a March statement. Derby’s losses are modest compared to the other top teams. “Derby’s losses are well below other clubs gaining promotion. Derby has done astonishingly well,” said Ed Thompson, who analyzes and writes about English soccer finances on his website, financial fairplay.co.uk. Leicester City, which finished atop the Championship league and gains automatic Premier League promotion along with secondplace Burnley, lost $57 million last year, the club said. Promotion provides a financial windfall, but traditionally fuels spending sprees that offset the new money. “Clubs always push up player costs when promoted; it’s not uncommon to end up financially worse off after promotion,” Thompson said.

Sports impresario Appleby has relied on his background in U.S. pro sports to help him oversee Derby and the complexities of English soccer finances. He is the chairman and CEO of General Sports and Entertainment, which he founded in 1998. The firm, which had about $30 million in revenue last year, specializes in consulting, team management, marketing, sponsorships, financing, and education, and had a synthetic turf division. Before starting his company, Appleby had risen to senior vice president at Palace Sports and Entertainment LLC, the Pistons’ parent company in Auburn Hills, where he worked from 1986 until launching General Sports. He previously was interested in buying hockey’s St. Louis Blues and in bringing a minor-league baseball team to suburban Detroit. Those deals didn’t happen, but General Sports did own the Fort Wayne Wizards, a Class A minorleague baseball affiliate of the San Diego Padres, for several seasons until selling the team in 2006. In 2000, Appleby was an honoree in Crain’s Detroit Business’ annual “40 under 40” awards. “(Derby’s ownership has) had a plan for a long time, and this is a very, very difficult business,” Appleby said. “We’ve been able to all stick together through lots of trying times.” Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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Crowd: Funding rule has biz seeking alternative ■ From Page 3

a handful of states — including Michigan last year — enacted their own laws to allow intrastate crowdfunding, to get around SEC rules. Michigan’s law allows companies that are Michigan-based to sell shares of their company to state residents, or receive a set percentage return on an investment in the company. But the recent guidance from the SEC, in the form of a compliance and interpretation document posted at sec.gov in April, discourages businesses from looking for investors on social media sites, since there is no way to control the message so that only Michigan residents see it. Coke said once a company puts something on social media, it crosses state lines and is no longer an intrastate offer. Several attorneys who practice securities law say businesses should even refrain from simply posting a link to a portal website that handles the investment transaction, even if the site only allows Michigan residents to invest. Kevin Hitchen, founder of Localstake, an online crowdfunding portal used by businesses to connect with potential investors, said potential investors who come to his site have to go through a series of steps before they can see investment documents for a company or actually invest, including providing their driver’s license to prove they are a state resident. He said he doesn’t think the SEC guidance will hinder efforts under the new law in Michigan.

MICHIGAN’S CROWDFUNDING LAW 䡲 Issuers must be headquartered in Michigan, and the offering may be made only to Michigan residents. 䡲 Social media use isn’t referenced in the Michigan law, so investors have interpreted the law to allow for its use. 䡲 The maximum a company could raise is $2 million if it makes audited financial statements available to investors as part of the offering. If not, the maximum is $1 million. 䡲 Securities may not be resold within nine months to any non-Michigan resident. 䡲 The issuer must provide quarterly reports to its investors and the state of Michigan for as long as the shares remain outstanding. “Businesses will just have to be careful what they post,” he said. And it is possible to successfully conduct crowdfunding without using social media, as the Tecumseh Brewing Co. proved on Thursday, Hitchen said. Through Localstake, the Tecumseh-based microbrewery was the first to take advantage of Michigan’s crowdfunding law, and the first to successfully reach its investment goal. It raised $175,000 from 21 investors, and did it without using social media. It hopes to be open by October. Kyle DeWitt, general manager and co-founder of Tecumseh Brewing, said they were able to raise the funds in just 45 days. “We were pleasantly surprised how quick it went,” he said. He said word of mouth, publicity in local news outlets and two tasting events were basically all it took. The sponsor of the state’s crowdfunding law, Rep. Nancy Jenkins, R-Clayton, said businesses will just have to be cautious when using social media and be careful about what they put even on their

own website, so as not to draw the ire of the SEC. Sandra Cochrane, a technology business consultant for the Michigan Small Business Development Center, said the new guidance will make it tougher for people to get the word out about their particular offer. Coke said old-fashioned word of mouth is still one way businesses can get their message out. Iris Linder, a shareholder at Lansing-based Foster, Swift, Collins & Smith PC, who works in the business and corporate practice group, said businesses could talk to customers in person and tell them about ways to go online and invest, but first they should ask if they are Michigan residents. Businesses could also collect emails from customers (after first checking they are all state residents) and then do an email blast to talk about the investment opportunity and direct them to a website where they could invest, she said. These are good working guidelines until the SEC issues permanent guidelines, perhaps by the

