Crain's Detroit Business, Dec. 1, 2014 issue by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 48

DECEMBER 1 – 7, 2014

$2 a copy; $59 a year

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Detroit puts the brakes on auto thefts

City eyes RFPs to refortify armory

Utilities see potential energy shortage

Biz survey: State should spend to aid city recovery BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

Best-Managed Nonprofits

After the R. Thornton Brodhead Naval Armory closed in 2003, the building surrendered to burst pipes and scrappers. Now the city of Detroit wants to redevelop the property at the gateway to Belle Isle.

Uncommonly good works of Common Ground, Page 9

COSTAR GROUP INC.

City bets that after two tries, site ready for redevelopment

This Just In Fifth Third helps launch WSU student-managed fund

NEWSPAPER

Fifth Third Bank on Wednesday will donate $100,000 to the Wayne State University School of Business to fund creation of a student-managed investment fund. “We’d like to build the fund as large as possible,” said Robert Forsythe, dean of the business school. The fund, which will invest in public equities, will be managed by students taking a new three-credit course that will start next fall. There are more than 300 student-managed funds in the U.S. An equities fund of $100,000 was launched for Walsh College students in January, and a $5 million student-run fund at Michigan State University also invests in equities. There are three studentrun funds at the University of Michigan. The $7 million Wolverine Venture Fund invests in early-stage private companies, the Zell Lurie Commercialization Fund helps entrepreneurs launch businesses, and the Social Venture Fund invests in forprofit enterprises with a goal of having a social benefit. — Tom Henderson

BY KIRK PINHO CRAIN’S DETROIT BUSINESS

n its 84 years, the R. Thornton Brodhead Naval Armory along the Detroit River has hosted a future president, a future boxing legend, and untold numbers of U.S. sailors, Marines and Coast Guard members. But since it closed its doors in 2003, scrappers have been more prevalent visitors to the 107,000-square-foot building at Savage 7600 E. Jefferson Ave. Now, the city is developing a request for proposals to redevelop the armory, which sits on 4.5 acres and was named in 1947 after Capt. R. Thornton Brodhead, who as lieutenant commander of the Michigan naval force lobbied the city and state for construction of the armory, which was built in 1929 and 1930. For Rebecca Binno Savage — the former treasurer

of the nonprofit Brodhead Armory Preservation Society, which raised funds to maintain the city-owned building now in disrepair and advocated for its preservation — the RFP is welcome news. “I spent a lot of my life working on this building. I took the flag down and turned the keys over to the city in October 2003,” said Savage, who is also the historic preservation leader for Detroit-based architecture firm Kraemer Design Group PLC. “That Thanksgiving weekend, we had a very hard freeze and every pipe burst. It went from a functioning, perfectly maintained building into an instantly soaked disaster.” In a different kind of destruction almost a decade later, Savage recalled seeing scrappers in April 2013 just after they had dismantled a portion of the building. See Armory, Page 24

Businesspeople think Michigan needs to open the purse strings and help fund infrastructure, job training and aid for a post-bankruptcy Detroit if the state wants them to benefit more from the economic recovery. But respondents in a survey by Crain’s Detroit Business and Honigman Miller Schwartz and Cohn LLP had more mixed feelings about whether the Republican Party, Crain’s Detroit Business and which made ma- Honigman Miller jor election gains asked 300 at the state and businesspeople federal level Nov. what they thought 4, would help the about legislative issues, Gov. Rick state’s economy. Snyder and other Some 300 busi- topics important ness owners and to them. Here’s executives in the what they said, Page 23 mid-November survey of Crain’s subscribers conducted by Lansingbased Epic-MRA identified job and skilled trades training programs, new revenue for roads and garnering federal support for the New International Trade Crossing as priorities for the coming year. But while 64 percent were optimistic that the re-election of Gov.

THE SURVEY SAYS ...

See Survey, Page 23

MSX reaps the benefits of outsourcing boom BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

MSX International Inc. — which, through an August acquisition, became one of the largest independent global contract staffing management companies — expects to reach $500 million in revenue as it closes out this year. That’s up 11 percent from $450 million last year and 48 percent from 2010 revenue — a jump that

helped land MSX at No. 41 on Crain’s 2014 Fast 50 list of the fastest-growing companies in metro Detroit. Demand for both the managed service provider busiMinturn ness, which oversees contract staffing con-

tracts for clients, and its automotive dealer training and services is spurring revenue increases for the privately held company, President and CEO Fred Minturn said. MSX — owned by Court Square Capital Partners, Prudential Financial Inc., Ardian and Falcon Investment Advisors — has seen double-digit revenue growth every year since 2009. “The outsourcing industry is just exploding” since the reces-

sion, when companies found themselves saddled with high levels of overhead, Minturn said. “We are getting a really nice pickup from that.” Minturn projects revenue will reach $550 million to $600 million next year with the addition of the managed service provider division of IQNavigator, a Denver-based provider of vendor management See MSX, Page 24

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Albion’s Caster Concepts acquires Illinois supplier for $2M Albion-based Caster Concepts Inc. acquired the assets of Rockford, Ill.-based Modern Suspension Systems Inc. for $2 million. The supplier of automotive and aviation casters and wheels closed on the deal late last month. Caster Concepts will move Modern Suspension operations into its Albion headquarters and plant. Modern Suspension’s more than 10 employees did not transfer with the business. Modern Suspension’s tread tray cart and die cast business will remain under control of its parent, MS Holdings Rockford LLC. That business distributes products through Plymouth-based R.T. Laird Inc. The deal marks the second transaction for Caster Concepts this year. In August, the company acquired Albion Machine and Tool LLC for $500,000. After the acquisitions, Caster Concepts projects revenue of $22 million in 2014 with 90 employees. — Dustin Walsh

Data: Kalamazoo Promise has promising results on grad rates Graduates of the Kalamazoo Public Schools who are eligible for The Kalamazoo Promise — with its commitment to pay up to 100 percent of the tuition at any of Michigan’s state colleges or universities — are

Tax inversion or not, Stryker ponders U.K. acquisition Stryker Corp. is examining a bid for $16 billion medical device manufacturer Smith & Nephew plc as a standstill period that prevents it from making an offer nears its end, people with knowledge of the matter told Bloomberg News. The Kalamazoo-based producer of surgical implants is discussing the financing of a deal and its potential antitrust hurdles with advisers. Londonbased Smith & Nephew and its advisers are aware of Stryker’s interest, although the U.S. company still could decide against a bid. Stryker is considering structuring the transacmuch more likely to enroll in college and more likely to earn a bachelor’s degree compared with their peers nationwide, MLive.com reported. More than 90 percent of Promise-eligible students have enrolled in college since the program started with the class of 2006, compared with two-thirds of recent high school graduates. As for college completion, 41 percent of Promise-eligible students in the class of 2006 have a bachelor’s degree, compared with 37 percent of U.S. high school graduates ages 2529.

MICH-CELLANEOUS A new plan for a recreational trail in Flint — the Grand Traverse Greenway — includes building multiple arches between

tion as a so-called tax inversion (See story, Page 16), allowing it to move its legal address to the lower-tax United Kingdom, three people familiar with the deal told Bloomberg. Still, Stryker sees strategic reasons to pursue the combination, and an inversion wouldn’t be essential to make the deal work. Stryker and Smith & Nephew representatives declined to comment. Medical device companies are looking to consolidate as hospitals and insurers demand better prices from suppliers to tame rising costs.

a former General Motors Co. manufacturing complex known as “Chevy in the Hole” and the city’s south end, The Flint Journal reported. The project, which has been discussed for years, involves taking about three miles of former railroad line to link Flint’s colleges, medical centers, recreation areas and two major development sites. A $45 million high-voltage power line project in Kalamazoo County is expected to move forward despite opposition from local government officials and landowners, the Kalamazoo Gazette reported. The Michigan Court of Appeals recently affirmed the Michigan Public Service Commission’s 2013 decision to grant a certificate to Michigan Electric Transmission Co., a subsidiary of Novi-based ITC Holdings Corp.

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The Traverse City City Commission won’t set up a review committee to consider moving the dates of the National Cherry Festival so it doesn’t run over the Fourth of July, the Traverse City Record-Eagle reported. Commissioners instead instructed the city manager to reduce festival-related costs to the city. After looking at 380 metropolitan statistical areas, Forbes magazine determined that Grand Rapids is the fourth-smartest city in the country. Forbes noted that 30.6 percent of the area’s population holds a college degree. Boston is the smartest city. The dumbest, apparently, was too dense to compile data. Kevin Mann is suing the city of Alma after he was told it annexed his property nearly 20 years ago without his knowledge, the Morning Sun of Mt. Pleasant reported. The mix-up was discovered this year.

The name of Valerie Parisi, former dean of the Wayne State University School of Medicine, was misspelled in a Page 3 photo caption in the Nov. 24 issue. A People item in the Nov. 17 issue should have said Beth deBaptiste, John Forrest and Steven Raymond became nonequity shareholders at Butzel Long PC, Bloomfield Hills, from partners at May, Simpson & Strote, Bloomfield Hills. A corrected version is on Page 20 of this issue. A story on Page 23 of the Nov. 24 issue should have said Amanda Van Dusen of Miller Canfield Paddock and Stone PLC charged $97 to leave two voicemail messages in October 2013, not $485. An article on Page 26 of the Nov. 24 issue should have said Quicken Loans Inc. and Meridian Health each will occupy about 330,000 square feet in the Compuware Corp. headquarters. The article also should have said Meridian will occupy five floors in the building, not six. The errors were due to incorrect information provided to Crain’s. A photo caption on Page 27 of the Nov. 24 issue incorrectly identified 40 under 40 honoree Shani Penn as another person. See Page 26 for the correctly identified photo.

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CRAIN’S DETROIT BUSINESS

December 1, 2014

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Utilities’ report warns of energy shortage ASSOCIATED PRESS

Consumers, DTE urge building new power plants BY JAY GREENE CRAIN’S DETROIT BUSINESS

In pointing to a potenial power shortage in Michigan, the Public Sector Consultants report notes that aging coal-fired power plants serve more than 1 million residents.

Michigan’s two largest utilities — Consumers Energy and DTE Energy Co. — are mounting a major public relations effort to make legislators and electric customers aware that a shortage of power generation reserve could occur in Michigan and the Midwest starting in 2016. The public education campaign began last month with the release of a utility-commissioned report by Lansing-based Public Sector Consul-

tants Inc. called Electric Reliability in Michigan: The Challenge Ahead. The use of the word “reliability” in the report surprised some experts because that word generally is used by state regulators — and even DTE and Consumers themselves — to describe the frequency and duration of power failures caused by storms. But utility representatives said that because of the planned retirement of nine coal-fired power plants in Michigan over the next two years, reliability now also means the ability of power compa-

nies to provide adequate electricity to customers at peak demand. While the 24-page Public Sector report does not address utility company efforts to reduce frequency and duration of power outages, it does try to explain the need for people to understand the difficulty that utility companies have in planning for future power generation. Officials at Detroit-based DTE and Jackson-based Consumers Energy said it is nearly impossible to plan for future electric capacity — primarily through natural gas power plants and renewable energy sources such as wind and solar — when 10 percent of their customers can choose lower-price alternative See Utilities, Page 25

Focus: Law

New rules make tax inversion a moving target, Page 16

Company index These companies have significant mention in this week’s Crain’s Detroit Business: Adoba Dearborn/Detroit . . . . . . . . . . . . . . . . . . . . . 7

Car thefts hit the brakes

Alpha Telsys Consulting . . . . . . . . . . . . . . . . . . . . 23

Improved police work, high-tech auto security lower crime numbers

Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Bartech Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Bodman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Brodhead Armory Preservation Society . . . . . . . . . . 1 Busted! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 CC Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Common Ground . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . . 3 Craft Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Delphi Automotive . . . . . . . . . . . . . . . . . . . . . . . . 16 Detroit Police Department . . . . . . . . . . . . . . . . . . . 3 Detroit RiverFront Conservancy . . . . . . . . . . . . . . . 24 DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Energy Choice Now . . . . . . . . . . . . . . . . . . . . . . . . 25

BY AMY HAIMERL

Epic-MRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CRAIN’S DETROIT BUSINESS

Fourmidable Group . . . . . . . . . . . . . . . . . . . . . . . . 24 Henry Ford Physician Network . . . . . . . . . . . . . . . . . 4

uto thefts in the city of Detroit are down nearly 20 percent compared to this time last year. And they’re down nearly 60 percent since 2005, when the city clocked more than 20,000. The numbers are falling thanks to police work but also because cars are more sophisticated. Newer models won’t start withEYS TO out a key, making hotKEEPING CAR wiring vehicles almost Tips for impossible. businesses and “As technology has individuals, changed in the cars, it’s Page 22 become more difficult for thieves to steal cars,” said Sgt. Patrick Saunders with the Wayne State University Police Department who has been on assignment with Detroit Police Department’s auto theft division for the past two years. As of Nov. 9, there had been 9,120 autos stolen in the city, compared to 11,189 in 2013 and 11,504 in 2012. Detroit experiences the most auto thefts in the state, followed by Warren, Flint, Dearborn and Southfield, according to the Michigan Automobile Theft Prevention Authority 2013 annual report. “Auto thefts are down across the state, and part of that is the work that is being done in Wayne County,” said Dan Vartanian, executive director of the ATPA. “A lot of that is happening in Detroit.”

Honigman Miller Schwartz and Cohn . . . . . . . . . 1, 17 HR Solutions Group . . . . . . . . . . . . . . . . . . . . . . . 13 Jewish Family Service of Metropolitan Detroit . . . . 11 JVS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Keller Williams Lakeside . . . . . . . . . . . . . . . . . . . . 23 Leader Dogs for the Blind . . . . . . . . . . . . . . . . . . . 12 M1 Concourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 M-1 Rail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 MedNetOne Health Solutions . . . . . . . . . . . . . . . . . 4 Michigan Capital Partners . . . . . . . . . . . . . . . . . . 21 Miller, Canfield, Paddock and Stone . . . . . . . . . . . 16

See Theft, Page 22

MSX International . . . . . . . . . . . . . . . . . . . . . . . . . 1 PJ’s Lager House . . . . . . . . . . . . . . . . . . . . . . . . . 22 Plante Moran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 KENNY CORBIN

As a restaurateur a decade ago, Lee Padgett worried about auto thefts. Today, she has a new business, but car thefts are an old concern.

Public Sector Consultants . . . . . . . . . . . . . . . . . . . . 3 Sam Bernstein Law Firm . . . . . . . . . . . . . . . . . . . . 18 Trinity Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Trott & Trott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

DECLINE IN THE D

Visteon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Wayne State University . . . . . . . . . . . . . . . . . . . . . 16

Cars stolen in Detroit, 2006-Nov. 1, 2014

Wayne State University Police Department . . . . . . . 3

ISTOCK PHOTO

TOP 5 COUNTIES FOR CAR THEFTS These are the top five Michigan counties for vehicle thefts based on the number of cars stolen in 2012. All five counties have seen significant declines since 1996.

Department index

9,120 YTD *

11,189*

11,504**

11,238

12,563

13,252

16,117

19,655

22,918

BANKRUPTCIES . . . . . . . . . . . . . . . . . . 5 Wayne: 15,352

-64% -31.2% -52.4% --71.4%

’06

’07

’08

’09

’10

’11

’12

’13

Macomb: 1,950 Oakland: 1,850 Genesee: 952

’14 --60.4%

*Data from Detroit Police Department ** 2006-12 data from Michigan Automobile Theft Prevention Authority

Kent: 611

Source: Michigan Automobile Theft Prevention Authority 2013 annual report

BUSINESS DIARY . . . . . . . . . . . . . . . . 20 CALENDAR . . . . . . . . . . . . . . . . . . . . 20 CLASSIFIED ADS . . . . . . . . . . . . . . . . 21 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 6 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 6 MARY KRAMER . . . . . . . . . . . . . . . . . . 6 OPINION . . . . . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 20 RUMBLINGS . . . . . . . . . . . . . . . . . . . 26 WEEK ON THE WEB . . . . . . . . . . . . . . 26

THIS WEEK @ WWW.CRAINSDETROIT.COM

10 D-lights (and a bonus) Small-business reporter Amy Haimerl went in search of some of her favorite Detroit-centric and Detroit-made gifts. Read her blog to see what she found, crainsdetroit.com/blogs.

