Crain's Detroit Business, Sept. 22, 2014 by Crain's Detroit Business

20140922-NEWS--0001-NAT-CCI-CD_--

9/19/2014

7:18 PM

Page 1

www.crainsdetroit.com Vol. 30, No. 38

SEPTEMBER 22 – 28, 2014

$2 a copy; $59 a year

Page 3 McLaren revives push for new Oakland hospital

‘Fail jail’ fix unlikely until after Ficano leaves office Gilbert aims to quicken lanes with new I-375 ramp

round is scheduled to be broken on the new Red Wings arena on Sept. 25. It’s the first step not only for the project, but for the larger area of development around it. Bill Shea answers some commonly asked questions about the project’s cost and financing.

How to pay for a new arena

See Page 17

Nonprofit Compensation Social service agencies turn to incentive pay for execs, Page 11

This Just In Molina Healthcare to lease part of DMP building

NEWSPAPER

Molina Healthcare of Michigan will lease space for a satellite office in the Dan Gilbert-owned Detroit Media Partnership building at 615 W. Lafayette Blvd. Tom Lasky, managing member of Bloomfield Hillsbased Forum Group Commercial Real Estate LLC, which represented Molina, would not disclose the size of the lease but confirmed that one has been signed. A real estate source said Friday that the space was 30,000 square feet. Jennifer Kulczycki, vice president of communications for Gilbert’s Rock Ventures LLC, said she could not confirm the lease or the square footage. Molina earlier this year purchased a building in the Troy Corporate Center for its headquarters. The company has about 300 employees in Troy; it’s unknown how many may move to Detroit. — Kirk Pinho

Expats join Detroit’s comeback story First event sparks inspiration – including city mortgage plan

HIGHLIGHTS

CRAIN’S DETROIT BUSINESS

ayor Mike Duggan took his Detroit story to a national audience last week. At the Detroit Homecoming, Duggan described in words and slides his plans for rebuilding the city post-bankruptcy, one street light, blighted house and sewer main at a time. But, he told an audience of about 150 Detroit “expatriates” as well as local business and civic leaders, he had a problem: Even though homes sold through the city’s BuildingDetroit.com Duggan auction website are coming in at sales prices of $50,000 or more, mortgage appraisals are coming in lower than selling prices — creating a big problem for buyers. “The single biggest problem to removing blight is that we can’t

MORE FROM HOMECOMING Auto technology: Southeast Michigan is at the center of the auto industry’s reinvention, for the second time, Page 20 Homecoming headlines: From real estate investment to philanthropic plans, Page 20 Complete Homecoming coverage, detroithomecoming.com get mortgages,” he told the crowd. Duggan had the right audience. By the time the Detroit Homecoming adjourned Friday afternoon, a group of expats had hatched an idea of raising $10 million to issue mortgages in the city. Josh Scott, founder of Craftsy, an online community for makers, led a brainstorming session that produced the idea of raising $5 million from Detroit expats, and finding a local bank or foundation to match that sum. He also said a bank would have to administer the program. “And I’ll write the first check for

AARON ECKELS

HERE’S THE PITCH: During a Friday business pitch competition, Carla Walker-Miller of Walker-Miller Energy Services told how her business, which sold components of the electric grid before the recession, nearly went broke before reinventing itself.

The Homecoming was created to be an immersion, packed with speakers and experiences. But it was supposed to create excitement, too. Highlights: Berry Gordy Jr., founder of Motown Records, returned to Detroit from Los Angeles to receive the inaugural Detroit Homecoming “Legend” award for creating a musical legacy. Adam Levinson, now leading a hedge fund in Asia, announced a $10 million pledge to the Detroit Children’s Fund, a side fund created by the Skillman Foundation. Singer and songwriter Michael Posner, a Southfield native, returned from California to close the formal program by performing his song, “Buried in Detroit,” a homage to the city.

See Homecoming, Page 21

TITLE SPONSOR

What’s behind their success? Oct. 7•7:30 a.m.•MSU Management Education Center Register at crainsdetroit.com/events•313-446-0300

20140922-NEWS--0002-NAT-CCI-CD_--

9/19/2014

4:15 PM

Page 1

Page 2

September 22, 2014

CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Towns along Lake Michigan expect strong tourism season While the economic recovery helped bolster tourism numbers in West Michigan this year, a steady Pure Michigan advertising push from the state and community level helped bring in regional visitors, particularly from out of state, MiBiz reports. Sally Laukitis, executive director of the Holland Convention and Visitors Bureau, agreed that a lot of the growth has been on the fringes of the traditional tourism season. For example, hotel occupancy rose 4 percent in April and 10 percent in May compared with last year. Preliminary numbers show tourism spending is on track to grow again this year, said Michelle Grinnell, public relations manager for the Michigan Economic Development Corp. Michigan saw $18.7 billion in travel spending in 2013, up 24 percent from an eight-year low of $15.1 billion in 2009, according to data provided by the MEDC. Last year also set a record for leisure travel at $13.8 billion.

2 global suppliers promise nearly 1,000 jobs near GR Nearly 1,000 jobs and $169 million in investments are coming to two communities near Grand Rapids, courtesy of automotive suppliers based in China and Israel. In Greenville, Dicastal North America Inc. plans to create up to 300 jobs over four years as it develops a plant to build 3 million aluminum alloy wheels a year on the former campus of United Solar Ovonic LLC, a subsidiary of Auburn Hills-based Energy Conversion Devices Inc. that closed in 2012 — as did its parent. Dicastal is a new North American entity created by China-based CiTiC Dicastal Co. Ltd. The $8.5 million state incentive package for the MiBiz reported. But the industry is still projected to pick up during the second half of the year and into 2015. The updated outlook, prepared by IHS Global Insight for the Grand Rapids-based Business and Institutional Furniture Manufacturers Association, now projects 2014 shipment growth of 3.3 percent to $9.2 billion, followed by 6.8 percent growth next year to $10.3 billion. Through midyear, industrywide orders were off 1.4 percent to $4.70 billion, while shipments inched upward 1.1 percent to $4.60 billion.

Updated office furniture forecast: Growth still slow; 2015 looks better Funeral home visitation from the The latest quarterly outlook for the office furniture industry tem- … uh … comfort of your car pered expectations again for this year as slow growth continues,

The Saginaw News reports that the Paradise Funeral Chapel in that

project includes local support. In the second announcement, Plasan Carbon Composites said it would create up to 620 jobs over three years as it spends $29 million to consolidate operations from Bennington, Vt., its former headquarters. The company is in line to receive up to $6 million through a Michigan Business Development Program performance-based grant, including local support from the city of Walker, according to The Right Place Inc., the Grand Rapids area’s economic development organization. Plasan Carbon, whose parent is Israel’s Plasan SASA Ltd., is now based in Wixom. way for the state to improve the speed and comfort of Amtrak services between Detroit and Chicago. The Detroit News reported the Senate cleared the final barrier by ending an investigation of a passenger rail car purchase. Transportation officials plan to buy two sets of cars and engines to allow trains to reach 110 mph and cut the travel time between Detroit and Chicago by up to two hours in the years to come. The $58 million trains would replace 30- to 40-year-old Amtrak cars. The money would come from federal funds.

city has installed a window that allows visitation from the comfort of your vehicle. Curtains automatically open when a vehicle pulls up, and mourners get three minutes to view a body as music plays. Funeral home President Ivan Phillips said many people fear funeral homes, and this is one way to address that problem, if the family of the deceased so chooses that option. At least three other U.S. funeral homes offer drive-through service. Although it remains unclear whether any asks whether you would like large fries.

MICH-CELLANEOUS

State lawmakers clear barrier to faster Detroit-Chicago trains

䡲 The U.S. Department of Justice said Jackson-based CMS Energy Corp. will commence an estimated

The Michigan Senate cleared the

$1 billion program to cut emissions from coal-fired power plants to settle air pollution complaints, The Associated Press reported. The plants are in Essexville, Luna Pier, Muskegon and West Olive. 䡲 After 41 years of running the Cascade Engineering family of companies, Fred Keller will hand over the CEO duties to Mark Miller, MLive.com reported. Miller, a Detroit native and Wayne State University graduate, currently is president of Grand Rapids-based Cascade Engineering. Keller, who founded the company in 1973, will remain chairman. 䡲 Walker-based Meijer Inc. expects to give out 30 percent more flu shots this year over last, MLive.com reported. In 2013, the retailer provided 103,000 shots to customers. 䡲 In other news about Meijer, under a settlement with the federal Consumer Product Safety Commission, the company will pay $2 million to settle charges that it knowingly sold and distributed hundreds of recalled products through a system it operated with a third-party contractor. Meijer neither acknowledges nor denies the charges. 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.

INDUSTRY HAS A HISTORY OF BUILDING SUCCESS IN WISCONSIN. When looking for the best place to relocate or expand a business, you have a 1 in 50 chance of selecting a state that puts you on the path to success. The chances are great that the state you are looking for is Wisconsin. We are committed to our industries, committed to our companies and, from day one of your arrival, committed to you. Wisconsin continues to enact policies and reforms designed to increase business growth, including our Manufacturing and Agriculture Tax Credit, which virtually eliminates the tax on income from manufacturing activity throughout Wisconsin.

In addition to leveraging our history of industry leadership, businesses here soon discover why Wisconsin is also leading the way in new developments, including bioscience and water technology. Business success is centered upon a skilled and diversiﬁed workforce, along with a built-in supply chain that is ready to support your expansion in Wisconsin. Take the next step and discover how your business will succeed In Wisconsin®. Call 855-INWIBIZ (toll free) or visit Advance.InWisconsin.com.

VANCE AD

In Wisconsin® is a registered trademark of Wisconsin Economic Development Corporation.

20140922-NEWS--0003-NAT-CCI-CD_--

9/19/2014

7:07 PM

Page 1

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 3

McLaren revives push to Oakland Bill creates state rules exemption BY CHRIS GAUTZ JAY GREENE

AND

CRAIN’S DETROIT BUSINESS

After being rebuffed twice by the Legislature and also by the courts, Flint-based McLaren Health Care Inc. is trying again in both venues to be allowed to build a

new hospital in Oakland County near Clarkston. Last week, Senate Majority Leader Randy Richardville, RMonroe, introduced Senate Bill 1073, which would allow Richardville McLaren to transfer beds from its McLaren Oakland Hospital in Pontiac to the new facility, a request denied in 2012 by the Michigan Department of Community Health because it doesn’t meet state certificate-of-need require-

ments. Lawmakers first tried to help McLaren with a legislative fix shortly after that denial, but that attempt fizzled when Gov. Rick Snyder said he didn’t see value in legislative exemptions to the regulations. McLaren then went to the courts, but lost in Oakland Circuit Court in December. Greg Lane, senior vice president and chief administrative officer at McLaren, said McLaren has asked the Michigan Supreme Court for permission to appeal and expects to hear a decision on whether it can

by December. But it’s possible the Legislature could approve its latest plan to help McLaren before then. Richardville’s bill is now in the Senate Government Operations Committee, which he chairs. He said he expects to have a hearing on the bill this week. “I think we’re ready to go,” he said. He said he wants to get the bill to Snyder’s desk before year’s end. Richardville said Snyder told him he felt he could support the bill this time, but Snyder’s press

Inside

Bill would give patients access to trial drugs, Page 4

See McLaren, Page 18

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

Gilbert funds plan to widen I-375 ramp to Lafayette

Area Agencies on Aging Association of Michigan . . . 6 Blue Cross Blue Shield of Michigan . . . . . . . . . . . . . 6 Conway Mackenzie . . . . . . . . . . . . . . . . . . . . . . . . 10 Council of Michigan Foundations . . . . . . . . . . . . . 11 Cribspot.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 17 Detroit Red Wings . . . . . . . . . . . . . . . . . . . . . . . . . 17 Detroit Regional Chamber . . . . . . . . . . . . . . . . . . . 20 Downtown Development Authority . . . . . . . . . . . . . 17 Economic Alliance for Michigan . . . . . . . . . . . . . . 18 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Greektown Casino-Hotel . . . . . . . . . . . . . . . . . . . . . 3 IHS Automotive Group . . . . . . . . . . . . . . . . . . . 10, 20 Jewish Federation of Metropolitan Detroit . . . . . . . 11 Law Offices of Brian M. Legghio . . . . . . . . . . . . . . 19

BY SHERRI WELCH

LB3 Management . . . . . . . . . . . . . . . . . . . . . . . . . 19

CRAIN’S DETROIT BUSINESS

Work is expected to begin this week on a Dan Gilbert-funded plan to widen the I-375 ramp to Lafayette Street to help alleviate bottlenecking at the exit and improve access to the downtown area. The Michigan Department of Transportation has signed off on the plan, but instead of a stateled financing plan, Greektown Casino-Hotel, owned by Gilbert, is covering the $1.25 million cost. Gilbert The Lafayette exit “is a popular access to downtown, and right now it’s constrained,” said Jennifer Kulczycki, vice president of communications for Rock Ventures LLC, which owns the casino. Widening the ramp will improve access to not only the casino but also to the Greektown neighborhood and central business district as a whole, she said. “There are more and more people coming downtown,” Kulczycki said. “If we can make it easier and a more pleasant experience to access points of interest, it’s a winwin.” Rock also has secured a permit from the city — which owns the service drive — to begin work, Kulczycki said. Slated for completion by December, the project will expand the See Ramp, Page 18

Masco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 McLaren Health Care . . . . . . . . . . . . . . . . . . . . . . . 3 Mercer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Michigan Department of Transportation . . . . . . . . . 3 Michigan Health Endowment Fund . . . . . . . . . . . . . 6 Michigan Primary Care Association . . . . . . . . . . . . . 6 Neighborhood Service Organization . . . . . . . . . . . . 11 Olympia Development of Michigan . . . . . . . . . . . . 17 NATHAN SKID

Construction on the Wayne County Jail in downtown Detroit has been halted since July of last year after cost estimates to complete it approached $300 million. It now sits unfinished while county commissioners weigh their options.

Pearl Meyer & Partners . . . . . . . . . . . . . . . . . . 11, 13 Rock Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 St. Joseph Mercy Oakland Hospital . . . . . . . . . . . . 18 TRW Automotive Holdings . . . . . . . . . . . . . . . . . . . 10

County doubtful to lock up ‘fail jail’ before Ficano exits

United Way for Southeastern Michigan . . . . . . . . . 12 Walbridge-dck . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 YMCA of Metropolitan Detroit . . . . . . . . . . . . . . . . 11

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 4

Lame-duck decision not likely best course BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

Wayne County will be in a flurry of activity over the next few weeks to put its so-called “fail jail” debacle in the past — but the odds are getting long for a resolution during Robert Ficano’s last six weeks as county executive, officials and observers said. First up is Tuesday’s arraignment at Wayne County Circuit Court for three past and present county officials in connection with the stalled jail project on Gratiot Avenue. Former Ficano CFO Carla Sledge, current Chief Assistant Corporation Counsel Steven Collins and jail project owner’s representative Anthony Parlovecchio were indicted after a one-man grand jury investigation convened by county Prose-

THIS WEEK @ WWW.CRAINSDETROIT.COM

cutor Kym Worthy. On Sept. 30, a committee of the County Commission expects to hear from bond attorneys as well as executives from Rock Ventures LLC, the development arm of Dan Gilbert’s real estate empire that has offered to pay $50 million for the Gratiot site along with the Frank Murphy Hall of Justice, a juvenile detention facility and other county buildings for private redevelopment. No date is set for the board to take a course of action, and a set of four options presented by Ficano’s administrators all involve adding hundreds of millions of dollars in new bonds to the county’s debt load. Ficano The county Building Authority reviewed those proposals last week but hasn’t set a date for a decision either, said Frederick Hoffman, See Jail, Page 19 The eats beat Catch up on the ever-changing menu of news from the food and restaurant scene, crainsdetroit.com/food ANJANA SCHROEDER/CDB

BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . 15 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 4 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

20140922-NEWS--0004-NAT-CCI-CD_--

9/19/2014

4:30 PM

Page 1

Page 4

September 22, 2014

CRAIN’S DETROIT BUSINESS

‘Right-to-try’ law would give patients access to trial drugs Michigan is poised to one involved in caring become the fourth state for the patient using the to enact a “right-to-try” experimental drug canlaw that would allow not be sued if it causes terminally ill patients harm to a patient. access to experimental A companion bill to medicines. the right-to-try bill, Senate Bill 991, sponsponsored by Rep. Nansored by Sen. John Papcy Jenkins, R-Clayton, pageorge, R-Troy, is on is awaiting action in the the House floor and Senate. could come to a vote this House Bill 5649 would week. protect physicians and Chris Gautz Pappageorge said he their facilities from disbecame interested in the idea af- ciplinary action by the Departter speaking with Terry Kalley, ment of Community Health for recmanaging director of Bloomfield ommending treatment of the Hills-based Global Logistics Strate- experimental drug, unless gross gies, whose wife, Arlene, has negligence or willful misconduct stage-four breast cancer. was found. “Denying a person the right to So far, Colorado, Louisiana and access drugs that might save Missouri have all enacted righttheir own life flies in the face of to-try laws, and Arizona has the our due process rights embedded issue on the ballot this Novemin the Constitution,” Kalley told ber. the House Health Policy commitSuch laws are being pushed tee last week. state by state by the ArizonaUnder the bill, the experimen- based Goldwater Institute, a consertal drugs patients could take are ones that have passed the U.S. Food and Drug Administration’s phase-one study, which looks at the drug’s safety and most-frequent side effects. But drugs are not available to the public until they have passed the FDA’s phase-two and -three studies, which continue to study the safety and the effectiveness of the drugs. Those studies can often take anywhere from five to 10 years. Kalley and Pappageorge say once the phase-one study proves a drug is safe, patients shouldn’t have to wait another decade before being allowed to try a drug that could save lives. Critics say it gives patients false hope. That criticism, Kalley said, is irrelevant. There is a 100 percent chance his wife will die, as there is no cure for her cancer. But if there is a drug that may have some chance of helping his wife, she should be able to try it, he said. The bill would allow patients to try experimental drugs, as long as a doctor prescribes it. Doctors would not be required to prescribe any experimental drugs. There is no requirement that insurers cover the cost of the medication, but they would be allowed to cover it. Manufacturers of the drug could provide it to the patient free of charge, or require payment from the patient. And the manufacturer or any-

Capitol B r i e fi ng s

THE MILLER LAW FIRM Changing the Odds in our Clients’ Favor

vative nonprofit group. Lucy Caldwell, the institute’s senior political adviser, said such laws are important because terminally ill patients don’t have time to wait for the FDA to finish its work. A House Fiscal Agency report noted the FDA does not accept many of the more critical patients in its clinical trials of these experimental drugs, and those patients that are accepted might end up receiving the placebo rather than the medicine being tested. The two bills have received strong support so far in the Legislature. The Jenkins companion bill passed the House last week, 109-0. The right-to-try bill passed the Senate 31-2 in August. The plan is for the two chambers to finish passing both bills at the same time so they can move to Gov. Rick Snyder’s desk together. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

Call Paul Mattes Vice President-Principal Certiﬁed Risk Architect

The Miller Law Firm is Recognized as a Leader in Complex Business Litigation Q

Automotive Supplier Counseling

Commercial and business lawsuits

Employment litigation

Shareholder and partnership disputes Referral fees honored on contingency fee cases

950 West University Drive, Suite 300 Rochester, Michigan 48307

248-841-2200

millerlawpc.com

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Sept. 12-19. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Somerset 2002 LLC, 40800 Woodward Ave., Bloomfield Hills, voluntary Chapter 11. Assets: $2 million; liabilities: $800,600. — Anjana Schroeder

It’s time to rethink your insurance strategy 888.525.7575 | 586.323.5700 | sterlingagency.com Sterling Insurance Group is a Michigan based company.