end of the year, Linder said. Coke said he has heard from some business owners who are angry and confused by the new rules, and are still unsure of what they can no longer do, but he is urging them to remain positive. “Focus on what you can do,” he said. Eric Misterovich, partner at St. Joseph-based Revision Legal, said one positive aspect to the new guidance from the SEC is that it will further shape which businesses are best suited to use crowdfunding under Michigan’s law. “I think a lot of people planned on using Facebook to spread the word about their offer. We’ve all grown accustomed to how easy it is to share things,” he said. “But if I live in St. Joseph, is someone in Bay City going to invest in my restaurant? Probably not.” He said Michigan’s law is still well-suited for hyperlocal businesses that have an established and dedicated customer base. Once the SEC has completed writing the final rules that allows crowdfunding nationwide, other businesses will likely then be able to use social media sites, because they will no longer be confined to just trying to solicit investors from Michigan, he said. At that point, it won’t matter if someone in another state sees their posting on a social media site, he said. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

Guns: Brothers aiming high with family business ■ From Page 3

They founded Detroit Gun Works in 2009, still under their father’s ownership, to manufacture upper and lower receivers for semi-automatic sporting rifles. A few years later, the brothers moved the company out of Detroit to a shop in Troy near Maple Road and Crooks. The Detroit Gun Works division, which currently sells to gun shops and private-label manufacturers, is expected to generate $1.2 million of the company’s $7.2 million in revenue this year. “We felt we had a better mousetrap due to the belt-tightening from the automotive industry collapse, said Arnot Heller, co-owner. “For a long time, all gun parts were made in-house by the big manufacturers, but now we’re seeing a different model, a more supplier-based model that we thought we could capitalize on.” Lawrence Keane, senior vice president and general counsel of Connecticut-based nonprofit National Shooting Sports Foundation, said the firearms industry is continuing to evolve into a more supplier-driven industry and could pay dividends for the right suppliers. “More and more manufacturers source parts from suppliers as part of a shift to lean manufacturing and just-in-time manufacturing,” Keane said. Diversification isn’t a new concept to automotive. Most suppliers in the industry needed to enter

new markets to survive the industry collapse. Laurie Harbour, president and CEO of Royal Oak-based manufacturing consulting firm Harbour Results Inc., said manufacturers led by younger generations are taking bigger risks than their predecessors, and it’s often paying off. “For the younger generation of manufacturers, risk is nothing,” Harbour said. “They are finding a balance in automotive and the right creative group of people to reinvent their company, challenge organizations and make it stick.” The Hellers took a calculated risk during a recent gun boom. There has been explosive gun sales growth over the past years, with 2013 setting the record for most guns sold in the U.S. The Federal Bureau of Investigation performed nearly 14.8 million new gun purchase permits through the National Instant Criminal Background Check System in 2013, according to a report by NSSF. Keane expects manufacturers to sell fewer guns in 2014, but even with reduced sales, smaller suppliers could flourish. “The peak has come down, but sales are still ahead of 2012,” Keane said. “There are going to be a number of smaller players who got into the market who are going to keep growing business, but it’s not certain.” However, the industry isn’t

quite as predictable as some others, and production has slowed, said Randy Perrault, president of Lake Havasu City, Ariz.-based R&D Precision Inc. R&D Precision, which started as a tooling and prototype supplier, manufactures bolts, hammers and other semi-automatic rifle parts. Perrault said sales have slowed in 2014 due to an oversupply of parts. “The bigger suppliers have saturated the market with parts because of the drop off of sales,” he said. “The manufacturers have enough parts to last a couple of years.” However, Detroit Gun Works operates with marketable advantage. The company has a federal firearms license, which is required for companies that manufacture lower receivers — the part of the gun that contains the bolt, trigger and magazine port. Perrault said fewer suppliers hold an FFL, making them more in demand. Matt Heller said it took Detroit Gun Works more than 18 months to acquire the federal license, but he knew it was necessary because of the higher barrier of entry for manufacturers. “We didn’t want other traditional manufacturers to follow us into the firearms market,” he said. “With the FFL, we can drive firearms components the way we do with heavy truck, but with less competition.”

