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®
www.crainsdetroit.com Vol. 30, No. 25
JUNE 23 – 29, 2014
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©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved
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Wait control: VA hospitals beef up patient referrals
Taubman shops for cash Developer raises capital; buyer seeks Mich. malls
After 125 years, Carhartt not the worse for wear A small-biz financing niche between banks, online firms
Focus: Auto Law
In aftermath of GM recalls, suppliers buckle up, Page 11
This Just In Merged exchange named Great Lakes Health Connect
NEWSPAPER
Michigan’s largest health information exchange has a name: Great Lakes Health Connect. Formed through the merger of East Lansing-based Great Lakes Health Information Exchange and Michigan Health Connect in Grand Rapids, Great Lakes Health Connect will be one of the nation’s largest, said Executive Director Doug Dietzman. It will include 80 percent of the state’s total licensed beds with 120 member hospitals, 20,000 physicians, 3,000 clinics and offices and consolidated revenue of $8 million, Dietzman said. The name is expected to be formally announced Wednesday at the annual meeting of the Michigan Health and Hospital Association at the Grand Hotel on Mackinac Island. The new 15-member board also is expected to select a chairman after the transaction closes on July 1. — Jay Greene
BY KIRK PINHO AND CHAD HALCOM CRAIN’S DETROIT BUSINESS
ear Michigan: It’s not personal. It’s business. For Taubman Centers Inc., the pending sale of two prominent local malls is all about the cash, continuing a company strategy of generating capital for new deals. For buyer Starwood Capital Partners Inc., the deal is about jumping into the Michigan market amid the state’s improving real estate and jobs outlook. Analysts said last week the announced $1.4 billion deal for Bloom-
D
field Hills-based Taubman to sell Dearborn’s Fairlane Town Center and The Mall at Partridge Creek in Clinton Township was unexpected, but followed Taubman’s usual model in real estate holdings. In other words, an eager buyer found a willing seller. Greenwich, Conn.-based Starwood and Taubman Centers (NYSE: TCO) jointly announced the agreement to purchase seven U.S. malls, including Partridge Creek, which was built in 2007 and has 600,000 square feet of space, and Fairlane, which was built in 1976 and has 1.4 million square feet, according to Taubman’s presentation to investors last week. See Taubman, Page 22
Brokers and real estate attorneys say the sale of Taubman Centers’ holdings may be a sign that even aging Fairlane Town Center (below) in Dearborn has a stable outlook in the next few years.
COURTESY OF JONNA FACILITY SERVICES
Joey Jonna, founder of Jonna Luxury Homes, plans to tear down the Greens Art Supply building and construct a $20 million building in downtown Birmingham with retail and high-end condominiums.
Birmingham turns corner on redevelopment $75 million in projects include condos, retail BY KIRK PINHO CRAIN’S DETROIT BUSINESS
Jana Ecker, Birmingham’s planning director, has worked in the planning department for 12 years — and she hasn’t seen this much redevelopment since before the recession. At least five redevelopments, totaling more than $75 million, are ongoing or planned in and around the downtown of the affluent Oakland County enclave. The projects will bring new Ecker high-end condominiums and senior living residential space, a new restaurant and more retail and office space to the city. Samuel Beznos, CEO and a partner in the Farmington Hills-based Beztak Cos., said increasing rental rates for office, retail and multifamily residential space all bode well for Birm-
COURTESY OF TAUBMAN CENTERS INC.
See Birmingham, Page 20
Channel 20 deal will bulk up TV ad buys, watchers say BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
The local media market is taking on an infusion of new content from WXYZ-Channel 7, and media watchers say it is expected to stir up the competitive landscape for audience and advertising — and pique interest in bundled TV ad buys.
The $110 million cash purchase that added WMYD-Channel 20 to E.W. Scripps Co.’s TV station portfolio last week was the first step in Scripps’ plans for the MyNetwork TV affiliate. Cincinnati-based Scripps, which has owned WXYZ in Southfield since 1986, closed Monday on the deal to acquire Channel 20 and ABC affiliate WKBW in Buffalo, N.Y.,
from New York City-based Granite Broadcasting Corp. Scripps marked the occasion, and signaled its strategy, by launching a new 10 p.m. newscast, “7 Action News at 10 on TV20 Detroit,” that very night. But WXYZ also plans to keep at least 20 of the 30 Granite employees in the region, add a new 7 a.m. news hour on WMYD this summer, put two
more news programs into rotation this fall and add at least 40 new local media jobs this year. Channel 7 will continue to have its early morning news show that leads into the station’s broadcast of “Good Morning America.” “We think we do very well in the early mornings, and this is a good See Channel 20, Page 18
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CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS Council on teacher education in Mich. lauds a place called Hope The National Council on Teacher Quality says Hope College in Holland has the only top-ranked education program in the state, MLive.com reported. Hope’s secondary education program was one of 107 nationally to receive the “top ranked� designation by the council, which examined factors such as student teaching, classroom management, content preparation and program selectivity. Of the 31 Michigan programs fully evaluated, 10 elementary and 10 secondary programs were strong enough to receive a national ranking. Other highly ranked programs include undergraduate elementary at Michigan State University and special education at Saginaw Valley State University. Hope’s program fared well because students are required to have a noneducation-related major and minor and because students spend time in classrooms as early as their freshman year, said Scott VanderStoep, dean of Hope’s Social Sciences Division, which includes education.
Auto supplier to add 144 jobs as part of expansion in Ionia Automotive supplier Ventra Ionia Main LLC, a subsidiary of Ventra
Will the first person out of GR put out the ‘for rent’ sign? More than a year ago, Crain’s Michigan Business reported that demand for apartments in downtown Grand Rapids was such that the only thing a prospective tenant could occupy was a waiting list. A survey this year by the Chicago real estate firm Triad Real Estate Partners confirms this in numbers: a nearly 99 percent occupancy rate. And apartments have been at capacity for nearly two years. The survey found that of 1,218 downtown rental units, more than 1,200 were filled, the Grand Rapids Business Journal reported. The Michigan State Housing Development Authority “has reported that our submarket Greenwich Holdings Corp. that makes bumpers and grille assemblies, plans to invest up to $8.5 million to expand its operations in Ionia, MiBiz reported. The expansion is expected to create up to 144 jobs. The company received a $500,000 performance-based Michigan Business Development Program grant from the Michigan Economic Development Corp., and the city of Ionia offered a $495,000 tax abatement. Ventra selected Ionia over sites across the U.S. and in Mexico, according to The Right Place Inc., the economic development organization serving the Grand Rapids area.
MICH-CELLANEOUS 䥲 Midland-based Chemical Financial Corp. has begun a public stock offering to raise $70 million, part of
for downtown Grand Rapids is the strongest submarket for housing as it relates to occupancy in the state of Michigan,� said Kris Larson, executive director of the Grand Rapids Downtown Development Authority. The survey found that about 78 percent of the tenants were born after 1977. It also noted that The Rapid’s Silver Line (Crain’s, May 12) could further bolster community development. The Rapid, the transit system serving metro Grand Rapids, is spending nearly $40 million on the Silver Line, a bus system mimicking light rail that will link the southern suburbs to downtown.
which could help finance the $120 million acquisition of Northwestern Bancorp Inc. in Traverse City, MiBiz reported. Chemical will offer 2.5 million shares at $28 each. 䥲 Livability.com has ranked Traverse City fifth on its national list of top 10 “foodieâ€? cities. Editors analyzed data about how often families eat at locally owned restaurants and how much the average resident spends eating out. They also examined accessibility to healthy foods, the number of farmers markets and restaurants that use locally grown ingredients, the number of acclaimed restaurants, successful chefs and winners of James Beard Foundation Awards. 䥲 Officials at the Gerald R. Ford Presidential Museum in Grand Rapids plan to proceed with an ex-
pansion after the Gerald R. Ford Presidential Foundation raised $15 million for the project, The Associated Press reported. The expansion is to include an 8,000-squarefoot student learning center and create interactive exhibits. 䥲 The federal government said Darryl Howes has agreed to pay $11,250 in back wages to three dozen people who picked cucumbers three years ago on his farm in the Manistee County town of
Copemish, The Associated Press reported. The U.S. Labor Department said migrant workers got less than the minimum wage and were given poor housing. 䥲 Gov. Rick Snyder appointed the father of House Speaker Jase Bolger to the Western Michigan University board of trustees. James Bolger is a retired Michigan State Police official who lives in Whitehall, north of Muskegon. He’ll fill the seat vacated when trustee Michelle Crumm resigned. Bolger will complete the term, which ends Dec. 31, 2020. 䥲 Attorney General Bill Schuette said Michigan residents will get a total of $4.6 million as part of a national settlement of complaints against SunTrust Mortgage, which was accused of underwriting risky mortgage loans, The Associated Press reported. Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for the Crain’s Michigan Morning e-newsletter at crainsdetroit.com/emailsignup.
CORRECTION 䥲 In a story on Page 3 of the June 16 edition, Crain’s incorrectly paraphrased a comment by Brad Klein, a senior attorney with the Environmental Law & Policy Center. The story should have said it is the position of the center that the amount the DTE Energy Co. pays customers to produce excess solar energy for the electric grid should not be considered a subsidy.
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June 23, 2014
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VA hospitals in Detroit, AA work to cut wait times
Inside
More doc, hospital referrals planned
WSU Physician Group to consolidate in Midtown, Page 6
BY JAY GREENE CRAIN’S DETROIT BUSINESS
Directors of Michigan’s two largest Veterans Affairs hospitals, in Detroit and Ann Arbor, say they have made changes to their medical appointment systems — and are offering to refer more veterans to community physicians and hospitals — following a VA inspector general audit that outlined appointment access problems at dozens of VA medical centers around the country. The VA patient access report earlier this month was triggered in May by allegations leveled against a Phoenix VA hospital by a whistleblower physician who charged that long waits to see primary care physicians led to at least 40 preventable deaths. Over the past two months, VA officials conducted initial audits of the more than 150 veterans hospitals and identified at least 112 VA medical centers nationally for further investigation about appointment wait times and scheduling problems. In Michigan, the Ann Arbor VA Healthcare System has been targeted for a more extensive audit based on preliminary investigation that also cleared the Detroit VA Healthcare System from additional scrutiny. The other two VA facilities in Michigan targeted for further investigation are large communitybased outpatient clinics located in Muskegon and Lansing, the VA report said.
Scheduling backlog Some 2 percent of veterans, or 662, at the Detroit VA had appointSee VA, Page 19
Three generations of Carhartt (from left): Gretchen (Carhartt) Valade; son Mark, who’s president, CEO and chairman of Carhartt Inc.; and his daughter, Gretchen, who works at the company in marketing. COURTESY OF CARHARTT INC.
An overall success After 125 years, Carhartt rolls up its sleeves for the future BY ZACK BURGESS SPECIAL TO CRAIN’S DETROIT BUSINESS
S
Early lessons Hamilton Carhartt started his company in 1889, as a horseand-wagon salesman, selling five-and-dime goods to anyone who would listen. The one thing people wanted the most in the rural southern towns of Michigan were overalls. See Carhartt, Page 21
Merchant lenders carve financing niche between banks, online firms CRAIN’S DETROIT BUSINESS
COURTESY OF ANN ARBOR VA HEALTHCARE SYSTEM
cludes a mix of corporate-owned stores and hundreds of retailers. It’s launching a cobranding initiative with a beer brand and even supporting community education in craft trades as it marks its 125th year in business.
ometimes innovation is found in a couple of yards of denim and a sewing machine. Dearborn-based Carhartt Inc. has found a way to thrive by some tried-and-true business principles: First, always listen, and make course corrections based on the voice of the customer. Second, quality always wins. Today a work clothing dyZACK BURGESS On display at Carhartt’s offices is a nasty, Carhartt is a global letter from a satisfied customer, along company with 800 products with a Carhartt jacket that has and a retail network that in- withstood the test of time.
BY AMY HAIMERL
The Ann Arbor VA projects it will spend more than $20 million this year on non-VA care, several million more than last year, said Rob McDivitt, director of the Ann Arbor VA.
