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www.crainsdetroit.com Vol. 30, No. 42
OCTOBER 20 – 26, 2014
$2 a copy; $59 a year
©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved
Hungry for growth funds
Page 3
Diversified opts to sell, lease back buildings
Granddaughter’s idea gives entrepreneur a leg up
BY KIRK PINHO
‘New’ Asterand, old home; HQ moving back to Detroit
Ebola FAQs answered by Beaumont doc, Page 23
The Big Bet on Detroit
NEWSPAPER
Our annual Detroit 2.0 supplement, polybagged with this issue, is aptly labeled. Lots of folks are betting on Detroit: the governor, mayor, investors and residents. To win, Detroit needs more jobs and investment. That’s why Crain’s was proud to produce the Detroit Homecoming in September. We brought 160 of the area’s most successful “expats” back home to see how they could re-engage with their hometown. They included philanthropist Eli Broad, former NBA star George “Iceman” Gervin and “Rehab Addict” Nicole Curtis. Commitments are coming and conversations are starting. Check out the expats who wrote essays for the supplement. We take a hard look at what it takes to actually make things happen in the city, including neighborhoods, from West Village to Brightmoor. Plus, don’t miss how Dan Gilbert and Warren Buffett became besties, and a look at the odd couple of politics, Mayor Mike Duggan and Gov. Rick Snyder, and what their alliance means for the November election.
The company (Nasdaq: BAGR) expects to close on a $24.6 million sale of 11 of its BWW and Bagger Dave’s buildings totaling about 79,000 square feet to Scottsdale, Ariz.-based real estate investment trust Spirit Realty CapiVacancy rates tal by Nov. 1. It will then lease them back for low, tenant an initial term of 15 years with the option for interest high in metro Detroit up to 20 more years in five-year increments. markets, Page 11 The buildings are in Canton Township, Birch Run, Cascade Township, Gaylord, and Clinton Township, along with others in Indiana and Florida. “It’s a way to recapitalize,” Ansley said. “Building stand-
RETAIL REALLY
CRAIN’S DETROIT BUSINESS
Nearly $25 million goes a long way when you’re expanding your restaurant business. As Southfield-based Diversified Restaurant Holdings Inc. plans to open three or four new Buffalo Wild Wings and five new Bagger Dave’s Burger Tavern restaurants — plus renovate existing ones — one way to get the money to pay for it is to sell some of the buildings. So that’s what CEO and President Michael Ansley is doing, funneling real estate value into new bar furnishings, technology upgrades and other expenses.
JUMPING
See Diversified, Page 32
COURTESY OF DIVERSIFIED RESTAURANT HOLDINGS
‘Its’ an issue Tesla’s sales limits in Michigan tightened by one word of law BY CHRIS GAUTZ CAPITOL CORRESPONDENT
y the removal of a personal pronoun from state law, a bill awaiting Gov. Rick Snyder’s signature would make it harder for Tesla Motors Inc. to sell its electric vehicles directly to customers in Michigan. Tesla already is barred from
B
doing so, but it has been fighting similar bans in states across the country. On Sept. 15, the California-based company won a key ruling in its favor from the Massachusetts Supreme Court. Seventeen days later, Republican lawmakers, at the behest of the Michigan Automobile Dealers Association, amended and shepherded through both houses a pending bill that would make it tougher for Tesla to challenge Michigan’s law in court. Snyder has until Oct. 21 to decide whether to sign it. Here’s how it happened. See Tesla, Page 33 BLOOMBERG
Greektown Casino-Hotel to modernize with new look BY SHERRI WELCH CRAIN’S DETROIT BUSINESS
COURTESY OF GREEKTOWN CASINO
Greektown Casino-Hotel will receive up to $60 million in renovations by the end of 2015.
Renovations meant to refresh Greektown Casino-Hotel’s look, plus provide easier traffic access and upgraded food options, are on the table for the coming months. Athens Acquisition LLC, whose sole shareholder is Quicken Loans founder Dan Gilbert, is investing $50 million to $60 million on the renovations to the Detroit casino to give it a more modern look and improve customers’ experience. The
plan is to differentiate the casino by positioning it as a boutique hotel yet “with a neighborhood feel,” meaning changes ranging from finishes on the ceilings to a newfangled $12 million-plus HVAC system to improve the air quality. Among other planned upgrades are new gaming machines and technologies, the new I-375 ramp now under construction to provide more access to the casino, and a curb cutout to the Lafayette median to provide faster valet service.
MGM GRAND DETROIT, NOVEMBER 19 @ 5 P.M. REGISTER TODAY! crainsdetroit.com/events OR CALL (313) 446-0300
See Greektown, Page 31
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CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS Parking’s pricey, so firm will move 300 more workers out of GR
State redesigns world’s-best license plate so U C type
California-based Advantage Sales & Marketing plans to move an additional 300 workers from downtown Grand Rapids to a suburban office because it no longer wants to pay for parking, MLive.com reported. Advantage Sales already has moved its sales department to an office near I-96 in Cascade Township. By the end of the next year, it plans to move about 270 more employees. The cost of employee parking is getting too high, said Bonnie Morgan-Becker, an Advantage Sales director. “We hate to move,� she said, “but the cost of parking has become a huge issue, and the availability. My guess is the cost is going to go up as parking becomes more scarce.�
Apparently, the aphorism “Beauty is And so state officials recently released a in the eyes of the beholder� applies even tweak of the plate, which, The Associatto something as innocuous as a license ed Press notes (and you can see for yourplate. self here) has “a more subtle yellow-orLast year, the Michigan license plate, ange background with black letters. featuring the Mackinac Bridge against a COURTESY OF STATE OF MICHIGAN Michael Yott Jr. of the St. Clair Shores bright orange sunset with white letters, Police Department collected more than was voted the world’s best license plate by the Auto- 700 signatures on an online petition to replace the mobile License Plate Collectors Association. Which, plates. among other things, tells you that members of the “We made some changes to the design after a year association don’t go on many high-speed chases. But to ensure it can be very easily read in all conditions, police officers do. particularly at night,� said Fred Woodhams of the And police officers have this thing about being Michigan secretary of state’s office. The new plates able to read the numbers and letters on the plates. were tested by the Michigan State Police and the secSomething that’s hard to do when they are white. retary of state. cans and Hispanics. In West Michigan, loans to nonHispanic whites fell 21.4 percent from 2005 to 2013, while loans to African-Americans and Hispanics were down 65.9 percent, the study showed.
Report: West Michigan Hispanics, blacks struggle to get mortgages West Michigan is the nation’s most “racially uneven� housing market when it comes to helping African-Americans and Hispanics recover from the housing bust, MLive.com reported, citing a report from the Urban Institute. A study of 100 million mortgages from 2001 to 2013 concluded that although mortgage loans are down sharply for all homeowners from the mid-2000s, the decline has been much sharper for African-Ameri-
Kent County homebuilding report: Sore spot to soar spot Homebuilders in Kent County are having their best year in five years, according to data from Builder Track Reports. Builders started 814 single-family homes through September, compared with 744 for the same period a year ago. Apartment construction was
up 300 percent over 2013, with 630 units under construction. All told, construction began on 1,632 living units through September, up 61 percent compared with the first nine months of 2013. Plainfield Township replaced Caledonia Township as the county’s hottest housing market.
‘The Rapid,’ indeed: New route for express buses set for GR A recent story in Crain’s Michigan Business on Grand Rapids’ new bus rapid transit route, the Silver Line, reported that another route was being considered to link downtown Grand Rapids to the Al-
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lendale campus of Grand Valley State University. Last week, it officially stopped being considered and started being a reality. The Rapid, the region’s transit system, said 14 stations are to be built along the 13-mile Laker Line route, and planners expect 13,000 riders each day. Construction probably won’t start until 2017, passengers boarding the year after.
MICH-CELLANEOUS 䥲 Ada-based Amway Corp. is donating $10 million to a Stanford University study that will track how everything from exercising to eating fresh produce can lengthen
how long a person lives. The WELL project will start next year and focus on wellness rather than diseases, MLive.com reported. 䥲 The Michigan Court of Appeals ruled that Jackson-based Consumers Energy will not be held responsible for a 2009 fire and explosion that forced more than 4,500 people to be evacuated in the Clio area north of Flint, MLive.com reported. The courts said the statute of limitations barred Consumers from being added as a defendant. 䥲 Flint will lose an estimated $400,000 a year because General Motors Co. will stop using Flint River water at its engine plant, The Flint Journal reported. TM said the water supplied caused engine parts to rust. 䥲 Lest we forget: Anila Quayyum Agha of Indiana won $300,000 in the annual ArtPrize competition in Grand Rapids for a sculpture called “Intersections,â€? taking not only the top spot in the public vote but also sharing honors in the juried competition. Her work was a cube that’s illuminated from the inside. And if that description seems lacking in a certain passion, well, consider that a Philistine wrote it. 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.
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October 20, 2014
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‘New’ Asterand back in old home Company ready to grow as it moves HQ back to Detroit BY TOM HENDERSON CRAIN’S DETROIT BUSINESS
Stemgent Inc., a Massachusettsbased company that sells products to the stem cell industry, including lines of stem cells, decided to diversify its business two years ago by buying Detroit-based Asterand plc, a tissue bank company that supplies
researchers around the world. Stemgent’s investors liked the tissue bank business so well they have decided to undiversify. In September, they announced the sale of the stem cell operation to ReproCELL of Yokohama, Japan, for $8.5 million in cash. On Oct. 1, Stemgent announced the deal had closed and that the company had been re-
named Asterand Bioscience Inc. According to John Canepa, who was Stemgent’s CFO, Asterand’s headquarters is moving back to Detroit. He recently signed a Canepa lease for 4½years that expanded the company’s space on the fifth floor of TechTown from about 8,000 square feet to 10,000 square feet, and he is looking to hire
a marketing team of three to four. “This is a great facility. We like the TechTown people, and it’s great to be part of the entrepreneurial technology scene in Detroit,” said Canepa. Asterand, founded in 2000, was the first tenant of the Wayne State University-affiliated tech incubator and has long been its largest tenant. It employs about 50 at TechTown and about 30 in a facility in Royston, England. Canepa said the company will
Inside
Street art defies Detroit’s laws of graffiti, Page 4
See Asterand, Page 33
Company index
Mismatched leggings have pull
These companies have significant mention in this week’s Crain’s Detroit Business: 50-50 Fashions . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Anton Sowerby and Associates . . . . . . . . . . . . . . . 11 Asterand Bioscience . . . . . . . . . . . . . . . . . . . . . . . . 3 Athens Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . 1 B Spot Burgers . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Granddaughter’s idea spurs retired entrepreneur to kick off new business
Bagger Dave’s Burger Tavern . . . . . . . . . . . . . . . . . 1 Beaumont Health System . . . . . . . . . . . . . . . . . . . 23 Berkadia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Blue Cross Blue Shield of Michigan . . . . . . . . . . . . 22 Brooklyn Street Local . . . . . . . . . . . . . . . . . . . . . . . 4 Buffalo Wild Wings . . . . . . . . . . . . . . . . . . . . . . . . . 1 Detroit Garment Group Guild . . . . . . . . . . . . . . . . . 25 Diversified Restaurant Holdings . . . . . . . . . . . . . . . 1 Environmental Consulting and Technology . . . . . . . 15
BY NATALIE BRODA
General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SPECIAL TO CRAIN’S DETROIT BUSINESS
George Matick Chevrolet . . . . . . . . . . . . . . . . . . . 29 Grand River Creative Corridor . . . . . . . . . . . . . . . . . 4
W
hen 73-year-old lifelong entrepreneur Tom Ervin talked fashion with his 10year-old granddaughter last year, he had no idea he was about to come out of retirement. His granddaughter, Josie Ervin, told him about a girl at school who wore leggings with different-colored legs. Ervin was struck by the idea and asked his granddaughter what she would name a company that sold mismatchedleggings. “She said ‘Oppos,’ because it’s short for opposite,” Ervin said. “I thought it was such an interesting idea.” It didn’t take long for that “interesting idea” to become a business. Ervin is co-founder and CEO of Bloomfield Hills-based 50-50 Fashions Inc., a family-owned and operated fashion company that designs and produces the Oppos interchangeable girls’ leggings. The right leg is patterned, and the left leg is a solid color. A zipper puts them together, allowing the wearer to mix and match. Oppos opened online Feb. 1; a kiosk at Twelve See Leggings, Page 31
Greektown Casino-Hotel . . . . . . . . . . . . . . . . . . . . . 1 Griffin Properties . . . . . . . . . . . . . . . . . . . . . . . . . 11 H2Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Hayman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Health Care Net . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Health Net Connect . . . . . . . . . . . . . . . . . . . . . . . 19 Henry Ford College . . . . . . . . . . . . . . . . . . . . . . . . 25 Henry Ford West Bloomfield Hospital . . . . . . . . . . . 21 Interactive Frontiers . . . . . . . . . . . . . . . . . . . . . . . 19 J&B Medical Supply . . . . . . . . . . . . . . . . . . . . . . . 19 Jems Technology . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Jones Lang LaSalle . . . . . . . . . . . . . . . . . . . . . 11, 13 Marcus & Millichap . . . . . . . . . . . . . . . . . . . . . . . 11 Max Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 MGM Grand Detroit . . . . . . . . . . . . . . . . . . . . . . . 31 MichBio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Michigan Association of Health Plans . . . . . . . . . . 22 Michigan Automobile Dealers Association . . . . . . . . 1 Michigan Economic Development . . . . . . . . . . . . . 15 NAI Farbman . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Ortele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Parjana Distribution . . . . . . . . . . . . . . . . . . . . . . . 15 Pfizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Princeton Enterprises . . . . . . . . . . . . . . . . . . . 14, 16 SHELLY CHILTON
Oppos leggings went on sale in August at a kiosk in Twelve Oaks Mall in Novi. Kiosks like this one are to be the launching pad for the nationwide growth plans of Bloomfield Hills-based 50-50 Fashions Inc.
Rader, Fishman & Grauer . . . . . . . . . . . . . . . . . . . . 3 Roco Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . 14 St. John Providence Health System . . . . . . . . . . . . 21 Signature Associates . . . . . . . . . . . . . . . . . . . . . . 11 Stokas-Bieri Real Estate . . . . . . . . . . . . . . . . . . . . 11 TDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Co-founder sues Rader Fishman, seeks $1.6M equity buyout BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
A co-founder of Bloomfield Hillsbased Rader, Fishman & Grauer PLLC claims the intellectual-property law firm is financially troubled and won’t buy out his nearly $2 million of equity, since a stroke last year left him unable to practice law. But the firm, through its general counsel, contends it has been more than accommodating to partner R. Terrance Rader, and that taking his
quarrel to court is a risky move. Rader, 66, who co-founded the firm in 1996 with current partner Michael Fishman and retired partner Richard Grauer, seeks more than $1.6 Rader million in a lawsuit filed before U.S. District Judge Arthur Tarnow this month against
the firm, Fishman and partner Michael Stewart. The lawsuit — which alleges violations of the state Limited Liability Company Act, infliction of emotional distress and violation of publicity rights to Rader’s name — contends that he still owns 37 percent of Rader Fishman and had $1.9 million in compensation accounts at the firm when a stroke left his speech and motor skills impaired in January 2013. He also contends in court that the
firm has kept his current compensation account status a secret, hasn’t tried to buy out his ownership stake, won’t release him from liability on a line of credit at Flagstar Bancorp with a $5 million balance, and “has otherwise been aggressively confrontational” about Rader’s requests. Not so, said Tom Hallin, a partner and general counsel at the firm, who contends Rader Fish-
Travel Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . 24 University of Michigan . . . . . . . . . . . . . . . . . . 13, 30
Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 28 CALENDAR . . . . . . . . . . . . . . . . . . . . 27 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 9 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28
See Rader, Page 32
RUMBLINGS . . . . . . . . . . . . . . . . . . . 34 WEEK ON THE WEB . . . . . . . . . . . . . . 34
THIS WEEK @ WWW.CRAINSDETROIT.COM
Blogs that provoke thought ... and usually nothing else Crain’s reporters write about what they see on their beats at crainsdetroit.com/blogs. ISTOCK PHOTO
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CRAIN’S DETROIT BUSINESS
THE MILLER LAW FIRM Changing the Odds in our Clients’ Favor
City ticket crackdown prompts primer on graffiti vs. street art What is the punishment for graffiti? For “true graffiti,” the city plans to aggressively issue tickets. Property owners have 14 days to remove the blight to avoid the $130 fine. If the markings are not removed within that timeframe, Duggan said, the city will clean it up and charge the building owner.
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Detroit Mayor Mike Duggan is cracking down on graffiti — but the city’s internationally renowned street art is safe. There was public uproar last week when the Grand River Creative Corridor, an arts district along Grand River Avenue where more than 100 murals adorn 15 buildings, and the Brooklyn Street Local diner in Corktown got caught up in an unannounced ticketing blitz. The Buildings, Safety, Engineering & Environmental Department sent out inspectors along Detroit’s main arteries — Jefferson, Gratiot, Grand River, Michigan avenues, etc. — and told them to ticket any graffiti they found. And they did. The team issued tickets for illegal graffiti — the spray-paint scribbles and tagging that covers many buildings across the city — as well as murals that building owners had commissioned as public art or as a graffiti-maintenance strategy. Derek Weaver, who formed GRCC, said the building owners who donated their wall space to the project received thousands of dollars worth of tickets. But Duggan said he never meant for authorized murals to incur tickets. “I apologize,” he said. “I’m embarrassed. “I thought we had given clear direction to our inspectors that, when you have wall art and murals that had the permission of building owners, that was not going to be ticketed.” At Brooklyn Street Local, owners Deveri Gifford and Jason Yates received a $130 ticket because their business name is painted on the west side of the building and the remnants of a mural peek out from behind the reconstruction work happening on the diner’s east wall. “The inspector told me that this is the mayor’s new project to get rid of graffiti,” said Gifford. “They were going to all of the businesses that have anything written or painted on the building and saying it was going to be ticketed as graffiti. “I understand that graffiti, that blight is a problem, but there is a better way than ticketing a businesses and removing beautiful art.” In response, Duggan met with Gifford to apologize directly — and tell her the ticket would be thrown out. He also called Weaver and told him the same thing. Building owners with authorized murals will not have to pay fines or remove the artwork. “He called me and apologized,” said Weaver. “But the bottom line is I talked with Mayor Duggan when he was campaigning, and I told him about the corridor and he was really positive. I wanted to prevent a situation like this from occurring. You can’t come in with an iron fist and chase out the artists and entrepreneurs and small businesses. If you are going to make it
ANJANA SCHROEDER
This mural is among those found on buildings along the Grand River Creative Corridor.
impossible for them to be in the city, you’ll lose a lot of people.” The crackdown last week caused a great deal of confusion for city property owners and small businesses. So, to ease the confusion, here is a handy primer on how graffiti and street art coexist in the city: What is defined as graffiti? Mayor Duggan wasn’t trying to stifle the arts in Detroit with his crackdown, but rather trying to rid the city of actual, unwanted graffiti. The city defines graffiti in municipal code section 9-1-3: “Unauthorized drawings, lettering, illustrations or other graphic markings on the exterior of a building, premises or structure which are intended to deface or mar the appearance of the building, premises or structure.” Are murals graffiti? No. “Commissioned art is not graffiti,” said Eric Jones, director of the buildings department. The code defines art murals in section 3-7-2 as “any mosaic, painting or graphic art, which is applied to a building and does not contain any brand name, product name, letters of the alphabet that spell or abbreviate the name of any product, company, profession or business or any logo, trademark, trade name or any other type of commercial message.” If murals aren’t graffiti, why did the city ticket? Because there is some lack of clarity in the city code. While the definition of graffiti includes the term “unauthorized,” in the section of the code that outlines property owners’ responsibility to keep their buildings graffiti-free, it encompasses any graffiti, painting, carving or marking. With that broader definition, a property owner could be cited. However, Jones is confident that murals are not graffiti by code and the tickets were a misunderstanding. “I wouldn’t say the (inspectors) were overzealous,” he said. “They are hard-working men. Some of the graffiti art was blurred and ambiguous and questionable, so they erred on the side of enforcing the code. … After a second look, we decided we were going to move forward with locations that are clearly blighted.”