Despite a slightly down market, Detroit Gun Works continues to target larger manufacturers to scale up production. It currently sells its lower receivers to private label gun makers and shops for sale to consumers looking to build their own semi-automatic files. Locally, Double Action Indoor Shooting Center and Gun Shop in Madison Heights and Scott Allan Wiseman’s Weapons Co. in Hamburg Township carry Detroit Gun Works’ receivers for gun buyers looking to build and customize their own rifles. Lower receivers are the part that must be registered with authorities. Detroit Gun Works expects to sell up to 12,000 receivers this year, up from 8,700 last year, Arnot Heller said. The company spent $1.5 million transition to automated machining and robot equipment. Matt Heller said changing the name and going high-tech is opening doors for the company that Central Screw Products just couldn’t do. “We wanted, and needed, high skilled laborers, and we had a tough time getting the right workers, let alone the right customers with the old name,” Matt Heller said. “It’s absolutely amazing what doors have opened because of the Detroit Gun Works name.” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain GROUP PUBLISHER Mary Kramer, (313) 446-0399 or mkramer@crain.com ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or mwise@crain.com EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or cgoodaker@crain.com MANAGING EDITOR Jennette Smith, (313) 4461622 or jhsmith@crain.com MANAGER, DIGITAL STRATEGY Nancy Hanus, (313) 446-1621 or nhanus@crain.com MANAGING EDITOR/CUSTOM AND SPECIAL PROJECTS Daniel Duggan, (313) 446-0414 or dduggan@crain.com SENIOR EDITOR/DESIGN Bob Allen, (313) 4460344 or ballen@crain.com SENIOR EDITOR Gary Piatek, (313) 446-0357 or gpiatek@crain.com WEB EDITOR Kristin Bull, (313) 446-1608 or kbull@crain.com WEST MICHIGAN EDITOR Matt Gryczan, (616) 9168158 or mgryczan@crain.com WEB PRODUCER Norman Witte III, (313) 4466059, nwitte@crain.com EDITORIAL SUPPORT (313) 446-0419; YahNica Crawford, (313) 446-0329 NEWSROOM (313) 446-0329, FAX (313) 4461687 TIP LINE (313) 446-6766

REPORTERS Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 4460416 or ahaimerl@crain.com Chad Halcom: Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson: Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho: Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 4466042 or dwalsh@crain.com Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or cgautz@crain.com

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RUMBLINGS Slush a treat! Vernors now a Slurpee drink etro Detroit consumes more Slurpees from 7-Eleven than any other U.S. market, so that’s why the convenience store chain now is selling a Vernors Slurpee at more than 200 of its Michigan locations. News of the slushed ginger ale drink broke last week to the delight of Vernors fans. The idea for a Vernors Slurpee as a regional item was ginned up by 7-Eleven’s in-house research department, a spokeswoman said Friday. Vernors ginger ale, born in a Detroit pharmacy in 1866, is produced and distributed by Plano, Texas-based beverage giant Dr. Pepper Snapple Group Inc. (NYSE: DPS), which had $5.9 billion in total sales in 2013. The ginger ale is produced in Holland, not Detroit. 7-Eleven opened a Detroit location, on Jefferson Avenue, in February — its first and only since the last store closed in 2003. Another is scheduled to open in May in Cadillac Square. The Vernor family sold the company in 1966, and the brand has had a number of owners since then. Dr. Pepper Snapple Group, when it was known as Cadbury Schweppes plc, acquired Vernors when it bought A&W Brands for $334 million in 1993. Oh, and the top Slurpeeconsuming city worldwide is Winnipeg, Manitoba.

Grand Prixmiere to kick off Belle Isle race weekend The Grand Prixmiere, the official launch party of the 2014 Chevrolet Detroit Belle Isle Grand Prix weekend, will be held for the first time at Belle Isle Park. The evening includes a seated dinner by Andiamo, a program hosted by WJR AM 760’s Paul W. Smith, a live auction and a live performance by country music singer Josh Kelley. General Motors Co.’s Mark

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Reuss is the event host. The event is 6:30-11 p.m. May 30. Tickets are $500 each. To join the waiting list, call (313) 331-7760. The event aids the Belle Isle Conservancy, which works to preserve and restore the island’s natural features, buildings and attractions (such as the Belle Isle Aquarium) through fundraising and volunteer efforts.

MSU coaches to offer business leadership savvy Michigan State University is again bringing together some of its top faculty and successful coaches for a three-day course on preparing business professionals for success. “Building Winning Teams: A Quest for Excellence” is scheduled for June 3-5 on the MSU campus in East Lansing. Spartans football coach Mark Dantonio, basketball coaches Tom Izzo and Suzy Merchant, and others will take part in the course with their takes on coaching philosophies, planning and winning approaches. Cost is $4,495. For details, visit execed.broad.msu.edu.