Company index
Breaking up is hard to do — especially when you have to finance it. Dan Linnen and Joe Vicari had been partners for years, building up a restaurant empire. Linnen owned the Novi outpost of Andiamo Restaurant, the flagship brand in Vicari’s Andiamo Restaurant Group (now Joe Vicari Restaurant Group), and the pair launched a midrange Mexican concept, Rojo Mexican Bistro, in 2008. But last year, the pair realized they were ready to part ways. Vicari wanted to focus on the future of Andiamo, while Linnen was passionate about growing Rojo. The solution, in the end, came in the form of alternative financing. Despite an improving economy,
THIS WEEK @ WWW.CRAINSDETROIT.COM
individual business circumstances have led certain types of businesses to seek an alternate path to cashing out or giving up equity. “I wanted to do for Mexican food what P.F. Chang’s did for Asian food,” said Linnen, 49. “I want to deliver Mexican food in a more contemporary environment. Blankets on the walls and sombreros, that’s really what people think of Mexican; they think down and dirty. We wanted to make it family friendly as well as hip and cool for the date-night crowd.” To do that, Linnen needed to buy the concept — and breakup cash isn’t something that banks are usually keen to lend. Linnen spoke with several lenders, but without collateral, they weren’t interested in the risk. After all, no matter how cushy his chairs or extravagant his kitchens, they’re worth peanuts on the resale market if he defaults. See Lending, Page 20 Before 130 taps, lots of hammers Get a progress report on the new HopCat Detroit bar, set to open in October in Midtown. Read City Moments and other blogs at crainsdetroit.com/blogs. ANJANA SCHROEDER/CDB
These companies have significant mention in this week’s Crain’s Detroit Business: A.F. Jonna Development & Management . . 20 Ann Arbor VA Healthcare System . . . . . . . . . 3 AutoHarvest Foundation . . . . . . . . . . . . . . 13 Axis Advisors . . . . . . . . . . . . . . . . . . . . . . 22 Beztak . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Brooks Kushman . . . . . . . . . . . . . . . . . . . . 11 Brooks Wilkins Sharkey & Turco . . . . . . . . 11 Butzel Long . . . . . . . . . . . . . . . . . . . . . . . 12 Carhartt . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Clark Hill . . . . . . . . . . . . . . . . . . . . . . . . . 13 Colliers International . . . . . . . . . . . . . . . . 20 Detroit Mercantile . . . . . . . . . . . . . . . . . . 21 Detroit VA Healthcare System . . . . . . . . . . . 3 Dykema Gossett . . . . . . . . . . . . . . . . . . . . 22 Fairlane Town Center . . . . . . . . . . . . . . . . . 1 Fuller Central Park Properties . . . . . . . . . . 20 General Motors . . . . . . . . . . . . . . . . . . . . . 11 Great Lakes Health Connect . . . . . . . . . . . . 1 Harrison Media . . . . . . . . . . . . . . . . . . . . . 18 Jaffe Raitt Heuer & Weiss . . . . . . . . . . . . . 22 Lawrence Technological University . . . . . . . 4 The Mall at Partridge Creek . . . . . . . . . . . . . 1 NAI Farbman . . . . . . . . . . . . . . . . . . . . . . 22 New Holland Brewing . . . . . . . . . . . . . . . . 21 Rojo Mexican Bistro . . . . . . . . . . . . . . . . . . 3 Sarkori Architecture . . . . . . . . . . . . . . . . . 20 Tanner Friedman . . . . . . . . . . . . . . . . . . . . 18 Taubman Centers . . . . . . . . . . . . . . . . . . . . 1 TD Industrial Coverings . . . . . . . . . . . . . . . 21 Warner Norcross & Judd . . . . . . . . . . . . . . 11 Wayne State University . . . . . . . . . . . . . . . 20 Wayne State University Physician Group . . . 6 WMYD-Channel 20 . . . . . . . . . . . . . . . . . . . 1 Woodward Brown Associates . . . . . . . . . . . 20 WXYZ-Channel 7 . . . . . . . . . . . . . . . . . . . . . 1
Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 4 BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . 17 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 5 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 17 RUMBLINGS . . . . . . . . . . . . . . . . . . . 23 WEEK ON THE WEB . . . . . . . . . . . . . . 23
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Southfield plan points path toward more walkable downtown BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS
Tooling down Evergreen Road in Southfield these days brings thoughts on the finer points of car suspensions and whether the people who make them are careful about it. But what if Southfield became more walkable? Workers were expected to begin ripping up the street Monday, the first step in a $12 million plan to turn the stretch of Evergreen between 10 and 11 Mile roads into a pedestrian-friendly zone. It’s the beginning of a broader plan to transform part of what’s dubbed City Centre into a retail-heavy, downtown-like area. City Centre is a triangularshaped special assessment district bounded by Evergreen, Northwestern Highway and 11 Mile, with the municipal complex area on the east and the Lawrence Technological University campus on the south. It also contains the landmark Southfield Town Center. By spring of next year, the one-
The
mile stretch of Evergreen will have been winnowed down to four lanes from six and seven, have green medians running down the middle and be punctuated with traffic roundabouts at Civic Center Drive and at 11 Mile. The median will add green space when Evergreen is closed off for events, while the roundabouts will guide traffic away from Evergreen. The sidewalks, now right at curbside, will be separated from the street by boulevards, while lighting, bus shelters and bike racks will be updated or added. The plan already has one thing going for it: There’s already a big park, library and golf course on the east side of Evergreen, where the municipal complex is. A specially marked “crossing plaza� midblock will make it clear that pedestrians are expected to traverse from one side to the other. The plan acknowledges the changed competitive landscape between cities and suburbs. As it’s become fashionable for companies
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COURTESY OF LAWRENCE TECHNOLOGICAL UNIVERSITY
“This redevelopment project is a response to the changing demands of the business community today,� said Rochelle Freeman, Southfield’s business development manager, of plans to change how the Oakland County city core functions.
to move to cities with identifiable downtowns, like Detroit, the sprawling office complexes of the suburbs have begun to look oldfashioned. The most striking piece of landscaping at 2000 Town Center is inside the glass walls of the tower’s lobby. “This redevelopment project is a response to the changing demands of the business community today,� said Rochelle Freeman, the city’s business development manager. But businesses are still attracted to the things that drew them to Southfield in the past, such as a central location and quick access to expressways, Freeman said. “We want Detroit to be successful. We’re all in favor of that,� Freeman said. “We do know Detroit is attracting a lot of great new tenants, but the city of Southfield is also attracting a lot of great new tenants from Detroit. Detroit is not for everybody.� Renderings of land a bit deeper into the area west of Evergreen show retail businesses overlooking wide, brick-paved pedestrian avenues filled with trees, art and bike racks. The renderings, purely conceptual at this point, were drawn up by Lawrence Tech students looking at market research data from Gibbs Planning Group in Birmingham that said City Centre could support 645,000 square feet of retail space, Freeman said.
BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit June 14-20. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Dok Mai Thai LLC, 3955 Telegraph Road, Bloomfield Hills, voluntary Chapter 7. Assets: $6,000; liabilities: $182,380.97.
Paskotech Painting and Industrial Flooring Inc., 7562 Greening Lane, West Bloomfield Township, voluntary Chapter 7. Assets: $41,165; liabilities: $928,759.46. Utech Properties LLC, 210 W. University Drive, No. 7, Rochester, voluntary Chapter 11. Assets and liabilities not available. — Natalie Broda
City Centre has drawn $120 million in development commitments since the start of fiscal 2014, according to numbers tallied by the city. Lawrence Tech announced in February that the first phase — a
three-story, 34,000-square-feet building — of its planned A. Alfred Taubman Engineering, Life Sciences and Architecture Complex will cost $15 million. The school estimates a total price tag of $55 million for the complex.
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Ceremony just part of ‘grand bargain’ work There were handsettlement authority, shakes and hugs and ohalong with oversight and so-many pictures with a pension reforms. smiling Gov. Rick Snyder It was a historic day holding copies of the for the city that saw De“grand bargain” bills he mocrats and Republihad just signed into law cans, Mayor Mike Dugthat seek to assist Degan and members of the troit’s exit from bankDetroit City Council standruptcy. ing together in support But Snyder, and nearof the city. ly every lawmaker and “This is a nice pause to dignitary that spoke afcelebrate,” said Sandy Chris Gautz ter him Friday morning Baruah, president and at the signing ceremony, made CEO of the Detroit Regional Chamber. clear that this is not the end. But there is still much more work The city is still in bankruptcy to be done, he said. and a crucial vote by the city’s reWhile it may not have official dutirees is ongoing. ties, the way retirees do in voting on “This isn’t a final victory lap,” the plan placed before them by the said U.S. District Judge Gerald court, Baruah said the business Rosen. “We’ve got a couple more community has plenty it can do. laps to run.” “We’re preparing now for the Snyder said it should also not be day we come out of bankruptcy so lost on anyone that Detroit retirees we’re ready to market and sell are being asked to make real sacri- Michigan and Detroit to an interfices in the municipal bankruptcy. national audience,” Baruah said. “No one should ever forget “It’s an incredible investment enthat,” he said. vironment.” Protecting those retirees as best as possible was front and center in the minds of several lawmakers The M-1 Rail project has been a who spoke, and who also praised Reps. Thomas Stallworth, D-De- long time coming, with fits and troit, and John Walsh, R-Livonia, starts and different iterations, but for their hard work on the package it is close to breaking ground, not slowing down, backers say. of bills. What appears to be political posThe “grand bargain” authorizes a $194.8 million state payment to the turing turned into a round of dam-
Capitol B r i e fi ng s
M-1 on track
age control for organizers of the $137 million project last week. When media reports surfaced that suggested the project could be indefinitely delayed if federal funds were not approved, the group dedicated to seeing the 3.3-mile streetcar run along Woodward Avenue become reality put out a statement that this was not the case. The reports were based on a letter written by members of the state’s congressional delegation urging approval of a $12.2 million grant by Transportation Secretary Anthony Foxx. The letter said that without the funding the project could be delayed and those costs could ultimately make the project unaffordable. But Matt Cullen, president and CEO of M-1 Rail and president of Rock Ventures, said the project is moving forward — with or without the grant. The grant “is very important to us, and we are hopeful about it … but the board is confident that Cullen if it doesn’t come forth, we’d continue to persevere,” Cullen told Crain’s on Friday. Cullen said the board is prepared to move operating funds to complete the project and that
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fundraising would continue if it didn’t receive the grant. The U.S. Department of Transportation is expected to rule on the grant in September. Meanwhile, the project is continuing, with the next expected step coming Tuesday when the Detroit City Council could approve the op-
erating agreement. Once that occurs, the group will sign a contract to begin construction, which should be finished within 2½ years. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz Dustin Walsh contributed to this report.
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Come 2016, physicians employed by the Wayne State University Physician Group will work in a $53 million ambulatory care center on Woodward Avenue in Midtown.
WSU Physician Group to consolidate in Midtown site BY JAY GREENE CRAIN’S DETROIT BUSINESS
©2014 TCF National Bank. Member FDIC. www.tcfbank.com
All of the physicians employed by the Detroit-based Wayne State University Physician Group will report to the same clinic building when the group’s $53 million ambulatory care center opens in Midtown in 2016. The planned five-story, 153,000square-foot ambulatory center, at 3750 Woodward Ave., will house all of the nonprofit academic group’s more than 15 specialty clinics in about 100,000 square feet, said Ken Lee, executive director of Lee WSUPG and vice dean of business affairs for the medical school. WSUPG has 2,255 physicians in its group practice. “We are going to lease space and consolidate all our clinic offices in Detroit into one building,” said Lee, adding that the group had considered acquiring and developing its own building. “We talked about it, but I don’t like owning real estate.” he said. “We are health care” providers. Consolidation of the clinical practice also is expected to help WSUPG increase revenue by generating operating efficiencies and greater internal patient referrals, Lee said. “We don’t get the advantage as does (University of Michigan Faculty Group Practice and Henry Ford Medical Group) of having people in a central location,” Lee said. “We will have one-stop shopping, an increase in referrals. We won’t have the leakage” of patients going elsewhere. Lee said WSUPG projects a 10 percent to 20 percent increase in patient revenue as referrals beSee Next Page
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tween specialists become more fluid and new patients seek the academic group. If revenue increases 10 percent, Lee said, WSUPG could generate an additional $10 million in annual revenue. John Ferchill, chairman and CEO of the Cleveland-based Ferchill Group, is developing the building for Southfield-based Midtown Project LLC, a group of local investors who have owned the building for more than 12 years. Midtown is represented by Southfield attorney Gary Novara. Other tenants in the building, formerly called the Professional Plaza, could include one floor leased by the Detroit Medical Center, Ferchill said. He said the building will be rounded out with other medical, pharmacy, eye care, retail and food services. “We intend to start clearing the site later this month, start demolition (in July) and open in 18 months,” Ferchill said. Jim Bieri, president of Detroitbased Stokas-Bieri Real Estate, said the tenants best suited for the space depend on its configuration, but a drugstore and food are good options. “That area is always good for fast casual” dining, he said. Over the past two years, the physician group has been consolidating about 160 office locations in Southeast Michigan into its four main buildings in Troy, Dearborn, Southfield and now Detroit, Lee said. In 2012, WSUPG opened a corporate administrative office in Troy that also has physician offices and an outpatient surgery center. Some WSUPG physicians, including its obstetrics and gynecology group, already have an office at 3750 Woodward, just north of Mack Avenue and next to the new Whole Foods Market. Other tenants of the building include Comerica Bank and a Subway sandwich shop. Lee said other physician group practices include family medicine, internal medicine, surgery, neurology, dermatology, ophthalmology and oncology. Combining the offices isn’t expected to directly save on real estate costs, Lee said. “We will have a lot more efficient operation and a lot nicer place for patients to come,” he said. “There will be cost savings from the fact we will cut down on front-office staff because of the combined lobbies. We will continue to expand, so we will have the same number of employees. We will have opportunity savings.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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OPINION
‘Grand bargain’ day is one to celebrate I
t is nonpartisan, it is out-of-the-box, and everyone from U.S. District Judge Gerald Rosen to Gov. Rick Snyder’s team to union and retiree group leaders should be congratulated. (Not to mention state lawmakers who irked us all the previous week over stalled action on road funding.) The “grand bargain” for Detroit’s bankruptcy includes $195 million from the state, along with $366 million from foundations and a $100 million pledge from the Detroit Institute of Arts. As Snyder signed the grand bargain bills Friday, we saw political forces that usually don’t agree standing together. (See Chris Gautz column on Page 5.) It was a historic moment. Under the bargain, for the next 20 years, the state’s rainy day fund will be replenished with annual payments of $17.5 million from the state’s tobacco settlement revenue. While it’s not time yet to get out the cigars because a trial on the restructuring plan is set for August and retirees still need to sign off, the bill-signing was a significant milestone.