Do I need a permit for a mural? No. As long as the artwork is non-illuminated and non-commercial, you do not need a permit for a mural on your building. But make sure it meets the definition of art murals above. Any reference to your business name or a product and you will need a sign permit. Is my business name painted on a building considered graffiti? No. However, you do need a sign permit. This is where the situation got complicated for Brooklyn Street Local. The inspector issued Gifford a graffiti ticket for having a sign painted on the building. That caused other business owners to believe the city was treating business signs as blight. However, the mayor’s spokesman, John Roach, said that ticket was issued erroneously. Because Gifford did not have a sign permit, she should have been cited for that violation, not graffiti. Gifford would have been happy to get a permit for her sign, but she just didn’t know she needed one. “I have an awning permit,” she said. “It would have been nice if someone had told me when I was getting that permit that I needed a sign permit, too.” Farther down Michigan Avenue, the restaurant Gold Cash Gold is close to opening. As part of its decor, the Cooley family repainted the exterior of the building and recreated the old pawnshop signage. Because they had a sign permit for the work, they didn’t receive a graffiti ticket. Still, Ron Cooley, president of the Corktown Business Association, said he wished the city would be proactive instead of reactive. “They could have given written warnings instead of writing tickets,” Cooley said. “It’s a matter of explaining yourself. (Gifford) shouldn’t have been ticketed. She should have been told: You need a permit for your sign.” What is the cost of a sign permit? There is a one-time permit fee that starts at $80 for the first 100 square feet; each additional 50 square feet costs $26. The annual fee is $46 for 300 square feet; each additional 32 square feet costs $52. Are the murals in Eastern Market legal? Some are; some are not. It all depends on whether the property owner allows the artwork and they fall in the definition of “art mural.” Eastern Market Corp. has sign permits for the murals that feature its name.
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CRAIN’S DETROIT BUSINESS
National
Philanthropy Day Congratulations, 2014 National Philanthropy Day Awardees! Max M. Fisher Award for Outstanding Philanthropist Marcia and Eugene Applebaum Nominated by: Beaumont Health System
Outstanding Foundation The Jewish Fund Nominated by: Jewish Family Service and JARC
George W. Romney Award for Lifetime Achievement in Volunteerism Eugene and Elaine C. Driker Nominated by: Wayne State University
Dr. John S. Lore Award for Outstanding Fundraising Executive Audrey M. Olmstead, Walsh College Nominated by: Walsh College
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GM counsel criticized in recall hearings to retire BY MIKE COLIAS CRAIN NEWS SERVICE
General Motors Co.’s top lawyer, Michael Millikin, is retiring three months after he withstood withering criticism by lawmakers for his department’s handling of GM’s deadly ignition switch defect. GM said Friday that Millikin, 66, informed the company of his decision to retire early next year. GM will begin an immediate external search for his replacement, the company said in a statement. During a Senate hearing in July on GM’s handling of its recall of 2.6 million cars for a faulty ignition switch linked to 27 deaths, senators questioned how Millikin couldn’t have known about the defect when top lawyers had worked on the matter for years. In a statement, GM CEO Mary Barra — who defended Millikin during the hearings — praised his leadership. “He has led global legal teams through incredibly complex transactions, been a trusted and respected confidant to senior management, and even led the company’s global business response team following the tragedy of 9/11,” Barra said. Millikin is the third GM execu-
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The Society of Hispanic Professional Engineers helps empower the Hispanic community to realize its fullest potential, and this year their annual conference is coming to Detroit. The newly remodeled Cobo Center is set to greet engineering professionals, students and corporate representatives, all dedicated to creating opportunity for Latinos across the country. Detroit is getting the same opportunity as well, with over 5,000 attendees enjoying all The D has to offer, like great food to diverse sights and cultural attractions. And while the Grand Prix electrifies Belle Isle one weekend a year, Detroit is always ready to let its engines roar. Be part of America’s great comeback city. To see
all that’s happening in The D, visit vimeo.com/meetdetroit.
tive with a connection to the ignition issue to retire this year. Jim Federico, a top engineer who oversaw an internal inquiry into the problem several years ago, retired in May to take a job as vice president of Harley Davidson. GM’s global engineering chief, John Calabrese, announced his retirement in April as Barra unveiled a restructuring of his department that included splitting his job into two separate roles. Documents show that Calabrese was aware of GM’s investigation into the matter in recent years, and he was one of three executives charged with deciding when to issue a recall. GM said the earlier retirements were not related to the recall. Federico and Calabrese are each about 10 years younger than Millikin. Millikin joined GM in 1977 after a short stint as a federal prosecutor on drug cases. He was named chief counsel in July 2009. At least five employees from Millikin’s department were fired in June for their handling of the ignition switch defect. GM said Millikin will stay on the job until the transition of the new general counsel is complete. From Automotive News
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Too much stealth around Tesla bill ov. Rick Snyder has a bill on his desk that would reinforce the current state law and make it tougher for Tesla Motors Inc. to sell electric vehicles directly to consumers in Michigan. As Chris Gautz reports on Page 1, state auto dealers quietly pushed for an amendment to a bill that focused on documentation fees charged to consumers. The new language, though, strengthens the state’s system of auto companies selling vehicles through franchised dealers. Tesla wants to sell directly to consumers. Some critics have said Snyder, an advocate for loosening strictures on business, should veto the bill. Others think the new wording was done in a less-than-transparent manner. We agree; it was a sneaky end-run, which caught Tesla by surprise. If franchising is good for consumers, be open about it. This stealth attack on Tesla — a disruptive company in the auto business — was perhaps legal, but certainly not transparent. If franchising is so great, it can stand up for itself in broad daylight. That said, we think the franchise-dealer system has worked pretty well for 100 years. Consider this: What if GM didn’t have its own franchised dealers to handle 30 million recalls? Dealers protect consumers and are responsible for service, trade-ins, recalls and other issues. They are directly and legally linked to the manufacturer. It works.
G
Skills program a model to copy This is how it can work: Employer demand grows for a specific type of skill and a community college quickly ramps up to meet the demand with a program that grants a certificate. The skill? Industrial sewing. As Art Aisner reports on Page 25, Henry Ford College in Dearborn created the program in concert with the Detroit Garment Group Guild and area businesses and workforce councils. It isn’t cheap; tuition is $2,000, but aid is available. And if the college can churn out graduates in six weeks, those students can ART AISNER then apply for some of the 300 advanced inHenry Ford College is dustrial positions that are open now. offering the state’s That model can — and should — be first industrial sewing program. replicated.
OTHER VOICES Sunshine Act shouldn’t start chill No consumer relationend of September. It’s inship demands more trust tended to increase transthan that between a physiparency in health care by cian and a patient. making public any finanWhatever the ailment, cial relationships — the patient is asking to be whether cash or “transhealed. In return, he or she fers of value” — between is asked to trust that the physicians, pharmaceutitreatment — whether simcal makers and medical ply medication or a delidevice companies. cate surgical procedure — It is a laudable endeavis the best means to reach Steven Kalkanis or that deserves the supthat end. port, at least in principle, of the This trust requires that no other health care industry. Yet great agenda be at work in a unique con- care must be taken that this transsumer business: It offers no mon- parency does not chill the legitiey-back guarantees and sometimes mate and absolutely essential partlittle assurance that the treatment nerships between industry and will even work, just that the practi- medicine. tioner believes it is the best reIn my practice, many of the sponse to the patient’s needs. stunning, lifesaving innovations Doubt upsets this balance with and advances in neurosurgery every news story or blog entry or over the past few decades have social media post about doctors been developed in healthy, ethical who break trust by acting in their collaborations between manufacown interests: The doctor who turers and neurosurgeons. overprescribes a new drug after Advanced imaging and navigaaccepting gifts from the pharma- tion techniques that make brain ceutical reps who sell it, or who or- surgery safer, minimally invasive ders unnecessary and costly diag- tools that allow patients to heal nostic tests from a company in faster from spine surgery, and new which the doctor is an owner or in- drugs developed through clinical vestor, or any interest that con- trials for diseases like brain canflicts with the best patient care. cer and epilepsy are all examples After several delays, a new com- of these successful collaborations. ponent of the Affordable Care Act, The same can be said for other known as the Physician Payment fields of medicine. Sunshine Act, took effect at the In a country where the public
expects — and deserves — innovations in health care, these partnerships often unite the top minds in their fields to develop the best possible products for patients. As we continue to live longer lives, there is an ongoing and evergrowing need for doctors and companies to work together to continue developing new medicines and devices in the most honest, open and transparent manner possible. This is the intent of the Sunshine Act. However, it will be an extremely significant loss for medicine if inclusion in the Sunshine Act database leads to a negative connotation for physicians or companies, rather than an acknowledgment of a fusion of the leading minds and resources in the field. This is one of the many ways — through research, conversations and clinical trials — that we work to meet growing patient demands for safer surgery, more effective medicines and the eradication of chronic diseases. If the well-intentioned new law confuses such vital work with that of practitioners who follow their own financial agendas, it will have backfired. Steven Kalkanis, M.D., is chairman of the Department of Neurosurgery at Henry Ford Health System.
LETTERS A good wage yields good work Editor: In response to the Oct. 13 article “DMC weighs outside housekeeping; 565 jobs on the line,” one need look no further than the Detroit Public Schools to see the negative consequences of subcontracting. DPS is now on its third janitorial subcontracting company in five years. A May article in the Detroit Free Press reported that DPS spokeswoman Michelle Zdrodowski cited food services and facilities
management corporation Sodexo’s failure to adequately maintain clean and sanitary schools and an “ongoing failure to hire licensed and qualified personnel which has resulted in not only lost school days, but also significant and costly damage to equipment” as the reasons DPS was seeking to terminate its contract with Sodexo. If management is justifying subcontracting by portraying its current workers as disgruntled em-
ployees who come to work just to pay the rent on $15 an hour, what kind of attitude will workers have who can’t pay the rent even if they do come to work because they make only $9 an hour and have fewer benefits? Detroit will not be “revitalized” without living-wage jobs. Donna Stern Detroit
See Letters, Page 9
Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email cgoodaker@crain.com
KEITH CRAIN: A company too big to fail – or merge Right now, the Federal Communications Commission and Justice Department are studying whether or not to let Comcast purchase a rival cable operator, Time Warner Cable. In order to gain federal approval, Comcast created a side deal to turn over nearly all Michigan customers to a new company managed by Charter Communications. We, the Michigan customers, may or may not see an improvement in our cable service. It’s nothing but a way to get
Comcast’s customer count below 30 percent market share nationwide — low enough to satisfy the feds and allow this merger. I can’t help but wonder what Judge Harold Greene would think. Greene, who died in 2000, was the federal judge who presided over an antitrust case that led to the breakup of the AT&T monopoly in phone service
and equipment. It led to the birth of “Baby Bells” and a wave of product innovation and low-cost long-distance service. It just might be time to consider doing that with cable companies. There are plenty of telecommunication folks who would tell you that it’s time to start to make these companies smaller, not larger, so they can do
a better job of serving their customers. Comcast’s plans for Michigan involve spinning off customers to GreatLand Connections, the new Charter Communications company. There are even reports that Comcast would own a part of GreatLand. It’s odd that Comcast is shedding customers in Michigan in order to get a deal approved so it can gain millions more. Unbelievably creative, to say the least. But it’s a way for Comcast to gain two
big markets — New York City and Los Angeles. This is just another example of a company that would be described as too big to fail, as we discovered during the recent financial crisis, yet seems quite content to try and create an even bigger monopoly. Judge Greene had it right several decades ago. Getting a lot bigger doesn’t always serve the customer or the nation. This is a perfect example of simply getting too big.
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MARY KRAMER: Voters, pay attention to college boards On Nov. 4, voters can pick people who steer policy, hire and fire university presidents and are ultimately responsible for the combined $9 billion budgets at Wayne State University, the University of Michigan and Michigan State University. But can you name a single candidate for university trustee? As Crain’s Chris Gautz reported Sept. 29, these bottom-of-the-ballot races are often decided by straight-party ticket voters. That’s a shame. Consider Wayne State: Many of its graduate programs are among the finest in the state; it is trying to grow its research budget and opportunities to spin off technology into new companies. But few people can name a current trustee. The big issues at WSU are enrollment (declining) and graduation rates (dead last among 15 state universities). Republican Satish Jasti is running for the WSU board to get his alma mater to focus on increasing
graduation rates. Jasti has an accounting degree from WSU; he helped to create Lotus Bank in Novi to focus on the niche of business banking for the local Indian and Asian community. With mostly parttime students, WSU graduation rates, he knows, will lag behind schools with more fulltime students. “But Wayne State’s rates were much better in the ’80s than they are today,” he says. He thinks WSU lowered its ad-
mission standards to bring in revenue, regardless of whether students were ready for college work. (WSU beefed up requirements last year; it’s too early to know the effect.) WSU faculty leaders, meanwhile, believe WSU’s problems are political. “The evidence is clear,” Charles Parrish, president of the AAUP-AFT Local 6075, wrote in a recent newsletter. “The annual percentage budget
increases for Grand Valley State, situated in Republican Grand Rapids, are many times those for Wayne.” As an alum and current trustee of GVSU, I can say he’s partly right. GVSU did receive a boost on its base funding — 6 percent — but only because it scored so high on six performance measures, including graduation and retention rates and degrees granted in high-demand fields. Parrish wouldn’t want GVSU’s biggest headache: Because state funding never caught up with its growth spurt, state dollars for 25,000 students breaks down to
$2,835 per full-time-equivalent student — the lowest of all 15 state universities. Wayne State gets more than $8,700 per student for its 27,000 fulltime equivalents — highest among the 15 universities. High investment, low results in terms of graduation rates. Maybe that’s why state investment hasn’t increased. Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer. E-mail her at mkramer@crain.com.
LETTERS CONTINUED ■ From Page 8
Raises for DIA execs are irresponsible Editor: Despite a community bailout of the Detroit Institute of Arts, anchored by three counties pledging to raise taxes for residents, and a concerted effort by businesses and foundations in the state to lend financial assistance to the DIA, the museum’s top officials accepted huge pay increases and bonuses the same year that the tri-county tax passed (“DIA boosts compensation of top execs,” Crainsdetroit.com Oct. 6 article from The Detroit News). This compensation flies in the face of fiscal responsibility. Director Graham Beal’s salary of $513,868 and COO Annmarie Beal Erickson’s salary of $369,366 (including bonuses) is obscene when compared with the sacrifices others, such as Detroit retirees and police and fire employees, Erickson have made to rescue the city from insolvency. Frankly, how much skill is required to operate a museum? There is no production line or thousands of widgets to manufacture. Heck, I would perform the same museum oversight for half the money and would promise not to wear bow ties. Bill Kalmar Lake Orion
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REPORTER’S NOTEBOOK Kirk Pinho covers real estate, higher education and Macomb and Oakland counties. Call (313) 4460412 or write kpinho@crain.com.
Real estate Kirk Pinho
Office vacancy continues steady decline The Class A and Class B office vacancy rate in Detroit as well as the suburbs continues to decline, albeit gradually — a positive barometer to the health of the office market. In the central business district and New Center area, vacancy fell from 18.4 percent in the second quarter to 17.9 percent in the third, according to a report released last week by Jones Lang LaSalle. That’s down from a four-year high of 28.9 percent at the end of 2010, said Robert Kramp, senior vice president and director of research for the Midwest and Great Lakes in JLL’s Chicago office. “There is just a general dearth of blocks of Class A space available,” he said. Average asking rents in the city dropped from $19.11 per square foot in the second quarter to $19.10. In the suburbs, vacancy fell from 28 percent to 27.3 percent, while average asking rents remained steady at $17.35 per square foot, compared to $17.33. Office leasing is expected to continue at a healthy clip, particularly in the central business district, Kramp said. Another positive trend is that employers downtown are leasing more space instead of shrinking their office footprints. “For a market like Detroit, which has really taken a beating in the last 10 years, this is so critical,” he said. Kramp also said that investment sales have been on the rise in the past few years. In 2013, there was $466.9 million in investment sales, and 2014 is on pace to best that figure with $430.9 million through the third quarter this year. In 2012, there was just $148 million worth of investment sales, he said. There are 13.93 million square feet of Class A and B office space in the downtown and New Center areas and 48.05 million square feet in the suburbs. The total city and suburban Class A and B vacancy rate in the third quarter fell to 25.1 percent from 26 percent in the second, according to JLL. Suburban areas with the lowest vacancy rates were the southern I275 corridor (9.4 percent, down from 17 percent in the second quarter); Birmingham and Bloomfield (11.2 percent, down from 11.9 percent); Royal Oak and southeast Oakland County (11.9 percent, down from 13.4 percent); and Washtenaw County (10.4 percent, down from 12.5 percent).
NATHAN SKID/CDB COURTESY OF NEW ENGLAND DEVELOPMENT
Clockwise from below: Work continues on the HopCat bar and restaurant in Midtown. The Arbor Hills shopping center, which includes a Lululemon store, opened last year a few miles from the University of Michigan campus. Bonefish Grill is part of the Galleria of Troy Phase 1, at Big Beaver and Wilshire Drive. New England Development plans to build an outlet center near Detroit Metropolitan Airport
COURTESY OF DEVELOPMENT MANAGEMENT ASSOCIATES LLC
Ringing up retail Low vacancy rates, eager tenants total steady leases, sales
ANJANA SCHROEDER
BY KIRK PINHO CRAIN’S DETROIT BUSINESS
A
ny retail real estate broker who’s not making a killing in the current retail environment in metro Detroit is doing something seriously wrong. So says Scott Griffin, president of Southfield-based Griffin Properties Inc. “It’s been very, very, very busy,” he said. Low vacancy rates in many parts of town, paired with a number of big and small tenants eager to find a spot in metro Detroit, are making for a steady stream of leases, build-to-suit deals and property sales. That’s across the board in Griffin most of the major retail areas around town, ranging from the I-75 corridor to Macomb County’s Hall Road hub to the western Wayne County suburbs, Griffin said. In the second quarter, the retail vacancy rate was 9.3 percent, according to a report by the Southfield office of Marcus & Millichap, on par with other Midwest markets. At the same time, new retail construction is lagging. About 525,000 square feet is expected to come online this year, down from
1.2 million square feet last year, according to Marcus & Millichap. The thin construction pipeline is causing rents to rise — up to an average of $11.91 per square foot, according to Marcus & Millichap. “In general, the market is relatively healthy because vacancies are down,” said Jim Bieri, president of Detroit-based StokasBieri Real Estate. “It’s stronger than it was. It’s a quiet, steady growth.” The tightest areas in the region are Troy, with a vacancy rate of 4.4 percent; Washtenaw at 5.3 percent; Royal Oak at 6.1 percent; and Livingston Countywest Oakland County at 7.1 percent, according to Marcus & Millichap. Demand is increasing Bieri for everything from clothing to groceries, from outlet malls to boutique shops, from restaurants to footwear retailers, said Joe Sowerby, president of Mt. Clemens-based Anton Sowerby and Associates Corp. That’s because people are generally more optimistic about the economy after the recession and have more expendable income to use at those stores, he said. “People have more to spend, thus the retailers are going into areas that are showing
strong sales,” said Viktor Gjonaj, a principal who focuses on retail at Southfield-based Signature Associates Inc. Those areas of strength include the I-75 corridor in Oakland County, Telegraph Road running through Oakland County and M-59 through Macomb County, Gjonaj said. “What you’re seeing now is a lot of expensive in-fill. I haven’t seen any monster centers going up, but I’ve seen these little small redevelopment infill sites taking place as long as it’s the absolute right corridors,” said Sowerby, who specializes in Macomb County retail. Sowerby
Shopping centers Although there aren’t many large, standalone new retail centers opening, plans for construction are taking shape. The 120,000-square-foot Outlets of Southeast Michigan, planned near M-59 and I-94, is a conference center and hotel on the same site. There also would be restaurants at the site, and possibly up to five or six hotels after sellSee Retail, Page 12
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Retail: Biggest demand here is mainly in the smallest spaces ■ From Page 11
ing parcels of land. There are also plans by Newtown, Mass.-based New England Development to build a 325,000-squarefoot outlet center near Detroit Metropolitan Airport in Romulus. Baltimore-based Paragon Outlet Partners LLC plans to buy about 50 acres at I-275 and Ford Road in Canton Township for a 375,000-squarefoot outlet center that’s planned to open in the summer of 2016. This summer, Meijer Inc. broke ground on its second Detroit location at Grand River Avenue and Mc-
Nichols Road, the site of the former Redford High School. The Walkerbased company opened its first location at the Gateway Marketplace in July 2013 at Eight Mile and Woodward. Last year, the Arbor Hills shopping center in Ann Arbor opened about three miles east of the University of Michigan with 11 stores in a 90,000-square-foot center. Tenants include Sur La Table, several restaurants including Pizzeria Biga and apparel stores such as J. Jill and Brooks Bros.