MDOT: Quit with the Ohio road stuff, please Ohio’s roads are NOT better than Michigan’s highways because of special concrete or secret blacktop recipes. The Buckeye State’s byways are smoother because Ohio spends more money on them. That’s the message from the Michigan Department of Transportation in its latest public relations selfdefense message. The Ohio roads message is part of a series of videos and facts sheets called “Reality Check” that seek to explain why the state road agency — often a target of public, media and political criticism — does the things it does. “The heart of this myth isn’t that Ohio’s roads are bet-

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF APRIL 26-MAY 2

ter than Michigan’s — they are — it’s about why they’re better,” MDOT Director Kirk Steudle said in the message. “It’s not some secret formula. Ohio simply invests $1 billion more each year in its roads than Michigan does.” Michigan spends, per capita, less on roads than not just Ohio, but every other state, MDOT said. Future “Reality Check” topics will include sign placement, roundabouts safety, truck weights, roadbuilding standards and the effect of gas prices on fuel tax revenues. View the campaign at Michigan.gov/realitycheck.

Huntington again tops J.D. Power bank rankings For the second straight year, Columbus, Ohio-based Huntington Bank has been ranked No. 1 in customer satisfaction by J.D. Power for the north central region of the U.S., which includes Michigan, Indiana, Kentucky, Ohio and West Virginia. Huntington scored 828 points, compared to the regional average of 796. Banks doing business in Michigan that were ranked: 䡲 Troy-based Flagstar Bank, No. 3 with 809 points 䡲 New York-based Chase Bank, No. 9 (tie), 801 points 䡲 Midland-based Chemical Bank, No. 9 (tie), 801 points 䡲 Wayzata, Minn.-based TCF Bank, No. 11, 798 points 䡲 Pittsburgh-based PNC Bank, No. 12, 795 points 䡲 Akron-based FirstMerit Bank, No. 15, 791 points 䡲 Charlotte, N.C.-based Bank of America, No. 16, 789 points 䡲 Cincinnati-based Fifth Third Bank, No. 17, 788 points 䡲 Ionia-based Independent Bank, No. 18, 786 points 䡲 Cleveland-based KeyBank, No. 20, 781 points 䡲 Dallas-based Comerica Bank, No. 21, 779 points 䡲 Providence, R.I.-based Charter One Bank, No. 22, 773 points 䡲 Evansville, Ind.-based Old National Bank, No. 23, 765 points J.D. Power only ranks the country’s largest 130 banks, which means that smaller regional banks such as Troybased Talmer Bank and Trust and community banks are not ranked.

BITS & PIECES 䡲 The Michigan Women’s

Foundation on April 24 honored three executives at its Women of Achievement and Courage celebration: Mary Barra, General Motors Co. CEO; Linda Forte, senior vice president of business affairs at Comerica Bank; and Irma Elder, CEO of the Elder Automotive Group in Troy.

Caraco to close pharmaceutical plant in summer Detroit manufacturing facility run by New Jerseybased Caraco Pharmaceutical Laboratories Ltd. will close around June 30 and its 178 employees will be laid off, according to a notification filed with the state Workforce Development Agency.

ON THE MOVE 䡲 As expected, Ford Motor Co. named COO Mark Fields to replace Alan Mulally as CEO. Fields, 53, who will take the post July 1, said his COO position at the Dearborn-based automaker won’t be filled. 䡲 Willie Brooks was named executive director of the Oakland County Community Mental Health Authority. Brooks, the Auburn Hills-based authority’s former CFO, replaces Jeff Brown, who left in April. 䡲 Donald Stebbins, former CEO at Van Buren Township-based Visteon Corp., was named CEO of Van Nuys, Calif.-based aluminum wheel supplier Superior Industries International Inc., Automotive News reported. Stebbins, 56, replaces retiring CEO and Chairman Steven Borick. 䡲 Plymouth Whalers head coach and General Manager Mike Vellucci, 47, was named assistant general manager and director of hockey operations for the parent Carolina Hurricanes of the National Hockey League.The Whalers and Hurricanes are owned by Peter Karmanos Jr., retired chairman and co-founder of Detroit-based Compuware Corp.