20140922-NEWS--0005-NAT-CCI-CD_--

9/19/2014

4:13 PM

Page 1

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

September 22, 2014

Page 5

Off-campus housing matchmaker Cribspot raises $660,000 round troit Business. Previously, Cribspot had received $11,000 from several UM grants and $40,000 by winning a pitch event at the TechWeek event in downtown Detroit in May. In August, the company moved its headquarters to downtown Ann Arbor to be close to the huge rental market at UM. With the close of its seed round, the company will expand its services to 15 campuses across the country. While testing the beta version of its website over the last year, Cribspot claims to have helped 56,000 renters find a place to call home at UM, Michigan State University, the University of Iowa, the University of Cincinnati, the University of Wisconsin and Ohio State University. â&#x20AC;&#x153;What I like about Cribspot is that the college rental market is fragmented and hasnâ&#x20AC;&#x2122;t caught up with the rest of the real estate industry on the technology front,â&#x20AC;? said Tim Streit, a managing director at Huron River. Huron River did not disclose the size of its investment; First Step Fund invested $50,000. Several competitors offer services that overlap with Cribspotâ&#x20AC;&#x2122;s, including San Francisco-based Craigslist Inc., Seattle-based Zillow and San Francisco-based Trulia. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

BY TOM HENDERSON CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Cribspot.com, a startup that helps college students find places to live while helping mom-and-pop owners manage their properties, will announce Monday that it has finished raising a seed round of $660,000, led by Ann Arbor-based Huron River Ventures and joined by the Detroitbased First Step Fund. Cribspot had been targeting a round of $500,000. Founded by three University of Michigan students in 2013 â&#x20AC;&#x201D; Okrasinski CEO Jason Okrasinski, Chief Technology Officer Tim Jones and lead software developer Evan Dancer â&#x20AC;&#x201D; and growing out of a business class at the school, Cribspot was incubated at Bizdom, the startup accelerator of Dan Gilbert in downtown Detroit. The company was a finalist in June for the grand prize of $100,000 at the Detroit stop of the Rise of the West tour put on by AOL founder Steve Case and one of four companies at a pitch contest last Friday that was part of the Detroit Homecoming event hosted by Crainâ&#x20AC;&#x2122;s De-

Chicago: October 14 - 15, 2014 Join top decision-makers from various healthcare organizations who will share their insights, experiences and the strategies that have helped them overcome the everyday challenges presented in balancing a unique combination of assets such as pension plans, operating pools, endowments and insurance. Sessions include these timely panel discussions:

â&#x20AC;˘ The Liquidity Challenge â&#x20AC;&#x201C; Maintaining Operating Funds in a Low Interest-Rate Environment â&#x20AC;˘ Building a Stronger Healthcare Organization â&#x20AC;˘ Managing Hospital Endowments & Foundations â&#x20AC;˘ Captive Insurers: A Risk Management Solution â&#x20AC;˘ Outsourcing Your Investment Portfolios PLUS our KEYNOTE PRESENTATIONS include:

Hospitals and Healthcare â&#x20AC;&#x201C; The State of the Industry featuring:

Professor Paul B. Ginsburg Norman Topping Chair in Medicine and Public Policy | Sol Price School of Public Policy Schaeffer Center for Health Policy and Economics | University of Southern California

The Future of Accountable Care Organizations featuring:

Michael Chernew Leonard D. Schaeffer Professor of Health Care Policy | Harvard Medical School

Complimentary registration* at www.pionline.com/HH2014 Questions? For more details please contact Elayne Glick at (212) 210-0247 or pi-registration@pionline.com *Registration is only open to healthcare and hospital pension fund and endowment executives and a limited number of investment consultants. All registration requests are subject to veriďŹ cation. P&I reserves the right to refuse any registrations not meeting our qualiďŹ cations. The agenda for the Hospital and Healthcare Investing Summit is not created, written or produced by the editors of Pensions & Investments, and does not represent the views or opinions of the publication or its parent company, Crain Communications, Inc.

%4#( T+N) )11& B''4, +Tâ&#x20AC;&#x2122;S WH#T + .18' T1 &1. FIGURING OUT PHONE SYSTEMS, NOT SO MUCH.

9hen you run your own business Ć guring out your +nternet or phone service should be the least of your worries. Thatâ&#x20AC;&#x2122;s our job. Weâ&#x20AC;&#x2122;re your tech experts. Weâ&#x20AC;&#x2122;ll make sure you get the right services and the tech support you need, so you can focus on your business, because thatâ&#x20AC;&#x2122;s the way it should be.

1-855-339-4514 | BRIGHTHOUSE.COM/BUSINESS PHONE

INTERNET

VIDEO

ÂŠ2014 Bright House Networks. Some restrictions apply. Serviceable areas only. Service provided at the discretion of Bright House Networks.

20140922-NEWS--0006-NAT-CCI-CD_--

9/19/2014

4:16 PM

Page 1

Page 6

September 22, 2014

CRAIN’S DETROIT BUSINESS

HAWKER 800XP

Michigan Health Endowment Fund to award up to $40M in grants BY JAY GREENE CRAIN’S DETROIT BUSINESS

NEW ARRIVALS FRACTIONAL AND MANAGED BUSINESS AVIATION PROGRAMS. SERVING ALL SOUTHEASTERN MICHIGAN.

CORPORATEEAGLE.COM

The Michigan Health Endowment Fund is expected to approve $25 million to $40 million in pilot grants to at least six and up to 11 health organizations on Oct. 20 when the board meets to vote, its chairman said. The fund was created last year by state legislation that allowed Blue Cross Blue Shield of Michigan to convert into a nonprofit mutual health insurer. The fund will receive $1.56 billion over 18 years from the Blues. “We have an opportunity in Michigan to do what most states can’t do. We must think long term because $1.5 billion can make a big difference in the quality of health for our citizens,” said fund Chairman Rob Fowler, who also is CEO Fowler of the Small Business Association of Michigan. The grants issued in October will be the largest so far — the first $2 million grant was to help low-income people in Detroit pay overdue water bills and recover from the August flood. Grants range from $3 million to $5 million over two to three years. “The total amount (and the number of health organizations approved) depends on the quality of the applications. It will total at least $25 million and could be up to $40 million,” Fowler said. “We will try to be as flexible as we can.” The purpose of the fund is to benefit the health and wellness of minor children and seniors in Michigan. For example, funds must be spent to reduce infant mortality, increase access to healthy food, enhance health information technology or prevent foodborne illness. The endowment fund also will provide $120 million in subsidized

payments to low-income seniors to buy Medicare supplemental, or Medigap, policies from Aug. 1, 2016, through Dec. 31, 2021. Blue Cross agreed to continue its subsidized Medigap program until Aug. 1, 2016. The 11 grant applications range from helping seniors control and manage diabetes and improve access to healthy foods to creating physical and mental health activity programs for children, said Geralyn Lasher, the fund’s interim executive director. “Some programs deal with providing evaluations for children regarding trauma they may have experienced and better coordination for public lands and community parks,” Lasher said. The health organizations that applied for grants this year include the Area Agencies on Aging Association of Michigan, Easter Seals Michigan, Food Bank Council of Michigan, Michigan Association for Local Public Health, Michigan Association of Community Mental Health Boards, Michigan Association of United Ways, Michigan Fitness Foundation, Michigan Primary Care Association, Michigan Recreation and Parks Association, Michigan State Alliance of YMCAs and Michigan Alliance of Boys and Girls Clubs Inc. Fowler said the endowment fund expects to hire a CEO by mid-October and then a CFO by year’s end. While the fund is still developing its grant-making process, the ninemember board wanted to demonstrate the fund’s commitment to help Michigan residents, he said. Kim Sibilsky, CEO of the Primary Care Association, said the association applied for almost the maximum amount allowed by the fund — $5 million — to help hire, train and integrate more than 30 community health workers into federally qualified health center teams. “This is an opportunity unequaled in my experience,” Sibilsky said. Sibilsky said the funding, if awarded, would help more than 20

With all the confusion surrounding healthcare, who knew providing it could be so simple? EXCHANGE SOLUTIONS™

INTRODUCING CAMBRIDGE EXCHANGE SOLUTIONS.

CAMBRIDGE CONSULTING GROUP

There’ss a ne There’ new solu utio ion to pro p ovid ding g gro rou up ben enefi efit co over vera age,, an and it’ss very very si s mple, rea really lly. You gi Yo g ve e you yourr empl mp oy oyeess a se et amo amoun unt of m money ney to sp spend end on be benefi nefits ts – it’s it s li like a ben nefitss allo a lowan w ce – a and nd th hey use se tha thatt mone oney to o sho shop fo forr the the combination of cov cove erage thatt meet ee s th their indi dividual ual ne eeds ds.. Empl Employ oyeess are em empow powe ered d by by more pl plan an cho choic ices. And you’r u’re e ab able to ge get cruc ucia ial co contr n ol ove over cost ostss. Cambridge dge br b ing ngss bene nefits fits,, tec t chnol nology og and d deci d isio sion supp up or ort tools in n a sim simple ple, convenien e t and a d eas easy y to impl mpleme men nt pac packag kage. Add it up,, and the ad a vantages are cl clea ear.

248.743.4300 ccgexchangesolutions.com

health centers in Michigan work directly with patients in their homes to provide information, support and assistance on food, housing, social services and counseling. “There is no current payment formula for community health workers,” she said. “One of our goals is to create the case for payment by demonstrating the quality and impact they can have.” Mary Alban, executive director of the Lansing-based Area Agencies on Aging Association of Michigan, said the $5 million grant application would create education sessions for older adults to prevent falls and learn to better control diabetes. “Falls are responsible for 79 percent of trauma emergencies in hospitals and are the most common reason for hip fractures,” she said. Alban said funding would be spread among 16 regional agencies based on various needs. A small amount would be set aside to help them become Medicare-certified providers of diabetes education. “We currently have programs in place that serve hundreds,” Alban said. “This would raise the needle for thousands to be served.” Last month, the Michigan Health Endowment awarded $2 million to help Detroit water customers pay overdue bills. Of that amount, $300,000 is going toward helping low-income residents with cleanup from the Aug. 11 storm that dumped more than 6 inches of rain on Detroit. Funds will be administered by United Way for Southeastern Michigan. Fowler said there is some board concern about the precedent set by awarding a grant for a natural disaster. By law, the fund is allowed to spend up to 80 percent of contributed funds each year, but Fowler said the board decided to spend a maximum of $40 million this year and add the remainder to the fund’s principal, which must total $750 million in 12 years. Since April, when Blue Cross contributed the first $100 million into the fund, investments had earned $1.1 million as of Aug. 31. After expenses of $590,381, the fund had netted $516,000, said an endowment fund report. Lasher said the board was surprised Blue Cross contributed $100 million this year. “We only expected $50 million” because that is the state-mandated minimum annual payment, she said. “They will notify us later in the year, and that will help us set our spending goals for the year.” Fowler said the board will set priorities each year on the types of grants it seeks and set a total amount it wants to spend after it receives the Blue Cross payment. “We have a lot of health needs in Michigan,” said Fowler, acknowledging that the state is ranked only 34th-healthiest in the nation by America’s Health Ranking. “I hope in 20 years,” he said, “there is a direct relationship with the health endowment fund and an improvement in health status.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

20140922-NEWS--0007-NAT-CCI-CD_--

September 22, 2014

9/19/2014

6:14 PM

Page 1

Page 7

Masco shares up with optimism over direction of market, company BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

Investors seem assured that Taylor-based Masco Corp. is heading in a strong new direction — even if that direction won’t be fully known for at least a few more weeks. Shares of Masco (NYSE: MAS) crested around $24.50 last week, its highest price since the same week of September in 2007 — even though the maker of faucets, cabinets, paint products and other home fixtures is on pace to make $3.3 billion less revenue and has 30,000 fewer employees than it did that year. Some of that buoyancy appears fueled by a housing market in the U.S. and Europe, according to company and analysts reports, that will continue to rebuild revenue through the end of the year. The rest appears to be a combination of shareholder excitement about Keith Allman, the CEO who replaced Timothy Wadhams in February, as well as faucet sales growth in Asia and a new strategic review the company undertook earlier this year, which should be complete within days. Jamie McDaniel, Masco corporate communications manager, said in an email to Crain’s, that the company is working on a strategic review of its businesses that it expects to complete by the end of the month. Company assets also grew about $300 million compared to a year ago, mostly in receivables. An improved cash position will probably help fuel small acquisitions that deepen the portfolio of individual business segments in the coming months, but the company has no large-scale acquisition deals planned. Analysts believe the liquidity will probably help restructure its more than $6 billion in debt, more than $1 billion of which matures within two years. “I believe them that they’re not looking at large acquisitions. They’ve been talking about buying back debt, they’ve been talking about repurchasing some shares even if they haven’t been aggressive about it yet, and there’s an expectation that in the next few months they’ll have a meeting and make some announcement about a change in the business model,” said Megan McGrath, building products analyst at Stamford, Conn.-based MKM Holdings LLC. “They still haven’t completed the review for that yet, but some of that speculation about it is carrying over into the shares right now.” The company also projects U.S. housing starts will top 1 million this year, compared with less than 600,000 in 2010 when Masco reported about $7.6 billion in revenue. Analyst consensus has ranged from neutral to strong buy, with no sell recommendations in at least a year according to data tracked by Bloomberg LP. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

Hindsight Is Not

a Perform ance S

Building a high-performance business requires more than a rear-view mirror approach.

trateg y

At Doeren Mayhew, we help businesses focus on the track ahead, use forward-looking financial data to successfully bank the turns, and spot the warning flags that it may be time to pump the brakes. An internationally recognized, Top 100 U.S. firm, Doeren Mayhew fuels our clients with insight into their businesses, oversight to ensure best practices and foresight for what’s ahead. We invite you to see how our crew can help you accelerate growth, maintain a steady pace or cross the finish line a real winner. Insight. Oversight. Foresight.® 248.244.3000 doeren.com

Ferdinand Samson, VP, Equipment Finance of Level One Bank and client Robert Brisley, President of Polymer Process Development

Ferdinand “Ferd” Samson, VP, Equipment Finance of Level One Bank and client Rob Brisley, President of Polymer Process Development

Equipment Financing Tailored for you, the entrepreneur. Finance up to 100% of equipment, plus soft costs. Flexible terms. Local decision making. Call us Contact Greg Wernette Entrepreneur and Chief Lending Oﬀicer, 248-737-0300

All ﬁnancing subject to credit approval.

32991 Hamilton Court ∫ Farmington Hills, MI 48334 ∫ levelonebank.com Commercial Banking ∫ Retail Banking ∫ Mortgage Services

20140922-NEWS--0008,0009-NAT-CCI-CD_--

9/19/2014

6:39 PM

Page 1

Page 8

September 22, 2014

CRAIN’S DETROIT BUSINESS

OPINION

LETTERS

Snyder should back CON regulations

Pollsters work to ensure accuracy

cLaren Health Care is making another push to get an exception to state law so it can build a hospital near Clarkston in north Oakland County. As Jay Greene and Chris Gautz report on Page 3, McLaren has found a friend in Sen. Majority Leader Randy Richardville, R-Monroe, who has introduced legislation that would allow the Flint-based health system to transfer beds from its Pontiac hospital several miles beyond the two miles allowed by state certificate-ofneed regulations. The move is opposed by other hospitals nearby that fear that a new competitor will leave them with more empty beds, which drives up costs. McLaren has been told “no” by the Michigan Department of Community Health, has Richardville failed twice to get an exemption from the Legislature and also has failed in the courts. But Richardville says this time the bill has the support of Gov. Rick Snyder. If that’s true, it’s a departure from Snyder’s mantra of not doling out special treatment. CON regulations are widely supported by business and exist to help maintain access to care and hold down health care costs. The governor should uphold them.