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

Doctors see potential revenue boost under Medicare changes, telehealth BY JAY GREENE CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

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Primary care physicians stand to earn additional revenue starting Jan. 1 under Medicareâ&#x20AC;&#x2122;s new fee schedule for care coordination of chronically ill patients and for using certain telehealth services. To bill for the $40.40 per member per month fee, physicians must offer some type of 24/7 access, a minimum of 20 minutes per month of clinical team time, a creation of care plan, coordinate communitybased services and agree to manage hospital, emergency department and home care services. Several doctors in metro Detroit interviewed by Crainâ&#x20AC;&#x2122;s believe some provisions of the 2015 Medicare fee schedule â&#x20AC;&#x201D; that also includes expansion of billable telehealth services â&#x20AC;&#x201D; have the potential to add to practice revenue and improve continuity of care. Rose Ramirez, M.D., a family practice doctor in Grand Rapids, said the Medicare payment has some strings attached, but most physicians who operate patientcentered medical homes will be able to comply. â&#x20AC;&#x153;We applaud any effort to reimburse physicians for all the time they put Ramirez into taking care of patients,â&#x20AC;? said Ramirez, who is president-elect of the Michigan State Medical Society. Medicare payment codes also have been expanded to include seven new telehealth services. They include annual wellness visits, psychoanalysis, psychotherapy and prolonged evaluation and management services. â&#x20AC;&#x153;This is long overdue,â&#x20AC;? said Ramirez. â&#x20AC;&#x153;It will be a tool used to communicate with patients who live in remote rural areas and maybe are too sick to come into the office.â&#x20AC;? Ramirez said her practice will set up a quiet room with a computer and video camera to conduct telehealth consultations. â&#x20AC;&#x153;This is such a patient satisfier and, for patients with busy schedules, will save them time away from work,â&#x20AC;? she said. However, Ramirez acknowledged that the Medicare revenue gains could be overshadowed by a scheduled 21 percent Medicare physician fee cut on Jan. 1, which goes into effect March 31. Each year since 2003, Congress has passed bills to delay the cuts, but only for 12 months. The cuts are mandated by the 1997 Balanced Budget Amendment. â&#x20AC;&#x153;One reimbursement goes up, the rest go downâ&#x20AC;? if Congress fails to act, said Charles Kelly, D.O., CEO of Henry Ford Physician Network in Detroit, adding: â&#x20AC;&#x153;If (sustainable growth rate) moves forward, the physician will actually wind up with less money to provide care as well as coordination of care.â&#x20AC;? Kelly said Medicare is beginning to see that improved results

need care coordination, and the fees help defray costs for patients with multiple chronic diseases. â&#x20AC;&#x153;It costs integrated provider networks and Kelly integrated delivery systems like Henry Ford Health System significant dollars to provide these resources,â&#x20AC;? Kelly said. Ron Williamson, M.D., a primary care physician affiliated with Rochester-based MedNetOne Health Solutions, an 800-member physician organization, said the care coordination fee has the potential to add revenue to his solo practice. â&#x20AC;&#x153;It is too long in coming, and something that is going to benefit primary care physicians,â&#x20AC;? said Williamson, who practices in northwest Detroit and also is affiliated with St. John Providence Health System. â&#x20AC;&#x153;We put in a lot of hours, a

lot of work in coordinating patient care already. It is good they are recognizing that.â&#x20AC;? Williamsonâ&#x20AC;&#x2122;s solo medical practice, which includes a mental health specialist and a care manager, consists of 30 percent Medicare, 30 percent Medicaid and the remainder private pay. Williamson said the only challenge he sees in qualifying for the fee is filling out the paperwork. â&#x20AC;&#x153;It depends on the format they want the information.â&#x20AC;? Communicating with other doctors using electronic health records (EHRs) also could be a problem, Williamson said. â&#x20AC;&#x153;Doctors have different EHRs and canâ&#x20AC;&#x2122;t communicate directly with each other that way. It will be another obstacle to overcome, but this is the future of medicine,â&#x20AC;? Williamson said. â&#x20AC;&#x153;We are moving in the right direction.â&#x20AC;? Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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THE MILLER LAW FIRM

Visteon in talks to sell stake in climate control joint venture

Changing the Odds in our Clients’ Favor

BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

Visteon Corp. confirmed last week that it’s engaged in discussions with a private equity firm to sell its stake in South Korean joint venture Halla Visteon Climate Control Corp. Media reports in South Korea said Visteon and South Koreabased Hahn & Co. had signed a preliminary agreement. Visteon plans to sell its nearly 70 percent stake for $3.6 billion, the Korea Economic Daily reported. However, Visteon said in a statement that “there can be no assurance these discussions will result in any transaction or on what terms any such transaction may occur.” The deal would mark the end of a tumultuous few years for the Halla Visteon venture. In 2012, two years after emerging from bankruptcy and still struggling to reach profitability, Visteon sought to own outright the Halla joint venture. In July that year, Van Buren Township-based Visteon said it would offer $805 million to acquire the 30 percent stake in Halla that it didn’t already own. But the deal was ultimately rejected by Korea’s National Pension Service, which held an 8 percent stake in Halla. The pension group said the offer was low compared to long-term profits. The failure to secure the deal ultimately led to Visteon’s board parting ways with then-CEO Don Stebbins. In September 2012, Visteon, under new CEO Tim Leuliette, sold its global climate control business to the $4 billion Halla joint venture. The move was made to make a sale of the venture, Leuliette told Crain’s at the time. Earlier this year, Halla Visteon agreed to acquire the thermal and emissions business from Novibased Cooper-Standard Automotive Inc. for $46 million. The deal beefed up the venture’s product line in North America and Europe. Halla Visteon Climate Control’s customers include General Motors Co., Ford Motor Co., Chrysler Group LLC, Tesla Motors, Honda Motor Co., Nissan Motor Corp., Volvo Car Corp., Volkswagen AG, BMW Group and Mercedes-Benz. It operates 35 plants in North and South America, Europe and Asia. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinwalsh

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CRAIN’S DETROIT BUSINESS

OPINION

MARY KRAMER

Detroit’s reputation Public transit will need push improves among biz D

etroit’s speedy course through bankruptcy is remarkable, but even more remarkable is the sea change in the city’s narrative — and how it is perceived around the

state. As Chad Halcom reports on Page 1, a survey commissioned by Crain’s Detroit Business and the law firm Honigman Miller Schwartz and Cohn, shows strong support for investing in the city’s recovery among business owners and executives in the suburbs and beyond. Business sees Detroit as critical to the state’s overall economic success, pollster John Cavanagh tells Crain’s. That’s a big improvement over the days when many in business preferred to think of Detroit as a part of the state it would happily see secede.

Dear Canada, sorry for Obama snub As we gave thanks last week, we realized one big thank you would not necessarily be coming from Washington, so let us send it, post-haste. We apologize to our Canadian neighbors for President Barack Obama’s insulting disregard, the latest evidence in a press conference and speech delivered in Australia last week when he disparaged the XL Keystone pipeline. He basically described the project as one that would allow Canada to ship its oil to “world markets, not to the United States,” making it easier to decide it would simply add to greenhouse gases and shouldn’t be supported. Two things are wrong about that assessment. First, the oil would be refined in the Gulf Coast into such products as gasoline and diesel fuel. That means jobs. Second, it ignores the opportunity that selling the oil “everywhere else” Crude oil pipe, crude comment. could help all U.S. allies reduce dependency on Russian or Middle Eastern oil and gas sources. So from either economic or national security perspectives, you can make an argument in favor of the pipeline. Canada remains the best ally and neighbor the U.S. — and Michigan — could want, which makes its ill-treatment by the president ever more mystifying. Whether it’s U.S. reluctance to fund a customs plaza for the new international bridge or the president’s refusal to endorse the Keystone pipeline, Canada is on the losing end. And so are we by stiffing so supportive a neighbor that surely deserves better treatment.

Is Southeast Michigan really ready to expand public transit? And will we pay for it? The answer will come in November 2016 when voters have a chance to approve a dedicated revenue stream to create bus rapid transit along main arteries in the region. But the specific ask — Sales tax? License plate tax? Millage? — is unknown. And just what voters will be buying isn’t clear, either. The vision is to create a high-speed network of commuter buses with limited stops along main arteries like Woodward, Gratiot and Michigan avenues as well as east-west routes like Eight Mile or Big Beaver. The fledgling Regional Transit Authority is working on feasibility studies with its new CEO, Michael Ford, a transplant from Oregon by way of Ann Arbor, where he led the charge to persuade voters to endorse a transit millage earlier this year.

Last month, a faithbased coalition joined the nonprofit Harriet Tubman Center and elder agencies to host a forum at Ford Field to build support for this still-evolving vision. The star of the show was Jason Jordan, who offered advice and video clips from winning — and losing — campaigns from around the country compiled by his clearinghouse, the Center for Transportation Excellence in Washington, D.C. “Not everybody uses it, but everybody needs it,” one campaign pronounced. Like a baby boomer whose aging parent needs a caregiver who relies on the bus to get to the job. In conservative Utah: “What do you get when you are not in traffic? Time with family.” In Austin, the pitch was: “If we don’t do something, the laid-back town we love will become a stressed-out city we don’t.”

Storytelling is key, Jordan said. And it will take at least $1 million to mount a campaign — plus some very visible champions, he added. So who are our champions? Regardless of how the storytelling evolves, 2016 is looming; it isn’t too early to identify champions for the cause. Sports figures? Labor leaders? Business types? College presidents? Maybe all of the above. Southeast Michigan’s “story” could vary, too. Millennials want to text, not drive. Business owners need ways to get employees to work more easily — and faster. Or maybe it’s simply a selfish desire to reduce the hassle in your own life: “I support transit to keep I-75 and I-696 less congested.” Regardless of what your story is, if you want to support expanded transit, you can email info@rtasoutheastmichigan.org. 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 Wall Street Journal column missed the point Editor: In his Wall Street Journal column on Nov. 15 titled “A solvent Detroit isn’t a self-sustaining Detroit,” Holman Jenkins argued that saving the collection of the Detroit Institute of Arts as a centerpiece of the city’s bankruptcy plan of adjustment places too much emphasis on restoring past glory and too little upon sustaining Detroit for the future. He bases his argument on the city’s impoverished “consumer punching weight” and muses whether the DIA might be better off located in “Guangdong Province from which the city would be collecting a nifty royalty while bearing none of the costs.” Detroit’s leaders who shaped the plan of adjustment do not deserve such cavalier slaps. What Jenkins misunderstands is that the art collection was not

Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com saved for the city alone but also for the Detroit metropolitan region of 4.5 million people and the state. Detroit is heavily dependent upon the health and prosperity of its metropolitan region and the state for its future sustainability. More Detroit residents work daily outside of the city than within. More suburban residents patronize Detroit sports events and cultural

venues than city residents. Revenue sharing from the state supports nearly 25 percent of the city’s budget. The DIA is an important asset for the region, and the state and its residents have a considerable “consumer punching rate.” No one in Detroit has lost sight of the need to avoid resting upon past glory in exiting bankruptcy. Rather, there is clear focus upon the need to rebuild a diversified Detroit economy for a smaller population. The recently unveiled Detroit Future City Framework Plan has been prepared to do just that. However, whatever the future economy and size of the city’s population may be, sustainability will depend heavily upon support of surrounding communities and the state. John E. Mogk Professor of Law Wayne State University Detroit

KEITH CRAIN: This year, it comes earlier than ever I guess we can call it “Black Thanksgiving.” It used to be “Black Friday” — the day when retailers saw big profits. But now it’s at least a day earlier, on the actual holiday itself. Forgive me if I sound a little like Scrooge, but I remember when there was a certain sobriety to the Christmas season. Even with the Macy’s parade in New York City and the Hudson’s parade in Detroit, we really didn’t worry too much about Christmas shopping until Thanksgiving was over. I can imagine we may soon be

asked to start shopping sometime between the Fourth of July and Labor Day. It will be our patriotic responsibility to help the national economy by participating in shopping for longer and longer periods. Retail marketers are working hard to get us in a frenzy earlier and earlier. I remember when the most we would get excited about was the Lions playing on Thanksgiving

against our lifelong rivals, the Chicago Bears. That was a frenzy. And I am not even counting the newfound excitement on the Internet. If we start shopping in stores after July 4, maybe we can get bombarded with holiday deals at Memorial Day. Are we actually spending more money, putting more cash in the economy? Or just spreading it out over more time? Stores and brands are certainly

spending more marketing dollars, so I have to assume that they are getting a big return. If you count Web stores, we’ve got thousands of places to lose our identity — all while getting the deal of a lifetime with our online purchase. I am not even talking about the millions of dollars I’ve been awarded by people I’ve never met but who want to give me money — if only I would supply them with my bank account information. I never knew how fortunate I have been; maybe now I’ll have millions

to spend on holiday gift giving. And just as our political campaigns — and their round-theclock advertising — ended in early November, we can now look forward to a new barrage of advertising messages to show me what I have wanted to give to those folks near and dear to me. It’s that time of year and we are all fortunate to be able to share it with friends and family. I am only sorry that it doesn’t happen a little after Thanksgiving, so I could just enjoy the football game.

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Adoba Hotel’s new owner meets with franchises, shops for new flag BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

The state’s second-largest hotel, the former Hyatt Regency Dearborn, could soon have a new flag. Since taking over management of the hotel Nov. 1 under a five-year contract, Longview, Texas-based Lodging Host Hotel Corp. has met with at least seven well-known franchises, said CEO Kevin Hilchey. They include Marriott International Inc., Best Western International Inc., Wyndham Worldwide, Choice Hotels International Inc. (with brands like Comfort Inn, Comfort Suites, Clarion, Sleep Inn and EconoLodge), and InterContinental Hotels Group PLC, which owns the Crowne Plaza and Holiday Inn brands, among others. Other franchises, including Starwood Hotels and Resorts Worldwide Inc and Hilton Worldwide, are set to tour the property this month, Hilchey said. The 772-room hotel and conference center, currently operating as the Adoba Dearborn/Detroit, is a prominent property with a good past, Hilchey said. It’s also the kind of property that doesn’t get built any more because of the cost, and it’s in an area where the economy is recovering. “All of the brands would like to have their names attached to the property ... it is a flagship for the Dearborn area,” he said. “I think there’s not going to be a problem branding the property.” Lodging Host has operated properties for most of those flags during its 30-year history, including many award-winning properties, Hilchey said. It operates eight hotels across Texas and New Mexico under flags including Residence Inn, Holiday Inn Express, Staybridge Suites and Comfort Suites. “With any flag that comes, we’re going to have to do a property improvement plan with capital expenditures on the property,” Hilchey said. And members of the hotel’s Israel-based ownership group, Royal Realties LLC, “are committed to doing that,” he said. Experts have estimated the improvements needed would likely range from $10 million to $50 million, a range that’s not out of line, Hilchey said. Two years ago, when Hyatt pulled out of its long-term management of the hotel, sources said it was because Royal did not want to make the level of investment needed. Royal’s reluctance to make investments in the former Hyatt Regency, which it bought for a reported $12.5 million in August 2010, was again at the forefront when discussions with Carlson Rezidor fell through after Hyatt’s departure. Royal would not invest money in the former Hyatt, given that it planned to sell the hotel to Atmosphere Hospitality Management Services LLC, the hotel’s management group for the past two years, Hilchey said. Atmosphere ended its management of the hotel abruptly on Oct. 31, following nearly yearlong litigation filed against Royal. Atmosphere accused Royal of breach of contract after it tried to dismiss Atmos-

of the brands would like to have their “ Allnames attached to the property. ” Kevin Hilchey, Lodging Host Hotel Corp.

phere from its management contract and barred Atmosphere from buying the hotel. Royal argued that Atmosphere hadn’t run the hotel as well as it should have and didn’t have the means to buy it. The suit was dismissed Nov. 7 after the parties reached agreement during court-ordered mediation.