LETTERS Belle Isle shined for Grand Prix Editor: I recently reveled in a truly Big Night in the D. It was one of those occasions that made me extremely proud to be a Detroiter, and it clearly made a similar impression on others as we were still talking about it at board meetings and in business circles in the days that followed. The May 30 Grand Prixmiere on Belle Isle, on the eve of world-class auto racing with the Chevrolet Detroit Belle Isle Grand Prix, showcased the spruced-up island in a glorious light. Thanks to enhancements by the Michigan Department of Natural Resources since the island became a state park in February, and the vision and dedication of Roger Penske and his entire organization, our island gem
Time to break ground on M-1 It’s time to get M-1 Rail construction on the fast track. Supporters of the 3-mile loop along Woodward Avenue were jolted last week by conflicting news reports. A Page 1 story in The Detroit News that said a $12 million shortfall jeopardized the funding on the $137 million project was followed a day later by M-1 leaders saying the project was secure. If it’s secure, break ground already. This project has been on the drawing board since 2008, when private sector and philanthropic leaders committed to leading the funding. Construction was to begin by this spring, with the system in operation by 2016. While underground utility work began in December, above-ground work isn’t yet visible. Significant work needs to start now and be a catalyst for even greater investment.
gleamed. The more than 500 guests who journeyed onto the re-polished island for the sold-out fundraiser supporting the Belle Isle Conservancy were treated to a beautifully flowing Scott Fountain and breathtaking panoramas of downtown Detroit
and the U.S.-Canadian shoreline in the background. The event itself rivaled anything that New York or Los Angeles could muster … but in a more beautiful setting. Best of all, the event raised more than $650,000 for island restoration projects. PricewaterhouseCoopers, Chevrolet and all the other Grand Prixmiere sponsors, along with the Belle Isle Conservancy and the Penske organization, should be congratulated. The D and Belle Isle sparkled on the big stage provided by the Grand Prix. Not only is Detroit being financially retooled, its iconic jewels are being saved and showcased. Richard Rassel Chairman, Butzel Long Member, Grand Prixmiere host committee Detroit
TALK ON THE WEB
VA should farm out routine care Referrals are one answer to the pain point in the Veterans Administration hospital backlog. As Jay Greene reports on Page 3, the VA Hospital in Ann Arbor is on the docket for a deeper audit as the VA examines long wait times at facilities around the country. And a solution — referring perhaps $20 million in care to two other health care systems in the Ann Arbor area — could be replicated across the country. The VA should focus on complicated cases of veterans of the armed forces; let more routine care be handled by existing health care delivery systems.
Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com
From www.crainsdetroit.com Re: State plans background checks on home-help aides The majority of nonviolent exfelons have the right to secure employment. There is no value in creating more barriers for these people. Greg Thrasher
Re: Report: Higher taxes helped Minnesota economy outpace Michigan The idea that the government can play a positive role in job creation by creating infrastructure and an educated workforce is apparently too radical an idea for many to accept. TS Galloway Comparing the tax rate of an automotive-dependent state during the past 24 years as it collapsed to an economy less dependent upon a one-employment sector is pure manipulation of numbers. No Spin; Facts Please
Re: Lawmakers have until July 1 to find $115M in road projects What happened to the $971 million budget surplus announced in
Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. January? They’ve had six months to work on this. And why just $115 million? Where’s the rest? The people want the roads fixed. Deana Vitale
Re: Spin, blame follow inaction on roads funding Found money to bail out Detroit. Found money to expand Medicaid. Found money to roll out Common Core. No money to fix something that pretty much everyone agrees on, which is that the roads are and continue to be a mess. Having some politician say “it’s not really a big deal” is insulting. William J
Re: Keith Crain: A pox on all their houses for delay on roads The Michigan Legislature needs to be fired, every last one of them. The people of Michigan need to stand up to these failures. The party lines are irrelevant; they simply don’t represent a meaningful dif-
ference in choice or direction. Vote out the old even if the new option is completely unknown or claims to be aligned with the party that you disapprove of. It will be a much better option than keeping the current bunch of special-interest, self-serving failures. Robert Bescoe
Ann Arbor VA hospital one of 3 in Michigan under federal investigation As a veteran, I’ve been a patient at the Ann Arbor VA Medical Center since 2010, and before that the James Lovell VA Medical Center in North Chicago. My care at both facilities has been excellent. Thomas Gillette When my father became sick in 2008, I was impressed with the level of care he received at the Ann Arbor VA hospital. He was treated promptly and thoroughly and, when it was determined that the care he needed couldn’t be provided by their facility, they helped our family arrange a transfer to an assisted living facility. Jessica Carreras See Talk, Page 9
KEITH CRAIN: Phony Detroit project should lose trademark It was announced with a great deal of fanfare last year that an Asian company would build electric cars in Wayne County under the historic name Detroit Electric. The company’s electric car, which was an English shell with Asian electric motor and batteries, was met with back-patting and handshakes from local dignitaries. Yet there was nothing Detroit about it except the name. At the time, I referred to the pro-
ject as Grand Theft Auto, and it sure looks like it’s been confirmed as the company is now setting up shop anew in the Netherlands. I never thought that it would really do business in Detroit, so I wish that the U.S. trademark office could wrestle control of the Detroit Electric name from this Asian/European company.
I have no doubt that someone will eventually want to produce another real electric car in Detroit and should be able to use this name. It was irritating at the launch, and even more so now, that an Asian company using a British car was going to use this name that just might have some value.
I would like to think that anyone who wants to use “Detroit” in his or her corporate or brand name should have some serious connection with the city and this community. It may not be required — but it should be. I have no idea who is the keeper of brands in our city. I sure would not wish to dump this additional responsibility on our city officials; it is just another thing on a long list that should be someone else’s responsibility. Perhaps the attor-
ney general could take it as a pro bono service. I was a bit outraged at these Detroit Electric folks who came into our city claiming all sorts of activities that obviously never came true. And now, not surprisingly, they skipped town. I have no idea what this community is supposed to do, except lament the theft of what was once a revered brand name. I just hate to see this company get away with Grand Theft Auto.
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OTHER VOICES: ‘Yes’ on Prop 1 would ax unfair, unreliable tax vices is to keep our local kind of hit. funding for police, fire, ambu- Michigan Sheriffs’ Association all Public safety officials community members and Now we finally have a solution lances, schools, jails, libraries, support Michigan Citizens for like me across the state visitors safe. — a solution that not only creates roads and other important ser- Strong and Safe Communities, a are doing all they can to Communities have been a more reliable system for funding vices would be forced to continue bipartisan coalition endorsing a make sure voters know relying on the personal essential local services, including to rely on a source of revenue that “yes” vote on Proposal 1. The coalitheir communities need property tax for revenue police and fire, but does so without we know to be unstable and unreli- tion includes tens of thousands of them to vote “yes” on Proto provide local services raising taxes. Proposal 1 is not a able. Michiganians representing police, posal 1 on the Aug. 5 balfor years. But you really tax increase. As members of the Michigan fire, education, local government, lot. couldn’t find a more unAnd it is not a constitutional Association of Chiefs of Police, small business, labor and farm Proposal 1 solves two predictable, unreliable amendment. we are proud to stand with Ford groups. major problems — withsource of revenue. When If this proposal fails, local small Motor Co., the Michigan MuniciIt’s important that voters in out a tax increase. It eliminates the person- Ronald Haddad Electrolux moved its businesses and manufacturers pal League and the Detroit Re- Dearborn and in communities al property tax — an unfair, anti- Greenville operations to Mexico, would go back to paying the unfair gional Chamber in support of Pro- across Michigan understand what’s at stake on Aug. 5. Please quated double tax on personal its PPT taxable value plummeted double tax on equipment, which posal 1. Additionally, the Fraternal Or- vote “yes” for public safety — vote property paid by local small busi- from $40 million to $34 million in punishes local businesses and nesses that most neighboring just one year. Michigan communi- threatens Michigan’s economic re- der of Police, Police Officers Asso- “yes” for Proposal 1. ties, and the businesses that thrive covery. ciation of Michigan, Michigan AsRonald Haddad is police chief of states don’t charge. If this proposal fails, community sociation of Fire Chiefs and the Dearborn. What is critical to me and my in them, simply cannot take that colleagues, though, is that Proposal 1 also replaces the unpredictable PPT for communities with a stable, reliable funding source to reimburse cities like Dearborn and other local governments for providing important local services. Many communities currently rely on the money raised by the PPT to help fund these services — including police, fire and ambulance services — even though it is an unreliable revenue source. And most important to taxpayers: Proposal 1 also includes a guarantee that 100 percent of the Each business is different, so DTE Energy offers an online Interactive Business tool which estimated revenue Michigan communities lose from the elimination lets you get information tailored to your specific business environment. From grocery of the PPT will be replaced. The stores to warehouses, you’ll find tips, incentives, rebates and more that will help you funding would be specifically dedicated for local community serreduce your energy use. We also provide a number of other online tools to help our vices. That means it is not subject business customers use less energy and save more money. to the politics and uncertainty of annual state budget battles. Without raising taxes, Proposal 1 also gets cities like Dearborn out from under the burden of administering the personal property tax while ensuring all estimated lost DTE wants to help you save, so get started at revenue is replaced. I know firsthand how important dteenergy.com/interactivebusiness steady, reliable funding for ser-
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TALK CONTINUED ■ From Page 8
Re: Companies take in revenue as e-inhalers gain in popularity Calling these products smokingcessation devices is so uninformed. NV Effect Good article. E-cigs are a great alternative for smokers. Castello
Re: Age diversity makes for better workplaces Tara Miceli’s June 9 op-ed piece on how age diversity makes for a better workplace is exactly what small and midsize businesses need to hear. By seeing age diversity as an advantage, it gives these companies the opportunity to put together a staff capable of bringing the best out in each other. It also addresses the concern about the perceived shortage of talented workers in Michigan. In essence, we all need to develop our communication skills in dealing with those older and younger than us. When we can do that, we will make for a better, more productive and more profitable workplace. Tom Borg
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REPORTER’S NOTEBOOK Dustin Walsh writes about auto suppliers, manufacturing, the steel industry and the business of law. Call (313) 446-6042 or write dwalsh@crain.com
Dustin Walsh
BY ‘DRIVERLESS,’ YOU MEAN? ... Autonomous vehicles idle while law catches up, Page 13
Auto Law
Patent trolls are, in a sense, legal extortion. These entities, which do not produce a product or sell a service, are set up only to bring about patent infringement lawsuits in hopes of collecting a payday. Google Inc. and Apple Inc. reportedly spend more on patent litigation than research and development — much of it against each other but a portion toward defending against patent trolls. One of the first known victims of patent trolling was right here in Detroit, when in 1903 Henry Ford was sued over his first production of the Model A. Ford Motor Co. was sued by a New York attorney named George Selden, who filed a patent for a horseless, engine-powered carriage in 1879, according to a recent Forbes article. Selden was never able to make a working engine, which only existed in a drawing. Ford lost the case in 1909 but won the appeal in 1911 on the grounds that Selden’s patent entailed only a twostroke engine, unlike Ford’s four-stroke. In 2011, President Barack Obama signed the Leahy-Smith America Invents Act, which makes it more difficult for patent trolls. However, trolls remain an issue, said Marc Lorelli, a partner at Brooks Kushman PC in Southfield. Patent troll litigation, Lorelli Lorelli said, “takes away resources for more merited issues at companies across all industries.” The America Invents Act now allows companies to file against a patent troll in the U.S. Patent and Trademark Office, where a panel of three judges will determine the validity of a patent. Lorelli said this process still takes about a year. “As of now, it’s been a very effective way to address the unmerited claims,” Lorelli said. “But it hasn’t slowed down the number of filings.” The U.S. Supreme Court ruled on the issue this year by allowing judges to impose fees on a baseless patent infringement lawsuit. And while the U.S. Congress has flirted with patent troll legislation, it has been unable to establish a ruling. “Cutting just the troll out is very difficult to do,” Lorelli said. “There are so many companies, individuals, universities that have patent rights; some may have a merited case that gets hurt by legislation.” So patent trolls march on, even harming investments. Over the past five years, U.S. venture capital investment would have been nearly $22 billion more without patent troll litigation, according to a May study by researchers at the Massachusetts Institute of Technology. For context, venture capital invested roughly $131 billion over the same time period.