MDOT needs more than Gilbert Dan Gilbert is taking the “adopt a highway” idea to a new level. Rather than focus on litter removal, Gilbert is ponying up $1.25 million to widen the exit ramp to Lafayette Street from I-375 to three lanes. The widening will benefit Gilbert’s Greektown Casino, which sits just off the ramp, but also will improve safety because it will help alleviate frequent traffic backups there. MDOT has expressed interest in more private parArtist’s rendering of the future I-375 ties stepping up to the plate, ramp. and we understand why. As we’ve noted many times before, there are not enough public resources available to adequately maintain and improve infrastructure. At some point, this has to change.

Editor: I read with interest Keith Crain’s comments in his Sept. 1 column regarding the accuracy of polling in this cellphone era (“Whom can we believe in election polling?”). Polling continues to be accurate, just not as precisely accurate as it was 10 years ago. If you look at Michigan in 2012, the RealClearPolitics.com averages for Michigan had President Obama winning by 4 percent (our final poll had Obama at more than 5 percent). The actual results had Obama winning by 9.5 percent. Two pollsters had it at more than 6 percent. This was not as accurate as we have been in the past, but we still had the winning candidate and the fact he was going to win easily. In 2010, our final poll had Gov. Snyder winning by 20 percent; the final margin was more than 18.5 percent. To assure greater accuracy in our operator-assisted polling, we continue to increase the number of completed calls to cellphones. Our goal is now to complete one-third of our calls to mobile phones. We also ask to speak to the youngest person in the household to get a younger sample of respondents in our landline calls. In automated calls, we have to make some assumptions based on what we know about the population. Crain is correct when he wrote that some characteristics are known. We know about 90 percent of all African-Americans vote for Democrats. This was true before our first black president, and it will be true after he has left office. One error we made last year was to under-sample African-Americans. As a result of efforts by Democrats to get African-Americans out to vote for Obama, black participation increased from 8 percent of the vote in 2004 to 16 percent in 2012. It will fall to 12 percent this year, but we are still weighting black participation at least 13 percent now to make sure this key Democratic group is not under-represented in our polling. Voters 18-29 years old tend to vote about 60 percent-40 percent Democratic. We are able to confirm how they are voting by increasing the number of 18- to 29year-olds we call on mobile

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 phones. In our automated polls, the larger sample sizes allow us to pick up enough voters in that age group so we can use the computer to weight them up to the correct percentage of vote they represent. Because we get too many older voters, we have to weight them down. We are all adapting to the new world of polling. But it is accurate. EPIC-MRA recently conducted a statewide poll using regular operator-assisted phoning including cellphones. At almost the same time, we conducted an automated poll not using cellphones. They had Gov. Snyder trailing Mark Schauer by 2 percent, and we had Snyder leading by 1 percent. Both polls, using different methodology, show the race to be very close. In polling, when two polls show essentially the same results, they substantiate each other. In the primary elections, we saw great volatility in polling. In the 4th Congressional District, Paul Mitchell led by as much as 23 percent at one time, but he eventually lost by 16 percent — a more than 30 percent change. We have not seen this type of volatility in the general-election voters. However, now we are heading down the stretch toward Nov. 4. The polling is still going to give you a good, accurate snapshot of where the race is at any given time between now and Election Day. I have predicted for years that eventually Congress (whose members really need the data we provide) will allow a national phonebook of cellphone numbers and allow both operator-assisted and automated pollsters to call cellphones. The Do Not Call list will still be in effect, but it will not apply to researchers. With portability in cellphone

numbers, the logical conclusion is a national cellphone directory. The reason it has not been done yet is because it will be unpopular. We will all work to be as accurate as we have been, and we will still provide the “scorecard” on who is ahead and who is behind until Election Day. This year will be a tough one for us because the races look close, but we will work as hard as possible to get it right. Steve Mitchell CEO Mitchell Research & Communications Inc.

DENNIS ALLAIN RENDERINGS

Artist’s rendering of the new Wings arena and surrounding district.

Ilitches’ arena plan proves commitment Editor: Regarding the Sept. 1 Other Voices column, “Detroit, state should’ve challenged Wings arena plan”: Mike Ilitch’s vision for the new Red Wings arena and entertainment district is a bold vision shared by the executive and legislative leadership of the city of Detroit, its residents and the state of Michigan. Crain’s got it right by describing this initiative as “a dramatic transformation of the heart of Detroit.” The positive impact will be profound and will include $200 million in private investment, 8,300 construction and 1,100 permanent jobs, $1.8 billion in economic impact to the city, state and region along and a commitment to contact with Detroit-based firms with 51 percent of the jobs filled by Detroit residents. This announcement comes at a See Letters, Page 9

KEITH CRAIN: In baseball terms, it was a grand slam Last week, Detroit celebrated the first Detroit Homecoming, an event that Crain’s was instrumental in organizing and running. It was a wonderful event and, I am pleased to say, a great success. Several hundred successful business executives from all over the country who had strong ties to Detroit were invited home last week. During the event, which lasted for three days, they heard and met many Detroiters who welcomed them home and introduced them to the exciting changes and oppor-

tunities that are available in this community. The event was orchestrated by Mary Kramer, publisher of Crain’s, and my old friend Jim Hayes, whom I first met when he was running the Detroit office for Sports Illustrated. He went on to finish up his publishing career at Time Inc. in New York as publisher of Fortune magazine. When he came home to Detroit, he

had an idea that was so good it had to be done. His idea was a smashing success. We’re proud to be a part of that idea. So much is happening in Detroit that for many who have left to become successful in other parts of the country, but still have ties with our city, it was time to come home and learn about all the exciting things that are going on.

The sponsors were great and very much involved in helping make this a reality. We gave these expats a taste of the new Detroit and showed them the changes that have been going on in their hometown. We invited speakers from Detroit to discuss the exciting projects and events that are happening right now in Detroit. The governor kicked it off and the mayor explained all the positive steps that are being taken to get this city back to the glory it once had and now is working hard

to deserve. Lots of great presentations, enough to keep our Homecoming guests interested and excited. No one can estimate what this Detroit Homecoming program will do for Detroit, but we hope it will be the beginning of an annual event to showcase the changes and improvements in our city. We thank all the expats for coming and, most importantly, we thank all our sponsors and speakers for their help and their support.

20140922-NEWS--0008,0009-NAT-CCI-CD_--

9/19/2014

10:45 AM

Page 2

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 9

OTHER VOICES: Reform Ex-Im Bank, help airline jobs University of MichiganCrain’s featured on Sept. Dearborn and the Wayne 8 an in-depth look at the deCounty Airport Authoribate over the Export-Imty concluded that the airport Bank of the U.S. and its port has a $10.2 billion impact on Michigan jobs annual economic impact (“The bank with a lightning on the state and supports rod”). It’s an issue in the 86,000 jobs. headlines this month as Those jobs are being Congress considers put at risk by the Ex-Im whether to reauthorize the Bank. While much of the charter for the bank, which expires at the end of Sep- Andrea Fischer public debate has foNewman cused on the bank’s astember. While the front-page article and sistance to small business, the maaccompanying editorial focused jority of its U.S. taxpayer loans on the impact the bank has on and guarantees go to foreign airmanufacturing statewide, it large- lines, which allows them to buy ly overlooked a critical part of U.S.-manufactured wide-body airMichigan’s economy that is deeply affected by Ex-Im — air travel. Delta Air Lines operates a major hub at Detroit Metropolitan Airport, where it has 7,500 employees. Detroit is an important international gateway for Delta, and our hub connects the region to key international business centers like Shanghai, Beijing, London and Sao Paulo. Delta’s international gateway helps Detroit maintain its status as an international center for business and commerce. The airport is a leading economic engine for the region. A study released earlier this year by the

craft at a large discount not available to U.S. carriers. The financial advantage that foreign airlines receive from the Ex-Im Bank tilts the playing field in their favor on international routes where they compete directly with U.S. airlines. This is a direct subsidy from the U.S. taxpayers that hurts our business and takes away good jobs here in Michigan. Most of the foreign airlines that receive Ex-Im subsidies are owned or operated by wealthy governments, many based in the Middle East. These airlines have no problems getting credit to buy air-

planes in the private market. Just recently, a senior executive at Emirates, a fast-growing airline based in Dubai that is a major recipient of Ex-Im financing, said it would have no trouble buying airplanes from Boeing if Congress fails to reauthorize the bank. The good news is that there is a simple way to continue the support Ex-Im provides for small business and manufacturers in Michigan without also risking the tens of thousands of jobs statewide that depend on air travel and a healthy airport. Both Delta and the Air Line Pilots Association, the largest union of airline pilots, are asking Con-

gress to reform the bank to make foreign airlines ineligible for Ex-Im financing for wide-body aircraft if the airline can finance their jets in the private market without support from U.S. taxpayers. As Emirates has stated, these airlines will continue to buy Boeing airplanes even without the ExIm support. This middle road is the best path toward reforming the bank so it works as originally intended — helping U.S. exporters where needed without doing harm to U.S. jobs. Andrea Fischer Newman is senior vice president of government affairs for Delta Air Lines.

GET A CLOSER LOOK AT THE HEALTH CARE INDUSTRY

Crain’s examines Cost vs.Quality AND HOW TO OBTAIN THE BEST OF BOTH WORLDS

LETTERS CONTINUED ■ From Page 8

MODERATOR:

Gene Michalski

Rob Casalou President and CEO, St. Joseph Mercy Hospitals — Ann Arbor, Saline, Livingston

Joe Mullany

President and CEO, Beaumont Health

CEO, Detroit Medical Center

KEYNOTE SPEAKER:

Plus

Joe Flower

Author and Health Care Futurist

Nancy Schlichting President and CEO, Henry Ford Health System

Marianne Udow-Phillips Director, Center for Healthcare Research & Transformation

■ Health Care Heroes awards ■ HealthFacts panel ■ Roundtable discussions

Nov. 6

7:30 a.m. - 1 p.m. Shriners Silver Garden Events Center, Southﬁeld TITLE SPONSOR

TITLE SPONSOR

PRESENTED BY

PREMIER SPONSOR

KEYNOTE SPEAKER SPONSOR

ROUNDTABLE SPONSORS

HEALTHFACTS UPDATE SPONSOR

REPORT SPONSOR

The Right Plan for a Healthier You™

BREAK SPONSORS

MAJOR SPONSORS

PRINT SPONSOR CRAIN’S DETROIT BUS INES TER OF SE PRIN VE IAL N FIC

Chairperson ULI Michigan District Council Executive director, Detroit-Wayne Joint Building Authority

To Consolidate or Not: Four Power Players Weigh In

critical time. The world is watching as Detroit works rationally through the most complex municipal bankruptcy in history. In this context, many of our Urban Land Institute associates from other major cities were stunned and thrilled to learn about this development. The ULI is a nonprofit research and education organization. One of our publications is Ten Principles for Successful Public/Private Partnerships. This development reflects these principles. It has been done transparently, includes a shared vision, clearly establishes risks and rewards for all parties — and was negotiated fairly. Our 10th principle is to build trust as a core value. The Ilitch family has demonstrated a deep commitment to Detroit. They moved their headquarters to the city in 1988 when other businesses were moving in other directions. They have anchored our theater district, built a terrific baseball park, and kept the Tigers and Red Wings as our hometown teams. They bring more than 500 events to Detroit annually, and consistently demonstrate their passion for our city and its residents and visitors. These are values you want in a partner. The partnership created is genuine and is beneficial to all parties, particularly the residents of Detroit, who will benefit for generations from this transformational anchor development. A diminishment of the benefits to any of the parties could have resulted in no deal at all. That would have been a tragedy. Gregory R. McDuffee

34 w.g 3.0 reko printing.com • 734.45

20140922-NEWS--0010-NAT-CCI-CD_--

9/19/2014

10:46 AM

Page 1

Page 10

Invest Wisely Choose an Advisor Who Sees the Bigger Picture WORLD CLASS MONEY MANAGERS

TRANSPARENT FEES | INDEPENDENT | ACTIVE TAX LOSS HARVESTING | ADVANCED TAX PLANNING

Leveraging the resources of our $2 trillion dollar institutional partner firm Callan Associates, we access world class money managers for our clients’ portfolios. This research is only available to a select group of advisors around the country. Discover how Schechter’s unique access and platform can build a better diversified portfolio. That’s Opportunity.

September 22, 2014

Analyst: ZF’s $13.5B deal for TRW to create ‘powerhouse’ BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

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

I N V E S T M E N T

A DV I S O RY

A DVA N C E D

L I F E

I N S U R A N C E

D E S I G N

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. SIA is an SEC registered investment adviser; please consult the Firm’s Form ADV disclosure documents, available on the SEC’s Investment Adviser Public Disclosure website.

Commercial Finance Experience

In Your Corner.

■ Domestic and international bi-lateral and syndicated commercial, realestate and asset-based financing. ■ Loan workouts, restructuring, bankruptcy and collection.

First Tier Ranking in Corporate Law and Commercial Litigation

Contact Bob Mollhagen at rdmollhagen@varnumlaw.com

■

Metro Detroit

■

Grand Rapids

■

Kalamazoo

■

Grand Haven

■

Lansing

An analyst says a “global powerhouse” in the automotive supply chain is in the making now that Livonia-based TRW Automotive Holdings Corp. has entered into an agreement to be acquired by German supplier ZF Friedrichshafen AG for $13.5 billion. Under the terms of the deal, ZF will acquire all TRW stock for $105.60 a share, a 16 percent premium over its trading price. That represents a multiple of 7.6 times earnings before interest, taxes, depreciation and amortization. The transaction, expected to close in the first half of 2015, will be financed through ZF’s cash reserves and debt, TRW said in a news release. The deal would create the second-largest auto supplier in the world, according to data from Crain’s sibling publication Automotive News. ZF reported global sales to automakers of $20.4 billion in 2013, with TRW posting $16.1 billion. The combined company would have 138,000 employees. It’s unclear whether ZF will consolidate TRW’s headquarters in Livonia and several plants across the metro Detroit region, but ZF CEO Stefan Sommer said in a news release that the region will “remain a major business center for the company.” TRW is expected to operate as a separate business division under ZF. Fred Hubacker, managing director of the Birmingham-based advisory firm Conway Mackenzie Inc., said the deal creates a “global powerhouse in driveline, chassis and electronics controls.” “There’s very little duplication in production between the two companies,” Hubacker said, “and together it will likely dominate several segments.” ZF’s North American headquarters is in Northville Township. The company, which operates 12 plants and offices in the U.S., will increase annual U.S. revenue to $9 billion from $3.9 billion after the deal. Each company divested a business unit to appease antitrust regulators and clear the new entity from a monopoly of a product line. On Sept. 10, TRW sold its engine valve business to Southfield-based Federal-Mogul Holdings Corp. for $385 million. On Sept. 15, German competitor Robert Bosch GmbH agreed to acquire ZF’s stake in a steering joint venture, ZF Lenksysteme GmbH. Mike Wall, director of automotive analysis for IHS Automotive Group LLC, said the ZF-TRW deal represents more consolidation through the supply chain as companies chase new technologies. “I don’t know that it fundamentally changes the industry, but it is another example of a supply chain that continues to evolve and one which could likely result in larger, and perhaps fewer, tier ones,” he said.

20140922-NEWS--0011-NAT-CCI-CD_--

9/19/2014

12:05 PM

Page 1

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 11

REPORTER’S NOTEBOOK Sherri Welch writes about nonprofits, services, retail and hospitality. Call (313) 446-1694 or write swelch@crain.com

Nonprofit compensation

Sherri Welch

Compensation with a catch

Nonprofits: Bill would free more funds Donors could see permanent tax deductions for certain charitable donations and have until April 15 of the next year to make contributions they can deduct on their previous year’s taxes. And foundations probably would increase the amount of grants they make each year if the America Gives More Act of 2014 — House Resolution 4719 — passes the U.S. Senate. The bill is “the biggest thing for the charitable sector since the introduction of the IRA charitable rollover in 2006,” said Rob Collier, president of the Council of Michigan Foundations. It would make permanent the IRA rollover — which allowed donors Collier age 70½ and older to give to charities up to $100,000 tax-free annually from their IRAs. It also would make permanent the tax deductions for gifts of excess food inventories and conservation easement provisions under which private owners promise not to develop land in exchange for the deduction while still retaining ownership of it, Collier said. Under the bill, foundations also would see a simplified 1 percent excise tax rather than the tax of 1 percent to 2 percent on assets they now pay under a complicated formula based on a rolling three-year average. The tax was created to fund the Internal Revenue Service’s Exempt Organizations Division. A flat excise tax is something the nonprofit sector has spent years lobbying for, Collier said. With a flat, 1 percent excise tax, foundations would be likely to increase their grantmaking, Collier said. That’s because when foundations increase their annual grant levels to respond to a disaster like a hurricane, they typically decrease their giving levels below the average the next year to avoid having to pay higher excise taxes, he said. With a flat rate, foundations wouldn’t have to decrease their grant levels to reduce their tax liability. The America Gives More Act also would give donors until April 15 to make charitable gifts they can deduct on the previous year’s taxes. That, too, is expected to result in more gifts as donors realize stock gains and have more time to understand their tax liabilities, Collier said. Late last week, Collier and other nonprofit leaders were strongly lobbying senators to take up the bill before the current session ended. In the absence of that, Collier said, “the idea is to get a commitment that they’ll bring it up in lame duck” in November.