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Out-lots But the largest demand for retail space in metro Detroit is found mainly in smaller spaces, whether in strip centers, in-fill lots or other spots, Sowerby said. A 50,000-square-foot Field & Stream store is planned on a vacant out-lot that was the site of the former Circuit City at Oakland Mall in Troy. That store is set to open in the spring, said Glenn Lapin, Troy’s economic development specialist. Sweden-based clothier H&M plans a 20,000-square-foot location at Macomb Mall, while fellow Swedish retailer Ikea is expanding its sole Michigan store in Canton Township by adding about 44,000 square feet to the 311,000-square-foot building. At Metro Airport, a bevy of new retail space is open or planned, including Andiamo; the Eastern Market Dining Experience food court; and national retailers such as The Body Shop, Spanx, Pandora and Be Relax Spa. It’s part of a $13.8 million investment to build out spaces in the McNamara Terminal. The desirable Big Beaver corridor in Troy also has gotten more retail recently, Lapin said. Among retailers and restaurants opened in the past six months are Bonefish Grill, Carrabba’s Italian Grill and Jersey Mike’s at the Troy Galleria, at Big Beaver and I-75. The Kilmer Plaza, on the northeast corner of Big Beaver and Kilmer Drive, includes Massage Green Spa, Sy Thai Café and DiBella’s. Big Beaver Center, on Big Beaver between Alpine Road and McClure Drive, includes Piada Italian Street Food.
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Lapin also expects more lease deals near Maple and Livernois roads, where the 16-story MJR Digital Cinemas opened this year on the site of a Kmart store that closed in 2009. Troy is seeing more retail activity, Lapin said. “These are prime locations. We are seeing that as a factor in why these developers want to be along Big Beaver and elsewhere.”
Food and drink tenants Whether it’s two new HopCat locations in Ann Arbor or Midtown, a second Crispelli’s Bakery and Pizzeria in West Bloomfield Township or the owners of Imperial and the Public House in Ferndale planning more restaurants — including another Imperial location in 2015 — restaurants are continuing to make inroads in Southeast Michigan. In August, “Iron Chef” Michael Symon announced plans for a third B Spot Burgers bar and restaurant at Partridge Creek Mall in Clinton Township. There currently is one at the Village of Rochester Hills and another planned for 310 Main St. in downtown Royal Oak. Chains such as Denver-based Chipotle Mexican Grill Inc. also have expanded their presences in metro Detroit. The fast-casual Mexican food chain has 12 locations in the region and plans a new one in Northville Township at Seven Mile and Haggerty roads in the Northville Park Place development. And the sandwich-sub building boom also shows no sign of winding down. Point Pleasant Beach, N.J.based Jersey Mike’s has opened seven stores in Oakland and Macomb counties and is opening a second Rochester Hills location Nov. 12. Douglas Petkovic, a business partner of Symon’s and Symon’s wife, Liz, said he hopes that the third area B Spot Burgers location at Partridge Creek will open by Jan. 1 after a downtown Royal Oak location opens next month. A Rochester Hills location is already open. “To say that we believe in the greater Detroit economy would be an understatement,” Petkovic said. “We feel it’s a very similar town to
Cleveland, where we base our operations. That’s not only proven by us but also other successful retail outlets like clothing stores and other restaurants.”
Grocery store shopping Several food-related stores in metro Detroit are planned or in store for renovations and expansions. At least four new Fresh Thyme Farmers Market grocery stores are planned for Rochester Hills, Troy, Northville and Farmington Hills in 2016. After opening a successful Midtown location, Austin, Texasbased Whole Foods Inc. announced at the Crain’s Detroit Homecoming event in September that it plans a second location in Detroit. It’s not just new locations, however, where the retail activity is noticeable. For example, the Kroger Co. of Michigan grocery store at West Maple and Lahser roads in Bloomfield Township underwent a $1.4 million renovation and reopened to shoppers in August. The renovation was part of a $137 million investment planned for its Michigan stores. A $5.5 million remodeling of the Kroger on East Maple Road in Birmingham is also ongoing. But will the reinvestment — and wave of new tenants — continue? That depends on whether lenders are willing to invest in the area by continuing to provide business and construction loans, Sowerby said. “I would say it could be moving at a better clip, but lending is still a fly in the ointment,” he said. “The banks are still not a friend to entrepreneurial capitalists.” According to Marcus & Millichap, Detroit’s 9.3 percent retail vacancy expected through the end of the year is on par with many other Midwest cities, such as Chicago (8.9 percent), Cleveland (8.9 percent) and Columbus, Ohio, (8.1 percent). Said Sowerby, “I think, hopefully, we are going to continue to go through a couple more years of slow and steady growth.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
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Real Estate
Former Pfizer campus nearly refilled as UM research hub BY KIRK PINHO CRAIN’S DETROIT BUSINESS
When news came out that the 174acre Pfizer Inc. complex in Ann Arbor, a crown jewel of commercial medical research, would be shuttered as part of the drug company’s cutbacks in 2007, there was a collective “what now?” in economic development and real estate circles. But within seven years, the sprawling, 2.1 million-square-foot complex is again a hub for medical and other types of research, this time for the University of Michigan. Within the next few years, it’s expected the complex will be fully occupied again. In 2009, UM bought what is now its 27-building North Campus Research Complex for $108 million using funds from the University of Michigan Health System. So far, the 20 buildings that have been reopened are full, bustling with mostly university researchers and also private-sector employees, said David Canter, M.D., executive director of the complex, who worked for 25 years for Pfizer in Ann Arbor as senior vice president of global research and development. About $57 million in capital improvements have been made or
will be made this fiscal year to the campus since UM has owned it, Canter said. The intent is to have the remaining seven buildings at the site open and almost entirely ocCanter cupied by 2019. Said Canter: “I would like to believe that by the 10-year anniversary (of the university’s ownership), the site will indeed be almost 100 percent utilized.” The complex is home to a U.S. Department of Veterans Affairs office, the Institute for Healthcare Policy and Innovation and eight UM research groups, nine scientific research core services and 10 UM schools. It also has Lycera Corp., Honda Motor Co., Bosch USA and BoroPharm Inc. as tenants. Researchers there focus on things such as microbiology, molecular imaging, internal medicine, oncology, engineering, cardiology and DNA sequencing. That so much of the space south of Plymouth Road and on both sides of Huron Parkway could be filled back up again as quickly as it did has been a surprise to brokers. “I don’t think anyone saw that
coming,” said Neal Warling, senior vice president in the Ann Arbor office of Jones Lang LaSalle. The complex’s closure was part of Pfizer’s global cost-cutting and restructuring efforts made to reduce its total workforce by 10,000 and save the drug maker $2 billion annually, Crain’s reported at the time. Before the Ann Arbor complex’s closure, the New York Citybased company also closed operations in Kalamazoo and Skokie, Ill. At the time, Pfizer was expecting a major revenue loss because a patent for cholesterol drug Lipitor, which accounted for about 20 percent of Pfizer’s revenue, was to expire in 2011. The company offered job transfers to about 1,000 of its 2,100 employees at the complex. Dave MacDonald, an executive vice president with Jones Lang LaSalle, was part of the five-member brokerage team at Staubach Co. marketing the site for sale. He called it “an incredible facility,” but it took a Herculean effort to sell it. The brokers put together an international marketing campaign and generated buzz for it, since building something of similar size and scale would have cost “in the 10-plus figures, into the billions” of dollars, MacDonald said.
“It was a worldwide, global marketing perspective. And really, it was a daunting marketing effort. ... But at the same time, coming across facilities like that was so unique.” That UM pounced on the opportunity was fortunate, brokers said.
“There was a collective sigh of relief when it was announced that they were going to occupy it,” Warling said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
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CRAIN’S DETROIT BUSINESS
October 20, 2014
Real Estate
High-demand multifamily rental market spreads to suburban spaces BY KIRK PINHO CRAIN’S DETROIT BUSINESS
It’s not just downtown and Midtown where demand for multifamily space is high and rents are rising. The inner ring suburbs in Oakland, Wayne and Macomb counties continue to have low vacancy rates, increasing rents and strong interest in investment sales, multifamily real estate experts said. The apartment and condominium units from Royal Oak to Dearborn, from Ferndale to Warren, from Westland to Southfield all have vacancy rates around or below 5 percent — and rents in those communities have increased by 2.5 to 4.5 percent year over year, said Kevin Dillon, partner at the Troy office of Phoenix-based Berkadia. “The question is, ‘Are we at a peak?’ We are certainly near the top, but it’s a sustainable plateau” because interest rates are low, the state’s job market is improving and car sales are doing well, Dillon said. Matt Lester, founder and CEO of Bloomfield Township-based Princeton Enterprises LLC, which owns or manages more than 18,000 apartment units in 10 states, including Michigan, said he considers the market somewhere near its peak. Vacancy rates in Royal Oak and Oak Park were 2.9 percent, while Southfield was at 3.9 percent and Warren and Roseville were 4.2 percent, according to a second-quarter report by the Southfield office of Marcus & Millichap. Across the region, 4.1 percent of the units in the metro region are expected to be vacant, according to the report, while the average rent has increased 1.2 percent to $822 per month regionwide. David Colman, principal of Bloomfield Hills-based Roco Real Estate Inc., which owns 10,000 apartments in seven states, said because properties are performing well, it’s becoming more difficult for his company to find off-market deals. “It’s a seller’s market to some degree, but it’s all about how creative you are and how you find the deals,” he said. Dillon said there are three groups that have been consistent renters in the apartment market: people who will always live in apartments because they prefer the flexibility; those who are saving up for a home; and those with less income who cannot afford a home and live in government-subsidized or lower-income units. But a fourth demographic has been apparent in recent years: new college graduates and other young people who want to be in or near downtowns like Ferndale, Royal Oak and Detroit but who don’t want the responsibility of home ownership. Even though it seems like there is a new apartment or loft proposal for a downtown or Midtown building virtually every week to satisfy demand, new multifamily construction in the suburbs has been limited, said Andrew Hayman, president of Troy-based Hayman Co.
AVERAGE SUBURBAN MONTHLY RENTS Average asking monthly multifamily rents per unit (across all unit sizes) in the largest metro Detroit suburban markets: 䡲 Ann Arbor: $1,065 䡲 Novi/Livingston County: $821 䡲 Pontiac/Waterford/Auburn Hills: $740 䡲 Royal Oak/Oak Park: $784 䡲 Southern Wayne County: $696 䡲 Southfield: $876 䡲 Sterling Heights/Shelby Township: $816 䡲 Troy/Rochester Hills: $938 䡲 Warren/Roseville: $708 䡲 Ypsilanti: $816 Source: Marcus & Millichap
But Lester said he thinks new construction is coming. “It’s borne out of this environ-
ment of rising rents, hot demand and some of the success in the city of Detroit,” he said. “I think it’s going to spread to a downtown Royal Oak or downtown Rochester, and other urban settings, particularly where there are rehab opportunities.” There is also demand for units with better amenities, Hayman said, which will eventually lead to new construction. Those include things like free Wi-Fi access, modernized clubhouses, and online rent payment and service requests. The investment sales markets also remain strong, as evidenced by Hayman’s purchase of two Cloverlane apartment buildings in Washtenaw County’s Pittsfield Township for $84 million as part of a joint venture with Birminghambased Belfor Holdings Inc. in April. By dollar value, the deal for the 1,022 units is the largest of the year to date in the area.
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CRAIN’S DETROIT BUSINESS
October 20, 2014
Page 15
Real Estate
Report calls Belle Isle stormwater project successful; city to review BY JAY GREENE CRAIN’S DETROIT BUSINESS
A pilot project designed by Detroit-based Parjana Distribution LLC to remove pools of standing water on Belle Isle and inject it back into the ground appears to be working, according to a report by Environmental Consulting and Technology Inc. The report by Environmental Consulting, a Gainesville, Fla.based engineering firm with offices in Detroit, found a 63 percent reduction in stormwater runoff from the 23-acre test area on Belle Isle from late July through September, compared with the similar nontest control area, said Joel Parker, ECT’s project engineer. “This project needed this test to verify the technology,” Parker said. “The data was statistically significant, no matter how you look at it. There was no change (in stormwater runoff) in the control site and a significant amount of reduction in the test area.” Alexis Wiley, chief of staff to Detroit Mayor Mike Duggan, said the city hasn’t received the full report, only a brief spreadsheet and a summary of the findings. She said the city was open to meeting with Parjana to discuss the results. “We are open to reviewing the report and talking with everyone,” Wiley said. Environmental Consulting was hired by Detroit-based H20pportunities to conduct the engineering report on stormwater removal technology pioneered by Parjana. H20pportunities received an $185,000 grant for the project from the Michigan Economic Development Corp. Last fall, Parjana began preparing the site by sinking up to 3,000 heavy plastic five-chamber tubes, or devices — measuring 12-18 inches long — at 5-, 10- and 20-foot depths. By using natural movements in the Earth, Parjana’s energy-passive groundwater recharge pump
creates a siphon action to pump surface water back into the ground. “All indications from the data shows that it is a success,” said Gil Pezza, the MEDC’s director of water technology. “The engineer says those figures will improve over time as (the devices) settle into the terrain.” Pezza said it is up to the city of Detroit whether officials want to expand the Parjana system across the entire island. Although the state took over management of Belle Isle this
year, the city is still responsible for stormwater management, Pezza said. “Our goal was to test this technology to see if it works,” Pezza said. “Once they overcame this first obstacle, it is up to the market to take over and others might do further funding.” Gregory McPartlin, Parjana’s managing partner, said ETC tests confirmed other tests the company has conducted over the past four years that the system works. “We really see this (Belle Isle project) as our Kitty Hawk,” Mc-
Partlin said. “Our technology is completely scalable. We can take these numbers and show state and national parks across the country how well our system works. “Everybody wants hard data. Now we have it.” McPartlin said the Parjana drainage system could save the city of Detroit thousands of dollars by reducing stormwater sent to the Detroit Water & Sewage Department for treatment. “The city of Detroit spends 8 cents to 12 cents a gallon to treat stormwater,” McPartlin said. “We
can reduce that amount.” Each year, Belle Isle costs the city about $338,000 for stormwater treatment, said Pezza, citing a project document. Parjana, founded in 2004 by CEO Andrew Neimczyk, has been demonstrating its technology at golf courses, residences and the Coleman A. Young International Airport in Southeast Michigan over the past several years, McPartlin said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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20141020-NEWS--0016-NAT-CCI-CD_--
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When it comes to real estate development, we dig right in.
October 20, 2014
Real Estate
Princeton Enterprises buys four downtown Detroit buildings BY KIRK PINHO CRAIN’S DETROIT BUSINESS
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Bloomfield Township-based Princeton Enterprises LLC has closed on the purchase of four buildings totaling more than 81,000 square feet in downtown Detroit, with retail and new multifamily residential space planned. The buildings, which founder and CEO Matt Lester said were purchased for about $6 million, are: 䡲 The 20,000-square-foot Oslo Building at 1456 Woodward Ave. 䡲 The 11,000-square-foot Singer Building at 1416 Woodward. 䡲 The 2,500-square-foot building at 1420 Woodward. 䡲 The 48,000-square-foot building at 1449-1459 Woodward. The purchase brings Princeton Enterprise’s greater downtown real estate portfolio to 17 buildings totaling more than 1 million square feet and containing more than 1,000 multifamily residential units. Lester said the first floor of the Oslo Building will remain as retail/restaurant space, and the upper seven floors will be used for seven to 15 apartment units. The number of units will be determined in the first quarter next year. “Whatever we put there will be luxury,” Lester said. A renovation budget has not yet been determined. The building at 1449-1459 Woodward is expected to have first-floor retail and 20 to 25 residential units on the upper floors. Plans for the Singer Building, which Lester said has been combined with the building next door at 1420 Woodward by removing a wall, have not yet been determined. “Although the market is getting a little tighter and the opportunities are fewer and farther between, we are still bird-dogging and seeking additional acquisitions in the central business district — us and everyone else,” he said. Southfield-based Farbman Group represented the seller, Sophie Tatarian, who owned all four buildings with separate limited liability companies. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
COSTAR GROUP INC.
The 2,500-square-foot building at 1420 Woodward Ave. is part of a group of downtown Detroit buildings purchased by Bloomfield Townshipbased Princeton Enterprises LLC.
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CRAIN’S DETROIT BUSINESS
CRAIN'S LIST: LARGEST RETAIL CENTERS Ranked by gross leasable area Shopping center name Address Rank Phone; website
Top executive(s)
Gross leasable area (square footage)
Center type
Leasing agent Company Phone
Number of stores Anchors
Twelve Oaks Mall >9!EE -@& - -@& " =99 0>" 1 =" %,"EE8 AAA27$-/<A )@ - (72 -*
+& ) -+ 7 # + 6 ) * + # 6
1,515,000
1.
?/ 6%6 #&-+ )
- &-6 + $ ? * + -2 0>" 1 >! %: EE
>EE
-6 7<6-* C57 -6 C)-6 2 2 ++ C 67
2.
Lakeside Mall ."EEE ( 7& &6 ) < 6)&+# &#$<7 " =.= 0! :1 >"9%.!,E8 AAA27$-/%) ( 7& * ))2 -*
? 7 # + 6 ) * + # 6
1,506,000
?/ 6%6 #&-+ )
&(& -6 )) + 6 ) 6-A<$ 6-/ 6<& 7 + 2 0=.>1 ,:E%!>9E
. E
C57 C57 + -* 67 2 2 ++ C -6 C)-6
3.
Oakland Mall ".> 2 ." &) - 6-C " E = 0>" 1 ! !%:EEE8 AAA2- () + * ))2 -*
< 6 &#$< # + 6 ) * + # 6
1,500,000
?/ 6%6 #&-+ )
++& 6 -+ 7 6 + < &) 6-/ 6<& 7 0>" 1 ! !%".."
.>
C57 67 2 2 ++ C
4.
Northland Center >.!EE -6<$A 7< 6+ AC2 -?<$ ) " E9! 0>" 1 !:,%:>9>8 AAA27$-/ <+-6<$) + 2 -*
7 C -+) C 77&7< +< # + 6 ) * + # 6
1,449,719
?/ 6%6 #&-+ )
F* + -C )<C FF )<C 0=.91 !,E%9,.=
.E>
C57 6# <
5.
Somerset Collection > EE 2 &# @ 6 - 6-C " E " 0>" 1 :"=%:=:E8 AAA2<$ 7-* 67 < -)) <&-+2 -*
-$+ C7D ( # + 6 ) * + # 6
1,440,000
?/ 6%6 #&-+ )
$ -6 7 -2 0>" 1 >9%":EE
. E
C57 &* + 6 ?7 -6 7<6-* (7 & <$ F@ +?
6.
Eastland Center . EEE 6+& 6 - 6/ 6 -- 7 " >>! 0=.=1 =9.%.!E.8 AAA27$-/ 7<) + 2 -*
6 +< <D # + 6 ) * + # 6
1,393,222
?/ 6%6 #&-+ )
7 C -+) C F7$( + DC F 3?&7&<&-+ -6/2 0>.>1 >.=%""""
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6# < C57 -A 57 ?6)&+#<-+ - < <-6C 7$&-+7
7.
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<$ 6&+ '5 )) C # + 6 ) * + # 6
1,386,000
?/ 6%6 #&-+ )
-+ $ C $ ? * + -2 0>" 1 >! %: EE
.:E
C57 2 2 ++ C 67 F < 6 $ <6 7
8.
Great Lakes Crossing Outlets "EEE ) A&+ - F? ?6+ &))7 " =>: 0>" 1 "!"%!E.E8 AAA27$-/#6 <) ( 7 6-77&+#2 -*
< @ + 6)-A # + 6 ) * + # 6
1,350,000
?/ 6%6 #&-+ )
< @ (7 $ ? * + -2 0>" 1 >! %: EE
. !