“Now that the property is not being sold, (Royal) will have to invest in order to get a respectable flag,” Hilchey said. The Adoba brand will be kept until Lodging Host and the hotel’s owners decide on a new franchise, he said, adding that the goal is to get a new flag before the end of the year.

COSTAR GROUP

Experts estimate that improvements needed at the hotel would range from $10 million to $50 million — a range not considered out of line.

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A CONVERSATION WITH

John Bebes, Plante Moran PLLC

Best-managed nonprofits

Nonprofits true to forms John Bebes, nonprofit national practice leader for Plante Moran PLLC, oversees the financial review of entries in Crain’s Best Managed Nonprofits contest. He talked with Crain’s reporter Tom Henderson about what to look for on a nonprofit’s IRS forms and where donors can go to vet a charity. When I look at quarterly reports for banks, I look at the tier-one ratio of equity capital to assets and at loan-loss reserves. Where on IRS 990s for nonprofits do you focus? I look at cash or what can be turned into cash in a hurry, and the ratio to liabilities. Do they have enough assets to cover liabilities over the next year? There are three categories of net assets. One is unrestricted assets, assets an organization can use as it sees fit. There are temporarily restricted assets, such as a pledge a donor pays off over time. And there are permanently restricted assets, where a donor says you can use this money only for X. Looking at the various assets gives you a feel for an organization’s liquidity. Is there a rule of thumb for how much a charity should spend on its mission, as opposed to overhead? The IRS doesn’t have a hard-and-fast rule, but it’s common thinking that the IRS will question it if an organization isn’t spending 60 percent on program services. Years ago the Free Press did an article looking at 990s and wrote about a client I had that spent zero on program services. But it was a new organization spending its money on a building and infrastructure. Now, it’s a 90 percent program-services organization. There was a white paper this year on the overhead myth that said having low spending on general overhead doesn’t necessarily make you a better organization. It might be because you’re not spending money on the right people or on infrastructure. You might not be building for the future.

ABOUT THIS YEAR’S CONTEST Common Ground, this year’s Crain’s Best-Managed Nonprofit Contest winner, will be honored at Crain’s Newsmaker of the Year lunch next year and will receive a $1,500 cash prize: $1,000 from Crain’s and $500 from Gary Dembs, president and CEO of the Nonprofit Personnel Network and 4th Sector Consulting in Southfield. Dembs also is a judge. The other judges: Karla Hall, manager, civic affairs, DTE Energy Co. Gerald Lindman, private nonprofit consultant. Also ran the former Center for Nonprofit Management at Lawrence Technological University. Richard Martin, chief advancement officer, Lutheran Social Services of Michigan. Donna Murray-Brown, president and CEO, Michigan Nonprofit Association. Jennifer Oertel, partner at Jaffe Raitt Heuer & Weiss PC and coordinator of the firm’s nonprofit practice group. The nonprofit practice group at Plante Moran PLLC in Southfield, led by partner John Bebes, did a financial analysis of the applicants.

THE FINALISTS Jewish Family Service: Shifting mission in era of health reform, Page 11 Leader Dogs: Puppy training ... behind bars, Page 12 JVS: HR outsourcing a new revenue source, Page 13

GLENN TRIEST

Common Ground President and CEO Tony Rothschild: “We’re not afraid to take risks. Sometimes you have to spend some money to develop an idea and not just wait for funding.”

Knocking down silos Common Ground cuts hospitalizations, costs by widening access to services BY SHERRI WELCH

Is seems counterintuitive that a nonprofit has to record a pledge as assets when it is made and not when the money actually comes in. If I pledge $5 million, the organization has to record it as revenue the year I make the pledge. But it books that into temporarily restricted assets, and then as I make payments over time, it gets reclassified into unrestricted assets. Those rules do go against the basic rules of accounting, which is to not count something until you have it. It can make it more difficult for organizations to fundraise. An organization can look richer than it really is. Tom Henderson covers banking, finance, technology and biotechnology. Call (313) 4460337 or write thenderson @crain.com.

Tom Henderson

CRAIN’S DETROIT BUSINESS

eeking ways to expand and improve its services for mental health patients in Oakland County, Common Ground looked in a surprising direction — inward.

It had offered a number of programs, including a crisis hotline, the mobile Crisis Intervention Recovery Team, a crisis residential program, a runaway and homeless youth shelter in Royal Oak, a transitional living program for homeless ages 16-23 and other services, such as its victims of crime counseling and advocacy program. But those programs had been operating in silos and rarely, if ever, were offered to the mental health clients it had been assessing for psychiatric hospitalization under a contract with Oakland County Community Mental Health Authority. In terms of the mental health contract, Common Ground’s sole function had been to serve as a gatekeeper. Did the client need

psychiatric hospitalization — yes or no? To improve outcomes for patients and reduce costs, Common Ground began offering the breadth of its programs to mental health clients as needed. As a result, psychiatric hospitalization rates for the 6,100 people it assists annually under the county contract have dropped to an average of 19 percent year to date from 45 percent in 2011. That’s saved Oakland County millions of dollars, President and CEO Tony Rothschild said, while helping improve outcomes for clients. Common Ground, which is operating on a $13 million budget for fiscal 2015, also restarted a mobile crisis team that had been dormant for five or six years because of funding cuts by shifting some of its funding from the county. The team responds to mental health crisis situations in the community, helping to de-escalate the situation and link that person and/or his or her family to needed services. The team also follows up with patients to ensure they are keeping to their mental health treatment plan and assistant area hospitals with follow up for mental health patients — again, helping clients manage their care and lowering hospitalization rates.

Common Ground currently serves 70,000 people each year, up from half that number in 2008. At the same time, in a bid to get ahead of the health care changes bringing behavioral and physical health together, Common Ground forged a collaboration with three other nonprofits. Partners 4 Health plans to use home visits and a triage approach to help reduce the issues that lead some patients to the ER for treatment time and again. With funding from at least three early grantors in hand, it’s preparing to launch a pilot with an undisclosed area hospital aimed at decreasing the high number of hospital visits for patients suffering from chronic physical illnesses. After being named a finalist in 2010 and receiving an honorable mention in 2004, Common Ground is Crain’s 2014 Best Managed Nonprofit.

WINNER

See Nonprofit, Page 10

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Finance: Best-managed Nonprofits

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Gary Dembs, a judge in the contest, is past chairman of Common Groundâ&#x20AC;&#x2122;s board and recused himself from deliberations about the nonprofit.

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â&#x20AC;&#x153;Sometimes you get hung up on different funding streams coming in instead of focusing on the people,â&#x20AC;? Rothschild said. â&#x20AC;&#x153;You have all sorts of compliance and paperwork, and youâ&#x20AC;&#x2122;re so busy doing that you forget you can help someone with a program you have right down the hall.â&#x20AC;? For a person in crisis, offering a range of services and referrals when needed from a single location is a huge step forward in improving client service, Rothschild said, since it prevents them from having to look up seven or eight telephone numbers for different types of assistance. Thereâ&#x20AC;&#x2122;s no other local crisis service that has the number of services Common Ground offers under one roof, Rothschild said. After adopting a recovery coach model that brought in peers whoâ&#x20AC;&#x2122;d suffered from mental illness and were managing it, Common Ground began to look for other ways it could better assist mental health clients. Its leadership traveled to Arizona to benchmark best practices at Recovery Innovations in Phoenix. The agency wrote new protocols on things such as internal referrals between programs and changed some job descriptions. Nurses shift-

Hitting the road Common Ground is now working to take its success in reducing psychiatric hospitalization rates in Oakland County on the road. Four years ago, Common Ground began offering mobile crisis response services under a contract with Genesee County Community Mental Health. More recently, it GLENN TRIEST This year, Common Ground consolidated programs into a began consulting former nursing home in the Oakland County government with Macomb complex. County â&#x20AC;&#x201D; which along with Wayne ed to doing medical assessments County has seen psychiatric hospirather than psychiatric screenings talization rates as high as 70 perto better serve the client and cut cent â&#x20AC;&#x201D; to set up a mobile crisis down on the number of people sent team and move mental health asto the ER. sessments out of the hospitals and When someone comes in now, into a separate crisis center. part of resolving the crisis is bringRothschild said he and Common ing in the expertise from Common Ground are intent on adopting best Groundâ&#x20AC;&#x2122;s other programs. management practices as well as A patient with schizophrenia, best practices in its programs. After for example, who is also in a do- seeing permanent endowments mestic violence situation that hailed as a best practice to help nonmakes it difficult to comply with a profits be sustainable, Common mental health treatment plan Ground began raising money for would be referred to the agencyâ&#x20AC;&#x2122;s one. Housed at the Community Foundavictims of crime program for coun- tion for Southeast Michigan, the fund seling and advocacy assistance. stands at $700,000-$750,000 today. Or, a 19-year-old who is homeThe nonprofit also is studying less and bipolar might be connect- what it would do if its current Oaked to Common Groundâ&#x20AC;&#x2122;s transi- land County contract was downtional housing. With a stable sized or other sources of funding living situation, a person is more are cut. likely to adhere to a plan to manPlanning efforts began four age the mental illness. years ago, with a $50,000 investment from Common Ground and each of the other founders: Southwest Solutions, Neighborhood Service Early this year, Common Organization and Oakland Family SerGround moved into a former nurs- vices. And Partners 4 Health officialing home in the county govern- ly launched late this summer. ment complex, consolidating its The new nonprofit plans to use a programs that had been housed on triage approach to help work todifferent floors of Doctorsâ&#x20AC;&#x2122; Hospital ward preventive care for chronic of Michigan in Pontiac and its crisis health issues that lead to high emerresidential program from Royal gency room and hospital visits. Oak. The arrangement was benefi- That could be connecting those pacial to Common Ground, since it tients with a primary care physiprovided a nonclinical, renovated cian or assessing their homes for isspace large enough to consolidate sues such as mold and themselves most of its programs. And in re- for depression and anxiety, subturn, the county is saving millions stance abuse and social isolation of dollars in hospitalization costs, leading to repeat visits to the ER. â&#x20AC;&#x153;The business plan calls for conRothschild said. tracting with insurance companies, Borrowed from Recovery Innovaespecially Medicaid insurance comtions, the design for the new site inpanies, because weâ&#x20AC;&#x2122;ll cut their costs corporates open spaces, new lightby reducing hospitalizations and ing and lots of couches to put people overuse of emergency departments at ease. Itâ&#x20AC;&#x2122;s been an important factor and doctors,â&#x20AC;? Rothschild said. in getting more patients to look into The joint nonprofit has secured the short-term residential place- initial grants from three funders, ments Common Ground offers on its including insurer Blue Cross Blue second floor as an alternative to hos- Shield of Michigan and plans soon to pitalization. The center provides begin a $500,000, six- to eightshort-term voluntary psychiatric month pilot with an undisclosed and substance abuse care. area hospital. Its design â&#x20AC;&#x153;says we respect you â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re not afraid to take risks,â&#x20AC;? as a person; weâ&#x20AC;&#x2122;re going to give Rothschild said. â&#x20AC;&#x153;Sometimes you you a first-class facility,â&#x20AC;? Roth- have to spend some money to develop an idea and not just wait for schild said. â&#x20AC;&#x153;All of those elements go into funding. â&#x20AC;&#x153;If itâ&#x20AC;&#x2122;s a good idea, money will deescalating a crisis, which means youâ&#x20AC;&#x2122;ll be more successful in help- come,â&#x20AC;? he said. Sherri Welch: (313) 446-1694, ing that person to come down from their crisis and have some plan for s w e l c h @ c r a i n . c o m . T w i t t e r : @sherriwelch managing their lives.â&#x20AC;?

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GIVING BACK TO

MICHIGAN Kroger is committed to Michigan Mic and its people and invested more than n $6 $6.1 million in cash, con merchandise and gift card contributions. This level of giving resulted from corporate corporate, customer and associate fundraising dur during 2013. Every year, we implement programs to support areas we feel have the greates greatest impact: hunger relief, volunteerism diversity and being a womenâ&#x20AC;&#x2122;s health, volunteerism, ou Kroger shoppers, our good neighbor. We thank our associates, vendors and com community partners who pro helped make these programs possible. These individuals understand that philanthropy isnâ&#x20AC;&#x2122;t eff to make Michigan temporary; itâ&#x20AC;&#x2122;s an ongoing effort eve better for everyone.

ÂŠ2014 The Kroger Co.

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Jewish Family Service shifts mission to meet needs in era of health reform To answer the need for health care for the uninsured, Jewish Family Service of Metropolitan Detroit launched Project Chessed a decade ago. The program provided pro bono health care for more than 1,800 uninsured people in the Jewish community through a network of 656 volunteer physicians, eight health care systems and five pharmacies. With the advent of the Affordable Care Act and Michigan’s Medicaid expansion, Jewish Family Service saw the need to shift the program’s mission. It trained staff in how to navigate the new health care exchange environment. In October 2013, Jewish Family Service relaunched Project Chessed to help the uninsured in Macomb and Oakland counties apply for health insurance through the feder-

FINALIST

tiative to help people living with chronic diseases such as diabetes, high cholesterol and heart disease build healthy eating, stress relief and fitness habits. Of the 100 people who participated in 2012-13, all of SAM WOLSON them diabetic, After the region was drenched by August flooding, Jewish 65 lost weight, Family Service set up a triage site in Oak Park to process started an exapplications for financial assistance. ercise proal health insurance marketplace. To gram, reduced medication needs date, the program has helped 4,200 or lowered their scores related to people navigate or enroll for health the measurement of average gluinsurance through the exchange. cose levels in the blood, Jewish At the same time, the agency Family Service CEO Perry Ohren launched a health and wellness ini- said. Last year, the program was expanded to 150 people. Jewish Family Service has responded to the changing needs in the community in other ways. Last year, it stopped serving as a local refugee resettlement agency when it saw the need for those services decline. That enabled it to concentrate on Ohren other community needs, Ohren said. After the historic flooding in August, the organization stepped in to provide flood assistance to members of the Jewish community. It has coordinated both financial grants and other resources such as donated furniture from Art Van Furniture and helped people apply for assistance from the Federal Emergency Management Agency. It already has administered nearly $700,000 in related assistance and expects to administer an additional $600,000 obtained from the Jewish Federation of Metropolitan Detroit and other funders and donors. To help build sustainable revenue for its programs, Jewish Family Service provides fee-based and full-fee transportation and social service coordination of services such as meal delivery and patient advocacy for seniors as well as general mental health counseling services for the community. Those revenue sources will contribute about $1 million of its $9.7 million budget for fiscal 2015, Ohren said. As part of a strategy to become one of the premier aging-in-place agencies in the region, Jewish Family Service developed with the Wayne State University Institute of Gerontology an assessment to gauge the impact the agency is having on senior citizens who remain in their homes. The organization is one of several members of a regional collaborative piloting the assessment. — Sherri Welch