ISTOCK PHOTO
Patent trolls take their toll
Automakers, suppliers buckle up GM recall scandal has manufacturers scrambling to review documents, practices to protect against potential liability BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS
T
he General Motors Co. recall saga is triggering a new reality for automakers and the supply base. Automotive manufacturers must — because they can’t afford not to — protect themselves from liability in every aspect of production. Attorneys around metro Detroit have been in overdrive since the GM recall scandal broke in January, either assisting the automaker or working with suppliers as recalls spike across the industry. Companies are feverishly working to correct potentially harmful language in documents, identify legal liabilities and prepare for the possibility of increased regulation. “Everyone is running scared because they don’t want to take any chances,” said Dan Sharkey, partner at Birmingham-based Brooks Wilkins Sharkey & Turco PLLC. “I’ve dealt with more client calls about recalls in the last few months than
I’ve dealt with in the 10 years prior.” As of June 18, GM alone had issued a record 44 recalls of 18 million cars in the U.S., although some of those were counted more than once because they are Sharkey being called back for multiple fixes. GM has set aside $1.7 billion to cover recall-related expenses this year. It’s the legal ramifications for GM that has the industry scrambling. The Detroit-based automaker has already been slapped with a $35 million fine by the U.S. Department of Transportation, is under a criminal investigation that could lead to fines and several civil lawsuits related to the faulty ignition switches linked to at least 13 deaths. The civil suits have already dragged in suppliers Delphi Automotive plc, maker of the ignition switch, and Continental AG, which supplied airbags to the defective cars. The lawsuits allege Continen-
tal and Delphi knew of the issue and didn’t fulfill a duty of reporting them to the National
Highway Traffic Safety Administration. “The fear of liability is growing,” said Tom Manganello, partner and Manganello co-leader of the automotive industry group at Warner Norcross & Judd LLP in Southfield. “A lot of suppliers think they are covered if they notify the OEM, but NHTSA may be taking a closer look at the participants in the reporting system.” Manganello said he’s now recommending that clients go their customers first, but if they “drag their feet” on reporting, then go directly to NHTSA to avoid getting caught in the middle of an investigation. Attorneys said the U.S. Department of Justice is eager to expose alleged wrongdoing in large industries. Automotive is See Review, Page 12
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Focus: Auto Law
Review: Recall prompts retooling ■ From Page 11
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already in the middle of the largest antitrust investigation in U.S. history. The antitrust investigation, which as led to $2.35 billion in fines, alleges dozens of suppliers engaged in discussions to rig bids of wire harnesses, airbags, and several other automotive products. The scandal has led to several civil lawsuits as well. “The DOJ is fishing for deep pockets,” Manganello said. “If you’re unsure of your obligation … report it.” Sharkey said the GM situation has increased attorney oversight into intercompany communications. Last month, the now infamous 68-word list of “banned words” at GM became public. Sharkey said this is becoming more mandatory for the supply base as well. “There are certain buzzwords that I don’t like my clients to use; you don’t guarantee things,” Sharkey said. “Engineers like to use certain language, but without knowing any better, they are open-
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The best advice I give to clients “ is to get their people well-educated about the laws, how to handle reporting and requests from outside the company. This is a communication issue at its root.
”
Daniel Rustmann, Butzel Long PC
ing the company up to liability.” Those words include: “failure,” “defect,” “dangerous,” “completely safe” and others. Comparisons between safety and price are also off limits, Sharkey said. “Saying something like, ‘If we spend $5 million we could make this product 1 percent safer’ is innocuous at the time, but looks terrible after an incident. But the reality is people make those decisions everyday, otherwise we’d all be driving Sherman tanks.” Daniel Rustmann, partner and cochair of the global automotive practice at Detroit-based Butzel Long PC, said the “era of recalls” is causing an increase in training on liability, from top to bottom in organizations. “The best advice I give to clients is to get their people well-educated about the laws, how to handle re-
porting and requests from outside the company,” he said. “This is a communication issue at its root and needs to be handled effectively.” Rustmann said that too often engineers identify and try to correct the problem themselves without elevating the issue to create a team to review internally. Externally, Rustmann fears, the GM recall issue will erode communication between automakers and suppliers. “The best way to go would be to share information more freely and work new systems to communicate better,” he said. “But because of the litigation atmosphere, I fear it will result in less collaboration and more isolation.” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh
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Focus: Auto Law
Driverless tech: First comes carriage ... then the law BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS
When it comes to law, words matter, and their definitions matter even more. The big problem with legal definitions surrounding driverless vehicle technology: There are none. Although a few states, Michigan included, have begun to acknowledge driverless systems in their law books, the subject mainly remains a legal gray area. Michigan’s laws, passed in December, only provide for testing of autonomous vehicles, and no state’s motor vehicle regulator (like Michigan’s Secretary of State) has begun addressing driverless technology in its rules. This is where the legal work will need to be done if full-blown driverless systems are to become a consumer reality, those who study the issue say.
Uncharted road “For truly autonomous vehicles to be successfully implemented in volume and in multiple states — a critical mass of deployment — there are going to need to be significant changes in law. One is permitting these vehicles on roadways, and that Kohler will take a number of years,” said William Kohler, speaking in his capacity as head of Clark Hill PLC’s automotive practice before taking a position as chief legal officer for Dura Automotive Systems last week. Analysts aren’t in even full agreement on the present legality of driverless systems. Some say the law’s lack of wording makes the systems tacitly legal, much as some new recreational drugs are legal until lawmakers or regulators say otherwise. For testing purposes, manufacturers already have special plates that should cover them. On the other hand, laws “presume and were intended to pertain only to vehicles that have drivers,” Kohler said. If autonomous vehicles hit the roads today, the result would be wildly varying court interpretations. “For autonomous vehicles to appear — nontesting — on American roads, there needs to be state-level legislation authorizing the operation of autonomous vehicles on states’ roads. That has occurred in only a few states subject to regulations being developed,” Kohler said.
Talking the talk Even basic terminology of autonomous vehicles isn’t agreed upon. “Driverless” and “autonomous” are the more widely used terms. Many developers and manufacturers who would put these systems on the road prefer “automated,” raising the possibility that the phrase “automated automobile” could be used in all seriousness — not an encouraging sign for anyone looking to clarify the law.
THE LINGO OF THE CONNECTED CAR Connected vehicle: Equipped with technology that enables a connection between other vehicles, infrastructure and a consumer wireless device. Automated vehicle: Uses mechatronics and sometimes connectivity to gather information and autonomously perform driving functions. Automated technology includes lane departure warning systems, emergency braking and adaptive cruise control. Autonomous vehicle: A vehicle equipped with radar, remote sensing, cameras and other technology to perform many or all of the driving functions — better known as a self-driving car. Automotive experts think partially autonomous vehicles will be sold by 2020. Muddying things further are the many gradations of automated vehicles. The National Highway Traffic Safety Administration and SAE International have applied levels to these gradations to bring some definition to the subject. Lower levels have the least amount of automation — features like adaptive cruise control — while the highest level means a person doesn’t have to be in the car to “drive” it. (See box.) It’s at these higher levels where the most society-changing effects would be — in safety, use of time, land use — and also where the biggest legal questions arise. “Everything will have to be redone in the context of this technology,” said David Cole, former longtime chairman of the Center for Automotive Research in Ann Arbor and now chairman of AutoHarvest Foundation in Detroit. Truly autonomous cars are the furthest from being ready for wide Cole public consumption because the technology still needs work and they involve things like changes to traffic infrastructure. But as things go, technology tends to march faster than law.
The legal driver’s seat While safety and liability concerns have been the focus of much of the legal talk over autonomous driving, the basic legal framework to accommodate the systems at all will need to happen first. “We won’t have major manufacturers committing to production of autonomous vehicles in volume until they can be sold in most states, not just one state,” Kohler said. As a practical matter, the law books’ saying nothing will only go so far. Otherwise, awkward legal questions arise — unintended consequences of laws made without a thought toward cars without people in them. “And those questions might be addressed first by legislatures, and if not, then they will be addressed by the courts,” setting the stage for a mess of rules and precedents, said Bryant Walker Smith, a fellow at
the Center for Automotive Research at Stanford University and a professor of law at the University of South Carolina. State laws say things like this passage from California’s rulebook on unattended vehicles: “No person driving, or in control of, or in charge of, a motor vehicle shall permit it to stand on any highway unattended without first effectively setting the brakes thereon and stopping the motor thereof.” Is it really unattended if the person who put it there did so from a computer screen miles away? And has the power to drive off using the same system? Isn’t that person “in control” of it? Similar questions arise from laws regarding negligence and distracted driving. Smith notes in one of his research papers from 2012 that an Ohio law says, “No person shall drive a ‘commercial motor vehicle’ ... while the person’s ability or alertness is so impaired by fatigue, illness, or other causes that it is unsafe for the person to drive such vehicle.” A strict interpretation of this and other distracted-driving laws would effectively outlaw autonomous driving, as one of the prime selling points is the ability to nap or read on the way to work. Countless examples like this can be found if a person were to peruse every state’s driving laws, which is precisely what Smith did. For the past three years, he has been studying, full time, the finer legal conundrums that autonomous driving exposes. He calls for common vocabularies and definitions, and for states to examine how their laws would apply to automated vehicles, with or without human operators. His work points needling questions at previously straightforward concepts like “driving.” What’s a “driver”? Does it have to be a person? How is it different from “operating”? Statutes are filled with these and other terms like “prudence,” “due care” and “reasonable” when it comes to driving responsibility. “Under the existing code, a human user could almost always be considered a ‘driver,’ ” regardless of where that person is, Smith said. “That is probably not appropriate for these higher levels of automation.” Many ambiguities could be clarified by through statements of purpose that say the state’s intent is to promote the use of safe technology on the road, he said. Judges would then use these statements as guidance for interpreting flexible concepts like “prudence” and “driving,” said Smith. States also could define terms like “automated operation,” “automated vehicle” and “driver,” which then would allow for clearer rules on unattended vehicles, distracted driving and so on. Adjustments such as these would smooth out most wrinkles in the legal codes and make it so every comma of the law doesn’t need reviewing. Smith does recommend, however, that autonomous system developers get in front of any legal issues by scrutinizing the codes and publicly requesting relevant changes.
It will take a lot of work to sort out the issues ahead, and that means business for lawyers. “Those who understand the legal issues — and anticipate them — will be wellrewarded,” Kohler said. An overhaul of the rules is necessary but not urgent, Cole said,
offering a final word of temperance. Although headlines suggest otherwise, the technology still has quite a way to go and the path it will take it remains unclear. “It’s very early,” he said. “The hype is running faster than the technology.”
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CRAIN’S DETROIT BUSINESS
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THE MILLER LAW FIRM Changing the Odds in our Clients’ Favor
Page 16
June 23, 2014
BUSINESS DIARY ACQUISITIONS & MERGERS Galco Industrial Electronics Inc., Madison Heights, a distributor of industrial and commercial electrical and electronic control, automation and motion products, was acquired by affiliates of AEA Investors LP, New York City. Quarton Partners LLC, Birmingham, acted as the financial adviser to Galco. Websites: galco.com, aeainvestors.com, quartonpartners.com.
CONTRACTS Gale Group Inc., Farmington Hills, part of Cengage Learning Inc. and a publisher of research and reference resources, announced an agreement to add more than 400 John Wiley & Sons Inc. e-books to the Gale Virtual Reference Library. The new titles include monographs covering business and economics, medicine, computer science and psychology, as well as titles from the “For Dummies” series. Website: gale.cengage.com. Near Perfect Media LLC, Farmington Hills, a public relations and marketing firm, added clients Moncur Associates and Funderbuilt, both in Southfield; Scavolini Store Detroit, Birmingham; Scavolini Store Chicago, Chicago; and Rockstar Digital Inc., Sterling Heights. Website: nearper fectmedia.com.
The Miller Law Firm is Recognized as a Leader in Complex Business Litigation Q
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implemented the IntelliResponse Virtual Agent technology platform by IntelliResponse Systems Inc., Toronto, on its website and Facebook page. Genisys members can use the platform to ask questions online and receive instant answers through the “Have a Question?” feature. Website: genisyscu.org. Hino Trucks, Novi, a Toyota Group company, with Telogis Inc., Aliso Viejo, Calif., is launching Hino Insight 2.0, Telogis’ Web-based location and telematics product and service suite tailored for the medium-duty commercial truck market. The suite will provide Hino customers with access to solutions for route optimization, real-time work order management and truck-specific navigation. Websites: hino.com, telogis.com. Magna International Inc., Troy, and Ford Motor Co., Dearborn, unveiled a multi-material lightweight vehicle concept based on the production version of a 2013 Ford Fusion that achieves a nearly 25 percent weight reduction compared to the current production vehicle, resulting in environmental and fuel-economy benefits. The project is co-funded by the U.S. Department of Energy. Website: magna.com.
NEW SERVICES ProQuest LLC, Ann Arbor, added more than 1,650 e-book titles from publishers Wiley and Wolters Kluwer Health to Academic Complete, the flagship ebook database from ebrary. A new enhancement for the database, the LibraryThing for Libraries Book Display Widget, will enable libraries to display titles visually for ease in finding and using. Website: proquest.com.