>. + $-67 &+ )? &+# ' !<$ (7 F@ +? '?<) < 7< )) C &* + 6 ?7 -6 C)-6 '?<) < -6 @ 6 >. 77 6- $-/7;'?< --6 -6) + & & $&# + -/ +&+# &+ 7/6&+# - >E.!2
9.
Westland Shopping Center =!EEE 2 66 + 7<) + " . ! 09="1 ">!%!EE.8 AAA2A 7<) + +< 62 -*
6-) ?<D # + 6 ) * + # 6
1,064,183
#&-+ )
<6& ( ?** ) /&+-7- ) 7< < 6-?/ 0=.!1 ">!%.EEE
>
C57 -$)57 2 2 ++ C 67
10.
Briarwood Mall .EE 6& 6A-- &6 ) F++ F6 -6 " .E 09="1 9:,%,:.E8 AAA27$-/ 6& 6A-- 2 -*
F?7<&+ 6<&+ # + 6 ) * + # 6
970,000
?/ 6%6 #&-+ )
F*C -+ 7 &*-+ 6-/ 6<C 6-?/ + 2 0=.91 >:=%>" !
.>E
C57 67 2 2 ++ C -+ ?6
11.
Macomb Mall =>>== 6 <&-< F@ 2 -7 @&)) " E:: 0! :1 >,=%9 EE8 AAA27$-/* -* * ))2 -*
&< )7-+ # + 6 ) * + # 6
933,492
#&-+ )
))C 6) C + # * +< 0=.>1 !"=%:,>"4
9,
67 -$)57 ') @C & 7 7
12.
Southland Center >=EEE ?6 ( - C)-6 " . E 09="1 =9"%> EE8 AAA27$-/7-?<$) + +< 62 -*
<$ 7-) # + 6 ) * + # 6
920,000
#&-+ )
&)) & *7 -?7 6-/ 6<& 7 >.>%:E %!.E
..!
C57 2 2 ++ C + 7< ?C ?/ 67<-6
& $ ) 6& @& /6 7& +< - 77 < * + # * +< &))& * 67$ +7-+ @& /6 7& +< - ) 7&+#
625,209
-A 6
& ( F+<$-+C * -% 67$ +7-+ 6-/ 6<& 7 6?7< 0 EE1 >>!%:9:!
.:
13.
Millennium Park .=..E%.=!EE & ) )< - &@-+& " .!E 0>" 1 =!E%,,EE8 AAA26#/<2 -*;/-6< -)&-; *&)) ++&?*%/ 6(; E
-7< - &' 6 -* /-< 67$ ))7 & $ )7 < * 6<
14.
Auburn Mile .EE% !E 6-A+ - F? ?6+ &))7 " =>: 0>" 1 =!E%,,EE8 AAA26#/<2 -*;/-6< -)&-; ? ?6+%*&) %<$ ;".
6& + )&DD 6 /6-/ 6<C * + # 6
624,212
-A 6
@& 6)&+# * -% 67$ +7-+ 6-/ 6<& 7 6?7< 0 EE1 >>!%:9:!
9
&' 6 6# < 7< ?C -7< - -%F++ <-6 7 < /) 7
15.
The Mall at Partridge Creek .9">E )) - )&+<-+ -A+7$&/ " E= 0! :1 >>:%E==E8 AAA27$-// 6<6& # 6 (2 -*
< @ 6)-A # + 6 ) * + # 6
607,000
& 7<C)
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-6 7<6-* 67-+57 &#&< ) &+ *
16.
Tel-Twelve Mall > :,E ) #6 /$ - -?<$ ) " E=" 0>" 1 =!=%. = 8 AAA26 * -%# 67$ +7-+2 -*;/-6< -)&-; < )%<A )@ ;>=
+ C 6C7(/6-/ 6<C * + # 6
523,411
-A 6
++& 6 C * -% 67$ +7-+ 6-/ 6<& 7 6?7< 0 EE1 >>!%:9:!
>.
&' 6 -A 57 < * 6< & $ )7 7< ?C + ' /-<
17.
Laurel Park Place =99EE &B &) - &@-+& " .!> 09="1 ":>%..EE8 AAA2) ?6 )/ 6(/) 2 -*
- ?$+ # + 6 ) * + # 6
489,865
#&-+ )
F) + - ( F77- & < 7 6-/ 6<& 7 + 2 0!.91 =",%>E=.
:
67-+57 -+ ?6
18.
Shelby Creek >: &) - < + C( F@ 2 $ ) C A/2 " E," 0>" 1 9=9%"E".8 )-6* B7< 6+2 -*;7$ ) C% 6 (
- 6< -A* + &6 <-6 &)&<C * + # * +<
440,000
-A 6
++& 6 2 )< 67 -6* B < 6+ @ )-/* +< -2 0>" 1 9=9%"E".
."
6# < -$)57 -* /-< & $ )57
19.
Winchester Center - $ 7< 6 + F@-+ - 7 - $ 7< 6 &))7 " =E9 0>" 1 =!E%,,EE8 AAA26 * -%# 67$ +7-+2 -*;/-6< -)&-; A&+ $ 7< 6% +< 6;"E
+ C 6C7(/6-/ 6<C * + # 6
429,788
-A 6
++& 6 C * -% 67$ +7-+ 6-/ 6<& 7 6?7< 0 EE1 >>!%:9:!
.:
& (57 /-6<&+# -- 7 67$ ))7 <7* 6< & $ )57 <$ C-+
20.
West Oaks II 7< ' (7 6&@ -@& " =99 0>" 1 =!E%,,EE8 AAA26 * -%# 67$ +7-+2 -*;/-6< -)&-; A 7<%- (7%&&;=,
+ C 6C7(/6-/ 6<C * + # 6
389,094
-A 6
++& 6 C * -% 67$ +7-+ 6-/ 6<& 7 6?7< 0 EE1 >>!%:9:!
>
-C7 5 5 7 -%F++ -$)57 <$ C-+ )? &<C ?6+&<?6 67$ ))7 &# -<7
21.
Utica Corners Shopping Center .==E, )) - <& " E 9 0>" 1 >:>%.EEE8 AAA27 $-7< (2 -*
C+-6 ) 6( /-6< -)&- * + # 6
333,727
-A 6
?7<&+ -77 $-7< ( 6-<$ 67 -2 0>" 1 ="9%:>>E
.,
6# < $6&7<* 7 6 $-/7 ?C ?C C ) + < &<+ 77
22.
Green Oak Village Place Phase I ,:E &)) # ) )@ 2 6&#$<-+ " ..: 0 .E1 >>!%E==98 AAA27$-/7 <#6 +- (2 -*
@& $&* (
-** 6 & ) /6-/ 6<C * + # 6
314,896
& 7<C)
6 C &##&+7 + - 7 + &#- +< 67 F
".
& (57 )< 6+ 7 - ) ') @C +
23.
Lakewood Shopping Center %," A7-+@&)) - )) @&)) " ... 0>" 1 =!9%:>>E8 AAA27 $-7< (2 -*
C+-6 ) 6( /-6< -)&- * + # 6
222,504
&#$ -6$--
?7<&+ -77 $-7< ( 6-<$ 67 -2 0>" 1 =!9%:>>E
.=
* 6<
24.
Northpointe Shopping Center "!= E -6<$/-&+< )@ 2 <& " =.! 0>" 1 =!9%:>>E8 AAA27 $-7< (2 -*
C+-6 ) 6( /-6< -)&- * + # 6
176,918
-**?+&<C
?7<&+ -77 $-7< ( 6-<$ 67 -2 0>" 1 =!9%:>>E
:
& (57 /-6<&+# -- 7 <7* 6<
25.
Windmill Plaza >>== . &) - < 6)&+# &#$<7 " E9 0>" 1 =!9%:>>E8 AAA27 $7-< (2 -*
C+-6 ) 6( /-6< -)&- * + # 6
162,448
-**?+&<C
?7<&+ -77 $-7< ( 6-<$ 67 -2 0>" 1 =!9%:>>E
.>
* 6<
This list of multitenant retail properties is an approximate compilation of the largest such properties in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Unless otherwise noted, information was obtained from the general managers, leasing agents or the retail center's websites. It is not a complete listing but the most comprehensive available. Center types: Super-regional = draws majority of sales from a 5- to 25-mile radius, three or more anchors. Regional = draws majority of sales from a 5- to 15-mile radius, two or more anchors. Power = generally a group of superstores and not enclosed. Lifestyle = outdoor shopping and entertainment venue. LIST RESEARCHED BY SONYA D. HILL
DBpageAD_DBpageAD.qxd 10/14/2014 1:17 PM Page 1
WHAT DID THEY FIND WHEN THEY ARRIVED? Crain’s Detroit Business invited 160 prominent Detroit-area “expats” to reconnect with their hometown, see Àrst-hand the reinvention taking place, and discover opportunities to reinvest in Detroit. Maybe The Detroit Homecoming was historic. But we know it was just a beginning. The “expat” Detroiters are now on a mission to make a difference in their hometown. You can read about it — and see the video — at detroithomecoming.com.
“We’re ready to buy a business here tomorrow,” Warren Buffett, chairman and CEO, Berkshire Hathaway “If Detroit was a stock, I’d be a buyer,” Dan Doctoroff, president and CEO, Bloomberg LLP
“Detroit is big enough to matter in the world, but small enough that you can matter in it,” Sara Sefcovic, vice president, Sloane & Co.
“I hang around a lot of cool crowds and this was the coolest ever. The genuine connection of Detroiters and the careful selection and recruiting you did created a magical grouping,” Jules Pieri, co-founder and CEO, The Grommet
“Detroit needs to be about continuous improvement, multi-tasking the challenges of today while continuing to build a culture of success and optimism,” Mike Jbara, president, Alternative Distribution Alliance
ATTENDEES INCLUDED
Eric Lefkofsky, CEO, Groupon | Don Green & Michael Budman, co-founders, Roots | Eric Ryan, co-founder, method | Bob Shaye, founder, New Line Cinema | Nicole Curtis, host, Rehab Addict | George “Iceman” Gervin, NBA Hall of Famer | Mike Posner, multi-platinum recording artist | Eli Broad, founder, KB Home & Sun America | Dan Doctoroff, CEO, Bloomberg | Jalen Rose, NBA star | Rebecca Blumenstein, deputy editor in chief, The Wall Street Journal | Quintin Primo III, founder, Capri Capital Partners | Braylon Edwards, NFL star | Mike Jbara, president, ADA Worldwide, Warner Music Group | Daniel Levin, chairman & founder, The Habitat Company | Ilan Zechory, co-founder, RapGenius.com
Find out what happened and keep up with future plans as they unfold at detroithomecoming.com
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People
Schlichting
Gilfillan
䡲 Nancy Schlichting, CEO of Henry Ford Health System, and Richard Gilfillan, M.D., president and CEO of CHE Trinity Health, were selected as two of the 100 Most Influential People in Healthcare as compiled by Modern Healthcare magazine. 䡲 Robert Chapman, M.D., director of the Josephine Ford Cancer Institute at Henry Ford Health System, was appointed to the Michigan Cancer Consortium board of directors. His Chapman term will last three years beginning in 2015. 䡲 Bruno DiGiovine, M.D., division head of pulmonary, critical care medicine and sleep medicine at Henry Ford Hospital, was named the Michigan Health & Hospital Association Keystone Center’s first senior fellow. DiGiovine will work on the development of interventions to improve patient safety and the quality of care. 䡲 Carl Karoub, M.D., an internal medicine physician at Beaumont Hospital in Royal Oak, established a $100,000 endowment in the name of the volunteers who serve the hospital system. The Carl M. Karoub Endowment for Volunteer Services also will benefit education and wellness activities.
Massey
Lamm
䡲 Kenneth Massey, senior director
of venture development at Wayne State University, was named chairman of the Botsford Hospital board of directors. Deborah Lamm, former program director for the Robert Wood Johnson Foundation, was named vice chair. 䡲 Kathleen Yaremchuk, M.D., chair of the department of otolaryngologyhead and neck surgery at Henry Ford Hospital, was elected to the Women in Otolaryngology section of the Yaremchuk American Academy of Otolaryngology-Head and Neck Surgery. She will be chairelect of the WIO section.
JOHN SOBCZAK
Steve Shaya, M.D., medical director for Health Net Connect, said the company has sold or leased several hundred of its telehealth units and expects more than 2,700 users by the end of next year. The 10- and 17-inch units are priced at $2,500 to $5,000 per kit and can be leased for $150 to $200 a month.
Growing remotely Local companies tap into telehealth market’s demand BY JAY GREENE CRAIN’S DETROIT BUSINESS
A
s telehealth expands under the demands of Obamacare, a number of local companies in Southeast Michigan are projecting big growth in 2015 and beyond. Executives of Wixom-based Health Care Net Inc., Orion Township-based Jems Technology LLC, Plymouth-based Interactive Frontiers Inc. and St. Clair-based Max Life LLC say sales opportunities have picked up dramatically the past two years. “There are lot of telemedicine companies out there, focused on devices and
TELEHEALTH DEFINED Telehealth, a term that is replacing telemedicine, is the provision of medical preventive and treatment services remotely through telecommunications devices and other technology. Services that fall under its umbrella can be as simple as the use of email for communication or videoconferencing to complex treatment such as monitoring the recuperation and compliance with postoperative instructions of recuperating patients at home.
TELEHEALTH IN ACTION Three examples of telehealth at work in hospitals, Page 21 Bill promotes more telehealth talk between insurers, providers, Page 22
technology, but we are a solutions provider and are there to help hospitals and other providers reduce readmissions and reach their patients,” said Steve Shaya, M.D., medical director with Health Net Connect, the telehealth subsidiary of Wixom-based J&B Medical
Supply Co. Inc.
Besides hospitals and specialty group practices, telehealth devices are increasingly being used by home health agencies, health insurers, nursing homes, community mental health agencies and medical device makers, with the goal of improving care and reducing costs. Health Net has sold or leased several hundred of its VideoDoc telehealth units, with more than 2,700 users projected by the end of next year, Shaya said. VideoDoc allows physicians to remotely examine patients and monitor vital signs in homes and from hospitals. The units, which come in 10-inch and 17inch models, are priced at $2,500 to $5,000 per kit, but can be leased for $150 to $200 a month in a three-year contract, depending on the chronic diseases. This past summer, Health Net signed a preferred vendor contract with Dell Inc. to help market and develop software interfaces with its VideoDoc system, Shaya said. See Telehealth, Page 20
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Telehealth: Picture this: Managing patient care remotely ■ From Page 19
Health Net also has worked with clients that include St. John Providence Health System, Molina Healthcare of Michigan, United Auto Workers, Hurley Medical Center, Detroit Medical Center, Blue Care Network and the University of Michigan, Shaya said. Shaya said Health Net also is developing a preferred vendor relationship with the United Nations to deliver telehealth units to rural areas in remote parts of the world to connect providers there with urban medical centers. During the next two years, Shaya said, Health Net plans to issue an initial public offering to finance expansion nationwide. In 2013, Health Net generated more than $1 million in revenue, with projections this year to exceed $18 million, he said. Like Health Connect’s VideoDoc, Max Life Inc. offers its Advanced Telemedicine for Pre-Hospital Diagnosis and Care unit that can be
We tell “ retirement homes that if you have this you can offer this as a service to your residents where they can stay at home and have medical visits with their doctors.
”
Frank Ferlito, Max Life Inc.
linked to wireless devices such as stethoscopes and EKG machines to transmit data to hospitals or physician offices, said Frank Ferlito, co-
owner and director of product development. Max Life started off selling security video cameras to businesses, but five years ago the nine-employee company began developing a device for the medical field, Ferlito said. “We thought physicians could assess patients early on in ambulances and that might save lives and reduce costs,” he said. Launched in June, Max Life’s device is priced at $20,000, depending on the peripheral devices, and includes a two-year wireless connection with Verizon Wireless and software updates, Ferlito said. It can be used by hospitals, ambulance companies, nursing homes and retirement centers, he said. “We tell retirement homes that if you have this you can offer this as a service to your residents where they can stay at home and have medical visits with their doctors,” Ferlito said. “It’s a convenience for patients and a way they can stay at home and get in front of their doctors.” The Max Life device features
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three cameras in each ambulance that can transmit clear video back to hospital emergency departments. The first camera shows the ambulance interior, the second shows the paramedic and the patient, and the third is handheld and allows the paramedic to closely display Lasser the patient’s injury, Ferlito said. “It allows ambulances to livestream to doctors in the hospital and more quickly diagnose the problem and prepare the emergency room,” Ferlito said. At Jems Technology, CEO Kevin Lasser said the company has developed proprietary software that allows telehealth devices on iPads, smartphones or other devices to securely transmit video images or data on patients to protect medical privacy. Lasser said Jems primarily sells to technology companies that manufacture a variety of devices. Over the past several years, Jems has sold its software and telehealth devices in Michigan to Sparrow Hospital in Lansing and War Memorial Hospital in Sault Ste. Marie in the Upper Peninsula, and is negotiating with other hospital systems, Lasser said. The company also contracts with the Veterans Administration, Department of Homeland Security and Department of Justice for its secure health care systems, he said. Jems, which recently signed a contract with Amerinet, a St. Louisbased group purchasing organization, has been growing recently and now has 10 employees. “The future is to provide health care outside of hospitals, where the costs are lower,” Lasser said. Lasser said Jems’ Rugged Solution portable laptop system works in rural areas. “Paramedics in an ambulance can go out in remote areas in the Upper Peninsula and use our technology to call neurologists in Ann Arbor for an examination,” Lasser said. “The patient may be having a stroke. The neurologist can pull his smartphone out and do a visual exam.” The system also connects to a variety of other devices to measure blood pressure, pulse and heart conditions. Since 2012, Lasser said, the company has doubled sales each year and projects continued growth the next several years. He declined to provide revenue. Christopher Hart, president of Interactive Frontiers, said his 15year-old company is expanding from its primary sports analysis software program into physical rehabilitation. In Southeast Michigan, Hart said, Interactive sells its V1 sports analysis software locally to Detroit Medical Center for its sports medicine program to record training programs. The software helps golfers, tennis players and other athletes improve their performance. But Interactive also is working
on an application that will enable sensors developed by Texas Instruments and other companies to relay data back to hospitals to monitor discharged patients undergoing home treatment. “A physical therapist might want to document the activity of a patient who goes home and needs continuing rehabilitation for an inHart jury,” Hart said. “A Bluetooth sensor would track their activity while they are doing it, send it back online and the physical therapist would monitor it.” Hart said the device would cost $50 to $100. “We are working on a lot of technology that will represent a big savings for patients,” he said. “They can connect remotely, and the costs will be very low.” Ortele LLC, a remote-based telehealth service based in Bloomfield Hills, is a startup company that began this year and is offering remote medical consulting, said COO Melissa Merideth-Phelan. Ortele currently works with correctional facilities and mental health providers to provide online and cloud-based physician and advanced practice nurse consultations, Merideth-Phelan said. With some 19 providers, including nine physicians and nine physician assistants or nurse practitioners, Ortele is looking to expand in obstetrics, eldercare, rehabilitation and substance abuse services, Merideth-Phelan said. The company employs five fulltime and five part-time workers, she said. Merideth-Phelan said Ortele works with facilities and clients that are able to bill insurance claims for services. Payers include Medicare, Medicaid and private insurers like Blue Cross Blue Shield of Michigan. “We are looking to expand into assisted-living facilities and nursing homes,” Merideth-Phelan said. “Our expansion is determined by the marketplace and what insurers pay for. Home health is not reimbursable now. We hope that changes because there is a need.” Other telehealth companies in Southeast Michigan include Farmington Hills-based Critical Signal Technologies and Ann Arbor-based Biotronics. The Biotronic NeuroNetwork was the first system to develop real-time remote neural monitoring of patients in hospital operating rooms through a secure internet connection. Critical Signal manufactures a number of in-home health monitoring products, including a wireless personal emergency response system and a medication management system that sends out an alert and automatically distributes pills from a locked container. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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Hospitals among health providers using or testing telehealth BY JAY GREENE CRAIN’S DETROIT BUSINESS
At least 12 telehealth networks in Michigan are using online technology to connect providers with patients and consulting physicians across vast distances — from hundreds of miles away in the Upper Peninsula down to Southeast Michigan’s many teaching hospitals. Patients with strokes, heart problems, cancer, mental health issues, diabetes, skin problems or emergency trauma are linked through fast and secure Internet connections and video conferencing. “The whole field of telehealth medicine is just in its infancy, but there is a large market for the management of patients with chronic illness,” said Shukri David, M.D., medical director of heart and vascular services with St. John Providence Health System. “The No. 1 reason why patients are admitted to hospitals is for chronic heart failure,” David said. “They have multiple illnesses and are quite sick and need constant care. Telehealth is one way to monitor the care they receive after they leave the hospital.” Nationally, there are more than 200 telehealth networks and more than 3,500 service sites in which hospitals and other providers use telehealth services, according to the American Telemedicine Association. For example, the Michigan Stroke Network, founded by Livonia-based CHE Trinity Health, is one such collaborative network of hospitals that uses telehealth technology to allow stroke patients 24-hour access for consultations from neuroendovascular specialists. Using bedside videoconferencing, telemedicine medical teams in hospital emergency centers can consult with neurospecialists who live in faraway cities. Dozens of pilot and demonstration projects are also underway by Michigan hospitals, nursing homes, physician organizations, home health agencies and telehealth companies. Here are three hospitalbased examples: 䡲 Dermatology: Melody Eide, M.D., a dermatologist based in Troy, is spearheading a new telehealth pilot project at Henry Ford West Bloomfield Hospital. In a grant from the American Academy of Dermatology, emergency physicians are taking iPhone pictures of ER patients with skin problems and sending them to consulting dermatology specialists, Eide said. “A patient comes into the ER with blisters or ulcers, a severe skin condition,” Eide said. “Using an iPhone application to upload a photo of the lesion and other pertinent history, (the image and data) is sent either to an iPhone or (Web-based computer) of a dermatologist on call.” The goal is for the consulting dermatologist to issue a treatment recommendation or diagnosis in an hour, Eide said. Some 25 physicians in the department of dermatology at Henry Ford Medical Group, 18 residents and more than 10 emergency medicine physicians are testing the program, which began July 1 and will
are “ Hospitals looking at different solutions, and telemedicine has a huge role to play.