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Leader Dogs unlocks new source for puppy training: Prison inmates Leader Dogs for the Blind looked to a surprising volunteer base to help it raise puppies: prison inmates. The organization launched its Prison Puppies Initiative over 10 years ago in Iowa correctional facilities. In July 2013, Leader Dogs expanded the program to Chippewa Correctional Facility in the Upper Peninsula and has since expanded it to Baraga Maximum Correctional

Facility in the U.P. and the G. Robert Cotton Correctional Facility in Jackson. The program taps model inmates to help raise for the first year puppies destined to become guide dogs. To date, 500 puppies have come through the program. The inmates have a 55 percent success rate, 11 percentage points higher than that for puppies raised

by volunteers in the general population. The initiative also improves relationships between corrections officers and inmates, because they must rely on each other. While inmates raise the puppy in the prison during the week, corrections officers take the puppy home on weekends to help socialize it and expose it to new environments. Last year, Leader Dogs served 300 people coming from the U.S., Canada, Spain, South America and Central America through its cane training, guide dog and kids camp programs. It’s operating on an $11 million budget that comes almost entirely from grants and donations. In an effort to minimize fraud, it regularly conducts fraud brainstorming sessions to adjust internal controls proactively. Leader Dogs has long relied on volunteers to help raise puppies. But more recently, it has expanded its use of volunteers. More than 350 people now come to help with tasks such as cleaning the kennels at the organization’s Rochester Hills campus and picking up clients at the airport, freeing the instructors to focus on training with the guide dogs and clients. — Sherri Welch

FINALIST

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JVS uses its strength in HR to create revenue source In 2001, JVS received a grant to develop a joint recruitment program for five other human service agencies that were advertising and recruiting for the same types of positions in Oakland County. The Southfield-based agency developed a program and led a team to recruit, screen and refer qualified candidates for direct care, personal care and housekeeping positions at the five nonprofits. The effort saved the other agencies staff and financial resources. And JVS saw a niche. “For many years, a flat (grant) allocation was good news, but it’s not after many years,” said JVS President and CEO Leah Rosenbaum. “HR was a strength for us. ... We could do Rosenbaum this for other organizations at less money,” Rosenbaum said, helping them while producing more revenue to fill the gap between growing demand and flat funding. With an annual budget of $21 million, JVS operates 80 programs in three areas: job placement, services for the developmentally disabled and senior services and respite for caregivers. To capitalize on demand for outsourced human resource functions, it launched the HR Solutions Group, a subsidiary providing human resource functions for other

FINALIST

COURTESY OF JVS

JVS senior HR specialist Laura Panoff discusses a new volunteer training program with Chris Allen, CEO of the Detroit Wayne County Health Authority. The authority contracts with JVS’ HR Solutions Group to handle its HR functions.

nonprofits and businesses. HR Solutions Group offers services ranging from turnkey HR

management to specific functions such as managing staff absences taken under the Family and Med-

ical Leave Act, staff training, development of job descriptions and criminal and reference back-

ground checks of potential employees. The subsidiary manages human resource functions for 13 agencies, including Gleaners Community Food Bank of Southeastern Michigan, Detroit Wayne County Health Authority, Alternatives for Girls and the Chaldean Community Foundation. Those services span 1,000 employees and bring in $750,000 annually to support JVS programs. During fiscal 2013, those programs served 16,386 people in metro Detroit. Through just one of its job placement programs, JVS serves as the janitorial company for 39 buildings on the Warren campus of the U.S. Army Tank Automotive Command, Rosenbaum said. JVS janitorial contracts have created about 300 jobs. Another JVS program works with veterans to reintegrate them into the community, engage them in volunteering, teach them computer skills to get them on email so they can reconnect with family and become competitive in the workforce, and places them in jobs with resumes and networking assistance. Last year, JVS provided direct placement services to more than 2,000 people, Rosenbaum said. — Sherri Welch

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REPORTER’S NOTEBOOK FROM LAW OFFICE TO HIGH OFFICE

Chad Halcom covers litigation and the defense industry. Call (313) 446-6796 or write chalcom @crain.com.

How Bernstein, Trott are preparing for new roles in public service, Page 18

Law: Trends in Business Law Chad Halcom

Growing firms turn to IPOs It’s no secret the IPO market is booming — U.S. deals this year are already more than $20 billion ahead of 2013 as a whole. But the volume of IPOs is largely midsized companies seeking modest capital raises to fuel growth or provide an exit for private equity and venture capital firms, said Jeffrey LaBine, deputy group leader of the corporate practice at Detroitbased Miller, Canfield, Paddock LaBine and Stone PLC. LaBine said his research suggests that more than 80 percent of all IPO issuers at year’s end will be emerging growth companies with less than $1 billion in revenue who qualified for easier market access under the federal Jumpstart Our Business Startups Act of 2012. Auburn Hills-based Unique Fabricating Inc. and Troy-based Talmer Bancorp, which reported recent revenue of $121 million and $361 million, respectively, each stated in a prospectus this year they qualified as emerging growth companies under the JOBS Act. Unique Fabricating seeks $15 million to $17 million via an IPO under a pending registration, and Talmer raised $202 million in February. “Overall, the market’s been performing very well the last 18 months, corporate growth has been quite good, and you can’t get money through other investment options like bonds,” LaBine said. The JOBS Act created a category of companies that can submit confidential draft registrations to the U.S. Securities and Exchange Commission and get more time to comply with the SEC’s full regulatory and fee structure after they go public, making IPOs more accessible. “For the middle-market guys who would be raising $30 million to $50 million for a growth plan, it can still be challenging to get financing. If I don’t want to sell my company and the bank won’t give me money, what can I do?” LaBine said. “This new option allows you to see what the SEC’s view is about your IPO, or for your banker to go out and try to engage interest — to make a trial run, without your competitors and everyone else necessarily finding out.” More than 850 global IPO deals have raised more than $186 billion in capital so far in 2014, including more than 300 raising more than $77 billion on U.S. exchanges, according to Ernst & Young LLP. More than 250 listings this year have been filed by companies looking to raise less than $50 million. Locally, Flint-based Diplomat Pharmacy Inc. wasn’t an emerging growth company at $1.5 billion in revenue, but it raised $173 million in October.

Firms looking to reincorporate overseas to trim taxes must consider new regulations BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

orporate tax inversions are an area of tax law that has brought recent scrutiny. Politicians call the practice “un-American,” while many corporations embrace the practice as a legal way to reduce tax burden.

In the past decade, as many as 45 companies have inverted — established a foreign tax domicile — including Troy-based Delphi Automotive plc. But in September, the U.S. Department of Treasury issued new rules aimed at thwarting the practice. Local tax experts say most clients aren’t participating in the activity, but curiosity is rising during immense government attention and increasing media coverage. For some, the benefits of a lower tax bill and showing better performance to shareholders outweigh the negative public and political perception. While inversion is still a relatively rare practice, the new rules also can put a few complications into international merger-and-acquisition talks, and a few negotiations already have become unhinged because of the new rules, local consultants say.

Unintended consequences At the center of the dispute is what the U.S. Internal Revenue Service calls tax manipulation by U.S.-based corporations operating globally. Under the U.S. tax code, domestic corporations must pay U.S. income tax on total global income, including that generated in other countries. The workaround, therefore, is to reincorporate under a new parent company in other countries.

On Sept. 22, Treasury and the IRS issued a notice to take targeted action against corporations reducing their U.S. tax burden abroad. The new rules prevent the use of loans to repatriate overseas sales, moving stock with cash or property to avoid taxes, using deferred earnings to prevent cash from coming ashore and using liquid funds as stock in local entities. (See box, next page.) The side effects of the rule changes have become a deal-breaker for some. The new rules killed a $54 billion deal this year between North Chicagobased drug maker AbbVie Inc. and Dublin-based Shire plc. Under the deal, announced in July, AbbVie would have acquired Shire and reincorporated in the United Kingdom, lowering its tax bill. To fund the deal, AbbVie planned to use billions in cash it held overseas, money that would not be taxed in the U.S. Without the deal, AbbVie probably will have to repatriate the funds to the North Chicago parent and pay U.S. taxes.

ISTOCK PHOTO

See Next Page

TAX INVERSION RULES: A MOVING TARGET

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In October, AbbVie announced it had abandoned the transaction because of the rules. The rule “is definitely having a dampening effect on cross-border M&A activity,” said Sudip Datta, a professor of finance and interim chairman of the department of finance at Wayne State University. “Every law (or rule) has unintended conDatta sequences.” Kalamazoo-based Stryker Corp. is still considering moving its legal base to the UK as part of a $16 billion inversion bid to acquire London-based Smith & Nephew plc, Bloomberg reported last week. Stryker has used foreign holdings to avoid U.S. tax on about $7 billion in accumulated for-

eign earnings, according to data compiled by Bloomberg. It paid a 17 percent effective tax rate in 2013, according to its annual filing, which is much lower than the U.S. corporate rate. The deal is awaiting UK regulatory approval and it remains unclear how the new Treasury rules will affect the deal.

Complex tax code Corporations move their tax base overseas to avoid the U.S. corporate income tax rate — which sits atop the world at 35 percent. But the tax code also provides deductions or loopholes to avoid that high rate. Under U.S. tax code, foreign sales are also taxed when the domestic corporation returns those funds to the U.S., which is why many companies use methods to keep cash overseas. The Wall Street Journal estimates that $2 trillion in profits are being held by U.S.-based companies overseas. Many argue the U.S. tax code is simply too complicated. For instance, General Electric Co.’s tax return is reportedly 24,000 pages.

After its emergence from Chapter 11 bankruptcy protection in 2009, Delphi set up its tax base in the United Kingdom. Its operational headquarters and executive team remain in Troy. The move raised the ire of the IRS, which issued a ruling in June that Delphi should be taxed as a U.S. corporation. In 2013, Delphi paid $256 million in taxes at a 17 percent effective rate, according to filings with the U.S. Securities and Exchange Commission. That figure could rise to as much as 22 percent under the U.S. tax code, the supplier said in a filing. Under the U.S. code, Delphi’s bill could have increased last year by more than $75 million, to roughly $331.3 million. Delphi reported net income of $1.4 billion on revenue of $16.5 billion in 2013. The company is appealing the IRS ruling and said it would litigate if the appeal is rejected. The new anti-inversion rules were championed by the Obama administration — President Barack Obama said companies were “gaming the system” in a July interview with CNBC. But the rules are only part of the solution for Michigan Democratic legislators U.S. Rep. Sander Levin and Sen. Carl Levin. Rep. Levin and Sen. Levin, who are brothers, were co-sponsors of the “Stop Corporate Inversions Act of 2014,” introduced in May. However, the bill never made it out of committee because House Republicans didn’t support it. “The administration has taken important first steps to stem the tide of inversions in the wake of Republicans’ refusal to act,” Rep. Levin wrote in an emailed statement to Crain’s. “Corporate inversions are costing the U.S. billions of dollars in lost tax revenue and putting an increasing burden on American taxpayers, who cannot just move their addresses overseas to avoid taxes.” Levin said he still wants anti-inversion legislation even with the new Treasury rules. Fiat followed suit this year when Fiat Chrysler Automobiles NV became its foreign parent company with a tax base in the U.K., although its executives continue to work from Turin, Italy. Levin declined to comment on Chrysler and Delphi. Despite the inversion of Fiat Chrysler, Auburn Hills-based Chrysler Group LLC did not follow suit, said Gualberto Ranieri, se-

nior vice president of communications for Chrysler. “Chrysler Group is not engaged in a corporate inversion and is not an inverted company,” the automaker wrote in an emailed statement to Crain’s. “Chrysler Group does and will continue to pay taxes in the United States.” Fiat Chrysler CEO Sergio Marchionne told reporters this year that tax avoidance was a major reason for the parent company to incorporate in the U.K. It’s unclear whether that move was to avoid U.S. or Italian taxes. Italy’s corporate tax rate is 31.4 percent. Inverting likely would have saved Chrysler Group million in taxes, but it didn’t make the move with its parent.

Public perception’s role Michael Antovski, a partner at Bodman PLC in Detroit, said public perception plays a major factor in preventing U.S. corporations from inverting. “Public perception means a lot. On Main Street, you’re hearing that tax inversioners are ‘unpatriotic,’ ” Antovski said. “That is playing a role in these transactions, given the political scrutiny, because you simply can’t predict the backlash.” Despite the high-profile examples, corporate tax inversions remain relatively rare, and local tax attorneys don’t expect an influx, especially given the new rules. “Locally, we’ve gotten requests

for how the rules will affect clients’ dealmaking abilities,” said James Combs, a partner and leader of the tax group at Detroitbased Honigman Miller Schwartz Antovski and Cohn LLP. “Regardless of the new rules, I always advise my clients to focus on whether a transaction makes business sense; any transaction for the tax benefit usually isn’t a good idea.” But who is benefiting from tax inversion? Government officials say corporations participating in tax avoidance are hurting the country — Rep. Levin said in May that participating in inversion is “undermining vital domestic investments.” But tax experts claim the moves benefit shareholders. “U.S. shareholders are the beneficiaries of these tax benefits — and we’re all shareholders, like it or not, through pension and investment funds,” said Datta, the Wayne State finance professor. “Either the government is losing and the shareholders are gaining or vice versa. Who makes better decisions about allocating funds?” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

and

SURVEY

Looking at Current Business Issues

MORE RESTRICTIVE INVERSION RULES What is a corporate inversion? A transaction where a U.S.-based company restructures to have a foreign parent company. Generally, this occurs so the overseas parent can keep the revenue of foreign sales offshore, thus not subjecting those sales to U.S. taxes. Provided the U.S. shareholders own at least 60 percent of the foreign parent company — but less than 80 percent — U.S. taxes can be avoided. What will the Treasury Department’s new rules restrict? So-called hopscotch loans, a financial strategy that reduces a portion of tax liability by avoiding dividends. Under current law, inverted corporations don’t pay tax on foreign profits until those funds are repatriated, or paid back to the U.S. firms in dividends. What inverted companies do to avoid this tax is make a loan to the U.S. parent instead of paying a dividend. They then repay that loan with the accumulated profits.

Under the new rules, these types of loans will be considered taxable under U.S. tax code. The new rules also prevent the foreign parent company from buying enough stock to take control away from the U.S. entity. It will also prevent the foreign parent company from selling its stock in the U.S. entity for cash or property to avoid paying U.S. taxes. To avoid U.S. taxes, the foreign parent must hold at least 20 percent, but not more than 40 percent, of the U.S. entity. New rules disallow the inverted company from using passive assets, also known as cash boxes such as cash or Treasury bills, as stock in the U.S. entity. Before inverting, the U.S. company was able to pay out extraordinary dividends to reduce its size and meet the 80 percent ownership threshold. The new rules ban this practice. The rules took effect Sept. 22. Source: U.S. Treasury and analysis by the Wall Street Journal

Highlights of the survey can be found in this issue and the full survey can be found at honigman.com or crainsdetroit.com This is the 25th in a jointly-sponsored series on critical business issues.