DIARY GUIDELINES
2 4 8 . 7 3 1 . 9 5 0 0 | W W W. S C H E C H T E R W E A LT H . C O M | B I R M I N G H A M , M I | N E W Y O R K , N Y FA
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Securities may be offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Investment Advisory Services may be offered through NFPSI or Schechter Investment Advisors, LLC. Schechter Investment Advisors, LLC. and NFPSI are not affiliated.
Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. 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.
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PEOPLE ARCHITECTURE
FINANCE Bradford Hyde to
architectural director and associate, Kraemer Design Group PLC, Detroit, from studio director.
vice president, senior development officer, PNC Finan-
cial Services Group Inc., Troy, from senior retirement plan consultant, Alerus Financial Corp., Troy. Luke Cherveny to partner, tax practice, Pricewater-
EDUCATION Leslie Hosey to director of the Lower School, The Roeper School, Bloomfield Hills, from school and clinical psychologist, Waterford School District, Waterford Township.
Rebain
Hyde
director.
Justin
Cherveny
Detroit, from associate and office director. Chris Talwar to director, business development, FEV
North Inc.,
America
Buren Township.
IN THE SPOTLIGHT
Farmington Hills, from founder and managing consultant, Pay Strategy LLC, Huntington Woods.
Amerisure Mutual Insurance Co., Farmington Hills, has named Angela McBride chief administrative officer and Shawn O’Rourke chief technology officer. McBride succeeds Greg Crabb, who was named president and CEO. O’Rourke McBride is Amerisure’s first chief technology officer. McBride, 48, had been Amerisure’s vice president of human resources and vice president of internal O’Rourke audit. In her
HEALTH CARE Elizabeth Gravel to director of clinical services, Quadriga Group, Livonia, from case manager, Rainbow Rehabilitation Centers, Ypsilanti.
HOSPITALITY Jennifer Ealovega
Also,
Cook to
principal, advisory practice, from director; Dennis Curtis to partner, risk assurance practice, from director; Sebastian de Meel to principal, advisory practice, from director; and Eric Schwartz to partner, assurance practice, from director.
Ealovega
O’Connell
to managing director, internal Talmer audit, Bank and Trust, Troy, from compliance operations
to director of catering, Cutting Edge Cuisine LLC, Bloomfield Township, from director of catering and membership director, The Village Club, Bloomfield Hills.
MEDIA David Bangura to
Louise O’Connell
Auburn Hills, from senior director, business development, Ricardo Inc., Van
Spieles
Stuart Brody to director of compensation, H.W. Kaufman Financial Group,
houseCoopers LLP, Detroit, from
ENGINEERING Nicole Spieles to principal, Greeley and Hansen LLC,
Hosey
manager, Flagstar Bank, Troy.
Brian Rebain to
Bangura
president and general manager, WADL-Channel 38, Clinton Township, from president and general manager, WMYDChannel 20, Southfield.
CALENDAR TUESDAY JUNE 24 Healthcare Reform — Know the Rules, Get the Tools. 9 a.m.-12:30 p.m. Arthur J. Gallagher & Co. Seminar will cover classification of employees; navigating health care exchanges and marketplaces; and related topics. Walsh College, Troy. Free. Contact: Christine Kloka, (248) 502-1107; email: chris tine_kloka@ajg.com; website: ajg.com.
Systems in Motion Startup Meetup. 4-7 p.m. Systems in Motion, Ann Arbor Spark. Intended to connect startup founders in the Ann Arbor area with System in Motion’s team of developers and senior managers. Systems in Motion’s Michigan Delivery Center, Ann Arbor. Free. Contact: Daria Fellrath, (734) 418-8643; email: dfellrath@sys temsinmotion.com; website: system sinmotion.com.
WEDNESDAY JUNE 25 Michigan Cyber Awareness Luncheon Conference . 9:30 a.m.-1:40 p.m. Discussions on whether Michigan is ready for cyberattacks, what is being done to ensure the state is prepared and what the issue means to business and education. With David Behen , DTMB director and chief information officer, state of Michigan; Beth Niblock , CIO, city of Detroit; Lt. Col. Gary Gorski, deputy director, Specialized Services Bureau, Michigan State Police ; David Martin , special agent, Cyber Task Force, FBI ; Lisa Birmingham , vice president of external affairs, Comcast Corp. others. Detroit Marriott at the Renaissance Center, Detroit. $20 students or members of various organizations (see website). Contact: Leslie Smith, (248) 353-0735, ext. 152; email: lsmith@esd.org; website: esd.org.
THURSDAY JUNE 26 The Road to Reinvention. 7:30-9 a.m. En-
HONORING ENTREPRENEURS Join Crain’s Detroit Business in its 2014 Salute to Entrepreneurs, 7:30-10 a.m. July 24 at The Henry, Autograph Collection, Dearborn. Every year, Crain’s recognizes entrepreneurs for their innovation, problem-solving abilities or sheer relentlessness. In addition to the awards ceremony, hear stories of David vs. Goliath, first-hand accounts from business executives who find ways to compete against larger rivals. Featuring Eoin Commerford, CEO, Moosejaw Mountaineering; Marc Gardner, founder, North American Bancard LLC and PayAnywhere LLC; and Lydia Gutierrez, president and CEO, Hacienda Mexican Foods. Roundtable discussions will provide in-person advice from the experts featured in the Crain’s Small Business Strategies webinar series. Tickets are $50, or $45 if purchased in groups of 10 or more. Preregistration closes at 5 p.m. July 18. If available, walk-in registration will be $65 per person. For ticket information, call Kacey Anderson at (313) 446-0300, email her at cdbevents@crain.com, or visit crainsdetroit.com/events. Join the conversation with #cdbsalute.#cdbsalute. gineering Society of Detroit. With Josh Linkner, CEO and managing partner, Detroit Venture Partners, talking about his new book, The Road to Reinvention: How to Drive Disruption and Accelerate Transformation. ESD headquarters, Southfield. $25 ESD members, $40 nonmembers; join ESD for $114 and attend the program free. Contact: (248) 3530735, ext. 222; website: esd.org.
UPCOMING EVENTS Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Pol-
itics and Fragile Economy. 11:30 a.m.1:30 p.m. July 16. Detroit Economic Club. Discussion on how communities and leaders are addressing the environmental, political, economic and fiscal problems that national leaders have yet to solve. With Bruce Katz, vice president and director, Brookings Metropolitan Policy Program, The Brookings Institution, and co-author, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy; George Jackson, outgoing president and CEO, Detroit Economic Growth Corp.; Susan Mosey, president, Midtown Detroit Inc.; presiding officer Cynthia Pasky, founder, president and CEO, Strategic Staffing Solutions; and moderator John Gallagher, business reporter, Detroit Free Press. Detroit Marriott at the Renaissance Center. $45 DEC members, $55 guests of members, $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.
Business Matchmaking Summit. July 22. Pure Michigan Business Connect, Detroit Regional Chamber. Invitationonly supplier summit designed to help Michigan companies gain procurement opportunities with Chrysler Group LLC, Ford Motor Co., General Motors Co. and 42 of their tier-one suppliers. Cobo Center, Detroit. Michigan companies interested in attending must complete the online application and identify their qualifications based on the needs listed (puremichiganb2b.com/b2b-web/ #DetroitThree). Invitations will be sent to companies that are the best fit for specific opportunities. Each invited company will receive at least one private meeting to discuss potential opportunities with one of the procurement teams at the summit. Applications received now will be considered only if needs exist that have not been addressed through the initial application window, which has ended. Applicants will be notified by July 3 whether they have been selected.
REAL ESTATE Bill Bubniak to executive vice president, NAI Farbman, Southfield, from senior vice president. Clay Thomas to senior vice president, Lutz Real Estate Investments, Birm-
new role, she assumes responsibility of corporate services, human resources, internal audit, the office of legal counsel, and strategic process design and controls. She received her bachelor’s degree in computer information systems from Michigan Technological University, Houghton, and has worked for Amerisure since 2010. O’Rourke, 51, had been vice president of information technology. He will continue overseeing Amerisure’s IT department, including application development and services, architecture, infrastructure and security. O’Rourke earned his bachelor’s degree in computer science from Iowa State University, Ames, Iowa, and participated in the Stanford Executive Program of the Stanford Graduate School of Business, Palo Alto, Calif. He has been with Amerisure since 2010. ingham, from vice president, McKinley Inc., Ann Arbor.
RETAIL Jessica Roberts to marketing manager, Busch’s Fresh Food Market, Ann Arbor, from marketing specialist.
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Channel 20: More ad buys, programs ■ From Page 1
opportunity to retain the viewers who were already enjoying us or just add those who want to stay with local updates, after the (program change) to ‘Good Morning America,’ ” said Ed Fernandez, Scripps divisional general Fernandez manager and vice president and general manager of WXYZ. Also in the offing is a new 4 p.m. newscast, “The Now,” starting Sept. 8 on WXYZ (moving “The Dr. Oz Show” to 10 a.m. for its sixth season), and “The List,” a Scripps information and entertainment program that will expand to five new markets, including Detroit at 7:30 nightly starting Sept. 9. “The List” also will include Detroit-produced segments. All told, Fernandez said, the expansion will grow the station from more than 190 employees to 250 by late fall. The company has retained “about two-thirds” of the approximately 30 former WMYD employees, including all of its sales staff, to coordinate media buys, Fernandez said. Most of the remainder, including a few editorial employees, are still in discussions with WXYZ. (Former WMYD General Manager David Bangura joined Adell Broadcasting Co.’s WADL-Channel 38 as president and general manager last week.) “We are also still exploring other opportunities to expand programming on 20 as we move along, but that’s all coming together on a case-by-case basis,” he said. “We have some ideas, but it’s too early to lay them out in detail.”
Bundled buys? The 10 p.m. newscast could be an audience-builder for WMYD since it already seems to feature some new or original reporting, rather than repurposing news content from WXYZ’s earlier broadcasts, said Matt Friedman, a former news Friedman producer at WDIV-Channel 4 and co-founder of public relations firm Tanner Friedman in Farmington Hills. “What Channel 2 (WJBK-TV2) has proven is there is great demand for that programming and for morning traffic and weather and other reporting, even after the traditional turnover to the networks. And it sounds like Channel 7 is realizing they don’t want to cede that entire market to someone else,” he said. “So this gives them some flexibility, and Channel 2 is a natural target to compete for viewers now. That’s a strength of the strategy — a weakness of the strategy is this might be the worst moment for syndicated programming, so how are they going to fill their day (at 20)? And do they fill it with content relevant to advertisers?” Friedman also said the acquisi-
tion gives Scripps the opportunity to bundle sales to various advertisers, giving WXYZ a second asset and greater exposure for media buyers in the Detroit market. Fernandez said the former Granite employees will continue to sell Channel 20 advertising time for now. The new local newscasts will largely use current Channel 7 on-air talent, but the increased newscast content will increase the station’s need for producers and other support positions, he said. “That (advertiser bundling) is something that’s still getting worked out. We’ll make that determination as we move along,” he said. Friedman said generating original new content on Channel 20, rather than recycling news from earlier broadcasts as some stations that shared owners have done in the past, might build a new audience and greater advertiser appeal than Channel 20 previously enjoyed. The former WMYD 10 p.m. newscast was one of several newscasts produced and anchored by Granite’s Indiana’s News Center at WISETV in Fort Wayne, Ind., with Detroit-based reporters contributing stories. Fernandez said fewer than half a dozen WMYD employees were news staff. Friedman said a similar arrangement was in place when he joined the staff of WCPX-TV, a CBS affiliate in Orlando, Fla., that also contributed a newscast to the thenWB Network affiliate WKCF in the mid-1990s splitting its advertising revenue. That newscast’s ratings were modest but improved substantially, he said, after WKCF began generating new material for it. “Once we started doing good stories, people sort of found it, and the brand confusion of (being on a different station) really just went away,” he said.