Following health care’s use of bonuses, social service agencies try incentive pay BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

hen Crain’s first began analyzing the compensation data of local nonprofit executives a decade ago, bonuses were prevalent among health care organizations but not so among social service agencies.

Only a handful of social service organizations, such as the YMCA of Metropolitan Detroit and the Jewish Federation of Metropolitan Detroit, provided bonuses as part of their CEO’s compensaISTOCK PHOTO tion in 2003, according to a review reported by Crain’s in 2005. Fast forward to 2012, the most recent year for which data is available, Every two years, Crain’s Detroit Business and the and seven of the top 10 social services CEOs Michigan Nonprofit Association compile databases of nonprofit executive compensation. This year, the in metro Detroit received bonuses. One who reports can be purchased individually or together – at had received a bonus the previous year dida 20 percent discount. Crain’s report, which provides n’t in 2012, but it was part of his compensacompensation detail for 135 nonprofit CEOs across tion package, meaning eight of the top 10 on the state, costs $75. The MNA report is $50 for the local list had bonuses in play that year. association members and $130 for others. To Of the 35 Michigan social services CEOs purchase the Crain’s report only, visit who were part of Crain’s larger compensacrainsdetroit.com/lists. To purchase both reports at tion review, 13 received bonus pay in 2012. the discounted price or the MNA report only, visit www.mnaonline.org/2014compensationreport.aspx.

BUY CRAIN’S, MNA COMPENSATION REPORTS

It’s not clear from the numbers how many others may have been eligible for bonuses but did not receive them that year. Among those receiving incentive pay was Sheilah Clay, longtime CEO of the Detroitbased Neighborhood Ser- Clay vice Organization. Her $21,575 bonus was hardly the largest among local social service executives that year. Others received two to six times as much in incentive pay. But 2012 marked the first time that NSO had awarded its top executive a bonus. “Sheilah came to NSO when it was at the brink of bankruptcy,” said Chairman Ray Johnson, an educational and organizational consultant in Detroit. Johnson “Since then, it has become nationally known.” See Compensation, Page 12

COMPENSATION TRENDS: LAST YEAR AND THIS YEAR LIKE 2012 “Nonprofits are being cautiously ast year and this year will look optimistic,” said Paul Creasy, a partner much like 2012 when it comes to at Avon, Ohio-based Organizational nonprofit executive compensation, Consulting Group LLC. consultants say. More organizations are considering Increases in base pay in 2013 and into increasing compensation through new 2014 continued to be in the 3 percent or larger bonuses, he said. range, and the same is projected for 2015, said Ed Steinhoff, Ann ArborAnd as salaries begin to increase, based managing director at Pearl Creasy said, he’s noting an increase in Meyer & Partners LLC. the number of nonprofit executives deferring part of their compensation. By The use of bonuses rather than base doing so, executives reduce their pay to increase the total compensation Steinhoff immediate tax burden, he said. of nonprofit CEOs also has continued, compensation experts said. For health care CEOs, bonuses for performance

over a period of about three years rather than just a single year are increasingly a part of the compensation packages, said Patrick O’Cull, a principal in Mercer LLC’s Southfield office. But overall, compensation for health care executives has been fairly stagnant, Steinhoff said, even with all the changes brought about by health care reform. However, the measures in annual and long-term bonuses for health care executives are changing to reflect some of the priorities under the Affordable Care Act and changing responsibilities with industry consolidation, Steinhoff said. — Sherri Welch

20140922-NEWS--0012,0013-NAT-CCI-CD_--

9/19/2014

12:02 PM

Page 1

Page 12

CRAIN’S DETROIT BUSINESS

September 22, 2014

Finance: Nonprofit Compensation

Compensation: The rise of the bonus ■ From Page 11

NSO finished fiscal 2013 ended Sept. 30 with reported net assets or reserves of $12.7 million. The board had taken a look at bonus pay as part of a competitive compensation package in 2009, but the recession tabled that. By 2012, as the economy brightened, the organization was ready to award Clay incentive pay. “We wanted to ensure NSO was providing a fair compensation for one of the leading executives of the nonprofit world, a tireless worker,” Johnson said. Social service agencies have taken longer to adopt incentive compensation than other segments of the tax-exempt sector, said Patrick O’Cull, principal in the Southfield office of Mercer LLC. But they are increasingly investigating the use of or employing variable compensation as they see the misO’Cull sion-related outcomes incentive pay has helped drive in other nonprofit segments and as they get more comfortable with the concept, he said. They are also looking at bonuses and at-risk pay as a way to better compete with other nonprofits and for-profits for executive talent and as a way to increase executive pay without adding to fixed base pay costs. That’s a trend in line with all nonprofit segments. The base pay of nonprofit CEOs increased 3.1 percent on average nationally in 2012, according to human resource consultants and a national rate published by The Chronicle of Philanthropy. Compensation data for 2012 is the most current available because nonprofits can get extensions from the Internal Revenue Service of up to 11 months after the close of their fiscal year to file 990 forms, which contain compensation data for their chief executives. The 10 highest-paid social services CEOs in metro Detroit saw an average base pay increase of 6.3 percent between 2010 — the last year of compensation data reviewed by Crain’s as part of its biennial nonprofit compensation review — and 2012. Over the same period, those CEOs saw an average increase of 5.9 percent in total compensation. That compares with a 6.4 percent base pay increase and an 8 percent total compensation increase over the same two-year period for the 31 of the 35 social services CEOs who were part of Crain’s larger review of Michigan nonprofit compensation and had the same CEO both years. The median total compensation for the highest-paid social services CEOs in Southeast Michigan was $327,266 and the median total pay for the 35 social services CEOs in Crain’s larger database was $225,682. Of the 60 highest-paid nonprofit CEOs across all segments in metro Detroit, 35 earned bonuses in 2012, compared with about 44 percent a decade earlier. Those segments included social services, business and civic groups, arts and culture groups, foundations, health care

COMPENSATION TRENDS Crain’s biennial review found the following compensation trends for the 10 highest-paid metro Detroit nonprofit CEOs in their respective segments in comparison to their 2010 compensation:

Business and civic organizations Average base pay increase: 8.2 percent Average total compensation increase: 15.6 percent Median pay: $308,439 Bonuses in 2012: 5 *Percent change based on nine of 10 organizations that had the same CEO in 2012 and 2010

Arts and culture Average base pay increase: 11.3 percent Average total compensation increase: 19 percent Median pay: $337,629 Bonuses in 2012: 6

Grant-making foundations Average base pay increase: 10 percent Average total compensation increase: 13.4 percent Median pay: $425,062 Bonuses in 2012: 2 *Percent change based on nine that had the same CEO in 2012 and 2010

Health care Average base pay increase: 14 percent Average total compensation increase: 42.6 percent Median pay: $2,795,982 Bonuses in 2012: 9 *Percent change and median based on seven that had the same CEO in 2012 and 2010 and no multimillion-dollar compensation payment outside of base pay or bonus.

and nontraditional types of nonprofits. Among the 135 nonprofit CEOs who were part of Crain’s statewide review, 53 of them, or 39 percent, received bonuses in 2012. There was some catch-up going on in 2012, O’Cull said, with bonus compensation rather than large base pay increases, largely being used to lift

compensation levels at that point. Metrics for social services CEO bonuses are typically tied to financial measures, individual performance measures and — something that sets them apart from for-profits — programmatic goals, experts said. But for bonuses to be in play in the first place, “you have to have a board that is comfortable with tying compensation to achievement,” O’Cull said.

Testing the water Following a compensation survey commissioned in 2009, it was clear to NSO’s board that Clay was not being fairly compensated for running an agency with a budget of about $30 million and roughly 300 employees and her accomplishments, Johnson said. Her compensation fell between the minimum and midlevel for the compensation of her peers. But there was still some uncertainty with the economy. And fundraising needs for the $52 million project to convert the former Michigan Bell Telephone Co. building into housing for the homeless and to relaunch programs that had been cut during the recession, as well as new programs, took precedence. In 2012, after the Bell Building was re-opened, providing 155 apartments for the homeless and program and administrative space for NSO, the agency commissioned an updated compensation study. Again, the disparity between Clay’s pay and that of peer leaders at her level was clear, Johnson said. That, and the McGregor Fund approaching Clay as a possible candidate for a leadership sabbatical spurred the board to award her a bonus in 2012. With the bonus that year, NSO dipped its toe in the incentive pool. It hasn’t since awarded Clay additional incentive pay, but it’s something the board plans to consider going forward as part of its annual compensation reviews, Johnson said. “Our core belief is that we want to have an organization where all See Next Page

20140922-NEWS--0012,0013-NAT-CCI-CD_--

9/19/2014

12:02 PM

Page 2

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 13

Finance: Nonprofit Compensation From Previous Page

of our folks will recognize that we are going to compensate this high performance we have,” he said. “If we have best-in-class performance from our team, then let’s also have best-in-class compensation packages that go with that.”

Rates may vary Bonuses may be in play for the majority of the top-paid social services CEOs, but the level at which they are paid varies for each. Of the six other local social services CEO who got bonuses in 2012, four got larger bonuses than in 2010. Two received smaller bonuses in 2012 vs. 2010. And Jewish Federation CEO Scott Kaufman, who received bonuses in 2011 and again last year, according to the federation, didn’t receive one in 2012. His base pay rose 4.5 percent between 2010 and 2012. Bonuses have been part of the Jewish Federation’s top executive’s compensation package since at least 2003. As with other nonprofit executives with at-risk compensation, “whether or not the CEO receives a bonus is determined on a yearby-year basis,” said federation CFO Dorothy Benyas. The bonus for Kaufman, who is also CEO of the United Jewish Fund, is based on hitting targets around the Benyas amount raised through the annual campaign and toward the federation’s endowment, donor numbers and other factors, she said. “But we try to balance that with the fact that first and foremost we want to maximize the amount of our campaign dollars we distribute in the community to meet the needs” in areas such as education and human services, Benyas said. For most nonprofits, “performance was at an expected level for 2012, so bonuses were paid at an expected level, not real high or real low,” said Ed Steinhoff, an Ann Arbor-based managing director of Pearl Meyer & Partners LLC. The YMCA’s former CEO, Reid Thebault, earned a $120,900 bonus in 2012, nearly 35 percent less than the bonus he earned in 2010. The Detroit-based agency operates just like a for-profit when it comes to bonuses, said CEO Scott Landry, who succeeded Thebault after his retirement in March. “We’ve got goals and objectives. If you don’t hit them, you don’t get a pay raise and you don’t get a bonus check.” Thebault’s Landry smaller bonus in 2012 reflected the fact that the YMCA was extremely challenged to meet financial goals those years, and he didn’t meet his stretch financial targets, Landry said. Among the YMCA of Metropolitan Detroit’s metrics for awarding incentive compensation to its CEO are the achieved net income for any

given year compared with the budgeted amount, the annual amount of money raised that year and very specific programmatic goals. “At the end of the day, we’re a mission-based organization. We will all have goals around enrollment numbers in large programs ... day camp … youth sports (and) … around board development,” Landry said. The IRS wants to see a nonprofit’s core operations defined so that a bonus can be in play, said Paul Creasy, partner with Avon, Ohiobased Organizational Consulting Group LLC. “The IRS does not like discretionary bonuses.”

United Way United Way for Southeastern Michigan CEO Michael Brennan was among those earning a larger bonus in 2012, $75,000, compared to $50,000 two years earlier. His base pay increased 8.8 percent over the two-year period. Brennan had a very strong year for performance in 2012, said Leslie Murphy, audit committee chair on United Way’s board and president and CEO of Bloomfield Hills-based Murphy Consulting Inc. And the market had moved, lessening financial pressures on the agency. United Way’s financial performance was certainly a part of the mix, but the heaviest weighted metric tied to Brennan’s bonus was meeting the targets set against the organization’s “agenda for change,” Murphy said. That agen-

da focuses on improving the conditions in education, basic needs and financial literacy. When Brennan joined in 2006, he came in with a $55,000 bonus, Murphy Murphy said, followed by a $40,000 bonus in 2007, $20,000 in 2008, but none in 2009. Having incentive pay in place “allows us to ... flex for performance of the organization,” Murphy said. “The incentive compensation is a huge protection for the organization.” In 2010 as things started to recover, Brennan was granted a $50,000 bonus. “We went out to the market and looked at what market conditions were and knew we had a period of catch-up to get (Brennan) to that median,” Murphy said. Brennan earned $70,000 in incentive pay in 2011, followed by $75,000 in 2012, after a competitive study found the market had again moved up as far as pay scale, she said. “We think we have a great talent in Mike. We want to pay him in accordance with the market because we think it reduces our risk of turnover in that position,” Murphy said. “It’s the fair thing to do, as well.” Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

Ready to grow your business?

We can help Macomb County and Pure Michigan Business Connect offer: Resources to Grow Your Business 5:30 - 8 p.m. – Tuesday September 30 Lorenzo Cultural Center, 44575 Garfield in Clinton Township Our evening will include: Light dinner Welcoming remarks from County Executive Mark A. Hackel Discussion of the Personal Property Tax Reform Rapid-fire overview of resources to help with talent, capital and strategic growth To register please visit www.MacombBusiness.com/businessevents or call 586-469-5285. There is no charge to attend.

{High Ŗ lighted.} Sign Up for a Plante Moran Webinar The accountants and consultants of Plante Moran are back with their fall webinar series — which is not to be missed if you are in business. These CPE-approved* sessions cover critical business topics like the complexities of international business, technology strategies, and of course, year-end tax planning. Double-booked? Don’t worry. Visit our archives and enjoy the presentation at your convenience. Sign up today and ﬁnd out why Plante Moran’s webinars offer

a higher return on experience.

Register at webinars.plantemoran.com. * Plante Moran is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have ﬁnal authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org.

20140922-NEWS--0014-NAT-CCI-CD_--

9/19/2014

12:11 PM

Page 1

Page 14

1HHG DQ ,QYHVWPHQW 5HDO (VWDWH /RDQ"

&DOO XV /RDQ DPRXQWV DQG DERYH $GGLWLRQDO DYDLODEOH ORDQV Â&#x2021; 6%$ 86'$ /RDQV Â&#x2021; 2ZQHU 2FFXSLHG 5HDO (VWDWH Â&#x2021; /LQHV RI &UHGLW Â&#x2021; $FFRXQWV 5HFHLYDEOH Â&#x2021; (TXLSPHQW Â&#x2021; %DQN :RUNRXWV

ZZZ HFOLSVHFDSLWDOJURXS FRP 2UFKDUG /DNH 5G 6\OYDQ /DNH 0, Âł6LQFH Â´

MINNESOTA TWINS VS

DETROIT TIGERS FAN APPRECIATION WEEKEND

FRIDAY SEPTEMBER 26 â&#x20AC;˘ 7:08 PM 20I5 Magnet Schedule to the ďŹ rst I0,000 fans

SATURDAY SEPTEMBER 27 â&#x20AC;˘ 7:08 PM Detroit Tigers Mouse Pad to ďŹ rst I0,000 fans

SUNDAY SEPTEMBER 28 â&#x20AC;˘ I:08 PM

SUNDAY KIDS DAY Miguel Cabrera Poster to all kids I4 & under

September 22, 2014

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

TOP-PAID NONPROFIT EXECUTIVES Every two years, Crainâ&#x20AC;&#x2122;s compiles a database of compensation of the top executives at selected Southeast Michigan nonprofits. This yearâ&#x20AC;&#x2122;s review focused on compensation data for calendar 2012, which is the most recent available, given that nonprofits can get extensions of up to 11 months after the close of their fiscal year to file their 990 tax forms. Our criteria for inclusion in the database: 501(c)(3) nonprofits with total revenue of $20 million or more The largest grant-making and fundraising foundations Hospitals and health systems Smaller organizations that in our judgment merited inclusion, such as well-known civic and business organizations or smaller nonprofits whose CEOs earned compensation commensurate with their peers at larger nonprofits. Published here are some of the top-paid executives in those categories.