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From law office to high office: Trott, Bernstein transition BY BRIAN BOWE SPECIAL TO CRAIN’S DETROIT BUSINESS

When Richard Bernstein talks about stepping into his new role as a justice on the Michigan Supreme Court in January, he can sometimes sound a bit grandiose. “I’m just going to work harder. I’m going to be more intense. I’m going to be more focused,” said Bernstein, 40, who is in the process of hiring his clerk and administrative staff for the coming term following his election in November. “I’m going to make sure that my chambers are the most outstanding chambers you’ve ever seen, the most organized you’ve ever seen.” But as he prepares to take the bench, Bernstein has a more immediate task at hand — guiding the transition as he steps aside from his role heading the pro-bono public service division of his father’s Farmington Hills-based Sam Bernstein Law Firm PLLC. For attorneys who seek elected office, such as Bernstein and U.S. Rep.-elect David Trott, 54, taking office means stepping aside from legal practices they have spent a career building. Trott, of the Farmington Hills real estate firm Trott & Trott PC, agreed in August to sell his interest in the firm to partners Jeffrey Raff, Marcy Ford and Jeff Weisserman. The financial terms of the deal were not disclosed. Trott, who was elected to Michigan’s 11th District U.S. House seat in November, declined to be interviewed for this story, but Raff said the transition planning began several years ago, before Trott knew he was going to run for office. “I don’t know that the specific political aspirations had come about yet, but we knew something was going to come about,” Raff said. A plan was drawn up to ease the transition both on the operational front, as well as the client-relations front. Trott hasn’t been a frequent presence in the office for more than a year, and it has been a long time since he has had an active caseload, Raff said. All of this planning smoothed the transition. Trott’s election is “a great event for him as a friend, but sort of anti-climactic for the law firm, because the pieces have been in place for so long,” Raff said. Things are a bit more complicated for Bernstein. In his role, he was the public face behind high-profile cases that increased accessibility at the University of Michigan’s football stadium, forced the city of Detroit to fix broken wheelchair lifts on city buses, and helped provide disabled airline passengers relief under the Americans with Disabilities Act. The public service division “has affected entire industries in our

I think it took a “ while for me to get used to the idea that I was a judge, that I was going to be treated differently — even by people who knew me well.

”

Marilyn Kelly, former chief justice, Michigan Supreme Court

country as it pertains to inclusiveness for special-needs people or people with disabilities,” Bernstein said. That concern with disabled populations is directly related to Bernstein’s own struggles being blind. “The reason that I went to law school was because I wanted to make a difference in the lives of people,” Bernstein said, describing how his blindness added to his burden of getting through law school at Northwestern University. However, this sort of legal practice is specialized, costly and a unprofitable practice area for the firm. While the firm has not yet announced who will succeed him, Bernstein doesn’t worry that it will lose its appetite for this kind of work — in part because of his family’s involvement. While justices are only required by law to recuse themselves from cases involving their previous firms for two years, Bernstein has pledged that he will never hear a case from the firm for as long as he sits on the bench — which he hopes is in the vicinity of 30 years. “I never want to be in a situation where there’s even a question,” Bernstein said. One legal action that will continue after Bernstein takes his place on the bench is his suit over pedestrian safety in New York City’s Central Park. He suffered a broken hip and pelvis in 2012 after being struck by a bicycle in the park, and filed suit to force the city to make the park safer for the disabled. Because he is a plaintiff and is represented by outside counsel, Bernstein said his position on the court will not interfere with the suit. Former Supreme Court Chief Justice Marilyn Kelly understands the transition process Bernstein is See Next Page

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RICHARD BERNSTEIN: New Michigan Supreme Court justice is hiring his clerk and administrative staff while transitioning from the Sam Bernstein Law Firm PLLC.

going through. When she was elected to the Michigan Court of Appeals in 1988, she left her private practice, which focused mostly on domestic relations cases. Kelly said she was driven to seek office after 17 years in private practice because she wanted to take the broader view of law that judging requires. Rather than focusing on winning cases for clients, she said, she wanted to focus on which side the law really falls on — “which

DAVID TROTT: Before his election to the U.S. House, he sold his interest in Trott & Trott PC to his partners. Transition planning began several years ago.

side ought to win.” “I think it took a while for me to get used to the idea that I was a judge, that I was going to be treated differently — even by people who knew me well — because of my position,” Kelly said. “I also had to get used to the idea that I had to be responsible to a higher standard of conduct than I had been as a lawyer, because there are canons of judicial ethics that are in addition to the canons of

ethics that lawyers are bound by.” She said she missed the relationships with other attorneys and clients when she left private practice, but did not miss the headaches that go along with running a business. Kelly has been teaching law at Wayne State University since she stepped down from the bench in 2013 because of age limits. She was elected to the Wayne State Board of Governors in November.

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PEOPLE ARCHITECTURE Melanie Berger to business development director, health care practice, Harley Ellis Devereaux Corp., Southfield, from health care business development director, AECOM Technology Corp., Detroit.

Berger

LAW Michelle Crockett to director of professional development, Miller, Can-

field, Paddock and Stone PLC,

Crockett

Detroit, from general counsel, Education Achievement Authority of Michigan, Detroit.

Beth deBaptiste, John Forrest and Steven Raymond to non-equity shareholders, Butzel Long PC , Bloomfield Hills from partners, May, Simpson & Strote PC, Bloomfield Hills. Michael Witzke to deBaptiste member, McDonald Hopkins PLC, Bloomfield Hills, from partner, Witzke, Berry, Carter & Wander PLLC, Bloomfield Hills.

MEDIA Steve

December 1, 2014

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Chessare

president/marketing

to vice manager,

IN THE SPOTLIGHT Ghafari Associates has named Keith Sherman, CPA, as CFO. Sherman is filling a new position at the firm. He has more than 20 years of experience in the financial and accounting Sherman business. Before joining Ghafari, Sherman worked at Hino Motors Manufacturing USA Inc. (a Toyota Group Co.), where he oversaw the firm’s accounting and financing divisions. Before that, he worked at Grant Thornton LLP in its audit and business advisory practices departments. Sherman, 44, holds bachelor’s degrees in commerce and accountancy from the University of the Witwatersrand in Johannesburg, South Africa. He is a certified public accountant and chartered accountant, as well as a member of the American Institute of CPAs and the Michigan Association of CPAs.

Greater Media Detroit , Ferndale, from market manager. Daniel Seliger to executive vice president of content and marketing, Carbon Media Group LLC , Bingham Farms, from vice president, marketing, Dmedia, Birmingham.

CALENDAR TUESDAY DEC. 2 Michigan’s Got Talent Series. 11:30 a.m.-1 p.m. Automation Alley. Lunch ’n’ learn event on hiring and keeping talent features Chad Sibley, business systems project manager, Merrill Technologies Group; Danielle Bates, human resources manager, Research Into Internet Systems; and Robert Cohen, executive director, Jewish Community Relations Council. Automation Alley, Troy. $30 members at the door; $50 nonmembers at the door. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com.

FRIDAY DEC. 5 Professional Development Seminar: Networking 2.0. 8-10:30 a.m. Marketing & Sales Executives of Detroit. Gerry Weinberg, CEO of Gerry Weinberg & Associates/Sandler Training, shares how to maximize networking efforts. Management Education Center, Troy. $35 MSED members, $50 nonmembers. Contact: (248) 643-6590; website: msedetroit.org.

UPCOMING EVENTS 21st Century Workspace, Workplace, Workforce. 11:30 a.m.-1:30 p.m. Dec. 8. Inforum. Speakers include John Fikany, Microsoft Corp. vice president, who will discuss living in a mobile and cloud-centric world; Laura Feinauer, project leader for brand communications at Steelcase Inc., who will talk about the importance of place for employee well-being and engagement; and Michael

Haid, executive vice president, talent management and global strategic workforce consultant at Right Management, who will discuss how to align talent and business strategies. Detroit Marriott Renaissance Center. $40 members, $60 nonmembers, $25 students. Contact: (877) 633-3500. Register at inforummichigan.org.

State of the Region/Annual Meeting. 5 p.m. Dec. 10. Detroit Regional Chamber. The chamber discusses an analysis of business and economy trends. Westin Book Cadillac Detroit. $25 members, $595 includes membership. Contact: Janelle Arbuckle, (313) 596-0340; email: jarbuckle@ detroitchamber.com; website: detroitchamber.com/events. Holiday in the D. 6-10 p.m. Dec. 10. Adcrafters. Holiday networking and a benefit for Bottomless Toy Chest. MotorCity Casino Sound Board, Detroit. $80. Contact: (313) 872-7850; email: adcraft@adcraft.org; website: adcraft.org. Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. Dec. 11. With Anthony Earley Jr., chairman, CEO and president of PG&E Corp. Westin Book Cadillac Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org. Silver & Gold Awards. 10:30 a.m.-noon Dec. 12. Auburn Hills Chamber of Commerce. Awards recognize women-owned, engineering and small companies, plus volunteers and chamber supporters. Great Oaks Golf & Country Club, Rochester Hills. $40 members, $45 nonmembers. Contact Rebecca Wiles: (248) 853-7862; email: rwiles@auburnhillscham ber.com; website: auburnhillscham ber.com.

Morning Mingle. 8-10 a.m. Dec. 16. Detroit Regional Chamber. Members networking event. Detroit Athletic Club. Free for members, $585 includes membership. Contact Maggie Oldenburg, (313) 596-0482; email: moldenburg@detroitchamber.com; website: detroitchamber.com/events. Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. Dec. 16. With Lily Eskelsen Garcia, president of the National Education Association. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 9638547; email: info@econclub.org; website: econclub.org. 2014 Excellence in Southfield Awards. 7:30-9 a.m. Dec. 19. Southfield Area Chamber of Commerce and the city of Southfield. Kim Yost, CEO of Art Van Furniture, is the guest speaker at this breakfast. Hilton Garden Inn Southfield. $25 members, $35 nonmembers. Contact: Tanya Markos-Vanno, (248) 557-6661; email: tanya@southfieldchamber.com; website: southfieldchamber.com. Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. Jan. 8. With Michael Finney, president and CEO of the Michigan Economic Development Corp., and Rodrick Miller, president and CEO of the Detroit Economic Growth Corp. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@ econclub.org; website: econclub.org. 2015 AutoGlow. 4:30 p.m-1 a.m. Jan. 16. Ford Motor Co. Fundraiser benefits the Children’s Center; theme is “The Future Starts Here.” Ford Field, Detroit. $275 through Dec. 15, or $325 beginning Dec. 16. Contact: (313) 2627123; email: autoglow@thechildrenscenter.com; website: thechildrenscenter.com/autoglow.

BUSINESS DIARY CONTRACTS Akervall Technologies Inc., Ann Arbor, has an agreement with Adidas subsidiary Reebok-CCM Hockey Inc. to offer co-branded CCM mouthguards made with Akervall’s lightweight Sisu technology. The guards will be available in stores in the spring. Websites: sisugard.com. ccmhockey.com. Evans Distribution Systems, Melvindale, is the new warehouse for the

American Red Cross Southeastern Michigan Regional Chapter’s Disaster Services and Services to the Armed Forces. Evans is providing storage, handling, order processing and labor costs as an in-kind contribution. Websites: redcross.org. evansdist.com. P2R Associates, Livonia, has been named the public relations agency of record for Process Development Corp., Canton Township. Website: p2rassociates.com. Steve’s Blinds & Wallpaper, Sterling Heights, announced an agreement with Waverly, a brand managed by Iconix Brand Group Inc., to launch Waverly Custom Blinds & Shades. Websites: stevesblindsandwallpaper.com, waverly.com.

EXPANSIONS Pet Supplies Plus, Livonia, has opened a store in Edelweiss Village, Gaylord. Rainbow Child Care Center, Troy, has opened a school in Fayetteville, N.C. Website: rainbowccc.com/fayette ville2. Domino’s Pizza Inc., Ann Arbor, has opened a store in Nairobi, Kenya. Om Nom Nom Ltd. is the master franchise holder of Domino’s Pizza Kenya.

MOVES Woll & Woll PC, law firm, has moved from The Franklin, 29100 Northwestern Highway, Southfield, to 550 W. Merrill St., Birmingham. Website: wollandwollpc.com.

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Trinityâ&#x20AC;&#x2122;s earnings boosted by merger synergies, pay model BY BETH KUTSCHER CRAIN NEWS SERVICE

Trinity Health marked its first full fiscal year as a merged organization with an earnings report that its CFO said reflects its success in finding synergies and moving toward a value-based payment model. â&#x20AC;&#x153;We had a tremendously successful first year as a merged organization,â&#x20AC;? said Benjamin Carter, the systemâ&#x20AC;&#x2122;s CFO. â&#x20AC;&#x153;Our focus is really on transitioning to population health, making the investment in ACOs.â&#x20AC;? Livonia-based Trinity completed its merger with Catholic Health

East in May 2013, bringing together more than 70 hospitals in 21 states. Five months later, the system found a new CEO in Richard Gilfillan, M.D., who was most recently director of the CMS Innovation Center. Gilfillanâ&#x20AC;&#x2122;s arrival suggested that the system had an ambitious plan to move toward a payment-for-value health care delivery approach. Only a small percentage of revenue is currently coming from value-based contracts, Carter acknowledged. But the system is laying the groundwork. â&#x20AC;&#x153;As weâ&#x20AC;&#x2122;re renegotiating contracts with payers across the nation, weâ&#x20AC;&#x2122;re factoring in value-

based contracts as far as those discussions,â&#x20AC;? he said. In total, the merged organization reported a $382 million operating surplus on $13.6 billion in revenue, for an operating margin of 2.8 percent. When factoring in non-operating gains, the systemâ&#x20AC;&#x2122;s total surplus was $937 million. Trinity was able to realize $50 million in savings, mostly on the administrative side, Carter said. The system, which set a goal to achieve $300 million in savings over three years, has been leveraging its size to get better deals on purchases and reduce costs across the organization, from risk man-

Ex-Meritor CEO, Northstar founder create $147M fund to target Michigan suppliers BY DUSTIN WALSH CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Former Meritor Inc. CEO Chip McClure and founder of Northstar Capital LLC Russell Youngdahl Jr. have formed a new $147.5 million private equity fund to invest in small- to midsized suppliers in Michigan. The Jacksonbased fund, Michigan Capital Partners LP, will provide capital to suppliers with $20 million to $200 million McClure in revenue. The fund will consider companies in the business of machining, forming, tool and die, supply chain support and technology in the automotive sector. The fund will be capitalized by a number of private investors in the state and up to $22.5 million from the Michigan Strategic Fund, Michigan Capital Partners said in

a news release Tuesday. â&#x20AC;&#x153;There are more than 1,700 (tier-two and tier-three) suppliers in Michigan, and many of them are well-run organizations in need of a little investment and operational expertise,â&#x20AC;? McClure said in a statement. â&#x20AC;&#x153;Our teamâ&#x20AC;&#x2122;s background in the auto industry allows us to provide these companies with the boost they need to compete and grow, not only with capital, but with strategic support to help drive operational improvements, and ultimately, economic growth in the state.â&#x20AC;? The investment fund plans to maintain its equity interest in invested companies for seven to 10 years. McClure served as the chairman, president and CEO of Troybased Meritor Inc. from 2004 through May 2013. He also serves on the boards of directors for DTE Energy Co., Penske Corp., Invest Detroit and on the executive committee for the Detroit Regional Chamber. Youngdahl is also the founding

member and CEO of Plymouthbased Grow Michigan LLC, an investment firm focused on growth capital for Michigan small businesses. He was also the president and CEO of Shane Capital Corp. The new fund follows the announcement of another small- to midsized business fund earlier this month. The Detroit-based Michigan Minority Supplier Development Council launched a $100 million fund focused on minority-owned businesses on Nov. 12. The Minority Business Access Fund is designed to provide funding to small- and midsized businesses by providing capital not readily available by traditional banks. That fund will allocate financing at or below bank rates to small- to midsized businesses â&#x20AC;&#x201D; from $100,000 to $25 million per transaction â&#x20AC;&#x201D; from four anonymous private equity firms. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

agement to information technology. The system also has reduced its full-time equivalent employees by 1 percent since the beginning of the year. It incurred $46 million in restructuring costs, mostly related to severance and benefits, according to its earnings report. However, it said it expects lower labor costs going into fiscal 2015. Trinity also froze the legacy Trinity Health pension plan to move employees into a defined contribution plan, Carter said. Vested employees had an option to receive a lump-sum payment, which resulted in additional costs for the system but will lead to long-