Building networks Patti Harrison, owner and president of Clinton Township-based media buying company Harrison Media LLC, also said Scripps is known for top-notch local news content and will be an appealing
change for WMYD. Like Friedman, she also thought the purchase benefits WXYZ as well. “We have not really been purchasing WMYD in a number of Harrison years because of low ratings and interest and the competition in that (station format) from cable,” she said. “But the news audience for TV tends to skew older, which aligns nicely with our clients in the health care business. This means a lot of new competition to WJBKFox 2 as well, and WXYZ has struggled in certain periods where they (Fox 2) aren’t as constrained by the same network obligations. So this is an opportunity.” Granite bought WMYD, then WDWB, in 1997 for $175 million. In 2006, it became a part of the MyNetworkTV station network formed by Fox parent News Corp. for stations orphaned by the merger of WB and UPN, which resulted in the CBS- and Warner Bros.-owned The CW Network. WXYZ is Scripps’ largest television station owner, reaching nearly 2.7 million households in the metro Detroit market. Scripps (NYSE: SSP) in 2013 reported a net loss of $474,000 in 2013 on revenue of $816.9 million. It is separate from Scripps Network Interactive (NYSE: SNI), which owns lifestyle brands such as HGTV and Food Network. Friedman and Harrison both said the possibility of fewer advertising outlets for the two stations should not hurt ad pricing much for Detroit. “There are too many other options. Contrary to some perception, TV is still a predominant medium for people to get their information,” Harrison said. “But the bigger threat to all these stations is everything going on outside of TV.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom
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7KH URDG WR WKH FRUQHU RIÀFH
STARTS HERE. Since March, the John D. Dingell VA Medical Center in Detroit has reduced its waitlist to 330 from 930 by scheduling appointments for veterans or referring them out for private care, said Michelle Werner, chief of clinical operations for the Detroit VA. COURTESY OF JOHN D. DINGELL VA MEDICAL CENTER
VA: Referrals prescribed to trim waits ■ From Page 3
ments scheduled out more than 30 days, the VA audit said. At the Ann Arbor VA, 5 percent of veterans, or 2,576, waited 30 days or more for an appointment, said the VA audit. National VA guidelines require that veterans receive an appointment within 14 days of the day they want to be seen. More than 100,000 veterans nationwide are waiting more than 14 days for their appointment. Rob McDivitt, director of the Ann Arbor VA, said he isn’t sure why auditors targeted his VA for a deeper view. “We are the largest VA in Michigan, and every large VA (medical center) from Boston to Seattle” was on the list, said McMcDivitt Divitt, noting that he isn’t sure if inspector general investigators will return for a second visit or if he will receive an administrative change order. McDivitt said he believed that the Ann Arbor VA didn’t have any problems of the kind alleged at the Phoenix VA. He said post-investigative comments by auditors did not list specific problems. “They didn’t find anyone who manipulated the data,” he said. “Everyone did a good job. We know the scheduling software is old. It was installed in the 1990s and updated hundreds of times. We don’t expect anything serious to come out of whatever they choose to do next.” Michelle Werner, chief of clinical operations for the Detroit VA, said the John D. Dingell VA Medical Center has made progress in speeding up appointments. Since March, the Detroit VA has reduced the number of veterans on the hospital’s electronic waitlist to 330 from 930 by scheduling them appointments or referring them out for private care, Werner said. The electronic waitlist makes note of veterans waiting 90 days or more for appointments. “All 330 patients have been called, and 200 decided to wait for a VA appointment,” said Werner, adding that the VA has been unable to contact the other 130 veterans by phone.
Werner said the Detroit VA is working to reduce the waitlist for veterans on the 60-day to 90day waitlist. McDivitt said discussions are underway to increase veteran Werner referrals to the University of Michigan Health System and St. Joseph Mercy Health System, two systems also based in Ann Arbor. McDivitt said every VA medical center received additional funding to add staff and improve appointment time for patients. “We received $1.5 million to enhance inhouse capacity,” he said. Meetings with University of Michigan officials so far have led to promises for additional physician support for the Ann Arbor VA, especially to help expand clinic hours for specialty care, McDivitt said. Rob Casalou, CEO of St. Joseph Mercy Ann Arbor and St. Joseph Mercy Livingston hospitals, said St. Joseph has been working with the Ann Arbor VA to treat a larger number of veterans and to share specialty physicians to reduce patient care backlogs. “In the past, we have had veterans get referrals for care at St. Joe’s, but we have never tracked those numbers specifically,” Casalou said in a statement. “Now we have agreed to develop a more formal structure to assist VA Ann Arbor when they have capacity issues.” Ann Arbor VA projects it will spend more than $20 million this year on non-VA care, several million more than last year, McDivitt said. “We are looking actively at nonVA care options to purchase care in the community,” he said. “We will refer out care to reduce our backlog.”
Funding push McDivitt said legislation working its way through Congress could increase funding for staff or clinic expansion. The House and Senate have approved separate bills that each total about $500 bil-
lion over 10 years. For example, the legislative packages would give the VA authority to contract with private providers to spend about $50 billion annually on community hospitals and physicians through 2024. “If there are things we can do to improve access, we will do it judiciously,” McDivitt said. So far in 2014, the Detroit VA has spent $14 million for 3,500 veterans to receive care outside the VA, Werner said. In fiscal 2013 that ended Sept. 30, Detroit VA spent $17 million on 3,800 patients, she said. Werner said the Detroit VA has added Saturday clinics and evening hours to many of its clinics. “(Staff) is working overtime,” she said. But Werner added that the Detroit VA is hiring additional physicians, nurses and schedulers to decrease patient wait time and to replace staff at two clinics — podiatry and eye. Werner said Detroit VA has discussed adding physicians from its primary affiliate, Wayne State University. “We are talking with Wayne State about providers working extra hours,” she said. “We also offer care through telehealth and secure messaging.” Werner added that Detroit VA continues to make appointments with 98 percent of veterans within the national VA guidelines of 14 days. “Some are waiting out there in a few clinics for appointments. The majority are getting care when they want,” Werner said. McDivitt said he believes that wait times for veterans in Ann Arbor are similar to wait times for private patients needing specialty care in the community. Since 2009, McDivitt said, he has added 650 staff members and expanded the facility with a new emergency department and clinics to accommodate 65,000 veterans treated last year, a 25 percent increase over the past five years. “We are equal or better than the community. There are a limited number of surgeons out in the community as well,” McDivitt said. “We still are not happy and are looking at enhancing access.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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Birmingham: Desire to be downtown propels ‘positive changes’ ■ From Page 1
ingham. Beztak, along with Southfield-based Etkin LLC, is developing the $26 million All Seasons of Birmingham senior residential project at 820 E. Maple Road. According to the Southfield office of Newmark Grubb Knight Frank, there is 834,000 square feet of office space in Birmingham’s downtown, which was 7.5 percent vacant in the first quarter. That’s down from 9.6 percent in the first quarter of 2012. Average asking rental rates downtown were $30.63 per square foot in the first quarter, the highest average in the Detroit office market. That is up from $29.24 during the first quarter of 2012. The average asking rent in the first quarter in the region was $18.39 a square foot, according to Newmark Grubb. “Birmingham is starting to come around where you’re going to see more development and redevelopment” because of increasing rents, Beznos said. “I think Birmingham has taken a turn and is seeing a lot of positive changes reBeznos cently in terms of retail, re-tenanting and office development.” Said Randy Book, executive vice president in the Southfield office of Colliers International Inc., “Everybody wants to be in downtown Birmingham right now. “There seems to be a very large group of companies and people that really want to be in that marketplace, and that made it so there is the need for redevelopment of office and retail.” Ted Fuller, president of Birmingham-based Fuller Central Park Properties, which has been developing commercial office space in Birmingham for nearly 30 years, agreed. “I think there has been some
BIRMINGHAM’S BUILDING BOOMLET The Forefront, 400 S. Old Woodward Ave., 49,000-square-foot mixed-use
redevelopment of the Greens Art Supply building with first-floor retail and 11 high-end condominiums. Developer: Joey Jonna, founder of Jonna Luxury Homes LLC, Birmingham. Estimated cost: $20 million. Completion date: Third quarter 2015. The Balmoral, 34901 Woodward Ave., 88,000-square-foot mixed-use redevelopment with underground parking, drive-through space, commercial space and residential space. Developer: Woodward Brown Associates LLC, owned by Harvey Weiss and Najib Samona, Royal Oak. Estimated cost: $28 million. Completion date: 2015. The Palladium (right), 202 N. Old Woodward Ave., redevelopment of second floor of existing theater into two floors of office space and three new residential units on the southeast corner of the roof. Developer: A.F. Jonna Development & Management Co., Bloomfield Hills. Estimated COSTAR GROUP INC. cost: Unknown. 220 Merrill St. (left), mixed-use redevelopment of the 23,000-square-foot former 220 restaurant building into a new 220 restaurant and office space on the second floor. Developer: The Elia Group, Birmingham, and Denise Ilitch. Estimated cost: Unknown. All Seasons of Birmingham, 820 E. Maple Road, redevelopment of former William R. Hamilton Funeral Home into a 131-unit senior COSTAR GROUP INC. housing complex. Developers: Etkin LLC, Southfield, and Beztak Cos., Farmington Hills. Completion date: May 2015. Estimated cost: $26 million. pent-up demand, and these guys are starting to come out of the ground now,” Fuller said. “It’s great that we are getting this capital coming into Birmingham and developing Fuller vacant sites.” Fuller Central Park owns 16 properties totaling 465,000 square feet in Birmingham, according to the Washington, D.C.-based CoStar Group Inc., a real estate information service.
Mix and serve In addition to All Seasons, Joey Jonna, founder of Birminghambased Jonna Luxury Homes LLC, plans
to tear down the Greens Art Supply building at 400 S. Old Woodward Ave. and construct a 49,000square-foot building with first-floor retail and 11 high-end condominiums. Jonna The project, to be completed in the third quarter of 2015, is estimated to cost $20 million. Royal Oak-based Woodward Brown Associates LLC, owned by Harvey Weiss and Najib Samona, plans a $28 million redevelopment of a vacant site into an 88,000square-foot mixed-use building with underground parking, drivethrough space and commercial and residential space. The developer
plans to build the project next year. The development, at 34901 Woodward Ave., received a $3.2 million Michigan Strategic Fund performance-based loan in September to help pay for construction of the five-story mixed-use building, which will be known as The Balmoral. Woodward Brown bought the land, vacant since 2005, from Bank of America in April 2010 for $2.5 million. Meanwhile, A.F. Jonna Development & Management Co. plans to redevelop the existing Palladium 12 theater at 202 N. Old Woodward Ave. after purchasing the building in April. Arkan Jonna, manager at A.F. Jonna, is a cousin of Joey Jonna of Jonna Luxury Homes, but the companies are not formally related. Repeated efforts to reach the Bloomfield Hills-based company to get further details were not successful, but the project calls for redevelopment of the second floor of the existing theater into office space and three new residential units on the southeast corner of the roof, according to city documents. Mark Nickita, a Birmingham City Commission member and co-founder of Detroit-based Archive DS, said the plan would reduce the theater size to five or six screens, down from 12. Other developments are in the works, but details are scant. Victor Sarkori, president of Birmingham-based Sarkori Architecture, is the architect for a mixeduse development by Group 10 Development for the vacant former Barclay’s Inn site at Maple Road and Woodward. He said the project is in the early stages and declined to reveal details other than that the development group has met internally with city officials and plans to present to the planning board soon. “It’s a corner that’s important, so we are taking it very seriously,” Sarkori said.
On deck: parking Robin Boyle, chairman of the Birmingham Planning Board, said the redevelopments are projects that had been planned for years, while others are relatively new. The Balmoral redevelopment, for example, “is almost a poster child for the development industry in Birmingham coming out of the Great Recession,” Boyle said. It has been on the table for years, he said. Boyle, who is also chairman of the urban planning and studies department at Wayne State University, attributed the redevelopment activity to not only the attractiveness of Birmingham life but also the rental rates. “People are Boyle seeing that as an opportunity to jump in if there is property — and there isn’t a lot,” he said. So what’s next? Book and Boyle both pointed to parking as a crucial need for the city. “We are definitely going to see people be more creative with their parking decks, coming up with more creative ideas,” Book said. Boyle said the fresh investment will generate more tax increment financing for the downtown, which then could allow the city to build a parking deck in the “triangle district,” the area bounded by Woodward, Maple and Adams Road. That’s sorely needed, he said. “It’s an important question,” Boyle said. “But I think we are seeing enough activity now to start generating tax increment” financing. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
Lending: An alternative source uses ‘technology with insight’ ■ From Page 3
And even if Linnen had the collateral, small-business lending is still paltry. Less than 20 percent of all loans were approved by big banks in May, according to the Biz2Credit Small Business Lending Index. Small banks had better results, with slightly more than half of applications approved. So Linnen turned to New York City-based Strategic Funding Source Inc., which makes the kind of loans that banks seem to be allergic to. It specializes in “alternative” financing, also known as merchant cash advance lending. The company got its start seven years ago, lending against credit card receipts for restaurants and nail salons. Since then, the company, which operates nationally, financed nearly 250 businesses in metro Detroit, with an average loan amount of $29,000 repayable over nine months. “Banks are all about managing risk,” said Strategic Chairman and CEO Andrew Reiser. “So are
we, but banks understand risk in a much different way than we do. Collateral is not what we look for; we look at the cash flow of the business and the personality of the owner and how we can help them grow.” When Reiser Reiser got into the business, few of these lenders existed. But in the wake of the recession, they’ve popped up everywhere, especially online, touting the ability to get small-business owners cash quickly, often within a week of application.
Algorithms, plus a human touch Today, SFS, which was called “one of the most experienced firms in the industry” by Merchant Processing Resource, is competing
against sites, such as Kabbage Inc., that use online data — including Yelp reviews — to underwrite loans. These notes often come with high rates and short repayment terms. A Kabbage loan of $29,000, for example, brings with it an average fee of $3,480 and a maximum six-month repayment term. Reiser sees his company as the sweet spot between the banks and these online lenders that focus on algorithms. “We use the algorithms, but we also have the human touch in our decision process,” he says. “It’s technology with insight.” That allows Strategic to offer interest rates that range from the midteens to low-30s with repayment terms of up to 18 months. Even doing that, the company keeps defaults at just 5 percent, which is “appalling” to banks, Reiser said, but good for the industry. Linnen wouldn’t reveal the size of his loan or the interest rate, but he said he’s comfortable with the deal.