COMPANY NEWS 䡲 Van Buren Townshipbased Visteon Corp. said it signed an agreement to sell its global automotive interiors business to an affiliate of private investment firm Cerberus Capital Management LP. Visteon agreed to provide $90 million in revolving credit to bridge the deal, to be paid back by Cerberus. 䡲 The consolidation of U.S. Toyota Motor Corp. operations from California to Texas is expected to lead to approximately 250 new jobs at the automaker’s technical center in Washtenaw County. 䡲 Southfield-based Optum, a health services technology subsidiary of UnitedHealth Group, said it will hire about 75 employees

over the next eight months, with plans for up to 120 in three years. 䡲 The 544-unit Eagles Landing of Troy apartment complex was sold to Southfield-based Kaftan Communities for $25 million and will be renamed the Gables of Troy. 䡲 Shinola’s new Willys Detroit shop, to open in Midtown this summer, will feature some Detroit and Michigan brands but won’t sell any of the company’s watches, bicycles or leather goods. 䡲 General Motors Co. and the Michigan Urban Farming Initiative plan to build what GM says will be Detroit’s first occupied shipping container homestead, on the grounds of the DetroitHamtramck Assembly plant, AP reported. 䡲 Northville-based Algal Scientific Corp., a manufacturer of algae-based chemicals for the food and beverage industries, announced it completed a $3 million venture capital round. 䡲 Part owner and former CEO Avinash Rachmale of Lakeshore TolTest Corp. claims $100 million in damages in a lawsuit at Wayne County Circuit Court against several company private equity stakeholders and senior executives, claiming their mismanagement led to a U.S. Department of Justice investigation. 䡲 Detroit-based lender Ally Financial Inc. said profits fell 79 percent in its first report as a publicly traded company, Bloomberg reported. 䡲 Attorneys in a lawsuit against Novi-based Lotus Bank over racist emails by bank executives were urged to settle the case by Oakland County Circuit Court Judge Denise Langford Morris, who postponed the trial’s start from May 27. 䡲 Flint-based McLaren Health Care Inc. completed its agreement to acquire Port Huron Hospital, making the 186-bed facility McLaren’s 12th hospital. 䡲 Warren-based Art Van Furniture plans to open its seventh franchise location, in Gaylord, by month’s end.

OTHER NEWS 䡲 Detroit Emergency Manager Kevyn Orr met with lawmakers in Lansing to urge approval of $350 million in state funds to help bring the city out of bankruptcy. 䡲 Gov. Rick Snyder confirmed that a financial emergency exists in Highland Park. The city, $19 million in debt, was given seven days to explore options. 䡲 Detroit’s Public Lighting Authority completed the installation of nearly 5,000 LED lights with overhead

wiring in two pilot area neighborhoods. 䡲 William Farber, chairman emeritus of Philadelphia-based drug maker Lannett Co. Inc., and his wife, Audrey, made a $10 million gift to Temple Israel in West Bloomfield that establishes an endowment for the temple’s Susan and Rabbi Harold Loss Early Childhood Center. The Farbers live in West Bloomfield. 䡲 The University of Michigan’s new Weinberg Institute for Cognitive Science, to study how the brain processes information, choice, emotions and language, will be funded with alumnus Marshall Weinberg’s $7.7 million donation. 䡲 The University of Michigan Health System announced a $1 billion effort to raise money to support medical research, patient care and education. 䡲 Oakland County is expected to add 43,000 jobs in the next three years and its unemployment rate to drop to 5 percent by 2016, according to the county’s annual economic outlook study. 䡲 Physical therapist Shahzad Mirza, 43, of Canton Township; physical therapy assistant Jigar Patel, 30, of Madison Heights; and Srinivas Reddy, 38, of Bloomfield Hills, an unlicensed foreign medical school graduate, were found guilty in what the U.S. Department of Justice called a $14.9 million Medicare fraud scheme involving four Livonia companies: Physicians Choice Home Health Care LLC, Quantum Home Care Inc., First Care Home Health Care LLC and Moonlite Home Care Inc. 䡲 The Save the Willow Run Bomber Plant campaign made its deadline to raise $8 million to save from demolition the facility where Rosie the Riveter helped build World War II-era bombers, organizers of a campaign to build a museum on the site announced. 䡲 The future of the Suburban Mobility Authority for Regional Transportation will be up to voters in Wayne, Oakland and Macomb counties after Oakland commissioners approved a millage proposal for the Aug. 5 primary ballot.

OBITUARIES 䡲 Marcella Tandy

Peterson, a longtime Detroit Public Schools administrator and former U.S. Department of Treasury official, died April 11. She was 97. 䡲 Mary Waterstone, a former Wayne County Circuit Court judge, died April 21. She was 74.

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