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Ahead of its 2015 grand opening, sales of the luxury â&#x20AC;&#x153;car condosâ&#x20AC;? at the M1 Concourse development in Pontiac are picking up. The development, a $40 million private car garage, 1.5-mile race track and auto-theme retail, has sold 40 of its first 80 available private garages, M1 Concourse said in a press release on Nov. 25. Billed as a country club for car buffs, the development sits on 87 acres formerly owned by General Motors Co. at Woodward Avenue and South Boulevard in Pontiac. It will house more than 250 climate-controlled garages for owners to store vehicles. The garages feature space for several vehicles and include a bathroom and loftstyle lounge area for entertaining. The complex is also expected to house a restaurant, clubhouse,

40,000-square-foot event center as well as retail shops and the 1.5mile racetrack. The owners of the new garage include Van Conway, CEO of Birmingham-based Conway Mackenzie Inc.; Tom Bailey, president of Waterford Township-based Alarm Services Network Inc.; Robert Hertzberg, partner at Pepper Hamilton LLP in Detroit; and Laurie Cunnington, partner at Walled Lakebased Cunnington & Cunnington. â&#x20AC;&#x153;When I heard about M1 Concourse, I was immediately sold,â&#x20AC;? Conway said in a news release. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m purchasing multiple units with a few friends to combine into the ultimate space to enjoy our love of cars and motorsports. I couldnâ&#x20AC;&#x2122;t think of a more perfect place for my collection of high-performance vehicles.â&#x20AC;? The first units sold for $110,000 to $120,000 for 600 square feet of space and $230,000 to $250,000 for

1,200 square feet. Those units come finished with drywall, electricity, lighting, HVAC, concrete floors and plumbing, M1 said. Phase 1 of the project, which includes the first 80 private garages, is expected to be completed by late summer 2015. Brad Oleshansky, former CEO of New York-based MXM Health and vice president at Sony Corp., created the development. He purchased the land from the Revitalizing Auto Communities Environmental Response (RACER) Trust in May 2013. Birmingham-based real estate investment firm Uniprop Partners Ltd. provided an equity investment in the deal. RACER took over the land, which was a former GM manufacturing plant, in 2011. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

Call Us For Personalized Service: (313) 446-6068 CLOSING TIMES: Monday 3 p.m., one week prior to publication date. Please call us for holiday closing times. FAX: (313) 446-1757 E-MAIL: cdbclass@crain.com INTERNET: www.crainsdetroit.com/classifieds

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December 1, 2014

CRAIN’S DETROIT BUSINESS

Theft: Cars still stolen in Detroit, but number is decelerating ■ From Page 3

Target areas Plummeting auto thefts are good news for the city and the region, but there are still thousands of cars taken each year, and each one brings a heightened perception that the city is ever-more crimeridden. Certain parts of Detroit already have a reputation for being car-theft magnets, and any new incident reinforces the perception. Corktown, for example, is considered a prime target because it has a large volume of visitors to the local bars and restaurants as well as easy access to the freeways. And certainly police warnings posted around venue such as Slow’s Bar BQ and the soon-to-open Gold Cash Gold restaurant foster both awareness and fear. But Saunders said the data doesn’t show that any area of Detroit is more of a target than others. The crews move in waves, hitting an area, then moving on to another. Even Corktown, he said, isn’t a prime target despite its proximity to I-75. “We find most of the cars there within a few blocks of where they were taken,” he said. There has been a recent spate of car thefts in the West Village, however, particularly of Ford Fusions. The community Google Group and email list light up with each new incident, residents alarmed and alert to what is happening. Residents talk about how many cars they’ve had stolen over the years, ranging from several to several dozen, with both steely resolve and hardened laughter. Jason Peet has been a resident in the east-side community that abuts Indian Village for the past 12 years and has been a landlord for the past six. His mother’s car was stolen once, but that’s been as close to auto-related crime as he’s come until this fall. A brother and sister, excited about living in the neighborhood, had moved into his rental property. But on their first night as Detroiters, thieves nabbed the brother’s company-issued Ford Fusion, Peet said. A month later, the replacement car, also a Fusion, was taken. After strike two, the tenant’s employer refused to issue another company car unless he agreed to move out of Detroit. And as an outside sales rep, he needs a company vehicle. “He calls me and says, ‘I have to break my lease. I can’t afford to lose my job,’” Peet said. “I’m sad about losing a tenant, but I can find another. I’m more sad that there is a brother and sister who tried to live in the city and had to leave. I can almost guarantee they won’t become part of this new Detroit. Their partners, their family, everyone they associate with know this story, and it layers on and reinforces the stereotypes of Detroit. So even though theft is down, the spinoff of just one crime is huge.”

Battling perception Local small-business owners feel that first hand. They find themselves spending time not just confronting real auto-related crime but rebutting perceptions that go viral. “Auto theft is one of those crimes

HOW DETROIT COMPARES NATIONALLY

Why is the 2004 Chevrolet Impala so coveted among thieves? Its parts are rare and it’s easier to steal.

TOP TARGETS The 10 most stolen vehicles in Michigan, 2013 2004 Chevrolet Impala 2000 Dodge Caravan 2013 Ford Fusion 2013 Ford Taurus 2013 Chevrolet Malibu 1999 Chevrolet pickup, full size

2000 Jeep Cherokee/Grand Cherokee 1999 Ford pickup, full size 2004 Pontiac Grand Prix 2013 Ford Explorer, 2013

Source: National Insurance Crime Bureau

that are personal to somebody, so I think they perceive it as more likely to happen to them than it is statistically,” Saunders said. Lee Padgett, for example, regularly takes phone calls from potential customers who want to visit her bra shop, Busted!, in Midtown and downtown Detroit but are concerned about the safety of their cars and themselves. “They want to know, is it a guarded parking deck or is it a well-used parking deck,” Padgett said. “Is it well lit? But once I say, ‘yes,’ they are reassured.” When Padgett opened her first store last December, the parking structure at the Park Shelton across

from the Detroit Institute of Arts building was one of the key selling points — but because of the weather, not because of safety. The same goes for her new second location, downtown in the Penobscot Building. “I didn’t want to get wet, or it to be icy!” she said. “I was worried about the weather, not my safety.” That’s a significant change from a decade ago when she and her husband, Patrick, ran the oncepopular Café de Troit in downtown. Then she struggled with weekly break-ins and auto thefts, and her employees didn’t always feel comfortable walking to work. “The atmosphere is very different now than then,” said Padgett,

KEYS TO KEEPING CAR THEFT IN PARK For businesses

䡲 Install the best lighting. “The biggest thing businesses that have parking lots can do is get lighting,” advised Sgt. Patrick Saunders of the Wayne State University Police and Detroit Police Department auto theft team. For individuals

䡲 Don’t leave your keys in the car. “A lot of the new cars have the push-button start where you have to have a key fob. But people leave the key fob in their car all the time, making their car easy to steal,” said Saunders. 䡲 Park in a well-lit area. “People coming in for a sporting event and try to save $10 on parking. You might save $10 this time, but in the long run you pay a deductible,” Saunders said. 䡲 Don’t leave title and registration in the glove box. “It’s an open invitation to have that car resold. So where should you keep it? Keep it in your wallet or purse. Just don’t keep it in your car,” said Dan Vartanian, executive director of the Michigan Automobile Theft Prevention Authority. 䡲 Get a Club or drive a stick shift. “Whether you live in the city or suburbs, you have to always assume that there is somebody out there who wants your car. Put an additional layer of protection on your car, like a club, to tell a thief it will take more effort to steal this car,” said Terri Miller, executive director of Help Eliminate Auto Thefts (HEAT). 䡲 Put your purse in your trunk before you leave. “I don’t know how many purses were stolen back in the day because people would arrive at the Magic Stick or wherever and then put their purses in the trunk. Put those purses in before you get there,” Saunders said. 䡲 Don’t get caught with packages. “A lot of people go to the mall, come out with a bunch of packages and then go back in. If you’re going to do that, move your car. Drive off so that the people watching you haven’t just watched you put several hundred dollars of valuable items in your car and then go back inside.” 䡲 If the theft is in progress, call the cops. “Try to get a description of the person, what they were driving, and the direction. Get the plate number, if you can,” Saunders said. 䡲 If the theft already happened, go to the station. “If you come back to your car and it’s been two hours, it’s not a priority. Nothing will be solved by the cops coming. Go to the station and make a report,” Saunders said. — Amy Haimerl

In 2013, the Detroit metro area ranked 23rd in the nation for the rate of auto thefts, according to the National Insurance Crime Bureau. Even Oklahoma City has a higher rate of auto theft than the Detroit metro area. But in terms of sheer volume of thefts, we’re No. 8. Here is who makes the top 10 for stolen vehicles. Thefts Population Los Angeles 50,758 12.8 million San Francisco 29,326 4.3 million Chicago 24,398 9.5 million New York City 24,316 19.6 million Houston 23,041 5.9 million Riverside, Calif. 22,943 4.2 million Dallas 18,568 6.4 million Detroit 18,343 4.3 million Seattle 18,128 3.4 million Atlanta 17,444 5.3 million 45. “Car theft and break-ins weren’t a thought for me when I opened Busted!, but it was 10 years ago.” Hugh Yaro, owner of Craft Work in the West Village, also takes calls from customers wondering whether he has off-street parking (he does) and whether their cars will be safe. But, he said, in a year of business, he has experienced just one auto-related crime: A patron left two laptops on the front seat of her car, which was parked on the street. When she returned, the windows were smashed and the laptops gone. “But that happens in any city,” Yaro said. “It’s not just Detroit. You don’t leave laptops on the front seat of your car anywhere.” Break-ins have been a constant source of anguish for Paul “PJ” Ryder, the owner of the Lager House in Corktown. He struggled, seemingly endlessly, with break-ins in his parking lot until installing a video camera system and hiring a security guard to patrol during the evening. Since then, break-ins have dropped. “I have someone on 56 hours a week,” he said. “Break-ins cost me in the sense that I basically have an extra full-time employee. But since I did that, we have a lot fewer breakins.” Break-ins are falling across the city, according to Saunders and Vartanian. Larceny is down by nearly 20 percent this year, according to DPD, though it doesn’t break out auto-related larceny from other forms. In Midtown, Saunders said, break-ins are down precipitously thanks to a partnership between Wayne State University police, Detroit Receiving Hospital and area businesses. When there is a breakout of break-ins, students from the university’s urban studies program place fliers on cars, reminding drivers how to be safe. The university also offers free VIN etching and discounted security clubs to students, faculty and area residents. “We try to educate people,” Saunders said. “I don’t know how many purses were stolen back in the day because people would arrive at the Magic Stick or wherever and then put their purses in the trunk. You’d have people watching and waiting. Put those purses in the truck before you get there.”

Trends in thievery The most stolen vehicle in Michigan is the 2004 Chevrolet Impala for two reasons: parts are scarce and older cars are easier to steal. But

that doesn’t mean thieves aren’t looking at newer cars, too. In fact, the improvements in technology are just making more innovative thieves. “They are just switching their M.O.,” said Terri Miller, executive director of Michigan’s auto theft prevent program, Help Eliminate Auto Thefts (HEAT). If they need a quick hit, they strip a vehicle of anything they can take easily, such as catalytic converters and components. If they have a bit more time and Miller energy, they use what cops call the “push steal.” Without a key, the car won’t start, so thieves break the windows, throw the car in neutral and then use another vehicle to push it a few blocks away to strip the tires and rims. “They like the newer cars, the Fusion, the Explorers, the Chargers and the Malibus, any car with the nicer rims,” Saunders said. The more terrifying option is carjacking. Thieves who want the car, not just the parts, have to take it alive, so to speak, and the only way to do that is with a key in the ignition. “Technology is so sophisticated that would-be thieves are simply carjacking vehicles,” said Vartanian of the Michigan Automobile Theft Prevention Authority. “Anyone who finds themselves in that position should give up the keys freely,” Vartanian added. “Keep your hands in full view and as gently and kindly as possible remove yourself from the vehicle.” So far, this has occurred a reported 483 times this year, according to DPD, down 32 percent from this time last year and down 62 percent since 1,231 incidents were recorded in 2008. Miller, who has led HEAT for the past 15 years, attributes much of the decline in carjacking — and in autorelated crimes overall — with the arrival of DPD Chief James Craig. “Since he has come into town, DPD is taking auto theft very seriously, much more seriously than in the past,” said Miller, whose tipline, (800) 242-HEAT, receives 30 to 40 calls per month. “He has raised the bar.” Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

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Survey: Optimism about economy, concern about Lansing ■ From Page 1

Rick Snyder and stronger Republican majorities in the state House and Senate would benefit the state economy, only 49 percent felt the same way about GOP gains in Congress. Optimism about Michigan’s economy continued to soar, with 78 percent saying they were satisfied with how it affected business, compared with 70 percent in May. Respondents in the Nov. 12-17 survey also exhibited little concern for some of the more polarizing issues of recent years. Just 7 percent mentioned Obamacare or health costs as one of their biggest business concerns; 17 percent had named it as a concern a year earlier. Only 22 percent thought limiting abortion access was important, while only 29 percent put a priority on easing restrictions on gun ownership or permits to carry concealed weapons. “From a business community perspective, getting good roads and schools are vital, so you can attract talent and employees, and have infrastructure at a level that the community becomes an attractive and competitive place to live,” said William Lockwood, president of Ann Arbor-based Alpha Telsys Consulting Ltd., who took part in the survey. “But the last thing you really want is to have a conversation about roads, because the only time you have that conversation is when they’re a mess. And to fund them, you either redirect resources from other programs or you have to raise taxes.” Like many respondents, Lockwood identified education, roads and getting congressional funding for a $264 million piece of the $2 billion proposed bridge to Canada as top priorities. But he expressed concern that new legislators and Tea Party candidates coming to Lansing next year will make it difficult for Snyder or other Lansing Republicans to lead. “I used to meet folks out of town about adding new retail markets, and people would almost immediately tell me, ‘Michigan’s near the bottom of our list.’ But now it’s become fashionable to become associated with projects in Detroit or at Ciura least in metropolitan Detroit,” said Cindy Ciura, principal of CC Consulting LLC in Bloomfield Hills. “Some of the coverage and national attention to our bankruptcy is turning a negative into a positive. People are seeing, I think, that now it’s working to our advantage. It’s almost an impetus to get people talking about the comeback.” Ciura also placed top priority on state assistance to Detroit in its recovery after its plan of adjustment to exit an $18 billion bankruptcy takes effect next week. So did 38 percent of respondents in the survey, and 79 percent said it was at least somewhat important. John Cavanagh, co-founder of Epic-MRA, said that level of support suggests the business community sees Detroit as critical to the

Survey says: Fix roads, train workers 66 percent believe the prospects for their business

LEGISLATIVE ISSUES Those surveyed were asked to rate whether individual legislative issues would assist their businesses. The percentages said each issue was important. 88 percent, finding a new source of revenue to repair and maintain roads; 64 percent said it was a top priority. 87 percent, increasing funding for job training and skilled trades, NATHAN SKID especially through local community colleges and public high schools; 51 percent said it was a top priority. 79 percent, giving special direct assistance to help Detroit in its post-bankruptcy recovery. A top priority for 38 percent. 74 percent, lobbying Congress and the Obama administration to accelerate the completion of the New International Trade Crossing. A top priority for 40 percent. 73 percent, restoring funding to pre-recession levels for traditional public K-12 schools. A top priority for 41 percent. 53 percent, amending the Elliott-Larsen Civil Rights Act to protect sexual orientation. A top priority for 25 percent. 49 percent, assigning Michigan’s electoral votes by congressional district, with the candidate winning the most votes in the district winning an electoral vote. A top priority for 20 percent. 45 percent, expanding the privatization of public services, including encouraging more for-profit charter schools. A top priority for 16 percent. 44 percent, repealing the existing prevailing wage law. A top priority for 19 percent. 29 percent, relaxing restrictions for gun owners and concealed-weapons permit holders. A top priority for 13 percent. 22 percent, enacting laws to restrict access to abortions. A top priority for 10 percent.