“It’s capital that is more expensive than traditional bank financing,” he said. “It is what it is, but it’s cheaper than giving up equity or bringing on a partner. In this environment, it’s great to have a strategic partner.” That was significant over the winter, when the polar vortex kept customers away from Rojo’s four locations. The repayment agreement is structured against revenue, so as a business does more volume, the payback increases. “Everyone felt the crunch in January and February,” said Linnen. “So to have a payback that followed along with our business volume, well, they were right there to help. They are really interested in making sure that you are able to get through any difficult period of time.”
The whole burrito Going forward, Linnen is re-
viewing all of the restaurants, tweaking layouts and even looking at the menus in preparation for growth. The restaurants currently do $10 million in revenue, but he wants to ramp that up and open in other markets. Reiser, too, is looking to growth for Strategic. The company, which employs 115, is investing in a greater variety of industries, thanks to the algorithms that it has created. He even sees auto suppliers and manufacturing becoming a bigger client base. “It has given us the ability to finance all businesses as opposed to just retailers,” he said. “It has opened up the market. Our industry is becoming a scalable smallbusiness lender. “This is something that we never anticipated a year and a half ago. We are seeing companies from all industries come to us.” Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad
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Carhartt: At 125, clothing company rolls up sleeves ■ From Page 3
“People would ask him, ‘Do you have any overalls?’ and he didn’t,” said Mark Valade, Carhartt’s great-grandson and company president, CEO and chairman. “So he thought he had this great idea to build these overalls. The interesting thing was that when he made them … they failed.” After failing the first time, Carhartt decided to visit a railroad engineer, and he copied everything the engineer told him to do. He got himself a couple yards of denim and a sewing machine and made a successful pair of overalls. In the 1800s, the overalls people wore were homemade with a patchwork type of fabric. But with the insight from the engineer, Carhartt found gold, considering he had created an extremely durable pair of overalls. “Ham always went premium with whatever he did,” Valade said. “Later on, he built cotton mills so that he could control all of the fabric. So what has always separated us is that we have always been the top brand as far as fabric is concerned — always.” From there, a brand was born that would eventually become a work clothing staple that also has a following for street clothes. Top sellers include coveralls, jackets, coats, vests, shirts, jeans and fireresistant clothing. As of 2013, Carhartt’s 2013 revenue was about $600 million, the company said.
Retail network Today, the company’s products are sold in more than 100 metro Detroit retail stores. There are also 12 stand-alone corporate stores in seven states, and also Carhartt Europe and Australia. Top sellers include the Sandstone Active Jacket ($105), Workwear Pocket Tee ($18), and the Washed Duck Work Dungaree ($50). Its website is organized around what the clothing is used for (yard, farm, home chores, weekend wear and fire-resistant). A line of 125th anniversary clothing also gives a nod to the company’s legacy and Detroitarea roots, leaving some customers to ask why there isn’t a stand-alone corporate store on Carhartt’s home turf. “Our strategy for opening stores is to look for places where we already don’t have significant distribution, where people don’t have exposure to the brand,” said Linda Hubbard, president and COO. “We have a vested interest in the city growing and thriving and continuing to do well. The immediate thing that comes to mind is continuing to grow our workforce and continuing to give back to the community through our workforce. “Obviously the city is very important to us. We are always open
“
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 RESEARCH AND DATA EDITOR Sonya Hill, (313) 446-0402 or shill@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
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PHOTOS BY ZACK BURGESS
Carhartt products are designed at the clothing company’s facility in Dearborn (above) and sold in stores such as The Detroit Mercantile Co., where owner Robert Stanzler (left) calls them “so perfectly Detroit.”
to looking at opening a Detroitbased store. But it has got to be the right site at the right time, and we want it to be successful because it would be our hometown store.” There is one store in Detroit where Carhartt is a big seller, and that’s The Detroit Mercantile Co., in Eastern Market. The minute you walk through the door, it’s evident — Carhartt is a major part of the brand. “They do well for us,” said Mercantile Co. owner Robert Stanzler. “It’s Michigan’s iconic apparel brand. You’re talking 125 years of history and local ownership, along with providing useful apparel to industry and skilled workers here in the area. The entire purvey of our store is U.S.-made items. Besides, it’s so perfectly Detroit.” Traditional large store chains that sell Carhartt goods include Gander Mountain, Cabela’s, Tractor Supply Co. and Dick’s Sporting Goods. Mark D’Andreta, president of TD Industrial Coverings Inc., a Madison Heights provider of contract sewing, industrial covers and other products and services, said Carhartt has excellent brand recognition and consistency with its products. In contrast, TD markets more its use of high-tech fabrics and the ability to make even a
very small run of niche products. For example, it could make a small run of extremely customized flame-resistant jackets. “I’d make 50 and be happy about it. That’s how we differentiate ourselves,” he said. “My whole shop is centered around … whether it’s robot covers or any of the uniforms or apparel that we do, it’s all custom made — small runs, highly customized.”
Civic-minded culture Beyond the products, Detroit Mercantile Co.’s Stanzler said he’s also impressed with the involvement of Carhartt — and generations of family members — in the metro Detroit community. The best known example is Gretchen (Carhartt) Valade’s commitment to the Detroit Jazz Festival; the Mack Avenue Records founder and Dirty Dog Jazz Café owner donated $15 million and counting to get the festival on solid financial footing and maintain it as a free festival, and created an arts endowment. But Carhartt offers other community support through programs many people don’t know about, Stanzler said. For example, there are community skilled trades workshops that Carhartt sponsors,
Obviously the city is very important to us. We are always open to looking at opening a Detroit-based store. But it has got to be the right site at the right time, and we want it to be successful because it would be our hometown store. Linda Hubbard, Carhartt Inc.
”
giving people a chance to learn about such skills as farming, bricklaying or making tools and flooring out of reclaimed wood. The classes are held at the Carhartt Workshop at Detroit Mercantile. “We’re often surprised about how little people know about Carhartt’s connection to Detroit,” Stanzler said. “But they always learn a little more when they come in here. They have also been great sponsors of the Eastern Market. Detroit is very lucky to have a company of that size, interested in civic engagement on the many levels that they are.”
Co-branding with beer As Carhartt embarks on the next decades of selling work and sports clothing, it’s also embarking on a collaboration with a beer brand. Carhartt and New Holland Brewing Co. will roll out a series of beers in the fall to celebrate Carhartt’s 125 years. The companies will collaborate from start to finish on concept, brewing, packaging and distribution. There will even be a tour from Detroit to Denver to celebrate the launch during the Great American Beer Festival in October. They’re going to be meeting customers and sharing stories. Two companies, 108 years apart, yet finding a similar mindset. “What can you say? … We like dating older brands,” said Fred Bueltmann, partner and vice president of sales and marketing at the Holland-based brewery. Some of the brewery and distillery’s best known products are Mad Hatter IPA, Dragon’s Milk Bourbon Barrel Stout, Beer Barrel Bourbon and Knickerbocker Gin. “I think the thing that we really share is an appreciation for craftsmanship. We’re both customer-forward companies, and while we haven’t determined what the next steps will be after this, if this will be a permanent thing or not, I do think if all goes well there could be plenty of possibilities. Right now we’re focusing on making sure the brand is ready to go.” Zack Burgess: (313) 286-9540. Twitter: @zackburgess1
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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Taubman: Mall sales provide needed capital for future deals ■ From Page 1
Partridge Creek is one of the region’s first lifestyle centers with walkable public areas and events, plus a movie theater. Fairlane, which also has a theater, opened the same year as Lakeside Mall in Sterling Heights, but more than two decades after Northland Center in Southfield, also developed by Taubman. Northland was, when it opened, the largest shopping center in the world.
‘Capital recycling’ Taubman’s strategy with the most recent sale is to leverage capital for growth, distribute a special dividend to shareholders, and minimize its need to raise equity, the company told investors last week. That keeps with Taubman’s historical strategy of “capital recycling,” according to a Morningstar Inc. analyst note provided to Crain’s by Todd Lukasik, senior analyst in the real estate sector for the Chicago-based company. “We weren’t expecting the asset sales, but this type of capital recycling has been a hallmark of Taubman throughout its history, as one of the few retail REITs (real estate investment trusts) that has not amassed an ever-increasing number of assets in its property portfolio,” the note said. “Instead, Taubman’s strategy has focused on improving the quality and productivity of its mall portfolio through strategic developments, redevelopments, acquisitions and dispositions, and this transaction is in keeping with that goal.” Steve Sakwa and Gwen Clark, analysts with New York City-based International Strategy & Investment Group LLC, agreed in a Wednesday report that the company “has not been shy about pruning its portfolio since its IPO in 1992.” The Morningstar note said that $453 million of the sale proceeds are expected to be paid out as a special divided (about $5 per share) early next year unless Taubman Centers can find new assets to purchase. That leaves $268 million in cash for future investments. Neither Starwood — whose Chicago-based, wholly-owned sub-
COURTESY OF TAUBMAN CENTERS INC.
With walkable public areas and events, plus a movie theater, The Mall at Partridge Creek in Clinton Township is one of the region’s first lifestyle centers. Partridge Creek is among seven malls Bloomfield Hills-based Taubman Centers is selling.
sidiary Starwood Retail Partners will manage the malls — nor Taubman would comment beyond publicly released statements last week. The sale is expected to close in the fourth quarter. Among brokers and real estate attorneys, though, the move was seen as a sound decision by Taubman Centers, which mall pioneer A. Alfred Taubman founded in 1950. “Now is a good time to sell properties,” said Bill Bubniak, executive vice president overseeing investment sales at Southfieldbased NAI Farbman. “We are seeing there is a lot of money out there chasing deals. It’s tougher to find deals in coastal Bubniak cities, so we are seeing more money come here to Michigan and Ohio than we have in the last few years. … It’s showing more out-of-town confidence making volleys into Michigan.” Bubniak pointed to the sales of two landmark office properties — the 2.2 million-square-foot Southfield Town Center for $177.5 million last month to 601W Cos. and
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the 800,000-square-foot Travelers Tower complex in Southfield for $25.1 million to Time Equities Inc. in May 2013 — both sales to New York companies, as key indicators of out-of-state interest. “It may be glamorous to have property in Miami and San Francisco on the covers of your brochures, but it’s all about returns,” Bubniak said. Bubniak said a stronger automotive industry and fewer commercial real estate foreclosure sales in recent years are making the Michigan market attractive to investors.
The forecast for Fairlane Other local brokers and real estate attorneys agreed the Starwood deal reflects a growing out-of-state investor appetite for Michigan property, and may be a sign that even aging Fairlane Town Center has a stable outlook in the next few years. It’s also a chance for Taubman Centers to shore up capital for growth and reduce its debt load — the company last November closed on a $475 million term loan with four of its mall-owning subsidiary companies acting as guarantors, including two involved in the sale. Other malls in the Starwood deal are MacArthur Creek in Norfolk, Va.; The Shops at Willow Bend in Plano, Texas; Stony Point Fashion Park in Richmond, Va.; Northlake Mall in Charlotte, N.C.; and The Mall at Willington Green in Wellington, Fla. Steve Morris, managing partner at Farmington Hills-based Axis Advisors LLC, also likened the Starwood-Taubman deal to office complex transactions attracting nonlocal buyers. Morris said he doubts that Starwood is looking to court a major retailer or make changes to the tenant mix of its new shopping centers. Instead, he believes StarMorris wood was attracted to a potential rate of return in Michigan and probably looked carefully at Taubman’s tenant mix at Fairlane, perhaps its softest local asset, before closing. “Fairlane is a mature center, but it’s near Ford (Motor Co.) headquarters. Downtown Dearborn has
seen a real comeback, and the residential market there is looking solid. It’s possible that (Fairlane) was just a part of the portfolio (in the deal) and they’ll be looking to sell it off soon. But there are reasons to be optimistic.” Real estate investment trusts and other financial buyers appear to be eyeing Michigan and other Midwestern markets in part because of recent resurgence in property values and jobs data, said Kyle Hauberg, director of the real estate and environmental department at Dykema Gossett PLLC in Bloomfield Hills. Michigan added 17,100 new jobs in May, including 4,500 manufacturing jobs, according to a recent report from the state Bureau of Labor Market Information. “There is not only perhaps a riper market here to invest but perhaps less competition and more return,” Hauberg said. Taubman estimates the capitalization rate on the seven malls in the sale was 6.6 percent, according to the report to investors, suggesting the properties may generate about $93 million a year in combined income. Mark Rubenfire, coordinator of the real estate practice group at Southfield-based Jaffe Raitt Heuer & Weiss PC, said Starwood simply views future opportunity in Michigan. Starwood has been building a retail real estate company through acquisitions as the U.S. economy improves. “I don’t think that the black mark that Michigan had for a while on real estate is there anymore, but it hasn’t been there for at least two or three years,” he said. “Beyond that fact, I don’t read too much into that specific transaction, other than just an anxious buyer meeting a willing seller.”