Base pay

Incentive pay

Total* compensation

$410,000 $428,846 $264,984 $292,964 $270,000

$50,000 $25,650 0 $50,000 $50,000

$513,868 $470.184 $428,740 $372,619 $352,999

$463,948 $312,710 $279,683 $315,000 $302,390

$50,000 $92,700 $95,736 0 0

$654,578 $462,722 $409,869 $364,883 $324,485

$417,116 $286,596 $220,640 $132,783 $115,132

0 $113,956 0 0 0

$477,844 $427.810 $297,081 $165,765 $115,132

$546,600 $209,394 $370,184 $390,832 $369,255

0 $117,941 0 0 0

$695,468 $571,462 $478,356 $467,185 $437,584

$229,871 $1,449,082 $1,253,511 $735,075 $1,421,785 $1,614,829 $1,371,098 $1,157,905 $1,077,142 0

$6,581,382 $3,908,063 $3,800,629 $3,309,005 $2,905,188

Arts and culture Graham Beal, Detroit Institute of Arts Ron Kagan, Detroit Zoological Society Anne Parsons, Detroit Symphony Orchestra Ritschard Homberg, Detroit Educational Television Foundation Patricia Mooradian, The Edison Institute Inc. (The Henry Ford)

Business and civic organizations Doug Rothwell, Business Leaders for Michigan Sandy Baruah, Detroit Regional Chamber Mark Tomlinson, Society of Manufacturing Engineers George Jackson, Detroit Economic Growth Corp./Growth Assoc. Larry Alexander, Detroit Metro Convention & Visitors Bureau

Fundraising foundations W. Clark Durant, The New Common School Foundation Susan Burns, St. John Providence Health System Foundation Thomas Stevick, Eastern Michigan University Foundation Melinda Conway Callahan, Crittenton Hospital Medical Center Foundation Paul Miller, Presbyterian Villages of Michigan Foundation

Grant-making foundations Richard Rapson, The Kresge Foundation Ira Strumwasser, Blue Cross Blue Shield of Michigan Foundation C. David Campbell**, McGregor Fund Mariam Noland, Community Foundation for Southeast Michigan Carol Goss***, The Skillman Foundation

Health care Thomas Fleszar, Delta Dental Plan of Michigan Judith Persichilli, Trinity Health Daniel Loepp, Blue Cross Blue Shield of Michigan Nancy Schlichting, Henry Ford Health System/Foundation Eugene Michalski, Beaumont Health System

Social services Michael Brennan, United Way for Southeastern Michigan Mark Stutrud, Lutheran Social Services of Michigan Mark Lit, Jewish Community Center of Metropolitan Detroit Reid Thebault****, YMCA of Metropolitan Detroit John Thorhauer, United Methodist Retirement Communities

$372,438 $281,000 $241,006 $184,252 $203,824

$75,000 $44,590 $25,958 $120,900 $27,000

$500,437 $445,806 $378,497 $374,049 $338,246

$256,003 $405,236 $438,570 $167,500 $164,700

$454,981 $458,778 $20,000 $7,500 0

$1,276,357 $703,918 $478,933 $175,000 $168,131

Other Lincoln Smith, Altarum Institute Kevan Lawlor, NSF International Jane McNamara, GreenPath Inc. (dba GreenPath Debt Solutions) Louis Glazer, Michigan Future Inc. Kathleen Zaracki, National Assoc. of Investors Corp. (dba Better Investing) *Total compensation includes benefits, deferred and other types of compensation. **C. David Campbell died in July 2014. His sucessor has not yet been named. ***Carol Goss retired at the end of 2013. Tonya Allen is president and CEO. ****Reid Thebault retired in May; Scott Landy is now president and CEO.

20140922-NEWS--0015-NAT-CCI-CD_--

9/19/2014

10:47 AM

Page 1

CRAIN’S DETROIT BUSINESS

September 22, 2014

CALENDAR TUESDAY SEPT. 23 2014 MICHauto Summit. 8 a.m.-5:30 p.m. Detroit Regional Chamber. A look at the new era of Michigan innovation; discussion will focus on the outlook on design, engineering, manufacturing and all things automotive. Cobo Center, Detroit. $125 DRC members, $200 nonmembers. Contact: Marianne Alabastro, (313) 596-0479; email: malabast@detroitchamber.com; website: detroitchamber.com.

WEDNESDAY SEPT. 24 Quality for Emerging Technologies. 7:30 a.m.-7 p.m., plus 7:30 a.m.-3:45 p.m. Sept. 25. Automotive Industry Action Group. Learn how companies are assuring quality, reliability and customer satisfaction in electronics and software products; directed at automotive suppliers and customers. Suburban Collection Showplace, Novi. $775 AIAG members, $975 nonmembers. Contact: Shannon Osburn, (248) 213-4642; email: sosburn@aiag.org; website: aiag.org. Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. Detroit Economic Club. With Hans Engel, chairman and CEO, BASF Corp. Detroit Athletic Club, De-

troit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

THURSDAY SEPT. 25 Western Wayne Business Leadership Banquet. 5-8 p.m. Conference of Western Wayne. Join chief elected officials and business leaders from 18 western Wayne County communities for an evening of networking and insights into the region. With Crain’s Detroit Business Publisher Mary Kramer as emcee and keynote speaker David Sowerby, portfolio manager, Loomis, Sayles & Co. LP, Bloomfield Hills, addressing economic and business trends for western Wayne County and metro Detroit. The program is scheduled to feature the appearance of chief elected officials from the area. Ford Motor Co. Conference & Event Center, Dearborn. $100 individual, $1,500 corporate sponsorship table of eight. Contact: Dan West, (734) 427-2122; email: dwest@ livonia.org; website: c-w-w.org.

Non-Traditional Sources of Capital for Small to Midsize Businesses. 5:30-7:30 p.m. Commercial Finance Association, Automation Alley Finance Committee. A panel will discuss capital sources of special interest to borrowers with unusual financing needs.

With Steven Beckett, partner, Peninsula Capital Partners LLC; Chris Cook, business capital relationship manager, Michigan Economic Development Corp.; Jeff Matzen, director, NorthStar/Grow Michigan; and Brendan Smith, analyst, Arctaris Michigan Partners LLC. Troy Marriott, Troy. $25 members, $40 nonmembers. Contact: Sharon Kimble, (517) 424-0081; email: cfamich@comcast.net; website: automationalley.com.

FRIDAY SEPT. 26 Developing Great Leaders That Bring Dynamic Impact to the Organization. 7:30-9 a.m. The Business Round Table. With John Lankford, CEO, Premier Executive Forums, master certified business adviser. Birmingham Country Club, Birmingham. $25 advance, $30 door. Contact: Christa Moxon, (269) 685-7829; email: christa. moxon@thebusinessrt.org; website: thebusinessrt.org.

UPCOMING EVENTS 14th Annual Great Lakes Women’s Business Conference. 9 a.m.-7:30 p.m. Sept. 29, 8 a.m.-5 p.m. Sept. 30. The

ADVISOR SPOTLIGHT

Center for Empowerment and Economic Development. Meet with supplier diversity and procurement representatives from corporate and public institutions and public entities; learn how certification status as a women’s business enterprise or minority business enterprise firm can benefit a business. With keynote speaker Andrew Yang, founder and CEO, Venture for America. Suburban Collection Showplace, Novi. $200 CEED members; $225 corporate, government, others. Contact: (734) 6771400; website: miceed.org.

GENE LOVASCO

HealthcareNEXT: Creating High-Performance Teams. 7:30-9:30 a.m. Oct. 2. Inforum Michigan. With Doug Finton, master trainer for Vital Smarts, in a

President As President of LoVasco Consulting Group, Gene leads and inspires his team to provide innovative and sustainable insurance, employee benefits, and retirement planning products and consulting services to clients. Gene works with clients to design sophisticated life insurance portfolios that enable them to optimize economic results, minimize taxes, and expand flexibility in multigenerational wealth planning. 535 Griswold Street, Suite 1600 • Detroit, MI 48226 • www.lovascogroup.com • 313.394.1700 A Member Firm of M Financial Group. Securities Offered Through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC. LoVasco Consulting Group is Independently Owned and Operated.

Graduate programs that change lives! Open House

MONDAY, OCTOBER 6, 2014 5 – 7 p.m. ROOM 2102 IN THE MAIN ACADEMIC BUILDING

Graduate School TO RSVP OR FOR MORE INFO: Sharon Urso, 734-432-5739 surso@madonna.edu madonna.edu/gradopenhouse

BUSINESS t CRIMINAL JUSTICE t EDUCATION t HIGHER ED & STUDENT AFFAIRS t HISTORY HOSPICE t HUMANE STUDIES t LEADERSHIP t NURSING t PASTORAL MINISTRY t PSYCHOLOGY t TESOL

workshop on learning strategies for leading change. Mackinaw Conference Room, Oakwood Health System, Dearborn. $20 Inforum members, $30 nonmembers (program and continental breakfast). Contact: (877) 633-3500; website: inforummichigan.org. Maverick Marketing Monday. 11:30 a.m.-1 p.m. Oct. 6. Detroit Regional Chamber. Join Nikki Little, marketing manager at Identity, for “Blogging 101 for Small Businesses,” with tips on how to get started and on content inspiration. Emagine Royal Oak, Royal Oak. $20 DRC members, $50 nonmembers; preregistration required. Contact: Janelle Arbuckle, (313) 596-0340; email: jarbuckle@detroitchamber.com; website: detroitchamber.com. CBS Radio Detroit Tour. 4-5:30 p.m. Oct. 8. Engineering Society of Detroit. Join the ESD for an insider’s look at CBS Radio Detroit’s new headquarters in Southfield, including WWJ 950, WXYT-

FM 97.1, WVMV-FM 98.7, WOMC-FM 104.3 and WYCD-FM 99.5. CBS Radio, Southfield. $25 ESD members, $60 nonmembers (first-time members can join ESD and attend tour for free). Contact: (248) 353-0735; email: esd@esd.org; website: www.esd.org.

Forward Thinking: Business Strategies for Health Care. 8:30 a.m.-noon Oct. 16. Detroit Regional Chamber. Larry Boress, president and CEO of the Midwest Business Group on Health, will share strategies MBGH members are using to improve health care value and highlight ways to implement a strategy. Detroit Regional Chamber, Detroit. $25 DRC members, $50 nonmembers; preregistration required. Contact: Jonathan So, (313) 596-0340; email: jso@ detroitchamber.com; website: detroitchamber.com. Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. Oct. 28. Detroit Economic Club. With Mary Barra, CEO of General Motors Co. Detroit Marriott at the Renaissance Center, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

Page 15

20140922-NEWS--0016-NAT-CCI-CD_--

9/19/2014

10:48 AM

Page 1

Page 16

September 22, 2014

CRAIN’S DETROIT BUSINESS

BUSINESS DIARY

PEOPLE EDUCATION

FINANCE

Betty Youngblood to vice president, organizational development and strategic planning, Oakland University, Rochester Hills, from interim president.

Lisa Manetta to senior associate, Plante Moran PLLC, Clinton Township, from associate. Also to senior associate from associate at the Southfield branch, Steve VanSteenkiste, Gabriel

ACQUISITIONS AND MERGERS

IN THE SPOTLIGHT

Manetta

VanSteenkiste

O’Keefe and Brian Camiller. Yunis Altahami to senior manager, Baker Tilly Virchow Krause LLP, Southfield, from assurance manager. Also from senior manager from manager, Kelly McEvilly, Christine Ross and Karen Sergolia; and Sara Rebman to manager, from senior accountant; and Jennifer Lohrer-Elstone to manager, from senior accountant.

GOVERNMENT

Proliﬁc growth? Whatever the season. We can help. When businesses face the changing demands of growth, purchasing goods, or making payroll, they require a strong, yet flexible solution. Our asset-based lending solutions can be the answer ... whatever the climate. Contact me today! 888.999.8050

Matt Dekutoski

Brad Coulter, to emergency financial manager, city of Lincoln Park, from managing director, O’Keefe & Associates Consulting LLC, Bloomfield Hills.

HEALTH CARE Cindy Clemence to senior vice president for finance operations, CHE Trinity Health, Livonia, from vice president for finance operations. Also, Cindy Fry to senior vice president for revenue excellence, from vice president for revenue excellence, and Kevin Sears to senior vice president for payer strategy and product development, from vice president for payer strategy and product development.

United Shore Financial Services has named Laura Lawson as its first “chief people officer.” A Crain’s “40 under 40” honoree in 2013, Lawson will lead the Troy-based mortgage lender’s teams in human resources, recruiting, training, client Lawson service, facilities and events, and maintain leadership over marketing for United Wholesale Mortgage, the company’s wholesale division. Lawson, who had been senior vice president of marketing, formed United’s marketing team in 2011. A veteran of the creative marketing and production industry, she is a former associate producer of TV’s “The Ellen DeGeneres Show.” Lawson, 37, earned a bachelor’s degree in advertising from Michigan State University.

TeamHealth Holdings Inc., Knoxville, Tenn., a provider of outsourced physician staffing solutions for hospitals, announced the merger of its operations with Emergency Medicine Specialists PC, Fraser, and its affiliated revenue cycle management and back-office support entity, Midwest Emergency Services LLC, Fraser. Emergency Medicine Specialists manages and staffs emergency departments for Ascension Health and McLaren Health Care facilities. Websites: teamhealth.com, emspecialists.com, midwestemergencyservices.com.

CONTRACTS Mo Marketing + PR, Ferndale, a boutique marketing firm, has added two new clients: Bella Rouge BBQ, Highland Park, and Arbor Teas, Ann Arbor. Websites: lessismo.com, bellarouge bbq.com, arborteas.com. Origen Financial Inc., Southfield, a real estate investment trust that manages interests in securitized loan portfolios for manufactured housing, announced it has entered into an agreement with an affiliate of GoldenTree Asset Management LP, New York City, for the sale of Origen’s assets for $47 million. Contingent upon closing, Origen intends to dissolve and liquidate. Websites: origenfinacial.com, goldentree.com.

MANUFACTURING

MOVES

John Thomas to vice president of operations, Detroit Chassis LLC, Detroit, from co-founder and CEO, ALTe Powertrain Technologies LLC, Auburn Hills.

Dick’s Sporting Goods Inc., Pittsburgh, has relocated a store from 35500 Central Parkway, Westland, to the Livonia Commons, 13501 Middlebelt Road, Livonia. Telephone: (734) 293-0069. Website: dicks.com. Enmark Systems Inc. has completed its expansion and moved from 75 Aprill Drive, Ann Arbor, to 3520 Green Court, Suite 100, Ann Arbor. Telephone: (734) 669-0110. Website: enmark.com.

NONPROFITS

NAME CHANGES

Flatt Flattered. HONORED. HUMBLED. Thankful. HU

Delley

Million

Sonya Delley to senior vice president, Invest Detroit, Detroit, from first vice president and community reinvestment act and community development department manager, Flagstar Bank, Troy. Also, Thomas Million to senior vice president, from vice president special assets, Comerica Bank, Detroit.

Fischer Body Refinishing automotive repair facilities in Troy and Farmington Hills are now part of the Suburban Collection, Troy, and have been renamed Suburban Collision Center of Troy and Suburban Collision Center of Farmington Hills. Website: suburbancollision centers.com. Planet Rock Climbing Gym has moved from 34 Rapid St., Pontiac, to 1103 13 Mile Road, Madison Heights. Telephone: (248) 397-8354. Website: planet-rock.com.

NEW SERVICES SERVICES Scott Susalla to director of creative services, Brophy Engraving Co., Detroit, from director of sales, Pluto, Birmingham.

Baker Tilly named a "Best and Brightest Company to Work For". Every day our employees contribute their talent, passion, and hard work to build our success. And now they've once again rewarded us. This time, with nothing more than their happiness. At Baker Tilly, we've come together to create a work environment that values respect, encourages advancement, and appreciates an entrepreneurial spirit. We're thrilled to be named one of Metropolitan Detroit's Best and Brightest Companies to Work For and would like to thank our employees for their dedication and enthusiasm. Connect with us at bakertilly.com

ASF Components, Roseville, a supply chain and inventory management firm, has launched a new website, designed by Market Pipeline, Portage. Website: asfcomponents.com.

Exceptional Leadership.

Delivered. Michigan’s Premier Retained Executive Search Firm Over 100 years of combined experience. LLC

International Executive Search Tel: +1.248.645.1551 • www.huntergroup.com

20140922-NEWS--0017-NAT-CCI-CD_--

9/19/2014

6:40 PM

Page 1

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 17

On cost, financing of Wings arena: Here are answers BY BILL SHEA CRAIN’S DETROIT BUSINESS

The financing plans for the new Detroit Red Wings arena are complex. Crain’s spoke with two key figures of those plans — Glen Long, vice president of administration and CFO of the Detroit Economic Growth Corp., and Art Papapanos, DEGC vice president of board administration — to get a simplified explanation of the taxes and bonds involved. Also consulted were outside sources, research and our past reporting. Included are exclusive details about the arena itself, provided by Olympia Development of Michigan, the real estate arm of Wings owners Mike and Marian Ilitch’s business holdings. How much will the arena cost? The initial base price is $450 million. Problems, changes and added amenities could increase that final cost. Anything beyond $450 million must be paid by the Ilitches. The ancillary development — bars, restaurants, stores, apartments, townhomes — is at least $200 million, and will be privately financed by the Ilitches and their third-party business partners. The Ilitches are obligated to pay any arena costs beyond the $450 million. How is the arena’s construction being financed? The Michigan Strategic Fund will sell $450 million in two series of bonds. They will be divided into $250 million in Series A bonds that will be backed by property taxes already captured by the Downtown Development Authority. The $200 million in Series B bonds will be backed by the $11.5 million Olympia Development has agreed to pay the DDA for bond retirement. Who will pay off the bonds? The Ilitches, through Olympia, will pay $200 million of the bond debt. Detroit’s DDA, via its property tax capture ability, will pay back $250 million of the bonds. How long will it take? 30 years. They mature in 2045. Are any city general fund taxes being spent on the arena? No. What is the Downtown Development Authority? The DDA is the city of Detroit’s economic development agency that supports project developments. It was created in 1978. The nonprofit Detroit Economic Growth Corp. staffs the DDA under a contract with the city. The DDA has used its tax capture powers to fund downtown projects such as construction of the Millender Center, Riverfront Towers, One Detroit Center and 150 West Jefferson. Property owners within the DDA district pay a 1 mill property tax to fund its basic operation. How does the DDA raise money? The DDA has a roughly 1-squaremile development district encompassing much of the downtown, and expanded last year to include the arena site. The increased value of taxes already paid by property owners within that district are captured by the DDA for economic develop-

TOP 10 TAXPAYERS IN DETROIT’S DDA These are the top 10 property taxpayers in Detroit’s Downtown Development Authority’s tax increment finance district. The numbers are total taxable value of their properties within the district. 䡲 Riverfront Holdings Inc.: (General Motors Co. subsidiary): $128.7 million 䡲 General Motors LLC: $46.3 million 䡲 500 Woodward LLC: $31.5 million 䡲 Piedmont Operating Partnership: $18.9 million 䡲 Olympia (various entities): $15.5 million 䡲 Greektown Casino LLC: $13.1 million 䡲 Quicken Loans: $11.7 million 䡲 Kennedy Square LLC: $11.4 million 䡲 Comerica Bank: $11.2 million 䡲 211 Fort Washington Associates: $10 million Source: DDA

ment within the district, better known as tax incremental financing. Can the tax captures be used for anything else? No. How are the property value increases determined? The DDA captures the increased value of a property in its development zone starting from a certain year for each parcel of land. There are eight different base years, between 1978 and 2013, that the DDA uses for property tax capture calculations. A property’s increased value for tax capture purposes begins with one of those years, and the years are linked to when the DDA development zone was expanded to encompass those properties. The 2013 properties are in the approximately 40 blocks north of the Fisher Freeway between Grand River and Woodward avenues to encompass the arena district site. The DDA’s capture of taxes on the to-be-built Olympia properties will be assessed starting with value increased after 2013. Is part of the tax capture taxes paid by the Ilitches? Yes. “They have other holdings in the development area, the Fox Theatre, and parking garages,” Papapanos said. “They pay taxes on those.” They are the fifth-largest downtown property taxpayer with a total of $15.5 million in taxable property value. (See box, this page.) Additionally, the new apartment buildings, offices, bars, shops and restaurants built by Olympia or other investors will be taxed. What entities normally would get the property taxes? They would go to the city’s general fund, Detroit Public Schools, Wayne County, Huron Clinton Metropolitan Authority, Wayne County Intermediate School District, Wayne County Community College District, and the state. The state reimburses Detroit Public Schools for the school taxes the DDA will use to pay off the arena bonds.