”
Shukri David, M.D., St. John Providence Health System
be completed later this year. “We will take lessons learned and hope to do this at all Henry Ford hospitals,” Eide said. Over the past 18 months, Henry Ford also has been piloting a similar project at a clinic operated by Community Health and Social Services Center Inc. in Detroit, demonstrating reduced costs and improved quality, Eide said. 䡲 Cardiology: At St. John over the past year, David has been piloting a telehealth project with Wixom-based Health Net Connect and its VideoDoc system. “We looked at a small number of patients — 14 with standard dis-
charge for congestive heart failure and 14 discharged with VideoDoc,” he said. “Only one patient was readmitted who used telemedicine. It was a very successful trial.” David said he is looking for funding to do a much larger trial with VideoDoc at all St. John hospitals and possibly other competing hospitals in Southeast Michigan. “These Medicare patients with heart failure are very sick with multiple chronic conditions, and many are not compliant with all the pills they have to take,” David said. Despite efforts to reduce readmission rates, hospitals still readmit 20 percent of their Medicare patients, on average, depending on the condition, David said. “With the penalties (from the Centers for Medicare and Medicaid Services), all hospitals are in the same boat,” he said. “Hospitals are looking at different solutions, and telemedicine has a huge role to play.” 䡲 Oncology: The University of Michigan Comprehensive Cancer Center uses telehealth by bringing together cancer specialists and other staff to discuss diagnoses and treatment plans. The group consultations, which include radiology images, tests and lab results, allow care teams to present and discuss numerous difficult cases in a single session. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
COURTESY OF HENRY FORD HEALTH SYSTEM
Dermatologist Melody Eide, M.D., is leading a telehealth pilot project at Henry Ford West Bloomfield Hospital in which emergency physicians take iPhone pictures of ER patients with skin problems and send them to consulting specialists.
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Telehealth bill promotes more talk with providers about what’s covered BY JAY GREENE CRAIN’S DETROIT BUSINESS
Michigan has been in the forefront nationally in paying for telehealth services under its Medicaid program since 2006. But telehealth legislation approved in 2012 — and promoted by its supporters as expanding commercial insurance coverage of telehealth — has stimulated more of a discussion between private health insurers and providers about what telehealth services should be covered rather than an explosion of covered services, several insurance experts told Crain’s. Bills approved in 2012, House Bills 5408 and 5421, and signed into law by Gov. Rick Snyder require health insurers to pay for health services claims delivered by telehealth by banning insurers from requiring face-to-face contact between providers and patients for treatment coverage. The language of the legislation, however, had one loophole. It allowed insurers to continue to decide if they wanted to cover the service. George Kipa, M.D., deputy chief medical officer for technology with Blue Cross Blue Shield of Michigan, said the number of telehealth claims paid by Blue Cross hasn’t changed much over the past several years. “We pay about 500 claims a year,” said Kipa, noting that most of the claims come from rural areas of the state where there is a lack of availability of specialists. In 2000, Blue Cross began covering telehealth services and now mirrors Medicare, Kipa said. Medicare has expanded the types of services covered, but limits coverage to only when a patient is located at a medical facility — not at home — that is located in a health professional shortage area or in a rural county. While the Michigan Medicaid program has expanded the number of telehealth services it covers, Blue Cross hasn’t adopted Medicaid reimbursement codes because physicians on its provider panel haven’t asked for additional coverage, Kipa said. “The (2012 telehealth legislation) catalyzed conversations with providers” about telehealth services, Kipa said. “The vast majority of primary care doctors are not quite there yet” in needing to bill for telehealth services. Ron Williamson, M.D., a solo family medicine provider in Detroit, said he doesn’t see a need yet to offer telehealth services to his patients. His office is a Blue Cross-certified patient-centered medical home that has installed a disease regWilliamson istry and an electronic health record. “I have not used a telemedicine device or equipment,” Williamson said. “I think it would be cost pro-
hibitive to me as a primary care physician.” Kipa said Blue Cross has responded to physician interest for some telehealth services. For example, Kipa said specialists asked Blue Cross to cover telehealth sleep disorder studies. “We used to require patients go to sleep labs” for treatment evaluation, Kipa said. “We realized it is easier done at home with a sleep monitor in their own bed. It made sense. We cover that now.” Snyder also expanded Medicaid coverage for telehealth when he signed House Bill 4714, the Healthy Michigan program. Some 400,000 additional Medicaid recipients now have access to telehealth services under Obamacare. Michigan now covers 2.5 million people under Medicaid, or 25 percent of its population. In 2013, Michigan Medicaid eliminated any distance require-
ments for fee-for-service beneficiaries. Medicaid covers services that include consultation, office visits, psychotherapy, pharmacologic management and end stage renal (kidney) disease related services. “Telemedicine is just becoming viewed as a potential tool to improve access in many different ways,” said Rick Murdock, executive director of the Michigan Association of Health Plans. “It can be a tool to link primary care with specialty services and a tool that can be used to help drive inappropriate utilization in an emergency room and link to more community services,” Murdock said. Over the next several years, Murdock predicted an explosion in telehealth services by primary care physicians in rural and urban areas. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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Epidemiologist talks about hospital preparedness for Ebola BY JAY GREENE CRAIN’S DETROIT BUSINESS
Ebola is only one of several diseases that are on the mind of Jeffrey Band, M.D., chairman of epidemiology at Beaumont Health System in Royal Oak. “It is one of many things keeping every hospital busy,” said Band, a nationally known infectious disease expert and head of the special pathogens branch with the Centers for Disease Control and Prevention. But, with a death rate of more than 70 percent, Ebola strikes more fear into many people despite its low incidence. “It is new and very contagious Band when a patient has symptoms,” he said. Meetings are planned soon with the Oakland County Health Department and the Michigan Department of Community Health to discuss Ebola with local hospitals and physicians, Band said. Since last week, Beaumont has been training its emergency staff to screen patients before they enter the emergency room.
Band talked with Senior Reporter Jay Greene about how the health care community is preparing. Answers are edited for length and clarity. Are hospitals ready to identify and treat Ebola patients? In general, the level of preparedness overall is not great at the majority of hospitals. Hospitals have not dealt with this entity other than the four or five specialized hospitals across the U.S. with biocontainment units. What do hospitals need to do to prepare? The key is effective triage and prompt identification. The moment that somebody appears with a significant travel history and or exposure within a 21-day window, that patient needs to be masked and placed into an isolation unit. If they have a positive travel history (West Africa connections), they do not go into the ER. They go into an adjacent decontamination, negative pressure, isolation room. Many hospitals have these for chemical emergencies. As of right now, individuals would be cared for, stabilized and diagnostic testing performed. We have the same tests in Michigan the CDC has. We can get the an-
swer back in 24-36 hours. Patients rapidly deteriorate and would need ICU management with a dedicated team.
DISEASE ROSTER Here are some other infectious diseases health care providers need to be aware of, according to Dr. Jeffrey Band. MERS (Middle Eastern Respiratory Syndrome) is a problem in Saudi Arabia and other Arabian Peninsula countries, where it is more readily spread than Ebola. MERS kills about 41 percent of its victims. Enterovirus, a serious neurological disease. “Fortunately, we know how to protect health care workers to limit the spread.” Chikungunya virus, a noncontagious disease spread by mosquito bites, has infected millions of people in the Caribbean and 750,000 people in the Dominican Republic, with about a 10 percent death rate. “Up until this year, Chikungunya never has been in the Western Hemisphere. Now it is in every Caribbean island, Puerto Rico and Florida, with scattered cases on the East Coast,” Band said.
Do hospitals need to purchase more or new supplies and equipment to prepare? I believe so. Even though the original CDC guidelines make recommendations on the types of supplies, there are full-body impervious gowns that I prefer because that represents a higher level of protection than (basic gown, mask, booties, gloves and goggles). What did Texas Health Presbyterian Dallas Hospital do wrong? We do not know exactly yet. The CDC and the Texas Health Department will issue a report. From what I know, they made a number of mistakes that would not have been made at Beaumont. What else is Beaumont doing to prepare? No. 1, you absolutely at all times need to have a buddy system. The Texas hospital did not do this. The Texas hospital also did not log each person in and out of the patient room. There needs to be a second person helping an individual put on and take off the gowns. At all times there should be a mini-
mum of two people caring for the patient so if there is a break in technique, that other person says stop. There also needs to be a third person watching with audio and video set up in the negative pressure isolation room to make sure breaks in protocol don’t occur.
We hope to identify a dedicated volunteer team, starting with first responders and emergency staff, who will train to take care of potential Ebola patients. The CDC is studying whether to designate one Ebola-certified hospital in each state. Is that a good idea? We already have several hospitals in the country with dedicated biocontainment units with personnel who have training. Those beds are not filled. The second nurse in Texas was transported to Emory University Hospital in Atlanta. Shouldn’t patients be cared for in those facilities? It makes sense because the intensive care required will take a tremendous amount of resources — builtin lab, X-ray, ICU — but every hospital has to take added steps to make sure no spread occurs. It takes more than just having a policy and a team. You need to practice, drill, then practice and drill some more. What is the chance that Detroit will see an Ebola patient? The chances are very low. There is a very small Liberian community in Michigan. New York has yet to see an Ebola patient. They have suspected some cases, but they all turned out to have malaria.
Inpatient Days ER Visits Community Health Encounters Associates Philanthropic Donors Physicians Volunteers Outpatient Centers
15 Although St. John n Providence Health System ha has accrued some impressive numbers over the past year, that’s the last thing we make our patients feel like. As we celebrate 15 years together, we look forward to the continued years ahead of treating each patient—body, mind and spirit.
YEARS Hospitals
Believe in better
St. John Hospital & Medical Center | Providence Hospital | Providence Park Hospital | St. John Macomb-Oakland Hospital | St. John River District Hospital
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New Pure Michigan chief: Expand regional, global tourism efforts The state’s heralded It’s a combination of you’ve convinced them they Pure Michigan campaign both national ad buys and should spend their precious dolwill soon have a new regional targeted ad lars and time to come to Michigan. leader — one who plans to buys. We’re going to look expand the outreach to at our partners to leverHow do you envision bringing more potential tourists to a age our brand. We want international visitors to the state? broader geographic base. to make sure people know You have a fantastic asset in DeDavid West, vice presithis is a great place to go troit Metropolitan Airport. We have dent of the Pennsylvaniaand get out of the city and world-class universities that bring based Pocono Mountains have a great experience. in thousands of international stuVisitor Bureau, will take dents. And there are corporations over Dec. 1 as vice presiWhat are your plans to that have international customers. dent of Travel Michigan, grow the brand and bring You have a wonderful opportunity where he will oversee more tourists to the state? to bring these entities together and David West, tourism branding, adverThere are four areas: brand this message to these countising and public rela- Travel Michigan Advertising, social me- tries. In tourism, it’s a snowball eftions. dia, public relations and fect. You bring in a few people, The Pure Michigan campaign content for people to research on they have a great experience, and has a $29 million budget this year, the website. That combination is they go home and talk about it. compared with the less than something we can put together in a They are going to convince people $3 million the state of Pennsylva- harmonious way. People are going to go themselves and check it out. I nia puts toward tourism efforts, to see a message, they may read an am very excited to get started. West said. article, they are going to go on the Chris Gautz: (517) 403-4403, Twitter: West also has worked for the website, and they are going to fall cgautz@crain.com. Bucks County Conference and Visi- in love. When it works all together, @chrisgautz tors Bureau, northeast of Philadelphia. Before that, he taught at Drexel University and Temple University. West, 43, grew up in East Lansing and earned a bachelor’s from the University of Michigan in natural resources and a master’s degree from Michigan State University in parks, recreation and tourism resources. West, who replaces George ZimDVISOR POTLIGHT mermann, who retired in April, spoke to Capitol Correspondent Chris Gautz about his new job. AnLAURA EAMES swers have been edited for length and clarity. Vice President of Employee Benefits
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What interested you about the job? As a Michigander, I am very proud of what’s been happening for tourism. I’ve had the pleasure of following the campaign from an industry perspective. It’s won a lot of awards. From a marketing perspective, I did happen to see a lot of the commercials. There is a high regard for the branding campaign that Michigan has run. It’s still referenced as one of the all-time best campaigns. This is a way to really bring attention to your state. Is there anything you want to change about the Pure Michigan campaign? I want to wait before I make any decisions. But I am very excited about the initiatives for international tourism. It will be a stronger priority moving forward. I look forward to visiting with all the stakeholders and getting a sense for what’s working and what’s not. Are there specific markets you want to reach? I think Chicago and the surrounding states and major metropolitan areas are prime targets. They are a drive market, such as Columbus, Indianapolis, Cleveland, Pittsburgh, Minneapolis and Green Bay. I still believe in a strong Midwest, regional and East Coast campaign, but we have the resources to bring in people from across the nation. Would you do that through targeted ad buys to specific regions?
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BY ART AISNER SPECIAL TO CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS
Sylvia Jackson has more than four decades of experience as a seamstress, but she isnâ&#x20AC;&#x2122;t ashamed to admit thereâ&#x20AC;&#x2122;s more to learn to realize her longtime dream of starting a business with her daughter. She took a big step toward her goal last week as part of the inaugural class of the Industrial Sewing Certificate Program, Michiganâ&#x20AC;&#x2122;s first such training course, which kicked off at Henry Ford College in Dearborn. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m self-taught and have been doing this since the seventh grade, but I want to learn and enhance my skills,â&#x20AC;? the Ecorse native said during a launch ceremony at the collegeâ&#x20AC;&#x2122;s Michigan Technical Education Center. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m excited about this because itâ&#x20AC;&#x2122;s really about fine-tuning my technique and perfecting what I can already do.â&#x20AC;? Jackson, who calls herself â&#x20AC;&#x153;of retirement age,â&#x20AC;? is one of four students in a pilot program designed to return to Michigan the lost art of industrial sewing and meet employer demand in the apparel, furniture and automotive supply sectors. For the next six weeks, participants will spend 180 hours working with industry experts to hone the skills needed for jobs once thought lost overseas but are returning as companies push for reshoring, said Karen Buscemi, president of the Detroit Garment Group Guild. The local nonprofit drove the collaboration among Henry Ford College, the Southeast Michigan Community Alliance, Michigan Works, local employers and the Minnesota-based Makers Coalition â&#x20AC;&#x201D; including businesses, academic institutions and nonprofits committed to restoring and rebuilding Americaâ&#x20AC;&#x2122;s industrial sewing heritage through training and workforce development. The demand for industrial sewing workers may be surprising to most people, but not in Mark Dâ&#x20AC;&#x2122;Andretaâ&#x20AC;&#x2122;s business circles. The CEO of Sterling Heights-based TDI Corp. â&#x20AC;&#x201D; which designs and manufactures protective covers for robotics and other industrial applications â&#x20AC;&#x201D; said he has about a dozen industrial sewing positions that he canâ&#x20AC;&#x2122;t fill. The majority of his employees on the manufacturing floor are immigrants with sewing skills that are not being passed on to their children like in previous generations. As a result, he said heâ&#x20AC;&#x2122;s had to invest significantly in technical training and language courses to maintain a viable workforce, and retention has been a challenge. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not what we do and not what weâ&#x20AC;&#x2122;re good at, but we train them to get them up to speed,â&#x20AC;? said Dâ&#x20AC;&#x2122;Andreta, a DG3 board member. â&#x20AC;&#x153;We thought the benefit of having a program like this is getting prospective employees there already. To train them so that an employer can expect a certain level of proficiency and bring them into the production process right away.â&#x20AC;? Dâ&#x20AC;&#x2122;Andreta said his company
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ART AISNER
Students Sylvia Jackson (striped shirt) and Tracey Agnew (red) watch instructor Rachna Chandra use an industrial sewing machine during a kickoff event for Michigan's first Industrial Sewing Certificate Program at Henry Ford College in Dearborn last week.
The heart of our â&#x20AC;&#x153;program is the unemployed and underemployed, and weâ&#x20AC;&#x2122;re offering an opportunity to learn a true trade and earn a living wage.
â&#x20AC;?
Karen Buscemi, Detroit Garment Group Guild
pays based on skill level. He canâ&#x20AC;&#x2122;t speak for the entire industry, but estimated that entry-level certificate holders could earn $9-$10 per hour and highly-skilled employees could earn $18-$20. In addition to meeting current demand, Dâ&#x20AC;&#x2122;Andreta said he believes the certificate program and other incentives could attract his competitors, largely based in other states, to see the benefits of doing business in Michigan. â&#x20AC;&#x153;We know there are a lot of reasons to work in Michigan, but until employers see some of the skilled labor force that will be here to support them, they wonâ&#x20AC;&#x2122;t come,â&#x20AC;? he said. â&#x20AC;&#x153;We need to provide an infrastructure for skilled workers to develop.â&#x20AC;? Chief among the other Detroitarea companies participating in the Henry Ford endeavor is Southfield-based Lear Corp., which donated nearly a dozen industrial sewing machine stations. Other companies donated materials such as the nylon and polyester fabrics, provided expertise to help shape the curriculum, and even offered their facilities for field trips and hands-on training. Michigan Works recruited and screened potential certificate candidates and will also assist with job placement and funding opportunities for eligible students. â&#x20AC;&#x153;The heart of our program is the unemployed and underemployed, and weâ&#x20AC;&#x2122;re offering an opportunity
to learn a true trade and earn a living wage,â&#x20AC;? Buscemi said. â&#x20AC;&#x153;Our industry surveys show there are roughly 300 advanced industrial sewing positions open right now that companies canâ&#x20AC;&#x2122;t fill because they donâ&#x20AC;&#x2122;t have the workforce.â&#x20AC;? Those same surveys show the bulk of the current industrial sewing workforce is nearing retirement age and will need to be replaced over the next decade. Thatâ&#x20AC;&#x2122;s what attracted Jacklyn Hatch, 25, to apply for the program after seeing a Facebook post about it. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve been jumping from job to job, and I want to absorb some technical skills and take what I learn here and springboard it into a career or my own business,â&#x20AC;? said Hatch, of Hazel Park. The program is currently noncredit and costs $2,000, but funding options are available for eligible students that apply through the network of Michigan Works centers. Buscemi and school officials said it was important to keep the inaugural class small to tweak the curriculum, but with continued interest there are plans to expand to a credited course and an associateâ&#x20AC;&#x2122;s degree. Officials with Henry Ford Collegeâ&#x20AC;&#x2122;s Workforce and Professional Development Department said they tried to recreate industrial working conditions in the M-TEC classroom, and that the goal is for students to attain the skills and knowledge to work in a variety of sewing production industries ranging from silk and leather goods to canvas. Certificate holders can also broaden their career paths into pattern making, quality control, machine repairs and more. Students will be graded on efficiency and the overall quality of the work they produce, instructors said. â&#x20AC;&#x153;Most of our students are selftaught and are used to working at home, but this is a lot different,â&#x20AC;? said instructor Rachna Chandra, clothes designer and owner of Taj Cottage in Novi. â&#x20AC;&#x153;The biggest challenge for them will be the speed and scale of how these machines work, but at the same time itâ&#x20AC;&#x2122;s exciting because no one else is teaching this employable skill on this level.â&#x20AC;?