SNYDER’S 10-POINT PLAN Respondents were asked to give Gov. Rick Snyder a letter grade on elements of his 2010 10-point plan to reinvent Michigan. Here’s how many gave him an A or B on each point: 72 percent for encouraging and supporting tourism, a culture of entrepreneurship, investing in the arts, and protecting and improving quality of life. 66 percent for creating more and better BLOOMBERG jobs by cultivating a more competitive economy. 59 percent for restoring cities and controlling urban sprawl. 57 percent for reducing the tax burden on families and businesses. 52 percent for protecting Michigan’s natural resources, lakes and landscapes. 42 percent for improvements to Michigan’s health care system. 37 percent for improving the educational system.

will improve next year, 28 percent about the same, and 6 percent thought they would get worse. 55 percent plan to keep the same number of employees, 39 percent plan to hire, and 4 percent may have reduced employment. 46 percent plan to increase wages next year, and 46 percent plan to leave the same. None had plans to reduce.

BIGGEST BUSINESS CONCERNS 14 percent, finding and keeping customers 11 percent, finding and keeping quality employees 11 percent, the economy 7 percent, health care costs, Obamacare

BLOOMBERG

BUSINESS CLIMATE 41 percent believe their state business taxes are

about right, 35 percent too high, and 3 percent too low.

19 percent said Gov. Rick Snyder’s switch to a

corporate income tax for C-corporations, which reduced taxes for many businesses, was an important influence in deciding whether to hire workers and increase wages; 25 percent said it was only a minor factor; and 48 percent said it had no influence. 31 percent said that retaining workers for available, unfilled jobs would have the greatest effect on reestablishing jobs in Michigan; 25 percent thought tax incentives for business would have the greatest effect; 23 percent favored a low predictable tax rate for all businesses, regardless of legal structure; and 16 percent favored public spending on infrastructure projects.

BLOOMBERG

POLITICS 64 percent said Snyder’s re-election as governor and increases in the Republican majority in the Legislature made them more optimistic about the state’s economy, 17 percent were pessimistic, and 11 percent said it had no impact. 49 percent said Republican control of both houses of the U.S. Congress made them more optimistic about the national economy, 28 percent were more pessimistic, and 16 percent said it had no impact.

THE ECONOMY

LOCAL ISSUES

75 percent think it will get better next year, 3 percent worse, and 21 percent about the same. 48 percent think their personal financial situation will remain the same next year, with 46 percent seeing improvement and 6 percent getting worse. 78 percent were at least somewhat satisfied with the Michigan economy; 19 percent expressed at least some dissatisfaction.

Water Authority will have little or no impact on their businesses, 26 percent said it will have a positive effect, and 4 percent were negative. 69 percent said they generally support the creation of regional governing authorities with taxing authority for things such as transit and water/sewage services; 18 percent were opposed.

state’s overall economic success. “There is a general satisfaction with the direction of the Michigan economy, but it appears to be much more state-centric satisfac-

58 percent said establishment of the Great Lakes

tion than nationwide,” he said. “The adage has been repeated for a generation that when the nation gets a cold, we get pneumonia, and as the nation’s economy goes, so

goes ours, in spades. So there may be concern about the cooperation in (Washington).” Douglas Andrus, general manager of Keller Williams Lakeside realty

in Shelby Township, agreed that aid in transforming Detroit is a top priority, particularly in blight removal and in business investment and attraction efforts by Quicken Loans Inc. founder and Chairman Dan Gilbert in the downtown business district. He gave high marks to Snyder for “making decisions that won’t necessarily be popular” but were financially beneficial, but thought the state had more to do in making its tax structure simpler and competitive to lure businesses. He also praised the state’s efforts to improve tourism. “When it comes to Pure Michigan, whoever invented that should be given sainthood. They take every place on those campaign spots and make me want to live there too,” he said. “I have sent links to that site to people we’re trying to do business with, and I think we’ve done a lot in reinventing our image.” Andrus gave solid marks to state tax reforms passed in Snyder’s first term, like replacing the Michigan Business Tax in 2011 with a corporate income tax and a phase-out plan for the personal property tax that took effect in 2012 and was amended by a ballot proposal this year. But 73 percent of businesspeople thought Snyder’s tax reforms either had no influence at all or only a minor influence on their own companies’ decisions to hire employees or increase wages. About 35 percent of respondents still rate business taxes too high, while 41 percent felt they are “about right” in the latest survey. “That’s somewhat surprising considering how hated the MBT tax was,” said Lynn Gandhi, partner in the state and local tax practice at Honigman. “One thing that business leaders want is consistency, and there is a somewhat high percentage of people who are dissatisfied because there has been no real status quo in Michigan (tax laws).” Gandhi thought some of the lingering dissatisfaction with taxes could be a somewhat adversarial audit process, where companies get little guidance from the Michigan Department of Treasury and often have to resolve tax disputes with litigation, as well as the gradual effect of the changes in personal property tax laws. “There is kind of a trickle, because the clearest early benefit is either in new equipment put into place in the last few months, and with very small businesses, that have under $40,000 (of taxable equipment), because they don’t pay it anymore,” Gandhi said. Jacqueline Anderer, who operates a personal chef business in Grosse Pointe Farms, said the infrastructure improvements are important, but the public bridge crossing and post-bankruptcy Detroit aid are crucial. “As a city we’re on the cusp of turning things around, in the downtown area for sure, and maybe in other neighborhoods as well,” she said. “People have a sense of that now, and you don’t just want to fall back into the old way of doing things.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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CRAIN’S DETROIT BUSINESS

Armory: City bets after two tries, site ready for redevelopment ■ From Page 1 nd nse Tow St.

t. nS rida She

s res ng Co t. ld S Fie

The city of Detroit issued redevelopment requests for the armory in 2003 and 2010, with no results. But that was before riverfront development.

Armory

on rs fe f Je

e. Av

Gabriel Richard Park

alk rW e v Ri d. Blv nd Gra E.

“I saw the steel in a pickup truck. I remember very clearly seeing a pickup truck and a side door open and the steel. … I called the president of the organization and told him to call the police,” she said. “It was that kind of frustrating thing. Scrapping in Detroit … what do you say? They drove the truck into the large, gym-type space and took their chainsaws and took whatever they could reach — columns, trusses. They literally removed portions of a truss.” John Roach, communications director for Mayor Mike Duggan, said the city has not determined when an RFP will be issued. But if it is, potential developers are expected to be allowed to tour inside the building to assess its condition. Mark Wallace, president and CEO of the Detroit RiverFront Conservancy and a former director at Hines Interests LP, said the site sits at the northeast corner of “one of the most special places on the riverfront,” Gabriel Richard Park, making it a prime redevelopment locale. “We would love to see productive use brought back to that location,” he said. “As stewards of the river’s edge, we would love to see public access maintained so that new residents and businesses that move into the armory site could connect directly to the RiverWalk.” Scott Allen, president of Bingham Farms-based property management company The Fourmidable

Belle Isle Bridge

Group Inc., which manages several Detroit riverfront properties, said the site is best suited for commercial use because of the lack of such space in the area. “Any kind of new activity that occurs there further up the river, there are opportunities for all of that to redevelop and come back to life,” he said. It wouldn’t be the first RFP for the site, where Franklin D. Roosevelt stumped in his first presidential campaign in 1932 and where Joe Louis fought his first amateur bout that same year (it was a tworound loss to British boxer Johnny Miller). The city issued redevelopment requests in 2003 and 2010 that

COSTAR GROUP INC.

produced no results. But things are different now since riverfront development and redevelopment have been moving forward at a steady clip. There is the recently completed $12.8 million Michigan Department of Natural Resources Outdoor Adventure Center, developed by the Detroit-based Roxbury Group. There is Orleans Landing, a project by St. Louis-based McCormack Baron Salazar with a $61 million first-phase price tag. It will feature about 278 multifamily residential units and 10,500 square feet of retail space. Then there is the Water’s Edge at Harbortown, which is new multifamily construction with 134

units developed by Greenwood Village, Colo.-based Triton Investment Co. near the Harbortown development. And those are just three of the projects that make up what the conservancy estimates is more than $1 billion in work that has been completed or is in progress along the riverfront as a result of its efforts. During World War II, the armory was where more than 1,000 sailors were housed and trained in electrical and diesel operations. At one time, it had been home to the most extensive Michigan collection of federal Works Progress Administration artwork

created through funding by one of its subsidiaries, the Federal Art Project. But after 11 years being vacant, scrappers made away with not just parts of the building, but also a substantial portion of the collection, leaving only a handful of murals remaining. “It’s sad to see,” Savage said. The armory building was designed by William Buck Stratton, husband of Pewabic Pottery founder Mary Chase Stratton, and built next to Gabriel Richard Park and near the Douglas MacArthur Bridge to Belle Isle. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

MSX: Evolving business model, acquisition help propel growth ■ From Page 1

software that MSX bought in August for an undisclosed amount. MSX’s business model got a vote of confidence in late August when it was able to raise $260 million of senior secured credit facilities in a syndicated financing led by RBC Capital Markets and SunTrust Robinson Humphrey Inc. to refinance outstanding debt. The refinancing reduced MSX’s annual debt interest costs more than 50 percent and provided a $40 million revolving credit facility from a group of lenders including Fifth Third Bank, FirstMerit Bank N.A., Hitachi Capital America Corp. and J.P. Morgan Chase Bank N.A. MSX launched in 1996 as a spinoff from what was then MascoTech Inc. At the time, it was the largest global automotive engineering company, said Minturn, who was vice president and automotive controller at MascoTech for three years before new company as executive vice president and CFO. But the company has evolved. Today, MSX provides only a fraction of the engineering and technical staffing it once did. That unit accounts for just 10 percent of total earnings, Minturn said. In 1997, MSX bought Geometric Results Inc., a Ford Motor Co. subsidiary that operated noncore operations for the automaker.

The two primary businesses that MSX operates today — both its managed service provider and dealer training and network business under the Retail Network Solutions banner — were part of Geometrics. They account for 30 percent and 60 percent of earnings, respectively, Minturn said. In August, after its purchase of the managed service provider division of IQNavigator, MSX revived the Geometrics name, creating a wholly owned managed service provider subsidiary that operates as Geometric Results Inc. The new subsidiary oversees $4 billion in contract staffing spending — double the amount MSX oversaw before the acquisition — for clients in the automotive and transportation, finance, insurance, energy, defense, industrial, telecommunications, technology and finance sectors. Clients include Ford, Apple Inc., Schlumberger Technology Corp., Gap and Kohl’s. Geometrics’ “independent” status comes by virtue of being separate from the MSX staffing business, Johnson said.. The managed service provider business is growing at 20 percent annually now, Minturn said, pointing to forecasts from Staffing Industry Analysts — which, like Crain’s Detroit Business, is owned

by Crain Communications Inc. “We’re in a great position to take advantage of that,” Minturn said. Following its IQNavigator acquisition, MSX is among the larger independent MSPs in the world, said Craig Johnson, managing editor of Staffing Industry Analysts. The IQNavigator acquisition opened nonautomotive markets with some brand-name clients, something that will help MSX gain a foothold with other clients in those industries, Minturn said. This month, Geometrics expects to complete a new $50 million to $100 million managed service provider contract with a Texas-based marketing company to launch in January, he said. The managed service provider industry as a Barfield whole is growing, said David Barfield, chairman, president and CEO of the Southfield-based Bartech Group Inc. Bartech, which has been active in the service provider industry since the late 1990s, managed about $3 billion in contract staffing spending last year. This year, it’s

north of that amount, he said. Bartech will finish 2014 with about $230 million in revenue, and it projects total revenue will increase 15 percent next year. “The MSP division is the fastestgrowing piece of our business,” Bartech said. More than half of MSX earnings stem from its dealer services and training division, Minturn said. That business, Retail Network Solutions, provides outsourced business process services to automakers for their dealer networks. The business provides training and other services to automotive dealers. Those services include service lane customer service training, something MSX provides for more than two-thirds of the automakers operating dealerships in North America, Minturn said. Among other programs, MSX also helps dealers sell wholesale parts to independent repair shops, and provides a technical help desk for service repair on Ford vehicles, warranty approval prior to repairs and training to equip dealership personnel to teach consumers about the technologies in their new vehicles. After exiting the project engineering business in 2008, MSX continued to provide engineering, product development, information technology

and other white-collar administrative staff only upon customer request for contracts in North America and Brazil, Minturn said, MSX’s staffing business is now completely separate from the Geometrics managed service provider business to avoid conflicts of interest, he said. The MSX staffing division will compete like everybody else on contracts Geometrics oversees, Minturn said. To accommodate its growth, MSX expects to be hunting for a new site in the Southfield area during the second half of 2015, Minturn said. The company, which moved its global headquarters and 20 executive team members to downtown Detroit from Warren this fall, plans to move 250 employees from its Warren location to a new site. Besides its Detroit and Warren sites, the company operates Michigan offices in Madison Heights, Dearborn and Flint. It employs 5,500 in 80 countries, after adding business in 10 countries through the IQNavigator deal. Just under a fifth of them are in North America and about 500 are in Michigan, Minturn said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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M-1 Rail work to move north of Grand Circus Park BY BILL SHEA CRAIN’S DETROIT BUSINESS

Work on the Woodward Avenue streetcar project north of Grand Circus Park was scheduled to begin in earnest Dec. 1 after construction wrapped up last week on the five-block stretch south of the park, organizers said. Work to install track and related infrastructure on portions of the $137 million 3.3-mile streetcar loop began in July, and the stretch of Woodward between Campus Martius Park and Grand Circus Park in downtown Detroit was scheduled to reopen to vehicle traffic after last week’s America’s Thanksgiving Parade. “As the winter weather be-

comes more severe, work will continue,” said Paul Childs, M-1 Rail COO, in a statement. “We will be working primarily with our partners at DTE Energy Co., Detroit Water and Sewerage and the Public Lighting Department on underground utility work.” Ongoing reconstruction of the Woodward Avenue overpass over I-75 and I-94 also will continue through the winter, M-1 said. Other ongoing work will include DTE duct bank installation and other utility relocation activities. Traffic barriers on Woodward in Midtown were to be removed temporarily for last week’s parade, and then returned immediately afterward. The work, which will occur in

phases, is scheduled to be finished by 2016, and passenger service to begin later that year. M-1 said it met its goal of installing a quarter of a mile of track in both the north and southbound lanes of downtown in four months. “With the exception of some minor tasks, we are done with our work in this area for the year, but will return next year for track work from State Street to Larned,” Childs said. “Woodward Avenue within the five-block stretch between Campus Martius Park and Grand Circus Park will be open to traffic. That’s really important to the businesses that have been so patient throughout the construction.”