Does the DDA have an estimate for how much property values will increase? The DDA said its calculations aren’t based on potential property tax value increases. Instead, as a safeguard, it estimated growth solely based on a number of property tax abatements and renaissance zones scheduled to expire within the zone in coming years. Who is buying the bonds? New York-based Merrill Lynch, a division of Bank of America, which has pledged to buy all the publicly backed Series A bonds. It will then sell the bonds to the public. Dallas-based Comerica Bank Inc. will buy the Series B bonds backed by Olympia’s money. Comerica intends to keep the bonds on its books rather then sell them. The public bonds use variable rate financing. Why? The DDA wanted 30-year fixed rate bonds, but couldn’t get them, Papapanos said, so they had to opt for variable rate financing. The plan is to sell the bonds again in 4.5 years at a fixed rate. Why sell them again? In 4.5 years, the arena will be open, and much or all of the new ancillary development will be done — and on the tax rolls. Hence, the DDA will have more revenue available for the bond repayment.

other party. While you’re neutralizing your risk, in a way, one of you is going to lose some money,” according to an explanation from MoneyCrashers.com. For the arena, the DDA is planning an interest rate swap on the Series B bonds, and will use New York City-based Mohanty Gargiulo LLC as a swap adviser as required under Dodd-Frank, the 2010 Wall Street reform act. Because a swap is still just in the discussion phase, the DDA was unable to provide specific details about what a swap could look like.

It did say there will be safeguards to provide additional protections.

MARKET PLACE

JOB FRONT

COACHING

POSITIONS AVAILABLE

Laurel A. Sills, Psy.D., PLLC Strategies for Executives in Transition Our business brings you to the top of yours! 31313 NW Highway μ Ste. 120 μ Farmington Hills, MI 48334

(248) 788-4230 / www.DrLSills.com

What is an interest rate swap? Interest rate swaps are a common but complex financing gamble used as a money-saving hedge, and they range from “plain vanilla” to “exotic” deal structures. Swaps are financial derivatives, and at their core are an agreement in which two (or entities such as the DDA) and financial institutions exchange interest rate payments with each other because they deem the other’s rate desirable for some reason. One party, worried that interest rates will rise, transfers the risk of interest rate fluctuations to the fixed-rate counterparty, who agrees to assume that risk for potential higher returns. That fixed rate usually is linked to LIBOR, the London Interbank Offered Rate. If interest rates rise, the party with the original floating rate is protected. But if the rates drop, they have to pay the difference. Only the interest rates are swapped, never principal. “The theory is that one party gets to hedge the risk associated with their security offering a floating interest rate, while the other can take advantage of the potential reward while holding a more conservative asset. It’s a win-win situation, but it’s also a zero-sum game. The gain one party receives through the swap will be equal to the loss of the

Welding Technology Corp (WTC) currently has positions open in: ∂ Software Engineering ∂ Advanced Technology ∂ Quality & Industrial Technical Services Depts.

We invite you to visit us at

www.weldtechcorp.com WEDDING SERVICES

Outside Waterfront Weddings & Receptions DestinationWeddingsUpNorth.com

Limited 2015 Dates Available

906-643-8621 What will the interest rates be? The specific rates won’t be known until the bonds go to market, but the Series A bonds are expected to have a rate between 4 and 5 percent for the initial 4.5 year period, according to the DDA’s bond documents. The Series B bonds may have a rate determined though an interest rate swap.

Under the original arena bond deal, the DDA had been capped at paying $15 million a year on the bond debt. Merrill Lynch, which is buying the publicly based bonds, got that cap lifted. Does that mean the DDA will pay more to retire those bonds early if the tax capture generates more than $15 million annually? Yes, although the DDA isn’t obligated to pay more. “If we have more, we’ll pay early,” said Glen Long, the DEGC’s CFO and vice president of administration.

WTC is a global manufacturer & supplier of the most advanced technology in the resistance welding industry. Our cross section of customers from the aerospace, automotive, and consumer goods industry have benefited for over 75 years from a multitude of patented welding products including Medium Frequency DC welding controls, networking, data collection and predictive maintenance tools. For more information please contact

HR@weldtechcorp.com

REAL ESTATE COMMERCIAL PROPERTIES

INDUSTRIAL PROPERTY

Dearborn Warehouse 87,000 SF Grand Rapids Area 18 Hole Golf Course Restaurant/Banquet Facility

6 Truck Docks & 1 Drive-In Door 22Ft. Clear Height Call 313-506-0534

Financing Available

Core Commercial Real Estate corere@msn.com / 586-992-8800

û MOTEL FOR SALE û MACKINAW CITY, MICHIGAN On Straits of Mackinaw and overlooking the Mackinac Bridge. 24 units plus living quarters. Large repeat business. Owners Retiring.

INVESTMENT PROPERTY Flat Roof Problems? Standing Seam Metal Roofing to go over most any existing roof, no tear off needed. 40 Year Warranty, wind proof, job site fabricated to any length, commercial, office, industrial, end ponding and leaks forever. Maintenance Free! Chris Branstock ~ 888-799-6918 branstockchris@yahoo.com

Call Steve at 231-631-6686 sdsteffes@gmail.com

RECREATIONAL PROPERTY

OFFICE SPACE

65 Acres, Hunting/Building Site, 430’ on North Coleman Rd. New Pole Barn. 30’ x 48’ x 12’. All equipment included. State land front & back. $225,000. CALL DAVE AT 989-777-1437.

MIDLAND COUNTY

û BLOOMFIELD HILLS û EXECUTIVE OFFICE SUITE FOR LEASE

OFFICE BUILDING û DOWNTOWN BIRMINGHAM, MI û

Private office atmosphere with full service environment including conference rooms, receptionist, coffee service, parking and more. Can accommodate a professional organization with 6 to 12 individuals. A desirable Bloomfield Hills address, southwest corner of Maple and Lahser. Call (248) 644-2701.

Call or email today for information on a custom advertising plan!

cdbclassified@crain.com 313.446.6068

For Sale ~ Rare Opportunity Class A ~ Core Asset Requests for information by email only to: 260eastbrown@brodersachse.com

20140922-NEWS--0018-NAT-CCI-CD_--

9/19/2014

5:48 PM

Page 1

Page 18

September 22, 2014

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

McLaren: Another attempt in Oakland â&#x2013; From Page 3 secretary, Sara Wurfel, has said that the administration will monitor it as it moves through the legislative process. McLaren believes there is sufficient support in the Legislature, and it is working to build support from building trade groups and local government officials about the new hospital.

A matter of distance

LENDING a helping hand from one entrepeneur to another.

Mike Semanco President and COO

Grow your company with our cuÂ&#x2022;tomiÂ&#x153;eÂ&#x2020;ÇĄ ĆŞeÂ&#x161;iÂ&#x201E;Â&#x17D;e Ć¤nanciaÂ&#x17D; Â&#x2022;oÂ&#x17D;utionÂ&#x2022;. Č&#x2C6; Č&#x20AC; inancinÂ&#x2030; Č&#x2C6; ineÂ&#x2022; of reÂ&#x2020;it

HitachiBusinessFinance.com (248) 658-1100

Let the Giant Buy Your

IT A$$ET$

E-waste recycling/data destruction/computer liquidation Call: 248-891-7330 or Email: info@R2Giant.com

McLarenâ&#x20AC;&#x2122;s efforts to build a hospital in the township date back to 2006, when it announced plans for a sprawling medical village that currently comprises medical office buildings, ambulatory surgery, a cancer center and other services. The health system bought the former Pontiac Osteopathic Hospital in 2007 amid unconfirmed, at the time, speculation that at least one reason was to have beds available to transfer to the planned hospital. But the distance between the two sites exceeds the two-mile limit allowed by state certificate-ofneed regulations. The tight radius is intended to prevent moving hospital access away from disadvantaged areas to more affluent ones and to hold down costs by preventing the conversion of licensed but unstaffed beds, to staffed ones. The health system lobbied unsuccessfully for legislative exemptions in 2010 and 2012 before turning, also unsuccessfully, to the courts. Richardvilleâ&#x20AC;&#x2122;s bill would make the McLaren hospital possible by expanding the radius to eight miles and including language that excludes other hospitals from doing the same. Jack Weiner, CEO of St. Joseph Mercy Oakland Hospital in Pontiac, said he continues to oppose any increase in inpatient bed capacity in Oakland County. â&#x20AC;&#x153;If you look at the market data, it has shrunk. There is less need this year than last,â&#x20AC;? Weiner said. â&#x20AC;&#x153;This is just another self-serving move (by McLaren) that I am real-

ly shocked the state Senate is taking up. It shows McLaren has real economic power. Whatever reasons these people are doing this, it is not based on scientific needs.â&#x20AC;? Lane said population growth in the Clarkston area supports the need for a new hospital. â&#x20AC;&#x153;There is no credible evidence out there to support (the claim) that these beds increase costs,â&#x20AC;? Lane said. â&#x20AC;&#x153;(Insurers) donâ&#x20AC;&#x2122;t pay for more beds. This is an access issue that (opponents) ignore.â&#x20AC;? He added: â&#x20AC;&#x153;All the naysayers for this project come from competitors. (St. Joseph Mercy Oakland hospital) recently added a $180 million tower. How can he argue that doesnâ&#x20AC;&#x2122;t increase costs?â&#x20AC;? Lane said people will come to the hospital. â&#x20AC;&#x153;Will they come in detriment to (other hospitals)? I donâ&#x20AC;&#x2122;t know,â&#x20AC;? Lane said.

â&#x20AC;&#x2DC;Plenty of capacityâ&#x20AC;&#x2122; Bret Jackson, executive director of the Economic Alliance for Michigan, which opposes the proposed McLaren hospital, said there are eight hospitals within a 30-minute drive of Clarkston, and on any given day they have a 40 percent vacancy rate. That translates to 1,380 open beds daily, he said. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s a lot,â&#x20AC;? he said. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s almost seven hospitals worth of patients. There is plenty of capacity to take care of patients in northern Oakland County.â&#x20AC;? Lane disputes that, saying, â&#x20AC;&#x153;This would be a narrow piece of legislation and would allow us to redeploy existing beds from one location to another. This doesnâ&#x20AC;&#x2122;t add new beds into the pool. It moves them to Clarkston.â&#x20AC;? Richardville said Snyder and other lawmakers are growing more comfortable with his bill â&#x20AC;&#x201D; compared to the effort two years ago that failed â&#x20AC;&#x201D; because it is â&#x20AC;&#x153;eliminatingâ&#x20AC;? a controversial exception made in 2002 for Henry Ford Health System and St. John Providence Health System to transfer

beds from their Detroit hospitals to new hospitals in Oakland County. The 200-bed St. Johnâ&#x20AC;&#x2122;s Providence Park Hospital in Novi opened in 2008, followed by 300-bed Henry Ford West Bloomfield Hospital in 2009. Richardville also denied that his bill is creating a new exception for McLaren. Jackson noted that itâ&#x20AC;&#x2122;s not possible to reverse the previous exceptions since that would mean closing the new hospitals. The McLaren effort is â&#x20AC;&#x153;just an end-run around the CON process,â&#x20AC;? he said. Henry Ford and St. John prevailed, at least in part, because of an argument that they needed hospitals in more affluent areas to balance losses from treating a disproportionate share of uninsured and underinsured patients in Detroit.

Provisions added Richardvilleâ&#x20AC;&#x2122;s bill also requires McLaren to provide $10 million a year in uncompensated care at its current Pontiac hospital and meet several other conditions. These include maintaining patient access and at least 70 licensed beds in Pontiac and developing a medical education and job training program. Lane said McLaren doesnâ&#x20AC;&#x2122;t have a problem with the provisions. â&#x20AC;&#x153;We provide a tremendous amount of uncompensated care and it is part of our recommitmentâ&#x20AC;? to Pontiac to continue doing that, he said. McLaren Oakland currently provides about $8 million in charity care and bad debt annually, Lane said. Lane also said that McLaren Oakland, licensed for 335 beds but only staffed at 105 beds, will maintain â&#x20AC;&#x153;above 70 licensedâ&#x20AC;? beds if the bill is approved. He said some licensed beds could be converted to other uses, including observation status and other less intense uses. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

I-375: Gilbert pays to quicken lanes â&#x2013; From Page 3

ramp from a single lane to three lanes, providing access to Lafayette Street, Monroe Avenue, Macomb Street and the Chrysler service drive when complete. The project will also include landscaping areas surrounding the ramp next spring. Detroit-based Blaze Contracting Inc. is general contractor on the project. The Mannik & Smith Group Inc. is project engineer. The existing wall at the exit will be removed, and additional lanes on the ramp will veer toward the service drive, said Rob Morosi, senior communications specialist for MDOT. The current single-lane ramp will remain open during construction except for short-term closures during non-peak hours, Rock said. Itâ&#x20AC;&#x2122;s unusual, but not unprecedented, to have a private company funding a public road project, Morosi said.

An artistâ&#x20AC;&#x2122;s rendering of the new I-375 ramp.

COURTESY OF ROCK VENTURES LLC

â&#x20AC;&#x153;Obviously, we have a funding issue in the state of Michigan when it comes to transportation. â&#x20AC;Ś When you have a private partner stepping up and willing to pay the cost for a safety improvement, we welcome that with open arms.â&#x20AC;? About 1,600 vehicles use the ramp every hour during peak travel times, according to MDOTâ&#x20AC;&#x2122;s counts, Morosi said.

It could be double that with future developments, according to studies commissioned by Greektown Business District, he said. And bottlenecks onto the freeway could increase with more traffic, presenting a safety issue. â&#x20AC;&#x153;Obviously, the safety benefit is the main reason on our end that this was approved,â&#x20AC;? Morosi said. The ramp expansion comes amid studies and conversation about raising I-375 to ground level. No determination has been made on that idea, Morosi said, but the study is still active. â&#x20AC;&#x153;Right now, we donâ&#x20AC;&#x2122;t have the funding to either rebuild or change the grade of 375 â&#x20AC;Ś (and) it looks like weâ&#x20AC;&#x2122;re not going have it in the near future,â&#x20AC;? he said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

20140922-NEWS--0019-NAT-CCI-CD_--

September 22, 2014

9/19/2014

5:04 PM

Page 1

CRAIN’S DETROIT BUSINESS

Page 19

Jail: Uncertain outlook to solution ■ From Page 3

vice chairman of the authority and an attorney at Clark Hill PLC. The authority and the commissioners did, however, both approve last week a proposed $6.7 million settlement with jail construction manager Walbridge-dck. “(Taking action) sooner rather than later makes more sense. All the players are at the table now to work something out,” Hoffman said. “But I think there’s a natural sense of deferral to let the new team give its signature or thoughts to what is planned, and it’s understood the governor’s election is a factor in … what role the state of Michigan may play in (bond) funding for the project. “I don’t think we’re going to have resolution until the issue of the governor’s election is also resolved.” That election, Nov. 4, is also when voters decide whether Democrat Warren Evans or Republican John Dalton will be Ficano’s successor. Political consultant Eric Foster, a senior consultant and chief strategist at West Bloomfield Township-based LB3 Management LLC, said the indictments may also make some officials more comfortable making a decision after that time. “He (Ficano) may still try to make a decision, but then how would the other stakeholders like the County Commission or Dan Gilbert respond to that?” he said. “You’ve still got to move to the next step in this project. In terms of cleaning up this mess, Bob Ficano’s credibility as someone who can advance a solution is now gone.” Next comes an Oct. 7 status conference in the county’s $154 million 2013 lawsuit against several contractors on the jail project, but attorneys will likely take that opportunity to enter a partial settlement and dismiss Walbridge-dck from the case. The litigation continues against jail program manager AECOM Technical Services Inc. and Dearborn architectural firm Ghafari Associates LLC. The settlement deal calls for the Building Authority to pay just over $2.9 million to Walbridge, and around $3.8 million to Atlantabased Oldcastle Inc. as a subcontractor on the jail out of bonds the county sold for the project, to pay remaining claims on their contracts. Walbridge and other companies had filed countersuits and claimed unpaid balances on the jail construction. The county has already spent about $157 million out of $200 million of bonds sold in 2010 to fund the jail, and halted construction in July 2013 after cost estimates to complete it soared closer to $300 million. Two of the four options before the board involve completing the Gratiot construction, one closing a separate building and the other keeping it open, at a cost of $213 million. The other two involve selling to Rock and converting the former state Mound Road Correctional Facility in Detroit to a new jail with either 2,392 beds or 2,008 beds, at costs of $488 million and $468 million respectively. The county would have to issue $171 million to $409 million to cover the costs, over and above the approximately $40 million of original bond capital it has left, to fund each of those proposals.