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CRAIN’S DETROIT BUSINESS
October 20, 2014
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CALENDAR TUESDAY OCT. 21 The Price Is Right: Are You Offering a Competitive Wage? 11:30 a.m.-1 p.m. Automation Alley. A “lunch ’n’ team” with Colby Spencer-Cesaro, research director, Workforce Intelligence Network for Southeast Michigan, as she discusses how small- to medium-sized companies can attract and retain a skilled workforce. Automation Alley Resource Center, Troy. $30 at door for members, $50 for nonmembers. Contact: (800) 437-5100; email: info@automationalley.com; website: automationalley.com.
Inno-vention 2014: A Medical Main Street Conference. 6:30-8:30 p.m. (also 7:30 a.m.-4:30 p.m. Oct. 22). Medical Main Street, Oakland County Advantage. Showcasing the life science and health care industries in Southeast Michigan and beyond. With keynote speaker Krischa Winright, CIO, Priority Health, and vice president of information technology, Spectrum Health, plus matchmaking sessions and startup pitches. Suburban Collection Showplace. Novi. $149, includes networking reception, conference and luncheon; register at medicalmainstreet.com. Website: advantageoakland.com.
WEDNESDAY OCT. 22 Minority Capital Access Forum, 8:30 a.m.-3 p.m. Michigan Majority Coalition, Asian Pacific American Chamber of Commerce. Bankers, community development finance practitioners and business owners highlight strategies that help funders connect with minority business owners. Federal Reserve Bank of Chicago — Detroit. Free; registration required. Contact: Sarah Lalone, (248) 430-5855; email: sarah@apacc.net; website: apacc.net.
CRAIN’S TO HONOR HEALTH CARE HEROES AT SUMMIT Discover ways to provide health care in an age of reform at the Crain’s Detroit Business Health Care Leadership Summit and Health Care Heroes Awards, 7:30 a.m.-1 p.m. Nov. 6 at the Shriners Silver Garden Events Center, Southfield. Keynote speaker is Joe Flower, an author and health care futurist. A panel discussion on health care consolidation will feature Rob Casalou, president and CEO, St. Joseph Mercy Ann Arbor and Livingston hospitals; Gene Michalski, president and CEO, Beaumont Health; Joe Mullany, CEO, Detroit Medical Center; and Nancy Schlichting, president and CEO, Henry Ford Health System. Tickets are $110 for individuals, $100 for guests in groups of at least 10. Preregistration deadline is Oct. 31. If available, walk-in registration will be $130 per person. For more information, call Kacey Anderson, (313) 446-0300, or visit crainsdetroit.com/events. Join the conversation on Twitter with #crainshealthcare. Michigan; Helen Stojic, director of corporate affairs, Blue Cross Blue Shield of Michigan; and Patricia Anstett, health and medical journalist formerly of the Detroit Free Press. University of Michigan Health System, Fairlane Center — South Building, Dearborn. $25 AWC members, $35 nonmembers, $15 full-time students; add $5 on day of event. Contact: (866) 385-1784; email: info@womcomdetroit.org; website: womcomdetroit.org.
UPCOMING EVENTS
trepreneurs and Angel and Venture Capital Professionals. 7:30-9 a.m. Nov. 6. In-
CAPA Leadership Summit, 9 a.m.-2 p.m. Oct. 25. Asian Pacific American Chamber of Commerce. With keynote speaker Joe Grimm, visiting editor in residence, School of Journalism, Michigan State University. GM Vehicle Engineering Center, Warren. $5$10; registration required. Contact: Sarah Lalone, (248) 430-5855; email: sarah@apacc.net; website: apacc.net.
forum Michigan. Meet women who have started companies and learn about investment opportunities, with moderator Paula Sorrell, vice president of entrepreneurial services, innovation and capital, Michigan Economic Development Corp., leading a conversation with Christie Coplen, president, Versicor; Andrea Roumell Dickson, president and CEO, ENT Biotech Solutions LLC; and M. Christine Gibbons, president and
Inforum BoardAccess Workshop: Kickstart Your Board Experience . 15:30 p.m. Oct. 27. Inforum Michigan. With Jennifer Dudley, partner, Warner Norcross & Judd; Blaire Miller, entrepreneur and partner, The Hunter Group ; Nancy Phillippart , general partner and co-founder, The Belle Michigan Fund ; and Mary Brevard , executive director, Inforum BoardAccess , in a conversation on board
CEO, HistoSonics Inc. Westin Book Cadillac Detroit. Free; registration required. Contact: (877) 633-3500; website: inforummichigan.org. Special Veterans Day Dinner, 6-8 p.m. Nov. 11. Leadership Oakland. Keynote speaker John Barfield, veteran and founder of Bartech Group. Iroquois Club, Bloomfield Hills. $47 general registration, $25 LOAA veterans. Contact: info@leadershipoak land.com; website: leadershipoak land.com.
service opportunities with privately funded companies. Skyline Club, Southfield. $125 Inforum members, $175 nonmembers. Contact: (877) 6333500; website: inforummichigan.org.
Detroit Economic Club Presents: Mary Barra. 11:30 a.m.-1:30 p.m. Oct. 28. Detroit Economic Club. With the 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.
A Reporter’s Perspective: How to Get Your Company on Their Radar Screen. 6-9 p.m. Oct. 30. North of 41. Attendees will learn how to nurture a relationship with the media. Lowe Campbell Ewald, Detroit. $15 regular tickets, $20-$25 night of event. Register at n41detroitreporters.eventbrite.com; website: northof41.org.
inGage Role Model and Investor Series: Introducing Women to Successful En-
THURSDAY OCT. 23
M&A Experience
In the Public Eye, 8:30 a.m.-noon. Troy Chamber, Delphi Foundation, Oakland University. How public relations can expand your business, with workshops and panel discussions on effective media strategies. With Michael Niederquell, CEO, The Quell Group; Jessica Muzik, vice president, Bianchi Public Relations; Terry Beam, chief networking officer and founder, MotorCityConnect; others. Altair, Troy. $45 chamber members, $75 nonmembers; includes continental breakfast. Contact: (248) 641-8151; website: troychamber.com.
In Your Corner.
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■ Mergers and acquisitions, private equity, angel and venture capital, finance, and joint venture transactions ■ Commercial transactions, corporate structuring and succession planning, real estate transactions, tax planning matters, and 1031 exchange transactions.
Taking the Pulse of Healthcare Communications, 5:30-8 p.m. The Association for Women in Communications Detroit Chapter. A panel discussion with Kara Gavin, lead public relations representative, University of Michigan Health System; Desiree Cooper, director of community and media relations,
Planned Parenthood Mid and South
CALENDAR GUIDELINES If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Detroit Events” in the red bar near the top of the page. Then, click “Submit Your Entries” from the drop-down menu that will appear and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event” button at the bottom of the page. That’s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.
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CRAIN’S DETROIT BUSINESS
October 20, 2014
PEOPLE ARCHITECTURE Jamie Millspaugh to director of interior design, Neumann/Smith Architecture , South-
IN THE SPOTLIGHT Cambridge Consulting Group has named Daniel Cornwell as CEO. Cornwell began his career at the Troy-based insurance and financial services consulting firm as a summer intern in the Benefits Consulting Practice Group. He has held various positions, most recently as Cambridge Consulting Group president. Cornwell, 43, replaces co-founder Albert Papa, who will serve as executive chairman of the company. Cornwell earned a bachelor’s degree in science/finance from Walsh College.
field, from sales executive, W.E. Gingell Associates Inc., Livonia.
CONSULTING Cameron Kennedy to president, Cambridge Consulting Group, Kennedy
Troy, from CFO.
INSURANCE
Cornwell
Donnelly to regional vice president of claims, from partner, Daniel P. Costello & Associates LLC, Chicago.
LAW
NONPROFITS Daniel Irvin to executive director, Greater Farmington Area Chamber of Commerce, Farmington, from general manager, Midland Mall, Midland.
MARKETING Jaclyn Bussert to senior account executive, Bianchi
Public Relations Inc., Troy, from acBeauchamp
count executive.
Cosman
Kevin Beauchamp to vice president, director of strategic partnerships, Schechter Wealth Strategies LLC, Birmingham, from assistant vice president, wholesaler, Eaton Vance Management, Oakland Township. Patricia Cosman to senior client executive, property and casualty business division, Oswald Cos., Bloomfield Hills, from senior vice president, Alliant Insurance Services Inc., Troy. Matthew Morrison to vice president of technical claims, Amerisure Mutual Insurance Co., Farmington Hills, from vice president of casualty and claims legal, QBE North America, Sun Prairie, Wis. Also, Laurie Pierman to vice president of claims operations and shared services, from assistant vice president of claims operational and systems management, and Steve
RETAIL Don Barnes III to Szalach
president of retail operations, Belle
Ortwein
Matthew Szalach to partner, intellectual property department, Honigman Miller Schwartz and Cohn LLP , Bloomfield Hills, from partner, Harness Dickey & Pierce PLC, Troy. Also, B. Michael Ortwein III to partner, litigation department, from assistant U.S. attorney, U.S. Attorney’s Office, Eastern District of Michigan, Detroit.
MANUFACTURING Tony Beauvais to quality and production/engineering manager, Maxitrol Co., Southfield. He continues as quality manager.
Bussert
Tire Distributors Inc., Allen Park, from vice president of retail operations.
SERVICES Eric Aasheim to vice president, strategy and business development, Global LT Inc., Troy, from vice president of Barnes sales. Also, Lisa Koziol to global operations director, from manager, language operations.
BUSINESS DIARY ACQUISITIONS & MERGERS
Trusted Business
Find Businesses You Can Trust
www.bbb.org/detroit
Neogen Corp., Lansing, a provider of testing products for food and animal safety, said it has acquired all the outstanding stock of BioLumix Inc., Ann Arbor, a manufacturer and marketer of automated systems for the detection of microbial contaminants. The BioLumix business will be consolidated with Neogen’s Soleris technology, used to detect spoilage organisms in the food and nutraceutical industries. Websites: neogen.com, mybiolumix.com. Radar Industries Inc., Warren, a provider of stamped interior, chassis and powertrain components and welded assemblies for the automotive industry, has been acquired by Shiloh Industries Inc., Valley City, Ohio, a supplier of lightweighting products to the automotive, commercial vehicle and other industrial markets. Angle Advisors-Investment Banking LLC, Birmingham, acted as the exclusive investment banking adviser to Radar. Websites: shiloh.com, radarind.com.
CONTRACTS Advanced Photonix Inc., Ann Arbor,
Businesses:
When they search, will they Įnd you?
Become a BBB Accredited Business
Email: info@easternmichiganbbb.org Call: 248.356.5085 Visit: www.bit.ly/applyBBB
has signed a value-added reseller agreement for its T-Gauge industrial terahertz gauging system with Seltek Ltd. Co., Istanbul, Turkey, a manufacturer of measurement and process control systems for continuous Web production. Websites: advanced photonix.com. seltek.com. Altair Engineering Inc., Troy, a provider of computer-aided engineering and computing software and services, announced that Vertu Corporation Ltd., Hampshire, England, a luxury mobile phone manufacturer, has invested in and deployed Altair’s complete range of technology and services through the company’s new HyperWorks Unlimit-
ed appliance, a private cloud service for computer-aided engineering. Websites: altair.com, vertu.com. Ingram Content Group Inc., Nashville, Tenn., and ProQuest LLC, Ann Arbor, are expanding an e-book collaboration that benefits libraries worldwide. This year, the companies made titles from the Ebook Library available through Ingram’s OASIS content platform. In addition, the Ebook Library has been integrated with Ingram’s ebook approval plans and demand-driven acquisition services. Websites: proquest.com, ingramcontent.com.
EXPANSIONS Art Van Furniture Inc., Warren, is opening an Art Van Flooring Design Center and corporate office at 6340 14 Mile Road, Warren. Website: artvan.com. Citistaff Inc., Troy, has opened an engineering and IT sales and recruiting office at 3069 University Ave., Suite 250, Ann Arbor. Website: citistaff.com. Edward Rose & Sons, Bloomfield Hills, has opened Rose Senior LivingClinton Township, 44003 Partridge Creek Blvd., Clinton Township, (855) 856-3819. roseseniorliving.com. Sight Machine, San Francisco, a provider of cloud-based manufacturing services, has opened an office at 900 Wilshire Blvd., Troy. Website: sightmachine.com.
Sweet Lorraine’s Fabulous Mac n’ Cheez, Southfield, has opened a restaurant at 547 E. Grand River Ave., East Lansing. Telephone: (517) 3250850. Website: macncheez.com. U.S. Small Business Administration, Washington, D.C., has opened a Business Recovery Center to help business owners apply for low-interest disaster loans, made available as a result of
storms and flooding Aug. 11-13, at the Oakland County Executive Office Building, 41 W. 2100 Pontiac Lake Road, Waterford Township. Website: sba.gov.
NEW PRODUCTS BorgWarner Inc., Auburn Hills, is supplying its high-performance wet-friction technology for Volkswagen’s new hybrid DQ 400e dual-clutch transmission, launching in the 2014 Volkswagen Golf and Audi A3 e-tron. Website: borgwarner.com. IDashboards, Troy, a supplier of business intelligence dashboard technology, announced the release of iDashboards v8.5, providing users with enhanced design options, including Image Plot Chart, HTML5, point-andclick chart designer and report scheduler, and SMS text alerts. Website: idashboards.com. Mastery Technologies Inc., Novi, has updated its video-on-demand platform. The platform, which has two iterations, gives users a bookmarking feature to allow them to return to the last viewed chapter if the learner exits before completing an entire course. Website: mastery.com.
NEW SERVICES Automotive Industry Action Group, Southfield, has created new conflictminerals microsites in English and Chinese to help automotive companies connect with resources and meet
U.S. Security and Exchange Commission requirements. Website: conflict minerals.aiag.org. Headlights Public Relations and Marketing, Royal Oak, has launched a website detailing its marketing, PR and print services to small businesses and nonprofits. Website: headlights pr.com.
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Auto dealers turn to local government help to upgrade facilities BY JAMIE LAREAU CRAIN NEWS SERVICE
A small but growing number of auto dealerships have obtained tax breaks or government funds in connection with their facility improvements, including George Matick Chevrolet in Redford Township. Through August, about two dozen such arrangements have been negotiated and approved nationwide this year. While that’s only a handful, industry observers say that’s noticeably more than recent years. Local and state governments say the incentives benefit local economies because dealerships create jobs and contribute to a strong tax base. Dealers benefit financially while spending on pricey improvements. But the deals require upfront investment by dealers in time and legal fees, and they can often come with strings. “The typical dealer wants less government involvement in their business, not more,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers in Trenton, N.J., and chairman of the Automotive Trade Association Executives, a body of state and local dealer groups.
Local government buy-in Local governments are usually eager to invest “in the future,” said Michael Hastings, principal of Direct Point Advisors in Burbank, Calif. “We are busier than we
MARKET PLACE
LARRY PEPLIN
Karl Zimmermann, owner of George Matick Chevrolet in Redford Township, said it will cost $9 million to renovate the dealership’s building and property, but the final financial outcome will be well worth the expense.
have ever been doing these kinds of deals in Southern California, Utah and Arizona.” Hastings’ firm specializes in economic development arrangements. He has won approval for 15 tax incentive deals for dealerships in those three states this year, and four more are in the works. He did two deals in 2012 and six in 2013, he said. In Michigan, in August, the Michigan Strategic Fund authorized tax increment financing for George Matick Chevrolet to make its various property improvements.
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Consultant Hastings said the cost to secure government incentives depends on many factors. It costs more if the company is seeking more in incentives or if it’s a complex tax-reimbursement arrangement. His firm charges a monthly retainer from $2,000 to $7,000 to put together a deal, then a success fee of $10,000 to $85,000, he said. Industry observers believe dealers simply do not do more of these arrangements with local governments because they do not know about them. Nick Nortz, co-owner of Nortz & Virkler Inc., a Ford dealership in Lowville, N.Y., said he had to dig around and do a lot of paperwork to ultimately secure his tax deal, which exempts it from local county taxes on certain materials it buys for its renovations. Nortz expects to save about $50,000 by the time a $1.5 million renovation is complete by March 2015. That additional $50,000 might allow Nortz to add an extra service lift and hire a new technician, he said. “It’s something you have to ask for. They sure as hell aren’t going to offer it to you,” Nortz said. “This is a small community, so everyone knew we were grappling with this idea of an upgrade. Luckily, most of the board members are my customers, and they said, ‘Hey, we got something that might help you out.’ ” From Automotive News
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The project to renovate the 50year-old building and property will cost $9 million, said Karl Zimmermann, owner of the dealership. After completion of the project, the improved property’s tax assessment will rise, pushing up the dealership’s property-tax bill. But over a period of more than two decades, Matick Chevrolet will be reimbursed for part of those higher taxes. Zimmermann says he expects to get $719,528 in tax reimbursements eventually. The deal created a minor stir. Some board members questioned
whether it gave Matick Chevrolet an unfair advantage over competing dealerships in its local market, said Mike Finney, CEO of the Michigan Economic Development Corp. But Finney said Matick Chevrolet had local government leaders’ support, so “we discussed all the options. The Brownfield TIF has unique purposes it can be used for, and it fit this project.” To earn the TIF, Zimmermann agreed to make various infrastructure improvements on the property, such as better storm drainage, to hire 55 more employees with an average annual salary of $43,000, and to buy a vacant Goodyear Tire store on adjacent property, which he would convert into a car wash. “In hindsight, I probably would have been better off just letting the township demolish” the Goodyear store, Zimmermann said. “I thought I might be able to retrofit a car wash in it. “I probably ended up overpaying for that property, and now I have to pay for the demolition.” The application process was arduous and expensive. By Zimmermann’s estimate, he spent $200,000 on various legal fees and other expenses over the 10-year process. Most of these deals take just a few months to negotiate and get approved, experts said, but his circumstance was unique because of ownership changes and General Motors’ bankruptcy in 2009. All in all, though, it was well worth it, Zimmermann said.