Retail scorecard Under the terms of the deal, Starwood will pay $785 million in cash and assume $620 million in debt, according to a statement from the companies. A $78 million loan for Partridge Creek at a 6.15 percent interest rate and maturing in July 2010 is part of that debt, according to filings with the U.S. Securities and Exchange Commission. Taubman Centers currently owns, leases and/or manages 27 retail properties in 15 states and
South Korea. The company reported mall tenant sales per square foot of $721 in 2013 and upon completion of the Starwood deal expects its mall tenant sales to increase $828 per square foot, according to documents presented to investors. Taubman reported $330.8 million in 2013 funds from operations, or $3.65 a share, on revenue of $767.2 million. For the first quarter of 2014, it reported $81.2 million in funds from operations, or 90 cents a share, on revenue of $174.8 million. Funds from operations is an accounting standard used by real estate investment trusts that reflects net income plus adjustments such as depreciation and amortization. As of Friday morning, Taubman stock was trading at $75.66 a share. On Tuesday, Taubman was trading at $73.68; it got as high as $75.90 last Wednesday after the announcement. Taubman will have 17.17 million square feet of space across the U.S. after the sale closes. The company told investors that the net operating income from Sarasota, Fla.; Waikiki, Hawaii; and San Juan, Puerto Rico, properties it is developing is expected to replace the net operating income of the seven it is selling. The three shopping center projects, along with three others in China and South Korea, are expected to be completed by 2016. After the sale, Taubman expects its remaining properties to have an occupancy race of 93.7 percent, or 1.6 percent higher than the reported 92.1 percent last year. The average rent in its portfolio will increase from $48.52 per square foot in 2013 to $56.23, according to the investor document.
Looking ahead Other Taubman properties in Michigan include Twelve Oaks Mall in Novi and Great Lakes Crossing in Auburn Hills, both of which are solely owned by Taubman, said Chris Tennyson, a spokesman for the company. “The seven centers we are selling are strong properties that fit well within the Starwood portfolio and will continue to thrive under their management,” said Robert S. Taubman, chairman, Taubman president and CEO of Taubman Centers, in a press release. The deal with Taubman will expand Starwood’s portfolio to 28 properties in 15 states, Barry Sternlicht, chairman and CEO of Starwood Capital, said last week. “The Taubman portfolio broadens our relationships with higherend department stores and in-line (smaller) tenants and gives us an excellent opportunity to continue to produce attractive returns for investors,” he said in the statement. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom
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June 23, 2014
RUMBLINGS ‘Thrones’ character to be a Cotton ame of Thrones” spoiler alert: There’s a new character coming to the Westeros universe, and it will be named after David Cotton, CEO of Detroit-based Meridian Health Plan. Series creator George R.R. Martin had created a Prizeo crowdfundCotton ing campaign — similar to Kickstarter — to raise money for the Wild Spirit Wolf Sanctuary and The Food Depot, both in Martin’s home state of New Mexico. The author was looking to raise $500,000 and offered donors who kicked in $20,000 or more the chance to appear in an upcoming novel. “You can choose your character’s station in the world (lordling, knight, peasant, whore, lady, maester, septon, anything) and you will certainly meet a grisly death,” the site extolled. When Cotton’s sons read about the campaign, they knew it was the perfect Father’s Day gift for their dad, who loves wolves (he gave $500,000 to the Detroit Zoo’s new wolf exhibit) and is an avid reader of Martin’s series and is eagerly awaiting the sixth installment. “We saw this crowdfunding come up online, and we thought it would be perfect for his love of wolves,” David Cotton’s son Mike Cotton, Meridian COO, told ABC News. No word what kind of character David Cotton will choose. We know nothing, Jon Snow.
‘G
Detroit women bring power to breakfast event If Mitt Romney ever again needs a binder full of women, he should check out Detroit. Last week, the Michigan Chronicle hosted the last of the season’s Pancakes & Politics breakfasts, featuring a discussion on “women and power.” The women on the panel were the concept personified, featuring Crain’s own publisher, Mary Kramer; Skillman Foundation President and CEO Tonya Allen; Inforum President and CEO Terry Barclay; and Siebert Financial
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Corp. CEO Suzanne Shank. The crowd was no slouch, either, with Detroit City Council members Mary Sheffield and Saunteel Jenkins in attendance, along with Glenda Price, former president of Marygrove College and current head of the Detroit Blight Removal Task Force. As Kramer surveyed the crowd, she quipped that she wouldn’t have enough time to name-check all the women in the room who had been influential in the “turnaround of Detroit.” The women fielded questions about the stereotypes they’ve encountered. “I’m surprised how often I’m the only woman in the room,” Allen told the crowd. The panel also noted the importance of celebrating how far they’ve come. Barclay said it’s critical to encourage “men who get it” — those who recognize the role of women in the C suite and all suites. Allen gave a shoutout to her husband, saying that their biggest responsibility is raising their daughters to be “three powerful women.” Here’s to #PowerfulWomen and #MenWhoGetIt — and the potential for making what’s happening in Detroit go viral.
Moonroof pioneer to enter German-American hall Heinz Prechter, founder of the company that invented the automotive moonroof, will be inducted into the German-American Hall of Fame in October. Prechter emigrated from Germany to the U.S. in 1963 as an exchange student at San Francisco State College. Less than two years later, he founded the American Prechter Sunroof Co. in Los Angeles. Prechter moved the company to metro Detroit in 1967 to install sunroofs for the Ford Motor Co.’s 1968 Mercury Cougar XR-7. American Sunroof changed its name to American Specialty Cars Inc. in 2004 and is now headquartered in Warren. Prechter also founded Heritage Network Inc. in Southgate, which reportedly in-
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cluded several holdings, such as Heritage Newspapers, hotels and cattle ranches. He committed suicide after an ongoing battle with bipolar disorder in 2001 at the age of 59. His wife, Wally Prechter, who has funded research on the disease at the University of Michigan, will accept the award at the Oct. 15 ceremony in New York City. Other inductees include former FBI director Louis Freeh, ex-Secretary of State Henry Kissinger, aviation legend Amelia Earhart and journalist John Peter Zenger.
TurtleCell has new digs, close to national retail deal An Ann Arbor startup intent on untangling the mobile phone earbuds of the world has new office space, a distribution deal — and plans to be on the shelves of two national retail chains by the holiday shopping season. TurtleCell LLC won the People’s Choice Award at the Accelerate Michigan Innovation competition last fall in Detroit. The company went to work developing its polycarbonate iPhone case with built-in retractable earbuds. Meanwhile, because of the award and the accompanying publicity, $160,000 in angel money materialized, and in January, the company showed prototypes of its case at the hugely influential Consumer Electronics Show in Las Vegas. Marketing director Jeremy Lindlbauer said the show led to nearly done deals with two national retailers, and contracts are expected to be signed any day that will call for TurtleCell to have 100,000 units in 6,000 U.S. stores later this year. The company has negotiated a distribution deal with Auburn Hills-based Digital Treasures. Last week,TurtleCell announced it had moved into new digs in Kerrytown, just north of the heart of downtown Ann Arbor. No longer in an incubator, with six employees on board and looking to hire three more, “this finally feels like a real company,” said Lindlbauer. The company plans to start shipping product in October and is taking preorders at turtlecell.com.
BITS & PIECES 䡲 Christopher Webb re-
ceived the Engineering Society of Detroit’s 2014 Horace H. Rackham Humanitarian Award during the organization’s annual awards dinner and benefit June 18 at Cobo Center. Webb, co-founder and volunteer director of the ESD Institute, was honored for his work with policy issues focusing on literacy and STEM education. For a full list of winners, visit esd.org.
Children’s institute closes outpatient clinics he Detroit Institute for Children shut down outpatient clinics in Detroit, Clawson and St. Clair Shores serving 250 special needs children to focus more resources on its larger school program. Some 27 employees, including 17 therapists, were laid off.
T
ON THE MOVE 䡲 Sadahiro “Sam” Usui was named chairman and CEO of Southfield-based Denso International America Inc. He replaces Hikaru “Howard” Sugi, who is retiring Usui from the automotive supplier. Usui will continue as an executive director of Japanese parent Denso Corp. Denso International COO Kazumasa Kimura was promoted to president; Doug Patton, its chief technology officer, was named executive vice president and CTO and a Denso Corp. senior director. 䡲 Matt Walsh was named senior vice president and COO of Detroit-based Health Alliance Plan of Michigan. Walsh, 42, who was chief access officer with Henry Ford Medical Group, replaces Christopher Pike, who resigned. 䡲 Corporate immigration law firm Fragomen, Del Rey, Bernsen & Loewy LLP named Alexandra LaCombe, 45, managing director of its Troy office. LaCombe, alLaCombe ready a partner, replaces Scott Cooper, who will head the firm’s Dubai office. 䡲 Freudenberg-NOK Sealing Technologies appointed Theodore Duclos, 55, acting president of its Plymouthbased North America division. He succeeds Bradley Norton, who left to pursue other opportunities, the company said. Duclos will remain CEO of the global fluid power division. 䡲 Veronica Conforme was named interim chancellor of the Education Achievement Authority, the turnaround district for Michigan’s worstperforming schools. Conforme, a former New York City educator who was an EAA adviser, replaces John Covington, who resigned.
COMPANY NEWS 䡲 Sequoia Property Partners of New York City, which bought the long-vacant CPA Building and the block on which it sits in Detroit’s Corktown, is seeking ideas from the community on the best use for the property. 䡲 Ann Arbor’s Movellus Circuits was named the best emerging company in the 14th annual Great Lakes Entrepreneurs Quest business plan competition, put on by Lansing-based nonprofit MiQuest. 䡲 Visteon Corp., the Van Buren Township-based supplier, extended President and CEO Tim Leuliette’s contract through 2017, Automotive News reported. 䡲 The Radisson Kingsley Inn in Bloomfield Hills sold to Birmingham-based real estate company The Elia Group for an undisclosed price from Kingsley Ventures LLC. Elia said it will keep the hotel’s Radisson flag. 䡲 A123 Systems LLC, the Livonia-based battery maker, purchased technology from Leyden Energy Inc. that A123 Chinese parent Wanxiang Group Corp. may use to make electric cars, Bloomberg reported. 䡲 TI Automotive’s hedge fund owners will reap a $435 million dividend by saddling the Auburn Hillsbased auto parts maker with more debt for the second time in two years, as J.P. Morgan Chase & Co. is arranging a $1.25 billion loan to be used to fund the payout and refinance TI’s debt, Bloomberg reported. 䡲 General Motors Co. delivered $20,000 in robots used on auto assembly plant floors to Oakland Community College’s robotics program, AP reported. 䡲 Ann Arbor-based Domino’s Pizza Inc. introduced a mobile app for iPhones and Android devices that allows customers to place orders by speaking with a computergenerated voice named “Dom,” AP reported.
OTHER NEWS 䡲 Bond insurer Syncora
Guarantee Inc. and foundations that want to protect the Detroit Institute of Arts from the city’s creditors agreed that U.S. Bankruptcy Judge Steven Rhodes can hold a hearing June 26 to resolve a dispute regarding Syncora’s request that the foundations provide documents showing charities they supported, mission statements and other information. 䡲 Four Detroit agencies were awarded $60 million in U.S. Department of Health and Human Services grants over the next five years to pilot a Head Start Birth to Five program. Starfish Family Services Inc. will distribute the grants through its
programs and those run by Development Centers Inc., Focus: Hope and Southwest Solutions Inc. 䡲 The Michigan Court of Appeals unanimously affirmed decisions by a Wayne County judge in favor of Mike Duggan’s victory as a write-in candidate for mayor of Detroit last November. 䡲 Grocers who want to spruce up their storefronts are eligible to receive financial help from the Detroit Economic Growth Corp. and its Green Grocer Project façade improvement program. The program is accepting applications (at greengrocerproject.org) until July 16 for 50/50 matching grants up to $50,000. 䡲 The Detroit Zoo broke ground on the $29.5 million, 33,000-square-foot Polk Penguin Conservation Center. 䡲 Median home sale prices in Wayne, Oakland, Macomb and Livingston counties increased by 24.3 percent last month compared to May 2013, to $138,000, but sales fell by 8.9 percent, according to data from Farmington Hillsbased Realcomp II Ltd. 䡲 A quirky story of courtship set in a Detroit Institute of Arts bathroom is the 6-minute entry by creative agency Detroit Lives LLC in the Nokia Lumia Icon Challenge, which gave five aspiring filmmakers $10,000, three weeks and two Lumia Icon smartphones on which to film. Voting was to end Friday. 䡲 The Pontiac Receivership Transition Advisory Board rejected the Pontiac City Council’s first budget proposal in years because of how it would finance retiree health insurance costs, AP reported. 䡲 An investigation into a traffic stop involving Detroit City Council President Pro Tem George Cushingberry concluded there was insufficient evidence that he abused his authority to receive favoritism from officers, AP reported. 䡲 University of Michigan and Michigan State University approved increases in tuition and fees for in-state undergraduates for the 2014-15 academic year, 2.6 percent and 2.8 percent, respectively, AP reported.
OBITUARIES 䡲 Charles T. “Chick” Fisher III, a former chairman and CEO of NBD Bank and a founding director of the Community Foundation for Southeast Michigan, died June 15. He was 84. 䡲 Casey Kasem, the Detroit native best known as radio host of “American Top 40,” died June 15. He was 82. 䡲 Hugh McCann, a longtime Detroit News and Detroit Free Press reporter who specialized in science issues, died June 13. He was 86.
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