FOUR OPTIONS FOR WAYNE COUNTY JAIL Bonding costs are lower than construction costs because any of the options would have the $43 million unspent from the original $200 million sale of jail bonds to use. The Mound Road options additionally would have an estimated $40 million from the sale of the Gratiot jail site and surrounding buildings to Rock Ventures LLC or another developer. Building costs do not include the $157 million already spent on the unfinished Gratiot project or operating costs once constructed. 䡲 Complete the 1,976-bed jail on Gratiot Avenue, renovate the Frank Murphy Hall of Justice, and maintain the William Dickerson Detention Facility in Hamtramck. Building cost: $213 million. Required new bonds: $171.6 million. 䡲 Same as above, but close the William Dickerson Detention Facility. 䡲 Develop a new 2,392-bed county jail, courthouse and a juvenile detention center at the former Mound Road Correctional Facility. Building cost: $488 million. Required new bonds: $409 million. 䡲 Develop a new 2,008-bed county jail, courthouse and a juvenile detention center at the former Mound Road Correctional Facility. Building cost: $468 million. Required new bonds: $390.7 million. — Chad Halcom

In terms of “ cleaning up this mess, Bob Ficano’s credibility as someone who can advance a solution is now gone.

”

Eric Foster, LB3 Management LLC

Terry Merritt, group vice president at Detroit-based Walbridge Aldinger Co., said last week she had not yet received word of a decision on the settlement and could not comment on it. She also declined to comment on the indictment or the grand jury review. Walbridge-dck is a joint venture of Walbridge Aldinger and Pittsburgh-based dck Worldwide LLC. June West, Ficano’s director of communications, said last week the office has received no other information about the new criminal charges other than what is detailed in various media accounts. “We in the administration haven’t seen any of the specifics on the charges, and that’s something we hope the prosecutor can rectify,” she said. “Though it does appear that there’s no allegation involving any payment of money or a bribe, or (peddling influence).” Sledge, 62, of Bonita Springs, Fla., and Collins, 53, of Grosse Pointe Park, both face two counts each of misconduct in office, a five-year felony, and two one-year misdemeanor charges of willful neglect of duty in a public office. Parlovec-

chio, a former appointee of county Chief Development Officer Turkia Mullin and later owner’s representative on the jail construction as president of Parlovecchio Building Inc., faces one of the misdemeanor charges. “I think the public was expecting a lot more nefarious activity to be charged this week,” said David Gorcyca, attorney at Troy-based Giarmarco Mullins & Horton PC and former Oakland County prosecutor until 2008. “But these are not earth-shattering charges, there’s no bribery or conspiracy or extortion. They’re pretty bland. I think there’s something very political about the (optics of) having convened this grand jury, and it’s clear there’s no love loss between (Ficano and Worthy).” Brian Legghio, a former federal prosecutor and owner of the Law Offices of Brian M. Legghio in Mt. Clemens, agreed and said the charges seem like a result of political pressure for Worthy’s office to produce some results, since grand juries are time-consuming and expensive to convene. Sledge and Collins are accused of giving misleading information or statements or of obstructing the flow of information to commissioners and the building authority about the costs and financial status of the jail project. But details of those allegations are scant thus far. “If you had more than this, and you wanted leverage to get someone here to roll on other people in a larger investigation, you would put your strongest foot forward, and (bring charges that) have people … genuinely concerned about their futures, as we saw with some people in the (former Detroit Mayor Kwame) Kilpatrick prosecution. Not … allegations that sound almost civil-esque,” Legghio said. “You want people strongly motivated to cut their losses. But here we see a really tepid indictment, and I don’t think this is because of a tactical decision. If (prosecutors) had yielded more out of this investigation, we’d have seen it.” Political and legal observers also said Ficano will probably be further marginalized on the deal he helped bring about, to create a proposed Great Lakes Water Authority to lease and manage assets of the Detroit Water and Sewerage Department. The Wayne County Commission also expects to take a vote Oct. 2. Ficano’s office sought and obtained a court order resuming mediation talks on forming the authority, when his counterparts in Oakland and Macomb counties had backed away from a deal in March, and the Wayne executive is widely credited with advancing legislation to create the similar Detroit Regional Convention Facility Authority to oversee Cobo Center five years earlier. “But (Detroit Mayor Mike) Duggan has clearly eclipsed Ficano in terms of being at the center of this new authority proposal and gathering support for it,” Legghio said. “If this is consummated, he (Ficano) may have wanted to have that last accomplishment but by the time this is over he’ll be completely overshadowed in it.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

20140922-NEWS--0020-NAT-CCI-CD_--

9/19/2014

6:24 PM

Page 1

Page 20

September 22, 2014

CRAIN’S DETROIT BUSINESS

Tech investments highlight region’s role in auto makeover BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

Southeast Michigan is at the center of the automotive industry’s reinvention, for the second time. This time, though, that reinvention is all about the connected car and vehicle safety and efficiency features. General Motors Co., only moments before CEO Mary Barra took the stage at Crain’s Detroit Homecoming event last week, announced it would build a new “top-end, high-technology” Cadillac at its Detroit-Hamtramck assembly plant next year. GM has invested more than $1 billion in the plant over the past five years. Over the past several weeks, GM has installed tools and equipment for the new car, part of a $384 million investment. The plant employs about 1,600 workers on one shift, a GM spokesman told Automotive News. At the Homecoming event, Barra dodged questions about the new Cadillac’s name or technology. Earlier this month, GM announced that the 2017 Cadillac CTS would come equipped with vehicleto-vehicle communication and adaptive cruise control, called “super cruise.” Adaptive cruise control autonomously controls the vehicle’s acceleration, steering and braking on the highway. Barra made the announcement at the ITS World Congress 2014 on Sept. 7 at Cobo Center. “No other suite of technologies of-

AARON ECKELS

General Motors CEO Mary Barra dodged questions about the new Cadillac announced Friday, moments before she took the stage at the Detroit Homecoming event on Friday.

fers so much potential for good, and it’s time to turn potential into reality,” Barra said at the event. Many Southeast Michigan suppliers also continue to innovate with autonomous technologies, including Livonia-based TRW Automotive Holdings Corp., Auburn Hillsbased Continental Automotive Inc., Northville-based IAV Automotive Engineering Inc. and many others. Since 2010, automakers and suppliers have invested more than $12 billion in the state, according to data collected by industry group

Highlights from stories that made Homecoming headlines

ots of headlines came out during Detroit Homecoming, from real estate investment to philanthropic plans, and the conference is meant to stimulate more investments. See full and continuing coverage plus photos and video online at www.detroithomecoming.com

Buffett: ‘Ready to buy a business’ The Oracle of Omaha is ready to buy in Detroit. Warren Buffett, billionaire investor and chairman and CEO of Berkshire Hathaway, said in an exclusive interview with Crain’s that he’s bullish on the city and is looking for the right investment. Buffett was a guest and speaker Thursday at Detroit Homecoming. “We’re ready to buy a business here tomorrow,” he said. “Every city has issues. … That’s the time to buy.” Buffett referenced the financial issues New York City faced in the 1970s. In 1975, New York sat on the brink of bankruptcy with $14 billion in debt. However, through a task force of business leaders, banks and unions buoyed the city’s finances.

and metro Detroit are receiving stems from the cohesive effort from the region’s stakeholders. The regional chamber unveiled MichAuto, its statewide automotive economic development group, in 2012. Last year, Gov. Rick Snyder named Nigel Francis, a former Mercedes-Benz AG vice president, as the state’s first car czar, in charge of aiding in economic development. Francis’ official title is senior automotive adviser for the state of Michigan and senior vice president at the Michigan Economic Development Corp. While local government agencies have jelled, the federal government has possibly played the biggest role in the industry’s revitalization, Robinet said. Investment include those like the $148 million American Lightweight and Modern Metals Manufacturing Innovation Institute, which will locate this fall in a vacant 99,000-squarefoot Corktown building. The institute — led by the University of Michigan, Columbus, Ohiobased manufacturing technology 501(c)(3) nonprofit EWI and Ohio State University — will be funded with a $70 million, five-year grant from the U.S. Department of Defense and $78 million from a consortium of 70-plus universities, businesses and organizations. Also, the UM Transportation Research Institute, along with the U.S. Department of Transportation, is in the midst of a more than $31 million study to analyze vehicle con-

nectivity. The UMTRI Safety Pilot program, which has existed since 2012, includes the deployment of cars, commercial vans, buses and motorcycles equipped with transmitters and data-logging devices to track position, acceleration and velocity to vehicles and infrastructure. The program will outfit 9,000 vehicles for the study. Much of the private-sector investment is to capitalize on the recovered car market — automakers are expected to sell more than 16 million cars this year. Since 2010, automakers and suppliers have invested more than $12 billion in the state, according to data collected by MichAuto. A large portion of that investment, however, has been to expand technologies and auto capabilities driven by regulation. “There’s no doubt that technology used to be driven by consumers, but now it’s truly driven by legislation,” Robinet said. Automakers must meet CAFE regulations of 54.5 mpg average across its fleet by 2025. This has led to innovations in lighter materials, a host of gas-saving technologies and alternative powertrains. Plus, the National Highway Traffic Safety Administration is preparing to weigh in on safety regulations including vehicle connectivity, autonomous driving and more. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

sented with the inaugural “Detroit Legend” award as part of Detroit Homecoming. Gordy reflected on his history in Detroit during his remarks when he accepted the award during a Thursday night reception at the former Globe Building on AARON ECKELS Detroit’s riverfront. Berry Gordy Jr. accepts the first “Detroit Legend” award. The Globe is now the Outdoor Adventure Center and operated by the Michigan Department of A $10 million gift for youth proNatural Resources. “One thing Detroit didn’t give me gramming in Detroit will help the is a singing voice,” Gordy, 84, told a newly launched Detroit Children’s group of Detroit expats. “But it did Fund expand its reach. During Detroit Homecoming, it give me the ability to dream.” He talked about the strength De- was announced that Adam Levinson, CIO of Fortress Investment troiters have. “Anywhere I go, people from De- Group’s (NYSE: FIG) $2.9 billion troit stand out,” he said. “They Fortress Asia Macro Fund, pledged tend to be at the top of their game.” $10 million to the Detroit fund. The pledge originates partly Gordy, born in 1929, is best known for founding Motown from a conversation between Records, which was incorporated Levinson and Crain’s nonprofit rein 1960. He signed iconic artists porter Sherri Welch; Welch like the Supremes, Marvin Gaye, briefed him on local charities supthe Temptations, the Four Tops, porting Detroit children. An affiliate charitable organizaStevie Wonder and the Jackson 5. Gordy was inducted into the tion of the Skillman Foundation, the Rock and Roll Hall of Fame in 1988 Detroit Children’s Fund is investing for creating the Motown empire. in Detroit neighborhood programs The house he worked out of on for kids that have shown proven reWest Grand Boulevard is used to- sults. The goal is to help those kids day as the museum for Motown, succeed so that they, too, will beotherwise known as Hitsville USA. come a part of the city’s turnaround.

The Detroit Children’s Fund will “hopefully serve as a major propellant for the city ... (and) attract resources from a variety of Detroit expats like myself,” Levinson said.

MichAuto. That’s following the economic downturn of 2008-09 that led to a slump in car sales, rampant job cuts in the auto sector, and federal bailouts. Nowadays, however, auto is on the rebound. Ford Motor Co. continues its plan to invest nearly $800 million in six of its plants in Southeast Michigan. Southfield-based supplier Lear Corp. invested more than $18 million in a new plant in Highland Park. But it’s also technology, said Michael Robinet, managing director of automotive consulting for Southfield-based IHS Automotive Group LLC. “There’s no doubt that the anchor for automotive technology is the continued infrastructure investments the automakers are placing in engineering, design and research,” Robinet said. “The need for more connected, lighter and safer vehicles has provided an enormous challenge to the industry, which has created new infrastructure investments to deliver … much of it here in metro Detroit.” The ITS event, which brought together technology and automotive companies to Detroit for the first time, showed why Detroit belongs on the world stage, said Glenn Stevens, vice president of the Detroit Regional Chamber’s MichAuto organization and strategic development. “There is no greater concentration of future mobility research done anywhere else in the world,” Stevens said.Stevens said the investment and attention the state

$10M gift to benefit youth

AARON ECKELS

Warren Buffett (right) talks shop with Dan Gilbert on stage Thursday during Detroit Homecoming at CCS.

“Investment was paralyzed,” Buffett said of New York. “Look at it today. Great cities will remain great as long as they tackle (their) problems.” Berkshire Hathaway owns companies and brands such as Geico, Dairy Queen, Fruit of the Loom, and portions of Heinz, Mars Inc., American Express, Coca-Cola Co. and IBM. It also owns BH Media, which owns 69 newspapers and other titles, such as the Richmond Times-Dispatch and the Omaha World Herald.

Gordy honored, recalls history The man known for creating the fundamentals of the Motown genre of music, Berry Gordy Jr., was pre-

Whole Foods seeks 2nd location Austin, Texas-based Whole Foods Inc. is looking for a second location in Detroit. Co-CEO Walter Robb made the announcement while speaking at Detroit Homecoming. The grocer opened its first location in Midtown in June 2013. The company announced it would open the 21,000-square-feet store in 2011. Detroit was one of eight cities named as locales to get stores before the first one opened.

TV house star added as speaker A last-minute speaker addition at Detroit Homecoming was Nicole Curtis of “Rehab Addict,” who set the Twitter-sphere ablaze when she announced her entire sixth season will focus on projects in Detroit. The premise for the DIY network show, and Curtis’ personal mission, is to save historic houses, down to the fireplaces and vintage fixtures, one at a time. The show, which airs on DIY and HGTV, chronicles Curtis’ efforts to remake condemned homes to their original glory. Her experience in interior design, contracting, real estate and salvaging are all put to use.

20140922-NEWS--0020,0021-NAT-CCI-CD_--

9/19/2014

7:07 PM

Page 2

CRAIN’S DETROIT BUSINESS

September 22, 2014

Page 21

Homecoming: Far away, but near in their hearts ■ From Page 1

$100,000.” Ideas to support what’s already happening on the ground in Detroit abounded during the threeday Homecoming event. The event drew such notable “expats” as entrepreneur and philanthropist Eli Broad, founder of The Broad Foundation; Mike Jbara, president of ADA Worldwide, a division of Warner Music Group; Eric Ryan and Adam Lowry, co-founders of Method Home Products; Lucinda Scala Quinn, executive editorial director for food at Martha Stewart Living Omnimedia; plus many other real estate developers, finance experts and advisers to government. “Now we have to bring them from ideas to reality,” said Homecoming co-director Mary Kramer, publisher of Crain’s Detroit Business. “The expats are passionate; this is the time to act. We heard again and again that they wanted to be ‘doers.’” Each attendee received a detailed “prospectus” listing more than 50 initiatives — philanthropic and commercial — for their consideration. Crain’s created the prospectus with help from foundations and the city of Detroit’s economic development team. “We wanted to give people a sense of what’s already happening, things they could support,” Kramer said. Expat Martha Boudreau, president of MLB Consulting in Washington, D.C., called Detroit Homecoming an opportunity to take a deep dive into the vision for the city, the execution of that vision and a better understanding of the challenges. “It was more than I ever knew and it was really impressive,” Boudreau said. Attendees with experience in digital platforms to help connect people and move ideas forward volunteered to work with Crain’s to help execute next steps, including fleshing out some of the ideas that emerged from the brainstorming and planning for a sequel in 2015. “The first thing is a survey of attendees to gauge real interest in specific topics,” Kramer said. “Imagine if the idea of the mortgage fund be-

A LITTLE BIRD TOLD ME ... A selection of tweets from #dethomecoming and #detroithomecoming conversation threads on Twitter. The conversations continue, and are also found at dethomecoming.com

ANJANA SCHROEDER

Among the messages conveyed: Bring your money along with your concern.