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FINANCE DIRECTOR OF FINANCE - CONTROLLER Professional needed to provide leadership and be responsible for the supervision and control of the financial system of this not for profit Agency, including budgeting and financial statement and report preparation. This person carries out the fiscal responsibilities and activities of the Agency under the supervision of the CFAO. Master degree in accounting or finance or a CPA with 5 years of experience, or Bachelor’s degree with minimum 10 years of experience. Submit your resume and cover letter with salary requirements to humanresources@daaa1a.org or fax to 313-446-4453
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2014 UPCOMING
PARTNER EVENTS Coming Up from the Troy Chamber of Commerce “In the Public Eye” PR Seminar From feared to welcomed: how public relations can help expand your business. Join the Troy Chamber for “In the Public Eye” PR Seminar featuring an all-star cast of local business executives and media mavens from CBS, FOX, MLive, Crain’s and more! Attend workshops and hear a panel of media experts sharing effective ideas/strategies for garnering the right media attention. October 23 • 8 a.m.-Noon Altair Engineering, 1820 E. Big Beaver Road, Troy Members: $45; Non-Members: $75 Registration: troychamber.com/events or (248) 641-0031 Simply Shopping Enjoy a unique shopping experience, including a lavish breakfast in the Peacock Café, presentation of gift items for shoppers to peruse during breakfast, a Simply Shopping signature bag to tote around purchases, package retrieval to lighten your load, free gift-wrapping compliments of The Somerset and discounts/ giveaways throughout The Collection. New location for this year’s afterglow: Join us at McCormick & Schmick’s Seafood & Steaks for prizes, networking, food and drink (cash bar). November 7 • 8:30 a.m.-5 p.m. Somerset Collection, 2800 W. Big Beaver Road, Troy Cost: $55 per shopper (cancel by 10/31 for refund) Registration: troychamber.com/events or (248) 641-0031 CEO Series Luncheon featuring Rip Rapson, The Kresge Foundation An unbelievable event featuring CEO/president of The Kresge Foundation, Rip Rapson, as our guest speaker. Opportunities to be a table sponsor are still available for $200, which includes a reserved table of 8 with recognition at the event. Non-Profit Network members will be featured at this event. November 12 • 11:30 a.m.-1 p.m. The Met Hotel, 5500 Crooks Road, Troy Members: $27; Non-Members: $37 Member exhibit table: $100 (includes 1 lunch) Non-member exhibit table: $150 (includes 1 lunch) Registration: troychamber.com/events or (248) 641-0031 Marketing & Sales Executives of Detroit (MSED) 21st Annual Awards Gala The MSED Annual Awards Gala recognizes the marketing and sales elite. It salutes those companies and individuals who have gone the extra mile, who are unafraid to challenge paradigms, and who have the courage to pioneer. Join executives who are making a difference in our region for a formal, but not stuffy, evening of networking, great food and celebration. This year’s honorees are MSED Executive Leadership Award: John Rakolta, Jr., Walbridge; MSED Trailblazer Award: Toby Barlow, Team Detroit; Herb Everss Lifetime Achievement Award: Joseph Anderson, Jr., TAG Holdings and the MSED Platinum Award Recipients. November 20 • 6-10:30 p.m. The Detroit Athletic Club, 241 Madison Avenue, Detroit Members: $150; Non-Members: $195; Tables of 8 are available Registration: msedetroit.org or call Meeting Coordinators at (248) 643-6590 CEED Microloan Programs CEED has made $5.5 million in loans and created more than 1,800 jobs. Now, after 30 years of providing access to capital, CEED is increasing their commitment to small business by reducing their interest rate. Loans up to $50,000 are offered at a 5% fixed rate for equipment, inventory, supplies and some working capital. To learn more and register for an upcoming loan orientation: miceed.org or (734) 677-1400
For more local events, visit Crain’s Executive Calendar at crainsdetroit.com/executivecalendar
October 20, 2014
Orr: Post-bankruptcy Detroit needs business to promote it to investors BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
A post-bankruptcy Detroit could be very well positioned to convince companies and financial markets it’s a good place to do business — although government accountability and persistent unemployment are issues to watch, two leaders of its reorganization told investors at the University of Michigan for a Friday conference. Detroit Emergency Manager Kevyn Orr made a request of the more than 100 guests at the ninth annual Michigan Private Equity Conference, hosted by the Stephen M. Ross School of Business, to persuade colleagues and portfolio company executives of the city’s appeal. “The city is going to need your support and help when those investment opportunities present themselves … to go to business executives and say, ‘We will assist you,’ ” Orr told the conference, which draws private equity and investment bank professionals and business leaders from across the U.S. “You all as co-investors, and people of their ilk, have got to help convince them that this city is the right place for them to be.” Orr and Kenneth Buckfire, president and managing partner of strategic advisory services firm Miller Buckfire & Co. LLC, both said investors can make the business case for Detroit. “Detroit has done a pretty poor job of marketing itself, economically, in the past to the kind of businesses that should be here,” Buckfire said. He added that he thinks resi-
dents can help persuade investors that Detroit is a safe proposition during the estimated 10 years it will not need to borrow money if a current plan of adjustment is confirmed in bankruptcy court. That will happen, he said, primarily through keeping Mayor Mike Duggan and the Detroit City Council accountable. “He (Duggan) is more than up to the challenge, but as citizens you have to keep their (elected) officials’ feet to the fire. Because otherwise there is always a risk that special interests will capture city government again, and it will go down the same roads as before. And it (potential recovery) will not happen,” Orr said. Buckfire and Orr also touted the success of a deal reached Thursday with bankruptcy creditor Financial Guaranty Insurance Corp., a bond insurer with a $1 billion claim, to obtain nearly nine acres on the site of Joe Louis Arena and a nearby parking garage, and bring in a developer for a hotel, condominiums, office space or retail. The state of Michigan has agreed to provide $6 million for demolition, which likely would start in 2017. The land is considered to be a valuable parcel because it’s near Cobo Center, Detroit’s downtown convention hall. Orr said Friday the FGIC negotiation included a due diligence review of the potential for private redevelopment of the arena, currently owned by the city Municipal Parking Department. He added that the market demand and investor appetite is there for a new hotel along the riverfront, but he would not comment on whether a
Report: VC investment in state tumbles BY TOM HENDERSON CRAIN’S DETROIT BUSINESS
The amount of venture capital money raised by Michigan companies fell sharply in the third quarter, dropping from $114.9 million invested in 11 companies in the second quarter to just $14.5 million invested in seven companies, according to the Money Tree Report issued Friday by PricewaterhouseCoopers and the National Venture Capital Association, based on data compiled by Thomson Reuters. In the second quarter, Michigan ranked 12th nationally for what was its best quarter for venture capital investing in 14 years and the second best since records began to be kept in 1995. In the first quarter of 2000, $143 million was invested in 17 deals. In the first quarter of this year, $37.6 million was invested in 14 companies. The third quarter saw Michigan fall to a national ranking of 32. The second-quarter total was driven by the largest single VC investment round in a company in state history, the $59.5 million invested in Plymouth Township-based ProNAi
Therapeutics Inc., which is developing drugs to fight cancer. In the third quarter: 䡲 Vestaron Corp. of Kalamazoo, an insecticide company, got $10 million. 䡲 Stratos Inc. of Ann Arbor, which tracks various credit card and membership rewards on one card, got $1.6 million. 䡲 ENT Biotech Solutions LLC of Detroit, a medical device company, got $940,000. 䡲 Loveland Technologies LLC of Detroit, which does social Web mapping, got $781,000. 䡲 Cribspot Inc. of Ann Arbor, which helps college students find housing online, got $660,000. 䡲 Grand Circus Detroit LLC, which does Web and IT training, got $250,000. 䡲 BoostUp LLC of Detroit, an online savings platform, got $250,000. As it does every quarter, California led all states with $5.2 billion invested in 438 deals, followed by New York, with $1.5 billion invested in 107 deals, and Massachusetts, with $596.8 million in 86 deals. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2
developer or hotel chain has yet been courted for the project. The proposal calls for at least 300 hotel rooms, in a structure no more than 30 stories tall, on the Joe Louis property. Orr also said attendees at the conference represent an opportunity to network among more than 1,000 people in the financial markets. “If I can get people in this setting to go out and network among 1,000 people and even get a 5 percent return on investment from that, that’s 50 more investors in this city, just by putting out the word,” he said. Buckfire also said there is tangible evidence city services are improving, with more than 1,000 streetlights being turned back on per week, and the city could be fully lit as soon as next March. But the Detroit Public Lighting Authority, in comments to Crain’s Friday via Twitter, hedged on that, saying it’s been doing better than 500 lights per week recently and that city neighborhoods could be complete by year-end 2015. Improving services is also an opportunity to draw investment in Detroit, Buckfire said, since the city has other assets like water that can help it compete for investment with other regions of the U.S. “As a long-term economic proposition, the way to convince business to come and stay and invest in the city is through the quality of services,” he said. “Because there are other cities to choose from (as investments) that do provide services to residents. And that’s really what this is all about.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom
Webinar to help employers with health insurance Crain’s will host a webinar from noon-1 p.m. Tuesday in its HealthFacts series, which offers strategies to deal with the Affordable Care Act. Tuesday’s webinar will focus on strategies for employers as they structure health insurance plans, and also on how to communicate changes to employees. Speakers are William Galvin, owner of William E. Galvin Co. insurance in Novi, and Bryan Cole, director of product development at Flint-based HealthPlus of Michigan. The moderator will be Kate Kohn-Parrott, CEO of the Detroit-based Greater Detroit Area Health Council. Registration is free at www.crainsdetroit.com/webinars.
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Leggings: Grandfather sees growth opportunity for ‘Oppos’ ■ From Page 3
Oaks Mall in Novi opened in August. Oppos has earned $35,000 in revenue. The company has about 10 employees. The company hasn’t made a profit yet, but Ervin predicts the company will make around $12 for every leg sold. Legs are $19 apiece, so a pair costs $38. While the first purchase may be close to $40, every leg bought for $19 after that would create a new pair. Ervin, who had been retired since 2004, was the founder of seven startups. Among them are Conquest Corp., a Berkley-based publishing company focusing on the trauma of relocation for children, and Envision, a real estate software company. Ervin sold Envision to the Ann Arbor branch of Citibank for an undisclosed amount in 2004. He also wrote a nationally syndicated column, “Let’s talk about real estate,” which ran in the Detroit Free Press for eight years. Ervin and his family spent $150,000 on the initial Oppos investment and are embarking on a nationwide growth plan through mall kiosks. In a typical kiosk business, the owner pays rent to the mall, purchases inventory and staffs the kiosk. Although Ervin has a companyowned kiosk in Twelve Oaks that follows this model, it’s not how he plans to grow the company. Instead, Ervin will try to sell distributorships to high-end mall kiosk owners across the country. In that case, someone else owns and operates the kiosk, while Ervin sells
We’re finding that the “young girls are the ones really loving it. Their eyes get as big as saucers, and they drag their parents over to the kiosk.
”
Shelly Chilton, co-founder, designer
his product wholesale to the distributor. Renting a kiosk is far less expensive than leasing store space at a mall. By using kiosks, Ervin is getting his product front and center next to some heavyweight names in the girls fashion industry, such as Claire’s and Justice. “It’s a perfect growth path for a company like us,” Ervin said. Oppos already has sold a distributorship to a specialty leaser in Selina, Calif., who will sell the leggings out of his own kiosk. Oppos also plans to open a kiosk at Great Lakes Crossing Outlets in Auburn Hills on Nov. 1. In addition to leggings, Oppos sells coordinating headbands and T-shirts, said Oppos in-house designer Shelly Chilton. Chilton got her start as a designer for Kay Unger New York, a fashion house specializing in high-end women’s clothing. Chilton is a friend of Ervin’s daughter-in-law, which is how she connected with
Oppos. “We knew we wanted it to zip apart, to give girls a means to create an entire look that’s just for them,” Chilton said. “We’re finding that the young girls are the ones really loving it. Their eyes get as big as saucers, and they drag their parents over to the kiosk.” Oppos isn’t the only company looking to benefit from the lure of mismatching. Secaucus, N.J.based MissMatched Inc. specializes in mismatched girls’ retail, including shoes and socks it sells under its LittleMissMatched brand. Larger retailers have jumped on the trend as well. According to Rayneld Johnson, a senior lecturer of fashion design and merchandising at Wayne State University, leggings are a growing trend. “Leggings have been around since the medieval times, and they have been a part of accessories in different styles until modern times,” she said. In contemporary times, Johnson
said, whether leggings are a classic or a trend is still yet to be seen. “However, in the cycle of fashion from innovation to mainstream to decline, I would say leggings are currently mainstream in fashion. The trend is still on the incline,” she said. Johnson also said she believes there is momentum for fashion production in Detroit. The Detroit Garment Group Guild recently started an industrial sewing program to prepare workers for the cut-andsew industry and is working to tighten the design community. (See story, Page 25.) According to a study done by the guild, there are more than 300 open positions in the cut-and-sew industry. The Detroit-based College for Creative Studies has also added a fashion accessories design degree, separate from its fiber arts program. Oppos said its girls line fits girls aged 4-15. Now it is getting ready to launch its first juniors line, for girls 14 and older and smaller adults. The junior leggings will be a spirit collection, with dark solids on the right and light solids on the left leg to match school colors. Most of them will be logo-less, but Oppos recently entered into a licensing agreement with Michigan State University and has applications in with others. Some of the Oppos leggings were made in a factory in Roseville that specialized in accessories, but Oppos has moved its production to Chicago, Ervin said. Last week, Oppos was to launch
SEEGER PHOTOGRAPHY
Tom Ervin’s chat with his granddaughter, Josie, 10, prompted a new business idea. Ervin, 73, is now cofounder of 50-50 Fashions Inc.
a national media campaign on television and digital platforms, including 50,000 banner ads and 15second spots on outlets such as Cartoon Network, Nickelodeon and Lifetime.
Greektown: Up to $60 million in renovations coming to casino ■ From Page 1
The improvements are set to be completed by the end of 2015, when Greektown will re-evaluate whether other upgrades are needed, said Assistant General Manager Brian Hall Eby. The intent is all part of refreshing the casino’s brand. “We want to be the cool boutique place people feel comfortable in ... a neighborhood joint,” he said. The casino’s website markets Greektown as “your downtown playground where the fun never stops.” But Eby said the casino is still working on its overall branding campaign. The changes to Greektown its new team envisions are really “back to the basics and nothing monumental,” Eby said. “But you couple all of this together, and you’ll have a great experience.” The casino is just beginning the bulk of its renovations, but already “we’re coming into our own,” Eby said. According to figures filed with the Michigan Gaming Control Board, Greektown gained 2 percent market share in July of this year versus the same month of 2013 and 2 percent again in September. Greektown’s quarterly gaming revenue was up 5.4 percent at $82.7 million compared with the third quarter of 2013. Eby credits much of the upturn
at Greektown to the new players’ club Greektown introduced in July: GT Rewards, which enables people to earn points at 10 times the rate of the casino’s former players club and includes an “invitation-only” level. “We made all these dangling carrots so it’s easy for people to attain the next (reward) tier,” with each tier getting an additional 10 percent of earning potential, Eby said. “We feel comfortable we’re pulling some market share from the other two.” Hotel revenue is also up, he said. “We certainly recognized early on we were comping rooms to people we shouldn’t,” Eby said. Comps are now more customized to key players, and cash from the hotel has increased as a result, he said. Improvements already completed at the casino include installation of a new server and network capabilities this summer, along with new machines for players to access their rewards and redeem tickets, 400 new slot machines and new bill validators on each of the games on the floor to put a stop to the issues guests were having with them. In September, Greektown rebranded its former steakhouse, Brizola, as Prism, adding seafood, pasta and chicken dishes to the
Whenever you “ add new things and upgrade ... it creates excitement ... and will draw more people.
”
Steve Zanella, MGM Grand Detroit
menu. Work has begun on the $1.25 million project the casino is funding to widen the I-375 ramp to the Lafayette Street exit to alleviate bottlenecking and improve access to the casino and downtown area. But the bulk of the renovations at the casino are set to begin later this year with installation of a $12 million-$14 million HVAC system, Eby said, aimed at solving the No. 1 criticism that customers mention at the casino — its smoky atmosphere. “I think we probably are going to have one of the most state-of-theart (HVAC) systems in the U.S. We’ll be drawing in 100 percent outside air,” said Eby who joined Greektown early this year from Warner Gaming LLC in New Mexico,
where he served as executive vice president of operations. Also on tap is a redesign aimed at giving the casino a more modern atmosphere. It will include an alabaster entryway into the casino, higher ceilings, wider open areas and the shrinking of the casino’s center bar area. New carpeting, lighter wall coverings and more neutral ceiling treatments are planned, along with new chandeliers to light up areas now dim and wood tones to create a modern, upscale look. The heavy columns that now dominate the gaming room floor will be stripped down to their thinner, weight-bearing widths, while “dummy” columns that aren’t supporting anything will disappear. Also on tap: new signage to help players navigate the way to their favorite games, adjustable chairs, new wood-tone slot machine bases and “skins” or laminate surfaces, glass escalator walls, complete renovations to six of eight sets of bathrooms that weren’t already updated, and a relocation of the Beaubien Street entrance to the casino to the Trapper’s Alley exit. A new pit podium with multiple television screens and a separate wall of video screens will broadcast sporting events in the casino. New picture-in-picture technolo-
gy is already in place on many of the games in the casino, and that will continue, Eby said, enabling more interaction with casino guests. The mix of restaurants in the food court is also under review, Eby said. In the gaming industry, it’s very important to keep meeting consumers’ demands and desires with new investments, whether new bill regulators, new games, a new slot club, a new lounge or a new restaurant, said Steve Zanella, president and COO of MGM Grand Detroit. MGM is in the process of taking out the U Me Drink center bar area and replacing it with a new entertainment lounge. The $3 million project should be completed by early December, he said, and is an example of keeping up with what customers want. The improvements at Greektown and all of the Detroit casinos are a good thing for the market, Zanella said. “Whenever you add new things and upgrade and reinvigorate your facility … it creates excitement ... (and) it will draw more people.” Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch
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Rader: Co-founder sues law firm, seeks $1.6M equity buyout ■ From Page 3
man has been continuing to negotiate with Rader, held a farewell party for him and has tried to be accommodating. He also said the firm was aware of the lawsuit but has yet to be formally served with it. “This is disappointing because the firm since Terry’s stroke has shown the utmost respect to him and his family. If you read the complaint, he obviously disagrees with that, but I think we have been (accommodating) to a fault,” Hallin said. “Terry has always been widely viewed as a very solid IP litigator throughout his career, and this lawsuit he’s initiating is not going to end well for him. In terms of reputation, he could be viewed very differently by the end of it.” Hallin did not elaborate. Rader’s attorney, Kenneth Silver of Bloom-
field Hills-based Hertz Schram PC, did not return phone calls seeking comment. Rader Fishman has 30 attorneys, including 14 partners, at offices in Bloomfield Hills and Washington, D.C. Rader, now a Georgia resident, according to court pleadings, owns about one-third of the firm, according to an operating agreement attached to the lawsuit. Fishman and Stewart own about 29.6 percent and 17.3 percent, respectively, while several other partners own stakes of less than 6 percent each. Hallin said the operating agreement was supposed to be confidential, and the firm also had an agreement with Rader to try and resolve the dispute without litigation. He would not discuss specific allegations in the lawsuit, saying
the firm would respond in court. Rader also claims that the firm is in default on its line of credit at Flagstar, with a balance of more than $5 million, and that Fishman and Stewart were “behind in their billings in 2012 by more than $1.1 million” while the firm was covering payroll and recurring monthly expenses out of its line of credit. His departure came amid downsizing at the firm, which went from 46 attorneys in early 2009 to 29 in mid-2013, according to past data reported to Crain’s. It now reports 21 attorneys in Michigan and nine in Washington, but no longer claims offices in California and Tokyo as it has in years past. Hallin said there was a small exodus of attorneys after Rader’s departure but that the firm has rebuilt with several lateral hires.
Hallin himself returned to the firm in March after departing in 2011; other new partners include Barbara Mandell, formerly of Dykema Gossett PLLC, and Lisa Rycus Mikalonis, formerly of Sommers Schwartz PC. “Was Terry a loss? Obviously. But I think we’ve done remarkably well, and that’s a testament to Michael Fishman and the firm’s leadership,” Hallin said. “From my point of view, it’s a better firm, and I think we’ve made tremendous strides.” The new lawsuit comes about three months after Rader settled a 2013 lawsuit brought by self-described former “confidant, sounding board, assistant and … (provider of) comfort, companionship, friendship and peace of mind,” Leatrice Klann.