HOMECOMING BRAINSTORMS Some ideas raised by Detroit expats during Detroit Homecoming: 䡲 Seek to form a $10 million fund to help Detroiters get mortgages. 䡲 Create a hashtag — #DetroitNation — where expats can post tweets and videos to tell a stronger story of the city. 䡲 Expand urban farming into a more fully fledged business operation, reversing the usual distribution channels. 䡲 Build a nonprofit to connect youths in Detroit with youths in Tanzania. The idea, specifically, was for Detroit Public Schools youths to craft African jewelry. — Amy Haimerl came reality.” Some expats are already thinking about ways they might become involved in civic or philanthropic causes or even expand business operations to Detroit. Expat Sarah Endline, CEO of Sweetriot, a New York City-based maker of chocolate bars and other snacks from Latin Americansourced dark chocolate, said she’s interested in learning more. “I sell products around the country and I’d really love to see if we can make something in Detroit for my company. The more people can support me and help me in doing that, the more I can bring opportunity to the city of Detroit.” Expat Pete Dawkins, retired vice chair, Citigroup Private Bank, a Heisman Trophy winner and U.S. Army brigadier general, said during his remarks that the Detroit Homecoming should be considered “a compelling call to action.” “The task ahead is not to try and recover Detroit’s former greatness. The task ahead is to invent a new Detroit.” Detroit Homecoming was conceived last September as a way to

reconnect successful “expatriates” to Detroit as it was poised to emerge from bankruptcy. Jim Hayes, retired publisher of Fortune magazine, brought the idea to Crain’s and served as co-director with Kramer. Crain’s Detroit Business produced and managed the event on behalf of a host committee that included major business and political figures, including former Detroit Mayor Dave Bing; foundation executives Rip Rapson of Kresge Foundation and Tonya Allen of Skillman Foundation; and Wayne State University President M. Roy Wilson, as well as business executives Mary Barra, Dan Gilbert, Christopher Ilitch, Cindy Pasky, Roger Penske and Shery Cotton, matriarch of the family that owns Meridian Health, a Detroit-based insurance plan. Speakers were a mix of local “doers” engaged in revitalization projects as well as national experts. “If Detroit was a stock, I’d be a buyer,” Dan Doctoroff, CEO of Bloomberg LP. told the audience at the opening dinner. “I’ve lived in New York for 30 years, but I still think of myself as a Michigander. And I know all of you who have re-

The Detroit Homecoming began Wednesday night, during which Dan Doctoroff, CEO of Bloomberg LP, told the audience: “If Detroit was a stock, I’d be a buyer. I’ve lived in New York for 30 years, but I still think of myself as a Michigander. ... We are drawn here today because Detroit is a core part of who we are and we want to be part of its future.” AARON ECKELS

So excited to be back in Detroit for #DetroitHomecoming. Took a walk this a.m. and it is so inspiring to see all of the energy and love in the D. Kristin Toth Smith @KTothSmith On a personal note, best thing about #DetHomecoming is that it has sparked a desire to network I haven’t felt since D.C. James David Dickson @JamesDDetroit Love being washed over with Michigan accents at #DEThomecoming. Mary Barra dropping local wisdom. Jules Pieri @julespieri Detroit is big enough to matter in the world, but small enough that you can matter in it Sara Sefcovic @sarasef7 Just toured .@Shinola. Manufactured in and Imported from Detroit! Nicole Y. Lamb-Hale @NLambHale Just heard @cavsdan & warren buffet speak -wow :) Nicole Curtis @NCRehabAddict I am now officially a landowner in #Detroit. Thank you, #DEThomecoming! Marc Evan Jackson @MarcEvanJackson Looking forward to learning about my hometown Detroit’s latest and greatest at this event. Sloan Eddleston @eddlest

turned here today do, too. We are drawn here today because Detroit is a core part of who we are and we want to be part of its future.” Throughout the program, “expats” who spoke on stage talked about Detroit as a good investment opportunity, but as Doctoroff cautioned, the city needs to make sure its post-bankruptcy stage has the ingredients to be sustainable. “Goodwill money runs out fast,” Doctoroff said. Philanthropist and business luminary Broad, a graduate of Detroit Central High School, said the city was a good investment but to be sustainable, K-12 education had to improve. That, he said, would give Detroit its “biggest bang.” Real estate investor and developer Quintin Primo III, co-founder of Chicago-based Capri Capital, said Detroit’s rebound needed diversity among investors, as well. Boudreau said Detroit also needs to return to its roots of leading in innovation. Innovation needs to be part of the Detroit brand; it needs to be called out, she said.

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 DIRECTOR, 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 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

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

ADVERTISING SALES INQUIRIES (313) 446-6052; FAX (313) 393-0997 SALES MANAGER Tammy Rokowski SENIOR ACCOUNT EXECUTIVE: Matthew J. Langan ADVERTISING SALES Christine Galasso, Jeff Lasser, Joe Miller, Sarah Stachowicz CLASSIFIED SALES Angela Schutte, manager, (313)-446-6051 DIGITAL MARKETING MANAGER Jennifer Chinn AUDIENCE DEVELOPMENT DIRECTOR Eric Cedo EVENTS MANAGER Kacey Anderson SENIOR PRODUCER FOR DIGITAL/ONLINE PRODUCTS Pierrette Dagg SENIOR ART DIRECTOR Sylvia Kolaski SALES SUPPORT Suzanne Janik, YahNica Crawford PRODUCTION MANAGER Wendy Kobylarz PRODUCTION SUPERVISOR Andrew Spanos

CUSTOMER SERVICE

MAIN NUMBER: Call (877) 824-9374 or customerservice@crainsdetroit.com SUBSCRIPTIONS $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. SINGLE COPIES: (877) 824-9374 REPRINTS: (212) 210-0750; or Alicia Samuel at asamuel@crain.com TO FIND A DATE A STORY WAS PUBLISHED: (313) 446-0406 or e-mail infocenter@crain.com CRAIN’S DETROIT BUSINESS IS PUBLISHED BY CRAIN COMMUNICATIONS INC. CHAIRMAN Keith E. Crain PRESIDENT Rance Crain TREASURER Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) EDITORIAL & BUSINESS OFFICES: 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of August, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

20140922-NEWS--0022-NAT-CCI-CD_--

9/19/2014

6:15 PM

Page 22

Page 1

September 22, 2014

CRAIN’S DETROIT BUSINESS

RUMBLINGS

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF SEPT. 13-19

ArtServe renamed, looks at numbers rtServe Michigan has changed its name to Creative Many Michigan, but its name isn’t all that has shifted. Historically, Wixombased ArtServe has made its mark as an arts advocacy group, working on behalf of nonprofit arts and cultural organizations and artists. That will continue. But over the past three years, the organization has begun highlighting the economic impact of the nonprofit and for-profit creative industries in the state, encompassing everything from traditional arts and cultural institutions to designers, graphic designers, architecture, industrial design, and film and broadcasting. The 2014 “Creative State Michigan” report found, among other things: 䡲 Michigan’s creative industries paid nearly $3.6 billion in wages to 74,000 employees in more than 9,700 businesses during the 2011 fiscal year. 䡲 The state’s arts and cultural nonprofits contributed nearly $565 million in expenditures to Michigan’s economy in fiscal 2011, including nearly $196 million in salaries for 26,064 jobs. 䡲 Arts and cultural destinations in 2011 generated more than $2 billion in state tourism revenue, or 16 percent of the state’s total tourism revenue. That economic impact research has been the first step in Creative Many Michigan’s evolution to an economic development framework, said President and CEO Jennifer Goulet. Besides advocacy, going forward the group will provide a “portfolio” of economic development services, including research, professional practice programs, strategic communications and networking, all aimed at growing the state’s creative economy, Goulet said. Masco Corp. provided $40,000 in grant money to support the name change and business model shift. Creative Many Michigan “embraces the history of ArtServe Michigan’s work and achievements with traditional arts communities while allowing the organization to reach out to new creative communities to sup-

plement and further impact its work,” Goulet said.

Author Porter: The new adventure of old DMC boss First Detroit Medical Center CEO Arthur Porter, then fugitive Arthur Porter, now author Arthur Porter. Along with Canadian freelance writer T.R. Todd, Porter, the DMC’s CEO from 1999 to 2003, has written a 256-page memoir, The Man Behind the Bow-Tie: Arthur Porter on Business, Politics and Intrigue. Porter, an oncologist, left the DMC with losses that totaled more than $242 million for a job as administraPorter tor of McGill University Health Centre in Montreal. But in late 2011, Porter moved to Nassau, Bahamas, just ahead of a lawsuit filed by McGill and various criminal charges filed by Quebec prosecutors for embezzlement, fraud and conspiracy over an alleged hospital construction kickback scheme. Since May 2013, Porter, who says he has terminal cancer, has been under arrest in Panama awaiting extradition to Canada. He has filed a lawsuit alleging Panama should free him because he hasn’t faced a hearing within 60 days of detention. Porter also makes his case in his book, priced at $10.99 for Kindle and $18.60 hardcover on mazon.com: “How does it feel to be deemed guilty before trial? To be held in a cutthroat Panamanian prison while suffering from terminal lung cancer? How does it feel to rise to the top of the medical and public arenas in your adopted country, only to crash miserably to earth under allegations of fraud and money laundering? In short: What is it like to be Dr. Arthur Porter?” Porter, who once served as head of Canada’s Security and Intelligence Review Committee, also alleges that a small number of rogue Canadian spies were

tortured and hanged overseas and that relatives were told that they had died from various other causes, according to a report in The Toronto Sun.

Pure Detroit aids ALS, with help from Affleck’s T-shirt A Detroit retailer is about to make a difference in three local families’ lives, thanks to a boost in sales from the ALS ice bucket challenge. This month, Pure Detroit pledged 25 percent of sales from its “Detroit City” Tshirts to support the ALS Association. The Pure DetroitALS connection was a natural for the shop after actor Ben Affleck, in town for filming of the “Batman v. Superman” movie, wore the T-shirt in his ice bucket challenge video posted on social media pages in August. At the time of Affleck’s posts, Pure Detroit had run low on shirts in stock; the shop scaled up practically overnight, printing 1,100 shirts, said creative director Ryan Hooper. The business — with locations in the Guardian Building, Fisher Building and Renaissance Center — sold 800 of the shirts, mostly in online orders from across the U.S. and as far away as Australia. In all, between the T-shirt sale proceeds and other donations associated with the pledge, Pure Detroit raised $9,000. Hooper insisted the money stay in Detroit. He connected with the ALS Association Michigan Chapter, which worked with Henry Ford Hospital to find three Detroit families who could benefit. Hooper and store employees will present the donation to three families affected by ALS at the Walk to Defeat ALS on Saturday on Belle Isle. “I’m hoping maybe it can help them buy a conversion van or maybe help build a handicapped walkway or something to help these families,” Hooper said.

Ben Affleck displays his Pure Detroit T-shirt in an image from his Facebook page.

Detroit council OKs creation of water authority plan to create the regional Great Lakes Water Authority was approved Friday by the Detroit City Council, AP reported. Council members voted 7-2 for the deal that would see suburbs in the water and sewerage system pay Detroit $50 million a year for the next 40 years. Detroit retains ownership of the system and would use the money to make repairs.

WSU TO SHOW OFF TECH CENTER

ON THE MOVE 䡲 Pete Auger, who re-

signed in June as Auburn Hills city manager, took the same post in Novi. He replaces interim City Manager Victor Cardenas, who resumes his post as assistant city manager. Clay Pearson left the Novi manager post in March to become city manager of Pearland, Texas. 䡲 David Jaffe, former vice president and general counsel at Auburn Hillsbased Guardian Industries Corp., said he is starting a boutique law firm, Jaffe Counsel PLC, to serve as acting general counsel for companies without inhouse representation.

COMPANY NEWS 䡲 Russian steelmaker OAO Severstal completed the $700 million sale of its Dearborn operations to West Chester, Ohio-based AK Steel Corp. as part of a deal to sell its entire U.S. operations for $2.325 billion. AK now controls the former Severstal North American headquarters and its renovated operations. 䡲 Tokyo-based Central Glass Co. Ltd. agreed to purchase the outstanding shares of two automotive units of Auburn Hills-based glass supplier Guardian Industries Corp., Automotive News reported. Terms of the acquisitions of Guardian Automotive Products and Guardian Automotive-E.S.A., including the former’s Sterling Heights headquarters, were not disclosed. 䡲 Warren-based Art Van Furniture signed an agreement for its first franchise in Indiana, a Soft Select site in Mishawaka, and is set to open another Michigan franchise, in Tawas, before the end of the year. 䡲 University of Michigan regents approved a new $168 million athletics facility proposal. The 310,000-squarefoot Stephen M. Ross Athletic Campus Athletics South Com-

COURTESY OF WAYNE STATE UNIVERSITY

Wayne State University will unveil its new Advanced Technology Education Center in Warren with a grand opening ceremony Oct. 2. The 40,000-square-foot, $12 million center, at 14601 E. 12 Mile Road, is intended to enable WSU and Macomb Community College students to complete four-year degrees in engineering, computer science, advanced manufacturing and other fields. There is no admission charge to the 5 p.m. opening, but those who wish to attend must RSVP at specialevents.wayne.edu/atec-grand-opening or call WSU’s Office of Special Events, 313-577-0300, by Sept. 24.

petition and Performance Project will be built on the site of a former book printing plant in Ann Arbor. 䡲 The Miami-based John S. and James L. Knight Foundation is offering $5 million in awards for the best ideas for accelerating talent, opportunity and engagement in Detroit and 25 other cities in the Knight Cities Challenge. Anyone can offer ideas from Oct. 1-Nov. 14 at KnightCities.org. The foundation also awarded a $500,000 grant to Global Detroit for efforts to find employment for skilled immigrants and refugees and to foster international student retention. 䡲 Detroit-based Meridian Health Plan of Michigan is the No. 1 Medicaid HMO in Michigan and ninth nationally, according to the National Committee on Quality Assurance’s 2014 health plan rankings. The Washington, D.C.-based NCQA ranked Grand Valley Health Plan in Grand Rapids as the No. 1 commercial plan in Michigan and 42nd nationally. 䡲 Greektown Casino-Hotel’s fine-dining restaurant has a new name: Prism. The former Brizola had operated on the Detroit casino’s main floor since 2012. Prism is offering entrees such as steaks, seafood and pasta from $20 to $59. 䡲 Detroit Metropolitan Airport was awarded a $5 million U.S. Department of Transportation grant to renovate its taxiway, AP reported.

OTHER NEWS 䡲 Detroit Institute of Arts

Vice President Annmarie Erickson testified in the city’s bankruptcy trial that the museum would battle any effort to sell its artwork because it believes the collection, including pieces owned by the city, are held in public trust and can’t be sold just to pay debt, Bloomberg reported. Detroit and Financial Guaranty Insurance Co., the city’s last remaining ma-

jor creditor, agreed to put the trial on hold until Sept. 29 to give the bond insurer more time to prepare. 䡲 Dr. Farid Fata, an Oakland Township cancer specialist accused of putting people through unnecessary treatments and then billing insurers for millions of dollars, pleaded guilty to fraud in Detroit federal court, AP reported. 䡲 Up to $100,000 will be available to metro Detroit startup and emerging businesses through the $2.7 million Innovation Fund, part of J.P. Morgan Chase & Co.’s regional investment. Macomb Community College will manage the fund. 䡲 RiseDetroit Charity Challenge, a nonprofit fundraiser focused on humor and inventive personal challenges, is underway. Nonprofits can sign up at ApplyRiseDetroit.com until 5 p.m. Oct. 3. 䡲 The Gateway Marketplace development, the Lowe Campbell Ewald headquarters and the Woodward Garden Theater and Apartments redevelopment were real estate projects honored at the CREW Detroit Impact Awards luncheon at the Westin Book Cadillac Detroit. 䡲 Cobo Center officials said the downtown Detroit convention center hosted 65 shows between June and August, compared with 26 shows there during the same period in 2013, AP reported. 䡲 Timothy Cromer, former technology chief for Detroit’s public libraries, was sentenced to 10 years in federal prison for corruption, AP reported. 䡲 Detroit’s once-troubled 36th District Court was returned to local control after a 16-month overhaul that cut millions in costs and brought many changes, AP reported. Nancy Blount, the court’s chief judge, is in charge after the Michigan Supreme Court ended the assignment of special administrator Michael Talbot.

DBpageAD_DBpageAD.qxd 9/17/2014 4:39 PM Page 1

GET MORE OF WHAT YOU NEED

with the MORE Everything Plan for Small Business. NEW! 200 GB SHAREABLE DATA - Share up to 200 GB on up to 100 devices. UNLIMITED TALK & TEXT - Including Unlimited International Messaging. 25 GB CLOUD STORAGE - For each device on your plan.

RANKED #1 IN OVERALL NETWORK PERFORMANCE IN THE NATION - AGAIN*

RootMetrics® 1st Half 2014 Independent State Study

$249.99 2-yr. price - $50 mail-in rebate debit card. New 2-yr. activation required.

19999

SAMSUNG GALAXY S® 5

GET A $100 BILL CREDIT when you activate a new 4G LTE smartphone.

Corporate subscribers only; new 2-yr activation on $34.99+ plan required.

RootMetrics® RootScore® Award Winner

AMERICA’S LARGEST AND MOST RELIABLE 4G LTE NETWORK CALL: 1.800.VZW.4BIZ

CLICK: vzw.com/business

VISIT: verizonwireless.com/storelocator

*Rankings based on RootMetrics US National RootScore Report: covering January-June 2014 and July-December 2013 for mobile network performance test results of 4 mobile networks as an average across all available network types. The RootMetrics award is not an endorsement of Verizon. Your results may vary. Visit www.rootmetrics.com for details. Our Surcharges (incl. Fed. Univ. Svc. of 15.7% of interstate & int’l telecom charges (varies quarterly), 21¢ Regulatory & 88¢ Administrative/line/mo., & others by area) are in addition to monthly access & not taxes (details: 1-888-684-1888); gov’t taxes & our surcharges could add 6% - 42% to your bill. Activation/upgrade fee/line: up to $35. IMPORTANT CONSUMER INFORMATION: Subject to Cust. Agmt, Calling Plan, rebate form & credit approval. Up to $350 early termination fee/line. Offers & coverage, varying by svc, not available everywhere; see vzw.com. Rebate debit card takes up to 6 weeks & expires in 12 months. Bill credit applied within 2-3 billing cycles. Samsung and Galaxy S are both registered trademarks of Samsung Electronics America, Inc. and/or its related entities. LTE is a trademark of ETSI. © 2014 Verizon Wireless. H9131

DBpageAD_DBpageAD.qxd 9/17/2014 11:06 AM Page 1