Klann has contended in that court case that Rader leased and made rent payments on an apartment she shared in Westland with her 15-year-old son, and used to pay her $1,500 a week under a contract signed in 2012, until he suffered his stroke. Rader had tried to have that lawsuit transferred to Georgia, but reached an agreement to settle in June after U.S. District Judge Nancy Edmunds denied his transfer request in March. Attorney Joel Sklar of Detroit, who represented Klann in that lawsuit, declined to comment on it. Rader’s attorney, Donald Campbell of Collins Einhorn Farrell PC in Southfield, could not be reached. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom
Diversified: Restaurant company to sell, lease back buildings ■ From Page 1
alone Bagger Dave’s and Buffalo Wild Wings can be capital-intensive, so rather than going back to the markets for equity, it’s better to use that capital for our growth.” Ground-up construction for a BWW can be about $3.5 million and $2.3 million for a Bagger Dave’s, he said. BWW build-outs in existing space on either end of a strip center cost between $2 million and $2.5 million; for Bagger Dave’s, it’s about $1.3 million. The company, which created Bagger Dave’s and is the country’s largest franchisee of BWWs, looks for new sites where the average household income is $60,000 to $90,000 and have an average population of 50,000. DRH targets endcap or free-standing locations with large retail hubs like Wal-Mart, Target, Lowe’s, Home Depot or shopping malls in close proximity. A typical BWW restaurant is 6,500 square feet and a Bagger Dave’s is 4,000. “We love to have the retail component with the office traffic at lunch and obviously residential,” Ansley said. “It’s really an art, even though we don’t bat 100 percent.” Between $5 million and $10 million of the sale proceeds will be used to pay down some of DRH’s $52 million in debt, with the rest going toward opening nine new locations and renovating existing ones, Ansley said. Ansley The new BWWs expected to open are in Birch Run (Dec. 21); Hammond, Ind. (Nov. 16); Wesley Chapel, Fla. (April 2015); and Adrian (August 2015). The new Bagger Dave’s are in Schererville, Ind. (Oct. 26); Grand Blanc (Nov. 23); Birch Run (Dec. 21); Canton (Dec. 28); and Crown Point, Ind. (January 2015). Every five years or so, renovations are expected at both BWW restaurants and Bagger Dave’s to
COURTESY OF DIVERSIFIED RESTAURANT HOLDINGS INC.
The location in Woodhaven, seen inside and out, is among 21 Bagger Dave’s Burger Tavern outlets owned by Southfield-based Diversified Restaurant Holdings Inc., which plans to open five more Bagger Dave’s soon.
add things like new interior décor, carpeting and paint. Those renovations are expected at the BWWs in Flint and Port Huron. Sterling Heights and Royal Oak locations will feature Minneapolis-based BWWs’ new “stadia” design, which will make the eating and drinking experience at the restaurant feel more like it’s being done in a stadium rather than a sports bar. That includes adding LED lighting, making the horseshoe-shaped bars look like they are made out of concrete, having lighter-color furniture and using brick facades on the interior. Other new concepts being introduced include ordering using tablets, which requires about a $15,000 investment at each restaurant, Ansley said. “Every five years, you have to do something. The restaurants take a beating and it’s refreshing your business,” he said.
DRH’s revenue has grown 141 percent in the last three years, from $45.2 million in 2010 to $108.9 million last year. It ranked No. 29 in Crain’s Fastest Growing Companies list this year. The company owns and operates 40 Buffalo Wild Wings and 21 Bagger Dave’s in Michigan, Indiana, Illinois and Florida. It expects to have 68 restaurants by the end of the year and 98 to 102 by 2017, according to investor documents. Its stock on Oct. 9, the day before the company announced the saleleaseback, closed at $4.92 per share. On Oct. 10, it closed at $5 per share and was trading at $4.97 mid-day Friday. The saleleaseback deal is a common Goldstone
business move to generate capital, said Ron Goldstone, a senior vice president specializing in retail real estate for Southfield-based NAI Farbman. “As opposed to owning bricks and sticks, they are using their capital to do more units,” he said. “It’s a component in a growth curve.” But it’s likely a necessary one, said Darren Tristano, executive vice president of Chicago-based food market research firm Technomic Inc., because banks remain a little skittish about lending to restaurants because of the high rate of closure. “There are limited options today for bringing capital to invest in business, and the sale-leaseback is an option. This is reflective of what companies have to do.” “It’s not only a creative way (to access capital), but in some cases, it’s the only way. It’s more necessity than creativity.”
Pre-sale, the company had $18 million in cash on hand and will add the $15 million or $20 million left over from the sale proceeds to its reserves. DRH also has a Tristano $20 million to $25 million development line of credit, Ansley said. In a statement, Gregg Seibert, executive vice president of Spirit Realty, said that DRH’s “position as both an owner of a growing regional concept as well as a successful franchisee of a national brand fits well in our tenant profile.” Spirit Realty’s portfolio is valued at $8.3 billion and has about 2,400 properties. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
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Asterand: ‘New’ company returns to its old home ■ From Page 3
use the proceeds of the sale of the stem-cell business to grow Asterand both organically and through acquisition. Canepa said he will function as Asterand’s CEO, though decisions on a formal title have not been made. He said he has taken an apartment on Woodward Avenue near TechTown and will split his time between Detroit and an office at the Cambridge, Mass.-based headquarters of HealthCare Ventures LLC, one of Stemgent’s two largest investors. “Asterand has a strong reputation and is a leader in providing human tissue,” said Stephen Rapundalo, president and CEO of Ann Arbor-based MichBio, a nonprofit that promotes the state’s life science industry. “I’m glad to hear the news that the headquarters are moving back to Michigan, because Asterand has been the poster child for Michigan’s emerging bioscience industry,” he said. In 2009, MichBio honored Asterand with the Good to Great Award at its annual expo for progress the company had made in growing its tissue bank business. HealthCare Ventures has raised $1.6 billion in nine funds since 1985. The other main investor in Stemgent was Cleveland-based Morgen-
glad to hear the news that the “ I’mheadquarters are moving back to Michigan, because Asterand has been the poster child for Michigan’s emerging bioscience industry.
”
Stephen Rapundalo, MichBio
thaler Ventures, one of the oldest venture capital firms in the U.S., which was founded in 1968 and has raised $2.8 billion in 10 funds. The two investment firms formed Stemgent in 2008 to supply what was envisioned to be a fast-growing industry, but growth and progress were much slower than imagined. “It’s fair to say the stem cell business didn’t meet the expectations of its investors based on the money they put in,” said Canepa. He declined to disclose the amount of equity capital Stemgent raised, but according to CrunchBase.com, a deal website, between 2008 and August 2012, Stemgent raised $51.9 million in eight rounds of venture capital from three investors. In 2012, Stemgent’s then-CEO, Ian
Ratcliffe, who had served on Asterand’s board of directors, put in a bid for the company when it was put up for auction by creditors. That auction was the result of Asterand not being able to pay a secured debt of $9 million to Silicon Valley Bank for its financing of the 2010 acquisition of a San Francisco company, BioSeek LLC. Stemgent won the bid for $9 million, and Asterand was delisted from the London Stock Exchange, where it had gone public through a reverse merger in 2006. The tissue bank business continued to operate under the Asterand name and kept its lab space in TechTown and the 51 employees there. TechTown supplies a wide variety of human tissue to researchers
at pharmaceutical companies, biotech, diagnostic device companies and universities. It receives its stock from 75 donor institutions around the world. “We’ve been very happy with the acquisition of Asterand,” said Canepa, who said revenue this year would be $18 million to $20 million. “As we looked to the future, we could expect reasonable organic growth, but if you really want to grow a business, you need capital,” he said. The capital came in the form of the $8.5 million in cash from ReproCELL. The American Association of Tissue Banks has accredited more than 100 tissue banks worldwide, including Asterand. “We’ll now be looking at acquisitions. We’re strategizing that now. There’s an opportunity to grow the business here,” said Canepa, who has a strong Michigan background. He grew up in East Grand Rapids, and his father, John Canepa, was the former chairman and CEO of Grand Rapids-based Old Kent Financial Corp. before it was bought in 2002 by Cincinnati-based Fifth Third Bancorp. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2
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
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Tesla:Car sales in state tightened by one word of law ■ From Page 1
On Sept. 18, the state House of Representatives passed House Bill 5606, written to keep automakers from forcing dealers to charge different documentation fees to different customers. But after lawmakers learned of the Massachusetts ruling, the word “its” was removed Oct. 1 on the Senate floor from a section stating that a manufacturer shall not “sell any new motor vehicle directly to a retail customer other than through its franchised dealers.” Both houses passed the revised bill the next day. The change was important because the word “its” in the existing language assumed the manufacturer has dealerships. In Massachusetts, the court ruled that the Massachusetts State Automobile Dealers Association did not have standing to bring a case against Tesla because state law only allowed dealers to sue a manufacturer they have a franchise relationship with. In other words, only a Tesla dealer could sue to stop Tesla, and Tesla does not have any dealerships. By removing the “its,” any automobile manufacturer is banned from selling new cars directly to customers, regardless of whether it has dealerships. The sponsor of HB 5606, Rep. Aric Nesbitt, R-Lawton, said the bill simply adds clarity to Michigan law surrounding the sale of vehicles and is not an attempt to single out any particular company. But Daniel Crane, a University of Michigan law professor who specializes in antitrust laws and believes in direct distribution, said that argument is disingenuous. “They want a law that applies to
A couple look inside a Model S at one of Tesla’s two company stores in New Jersey. That state blocked the company’s plan to sell directly to consumers and not through franchised dealerships. BLOOMBERG
everyone, meaning Tesla,” Crane said. “This is just protectionism.” Crane, who said he is not working for Tesla, wrote a letter to Gov. Rick Snyder last week urging him to veto the bill. Dave Murray, Snyder’s deputy press secretary, told Automotive News that the governor is still evaluating the bill.
‘Basic fairness issue’ No public attention was brought to the changes, and the bill was passed nearly unanimously by both houses. The spokespersons for the House and Senate Democrats said their caucuses were unaware of the effect the added language could have on Tesla. Amber McCann, press secretary for Senate Majority Leader Randy Richardville, R-Monroe, said Republican members were aware the amendment was added to the bill, but was not sure if each member knew about the effect it could have on Tesla. But she reiterated several times
that the bill passed the Senate by a vote of 38-0. “Every member of the Senate gets to see what they are voting on before they press the button,” she said. “I would find it concerning that they say after the fact they voted “yes” on a bill they say they didn’t read or understand.” Rep. Tom McMillin, R-Rochester Hills, who was the only member in the House or Senate to vote against the bill, said he opposed the bill’s original intent and was not aware of the effect on Tesla, but he’s opposed to that as well and believes Tesla should be able to sell directly to customers. “Consumers are expecting more choice and more freedom,” McMillin said. “If a company wants to try something different, we shouldn’t be standing in their way as the government and prohibiting it. We should let the free market decide.” Diarmuid O’Connell, Tesla’s vice president of business development, said in an interview with Automotive News that there’s a “basic fairness issue here.”
He said Tesla has been working in good faith with government agencies and lawmakers in Michigan to explore how the company could market, sell and service vehicles in the state. By adding the amendment at the last minute, O’Connell said, dealers are acting against Tesla’s “sincere efforts” to do business. “The dealers saw an opportunity to sneak in changes that no one was paying attention to and tighten up their case,” Crane said. Tesla’s only request, O’Connell said, is that the issue be debated in public and “in the light of the day.” Terry Burns, executive vice president of the dealers association, said the change was not an attempt to single out Tesla. It just makes clear that all manufacturers have to abide by state law. Dealerships provide a great service to their communities, and to consumers, Burns said. When car companies go out of business, the dealers still service those vehicles. When there are recalls, dealerships are where customers go to have their vehicles inspected and fixed. “We think the franchise system is fantastic. We have a good law that has been in place for a long time,” he said. “If another vehicle manufacturer wants to come in and sell in the state, they have to follow the law in Michigan.” Vince Bond Jr. of Automotive News contributed to this report. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz
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 Lynne Calcaterras, (313) 4466086 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
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CRAIN’S DETROIT BUSINESS
RUMBLINGS
WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF OCT. 11-17
Parade float in tune with Motown legacy etroit’s Motown heritage will be celebrated during this year’s Thanksgiving parade in the city. A Motown Museum float commissioned by Art Van Furniture was unveiled last week at The Parade Co.’s annual Parade Preview Party, attended by more than 1,200 people. It’s the first float reveal of the parade season. The 60-foot-long float is a replica of the Motown Museum house with the “Hitsville U.S.A.” façade, 26 spinning Motown Museum artist records and LED lights surrounding the house. The float will play toe-tapping tunes along the parade route, according to a statement from The Parade Co. With the theme of “Walking on Sunshine,” the 88th America’s Thanksgiving Parade presented by Art Van Furniture will begin at 8:50 a.m. Nov. 27 at the corner of Woodward Avenue and Kirby Street. Metro Detroiters and Olympic ice dancing gold medalists
D
Meryl Davis and Charlie White will be grand marshals.
KPMG chair tours Detroit Thirty-five members of KPMG LLP’s board of directors and management committee converged on Detroit last week. The group, which included the tax and audit giant’s U.S. and global chairman, John Veihmeyer, stayed at the Westin Book Cadillac and made the rounds at downtown hot spot restaurants, including The Whitney, The Rattlesnake Club and Wright & Co. Veihmeyer spoke to the Detroit Economic Club and held an evening of “C-level peer exchanges,” which brought together local business leaders and KMPG-ers to talk about the opportunities and challenges of doing business in Detroit. Said Heather Paquette, managing partner of KPMG’s Detroit office: “We were excited to have KPMG’s management com-
mittee and board of directors in Detroit during this time of growing optimism about the economic recovery in the region.” In the past year, KPMG has hired 100 people in Michigan, bringing its local employee tally to 350, most of whom work in Detroit.
Charity auction for Care General Motors Co. and Taubman Centers Inc. teamed up this year to surpass previous fundraising efforts for Pontiac-based Care House of Oakland County. The two companies are lead sponsors of 2014 Care Night Charity Ball that aids the shelter for abused and neglected children. Lisa Payne, vice chair and CFO for Bloomfield Hillsbased Taubman, and Alicia Boler-Davis, senior vice president of global quality and customer experience at GM, are co-chairs for the event. Payne said thanks to the auction of a 2014 Chevrolet Corvette Stingray, donated by GM, the event is expected to surpass its fundraising goal of $350,000 to $400,000. The event will feature a cocktail hour, dinner and entertainment, including a jazz trio from Detroit Country Day and a performance by vocalist Thornetta Davis, who is a Detroit Music Hall of Fame inductee and former backup singer for Kid Rock and Bob Seger. The event is 6 p.m. Oct. 25 at the General Motors Heritage Center in Sterling Heights. For details, go to carehouse.org.
BITS & PIECES
COURTESY OF THE PARADE CO.
A 60-foot-long replica of the Motown Museum is part of a new float revealed by The Parade Co. for next Thanksgiving.
Brian Balasia, cofounder and CEO of Detroitbased Digerati Inc., was selected this month to serve on the National Advisory Council on Innovation and Entrepreneurship for the U.S. Commerce Department’s Economic Development Administration.
BEST FROM THE BLOGS READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS
An epidemic: Supplier stocks
“
The stock market is a funny thing. Fears of a global economic slowdown, coupled with widespread panic over Ebola, continue volatility in the markets.
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Dustin Walsh’s “Shifting Gears” blog on auto suppliers, the business of law, and Livingston and Washtenaw counties is at www.crainsdetroit.com/walsh
L.A. team could be Lions’ gain
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With an uptick in chatter that the National Football League is serious about putting a team in Los Angeles, let us take a brief look at the enormous inflation in franchise fees.
”
Bill Shea’s “Shea’s Stadium” blog on the business of sports can be found at www.crainsdetroit.com/sheasstadium
Jenkins resigns council seat to join THAW as CEO aunteel Jenkins resigned from the Detroit City Council on Friday to become CEO of Detroit-based nonprofit The Heat and Warmth Fund. Jenkins will officially step down from the council Nov. 7 and take the reins at Jenkins THAW Nov. 10. She will replace Susan Sherer, who stepped down from THAW Sept. 1.
S
ON THE MOVE Carol O’Cleireacain was named Detroit’s deputy mayor for economic policy, planning and strategy. O’Cleireacain, who had been a New York City-based nonresident senior fellow at the Brookings Institute, a Washington, D.C., think tank, will be responsible for identifying outside sources of funding for Detroit so it can become financially stable outside of bankruptcy. German chemical conglomerate BASF SE promoted Christopher Toomey to lead its North American coatings division in Southfield. Toomey, senior vice president of regional procurement for BASF in North America, becomes senior vice president of North American coatings on Nov. 1, replacing Juan Carlos Ordonez, who will head BASF’s performance materials division in Wyandotte. Former Fiat U.S. brand chief Laura Soave was named senior vice president, chief marketing and communications officer of Southfieldbased Federal-Mogul Motorparts, Automotive News reported. Since leaving Fiat in 2011 after the flawed launch of the Fiat 500, Soave, 42, has consulted on automotive projects for manufacturers and investors. Former WJBK-TV2 anchor and reporter Robin Schwartz was named to the new position of public relations director by Detroitbased Bedrock Real Estate Services LLC. Tower International Inc., the Livonia-based automotive metal stampings and assemblies supplier, elected Alison Davis-Blake, dean of the University of Michigan’s Stephen M. Ross School of Business, to its board of directors. She replaces Jonathan Gallen, who resigned from the board.
COMPANY NEWS OcuSciences Inc., an Ann Arbor medical device company commercializing a fast and noninvasive test for early detection of retinal disease, will be honored as innovator of the year this week at Medical Main Street’s annual Inno-vention conference. Highland Park-based Dialog Direct completed a deal to acquire Clinton Township health care call center firm Allegra Direct Communications Inc. Terms were not disclosed; Dialog Direct will maintain the Allegra name and location. Birmingham-based venture capital firm IncWell LLC has begun making investments out of its second fund, which raised almost $10 million, founder Tom LaSorda said. IncWell, launched in May 2013, had a first fund of less than $3 million to invest in very early-stage technology companies. Precision French molder AdduXi Group is opening its first factory outside of its home country, in Rochester Hills, Plastics News reported. The company plans to create 40 jobs at the plant over the next two years. Ford Motor Co., on a hiring spree in advance of next year’s labor contract negotiations, said it’s adding 850 workers at its Dearborn manufacturing site to help make the new aluminumbodied F-150 pickup, Bloomberg reported.
OTHER NEWS The Wayne County Board of Commissioners ended talk of relocating the Wayne County Jail in downtown Detroit to the former Mound Road Correctional Facility, voting for a resolution to take two jail relocation proposals off the table and consider only completing the half-built Gratiot Avenue jail development or renovate existing jail facilities. Rock Ventures LLC has offered to pay $50 million for the Gratiot site and other county buildings. John Bravata, former chairman of Southfieldbased BBC Equities LLC who is in prison for running a Ponzi scheme out of his investment firm from 2006 to 2009, wants to appeal a related $8.2 million civil judgment in favor of the U.S. Securities and Exchange Commission, without costs. Bravata asked a federal appeals court to have indigent status to appeal the civil judgment. The Michigan State Housing Development Authority plans to fight blight in Detroit, Ecorse, Hamtram-
ck, Highland Park, Inkster and River Rouge and six other cities by using $75 million in federal funding, AP reported. The University of Michigan will open the $46 million Center of Excellence in Nano Mechanical Science and Engineering, AP reported. Separately, UM regents approved plans for a battery fabrication laboratory at the school’s Energy Institute and renovations at the Institute of Continuing Legal Education, plus the naming of a new building in the Stephen M. Ross School of Business after Jeff T. Blau, an alumnus who donated $5 million for an expansion. The $6.3 million Troy Multi-Modal Transit Center officially opened after years of debate, AP reported. The city initially planned for the project in 2000 and approved a smaller version of the center in 2012. Home sale prices again increased year-over-year last month in metro Detroit, jumping an average 14.6 percent to $149,000, from $130,000 in September 2013, according to Farmington Hills-based Realcomp II Ltd. Home sales slowed as prices rose, falling 2 percent to 4,729 from 4,830 in the region. Total revenue at Detroit’s three casinos was down 3 percent year-to-date through September compared to 2013’s first nine months, said the Michigan Gaming Control Board. The Detroit-based College for Creative Studies is working with watch and bicycle maker Shinola/Detroit LLC on plans for a bachelor of fine arts program in fashion accessories design to start next year, AP reported. Maria Contreras-Sweet, head of the U.S. Small Business Administration, came to Detroit to visit small businesses owned by women and highlight their achievements, AP reported. Longtime Detroiter Elmore Leonard’s vast collection of handwritten notebooks, typed manuscripts and screenplays will reside at the University of South Carolina, AP reported. Businesses in Michigan are continuing to see savings in their workers’ compensation rates, with a 27.7 percent drop since 2011 in the pure premium rate they pay to fund the workers’ compensation system. President Barack Obama will visit Michigan on behalf of Democratic candidates Mark Schauer for governor and U.S. Rep. Gary Peters for U.S. Senate in a major campaign push as the midterm elections approach, AP reported.
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