Specifics on work schedules and project details can be found at m1rail.com. M-1 Rail is a nonprofit using a blend of public and private funding to finance construction and operations. The line is a mostly curbside fixed-rail streetcar circulator system, which will be commingled with traffic. It will have 20 stations at 12 stops between Grand Boulevard and Congress Street, and it will run in the median at its north and south ends. Organizers predict 5,000 to 8,000 riders a day, with a basic one-way fare of $1.50. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

Utilities: Report sees potential power shortage ■ From Page 3

energy suppliers as allowed under the 2008 energy law, Public Act 286. “The abundant supplies of the past few years — magnified by declining demand due to the economic slowdown of the Great Recession — are rapidly coming to a close as aging coal plants retire in the face of federal environmental (air pollution) regulations,” according to the Public Sector report. The coal-fired power plants, which are more than 40 years old and are already well beyond their engineered life expectancy, currently serve 1 million people and produce 1.3 gigawatts of electricity. Although greater reliance on energy efficiency and renewable energy generation can increase electric supplies, DTE and Consumers officials say there is an urgent need to start planning to build new base load power plants. Construction of new base load plants, which both DTE and Consumers say means new plants powered by natural gas, takes as long as six years to complete. Ken Sikkema, Public Sector’s senior policy fellow, said Michigan’s current energy laws impede the utilities from having full information to decide on a course of action. “The state has a responsibility to solve the problem” of poSikkema tential future power generation shortages, Sikkema said. “When the energy choice law was passed, the state made it difficult for utilities to plan for the future.” Sikkema acknowledged that the utilities reluctantly supported the energy choice law in 2008 even though they wanted a return to full regulation. But more business customers than expected opted to buy from the alternative suppliers, and demand dropped in the regulated market because of the recession. Michigan’s 6-year-old customerchoice cap limits the number of business customers that can leave the state’s two main utilities to purchase lower-price electricity

from the state’s 24 licensed alternative providers of electricity. DTE and Consumers say moving to a fully competitive or deregulated market — as some proponents suggest — could reduce capital investments needed to expand generation capacity or delay improvements to aging distribution infrastructure. They support complete rate regulation. Wayne Kuipers, executive director of Kuipers Energy Choice Now, a coalition of consumers, businesses and alternative energy suppliers, said eliminating the 10 percent cap and allowing free choice of utilities or alternative suppliers would create competition that would force DTE and Consumers to reduce rates to keep their customers and market share. Kuipers said the Public Sector report’s suggestion of future energy shortages is a “scare tactic” by the utilities that “does not portray reality.” Instead, Kuipers advocates legislative approval of Rep. Mike Shirkey’s bill, House Bill 5184, that essentially would deregulate rates for only DTE and Consumers and open choice for all customers. Kuipers and Shirkey, a Republican from Clark Lake, believe increased competition also would generate jobs because comparatively high electric rates impede economic growth. Overall, Michigan’s average prices for electricity have increased over the past two years and are now the highest among four other Midwest states — Indiana, Illinois, Ohio and Wisconsin — and the national average, according to the U.S. Energy Information Administration. “What struck me about the (PSC) report is that the utilities continue to promote the idea that Michigan is an energy island and (disregard) the regional transmission systems (MISO and PJM)” that allows for electricity to flow between states, Kuipers said.

If Michigan faces a potential energy shortage, Kuipers said, it is up to MISO, the Midcontinent Independent System Operator Inc., to decide which state should build base plant facilities. PJM Interconnection LLC is a regional transmission company that serves parts of Michigan and 12 other Eastern states. “DTE and Consumers can build the cost of construction into their base rates. If production is built elsewhere, they cannot increase rates,” said Kuipers, who from 2002 to 2010 was a Republican state senator representing the Holland area. “The market says there is no need.” In an October report, MISO predicted for lower Michigan a shortage in electric power reserve margin — the amount of Mengebier excess power available to cushion against potential blackouts. MISO’s report said it is working with regulators and utilities to address potential regional shortfalls. Consumers’ David Mengebier, senior vice president of governmental and public affairs and chief compliance officer, said the utility’s seven older coal plants go offline in 2016. The company plans to make up about 45 percent of the difference with short-term purchases of electricity on the regional market, he said. In the next several weeks, Mengebier said, Consumers will make up the difference by submitting various plans for future power generation to the Public Service Commission that include a mix of adding an existing natural gas plant (Jackson) and additional sources of renewable energy. But Mengebier said that if the 300 former Consumers customers that now buy from alternative providers, accounting for 800 megawatts of power, suddenly decided to come back, “we would have a problem” providing power to them. “Right now, we don’t plan to serve them,” he said. To solve the potential problem, Mengebier said, the Michigan legis-

lature should address two flaws in the energy law. One, either eliminate the 10 percent customer choice provision — and move to complete rate regulation — or two, add surcharges to bills to help pay for future generation infrastructure and lock electric customers into either using utilities or alternative providers. Mengebier said Consumers’ advocacy effort, which includes an unspecified budget, will include paid advertising to educate the public and meet with the media and legislators. DTE plans a similar campaign. Howard Learner, CEO of the Chicago-based Environmental Law & Policy Center, agreed that allowing companies to opt in and out of DTE and Consumers Energy makes power demand for those companies unpredictable. But he said the Midwest power market has excess demand that the Lower Peninsula easily can tap into for years to come. “There are some plants closing in Michigan, but there are new plants in Indiana to take up the demand,” Learner said. “Energy efficiency is working for new businesses and customers. There is a great opportunity to expand renewable wind and solar power for jobs, economic growth and reliability.” Learner said the solution is not to build more base plant generation, as DTE and Consumers want. “The solution is targeted demand response throughout the region,” he said. In a statement, DTE officials said the Public Sector study shows the possibility of future energy shortages in Michigan and that legislators need to fix problems with regulatory rules. “We need to start building Michigan’s next generation of power plants soon,” said Alejandro Bodipo-Memba, DTE’s manager of media relations. “We need a fair, affordable and reliable solution so that it’s clear who we’re serving with these new power plants and our customers don’t pay more than their fair share of the costs to build these plants.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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RUMBLINGS Ugly sweater wears well for local sellers hat kind of ugly Christmas sweater does actress Kristen Bell wear? One with a blinking Rudolph nose, of course. Bell, a Huntington Woods native, is seen sporting the sweater in a holiday commercial for Samsung, in which she and her real-life husband, Dax Shepard, who is from Milford, play a couple obsessed with Christmas. Throughout the spot, they are clad in matching sweaters that can be found on UglyChristmasSweaters.com. That site is the child of brothers Mark and Fred Hajjar, who started it in 2012 to augment their main business, TVStoreOnline.com, which sells costumes and pop culture paraphernalia. This year the Commerce Township-based business is on target to sell 25,000 ugly sweaters, ranging from the sweet, like Bell’s, to the raunchy, with Santa’s elves doling out dollars to a stripper on the North Pole. “That’s a 350 percent increase over last year,” said Fred Hajjar, 32. “The whole sweater trend isn’t necessarily up 50 percent, but our SEO is pretty good. We really invested in that and marketing this year.” The company also decided to open kiosks to hawk the sweaters at Great Lakes Crossing in Auburn Hills and at Novi’s Twelve Oaks. “The plan is to open up 30 next year and franchise these out,” Hajjar said. “Our target is the Halloween mom and pop stores that open up for six weeks; they would go another six weeks and sell ugly Christmas sweaters.” So which sweater is Hajjar’s favorite? The Home Alone-themed version that reads “Merry Christmas ya filthy animal.”

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Gilbert, secret donor help raise $3M for kids A Nov. 22 Detroit fundraiser to support the New York City-based Children’s Tumor Foundation raised about $3 million in a single night, thanks to matching gifts from Quicken Loans founder and Chairman Dan Gilbert and an unnamed major foundation donor who came from Texas for the event. The two donors matched the auction proceeds from the event. Gilbert In taking the Giving Pledge two years ago, Dan and Jennifer Gilbert cited the foundation as one they have supported for many years. Their son, Nick, has neurofibromatosis, a genetic disease that is the focus of the foundation. The total raised during the Detroit event outpaced other large fundraisers held in metro Detroit this fall, including the College for Creative Studies’ Detroit International Wine Auction in October, which raised more than $2.4 million, and the Detroit Institute of Arts’ annual gala in early November, which raised $1.2 million.

Who knew Cadillac marketing chief told jokes? Uwe Ellinghaus could use some work on his comedic timing. Or maybe Americans just aren’t used to Germans telling jokes. When the Cadillac marketing chief was taking flak this fall for the brand’s decision to move its headquarters to New York City, he

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF NOV. 22-26

tried deflecting it with some deadpan humor. “I was asked, ‘Is that the beginning of the returning decline of Detroit? … And does General Motors maybe have the wish to move other brands out of Detroit?’ ” Ellinghaus recalled at the Los Angeles Auto Show. “And I said, ‘Guys, guys, guys, where are you living? We are moving to New York because this is the city all others are measured by, Ellinghaus and we need the talent, we need the luxury environment. … But we have no desire whatsoever to develop or manufacture cars in Manhattan.’ “And I read in an interview, ‘According to Uwe Ellinghaus, CMO of Cadillac, Cadillac has currently no plans to manufacture cars in Manhattan.’ “A couple of colleagues came to me and said, ‘Uwe, were you drunk?’ And I said: ‘No! I was kidding! But they didn’t get it!’ ” In all seriousness, though, Cadillac currently has no plans to manufacture cars in Manhattan. Or in Brooklyn, Queens, Staten Island …

Ross leaves Talmer board Financier Wilbur Ross Jr. has chosen Cyprus over Troy, though the decision had nothing to do with preferring Mediterranean locales or scenic backdrops even more exotic than those at Big Beaver and I-75. Troybased Talmer Bancorp Inc. announced last week that Ross had resigned from its board Ross because of restrictions in the European Union that limit the number of directorships a bank officer can hold. Ross recently was appointed vice chairman of the Bank of Cyprus. In August, Ross led an investment of 1 billion euros, or about $1.25 billion.

BITS & PIECES The Detroit Public Safety

COURTESY OF SAMSUNG

Actress Kristen Bell, a Huntington Woods native, shows off the “ugly” sweater sold on a website run by two local brothers.

Foundation will recognize Detroit police officers, firefighters, EMS personnel and local officials for exemplary service at a fundraising dinner Dec. 3 in Cobo Center. Comedian-actor Alonzo Bodden will host. Tickets range from $10$500. Visit detroitpublicsafety foundation.org or call (313) 628-2169.

Survey: Consumer HONORING CRAIN’S 40 UNDER 40 confidence highest since ’07 ccording to the Thomson Reuters/University of Michigan Surveys of Consumers released last week, consumer confidence posted its fourth consecutive monthly gain in November, rising to its highest level since July 2007. The annual gain of 1.1 percent in income expected by all households was the largest anticipated increase since November 2008. Conducted by the UM Institute for Social Research since 1946, the surveys monitor consumer attitudes and expectations.

ON THE MOVE Marschall Runge, M.D., executive dean at the University of North Carolina medical school, will be recommended for hiring as executive vice president for Runge medical affairs at the University of Michigan Health System, UM President Mark Schlissel said. Founder Andra Rush is stepping down as president and CEO of Waynebased Rush Trucking Inc. but will remain chairman of parent Rush Group Family of Cos. Rush Longtime logistics executive Gregory Humes was named interim CEO; he most recently was at Detroit-based logistics staffing school Driving for America LLC. Kathy Barks Hoffman, former Lansing bureau chief for The Associated Press, joined the Lansing public relations firm of Martin Waymire as a senior acHoffman count executive. She most recently was director of the public affairs practice for the Lansing office of Lambert, Edwards & Associates.

COMPANY NEWS Covisint Corp. plans to invest up to $5.5 million and create 50 jobs over a five-

AARON ECKELS

Shani Penn (center), senior strategy adviser to Gov. Rick Snyder, poses with her family as one of the honorees Nov. 19 at the Crain’s 40 under 40 awards event at MGM Grand Detroit. The annual event includes 40 honorees and attendees from past classes selected for their accomplishments. (This is a corrected version of a photo caption in the Nov. 24 issue of Crain’s.)

year period as part of a move of its headquarters from downtown Detroit to Southfield. The Compuware Corp. spinoff received a $1.5 million state performancebased grant. CareTech Solutions Inc., a Troy-based health care information company, is negotiating a sale to Troybased HTC Global Services, company officials confirmed. CareTech is a joint venture of Compuware Corp., Oakwood Healthcare and Detroit Medical Center. St. Joseph Mercy Health System and Probility Physical Therapy, both based in Ann Arbor, signed a letter of intent for St. Joseph to acquire Probility and its six outpatient physical therapy clinics for an undisclosed amount. The Suburban Collection acquired Ferndale-based Ed Schmid Ford in its sixth acquisition this year, giving the Troy-based group 36 dealerships and adding 52 employees to the 2,000 it already employed.

OTHER NEWS Wayne State University and Oakland Community College entered into an agreement that will allow OCC students who have received associate degrees in business administration to transfer up to 82 credit hours to WSU to complete their bachelor’s degrees there. The federal government-sponsored Fannie Mae is transferring 44 of its foreclosed houses to Detroit and giving the city $15,000 apiece for 18 of the properties that need to be demolished, AP reported. The move is part of a partnership with the Detroit Land Bank Authority. The Detroit Red Wings, who plan to move into a state-of-the-art arena in 2017, saw a 21 percent increase in value to $570 million, ranking ninth in the

30-team National Hockey League, according to annual estimates released by Forbes.com. The Detroit Lions said 56,044 fans showed up for the Nov. 24 National Football League game between the Buffalo Bills and New York Jets at the Lions’ Ford Field. The Lions said about 67,000 free tickets were distributed for the game, which was relocated because of massive blizzards in western New York. The value of each full share of Major League Baseball’s postseason ticket revenue that each of the Detroit Tigers will get for winning the American League Central Division is $31,544, less than one-fourth of the amount from 2013. The Tigers, who lost in the League Championship Series in 2013, were swept in the first round of the 2014 playoffs by the Baltimore Orioles. On his fourth trade mission to China since taking office in 2011, Gov. Rick Snyder said interest in investing in Michigan is at its highest level yet. Snyder told Crain’s that success of the trip is now measurable, thanks to building of relationships in previous trips. Federal prosecutors charged Bloomfield Hills spine specialist Aria Sabit with health care fraud, saying he fooled patients and cheated insurance companies by performing unnecessary back surgeries, AP reported. Detroit’s main pension fund plans to hold public meetings in early December to discuss upcoming cuts, expected by March 1, and an opportunity for retirees to apply for financial help, AP reported. Michigan Attorney General Bill Schuette’s office filed a legal brief at the U.S. Supreme Court asking the court to affirm the state’s ban on gay marriage, according to AP.

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Association of Fundraising Professionals Greater Detroit Chapter Congratulates the 2014 National Philanthropy Day Honorees! 2014 Philanthropy Awardees Max M. Fisher Award for Outstanding Philanthropist Marcia and Eugene Applebaum Nominated by Beaumont Health System

George W. Romney Award for Lifetime Achievement in Volunteerism Eugene and Elaine C. Driker Nominated by Wayne State University

Edmund T. Ahee Jewel Award for Outstanding Fundraising Volunteer Mark Blanke and Michael Perkins 1RPLQDWHG E\ $I»UPDWLRQV

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Nominated by Michigan Humane Society

Outstanding Foundation The Jewish Fund Nominated by Jewish Family Service and JARC

Dr. John S. Lore Award for Outstanding Fundraising Executive Audrey M. Olmstead, Walsh College Nominated by Walsh College

Neal Shine Award for Media Commitment to Philanthropy Paul Anger Nominated by Michigan.com and Reading Works

Sparky Anderson Award for Outstanding Youth Volunteer Fundraiser Mark Hooven Nominated by Hope Center in Macomb

2014 Distinguished Volunteers John Adamo – St. John Providence Health System Foundation Casey Adamowicz – CARE of Southeastern Michigan Robert Adams – Henry Ford Health System Karen Anderson – Forgotten Harvest Donna Anderson – Presbyterian Villages of Michigan Foundation Benard Antinossi – Marian High School Lizabeth Ardisana – University of Michigan-Dearborn Ashi Arora – Novi Youth Assistance Lowell W. Baker, III – Cranbrook Schools HorizonsUpward Bound Mindy Barry – Walsh College Anish Bhavsar – St. Frances Cabrini Clinic of the Most Holy Trinity Church David Boerger – Rose Hill Foundation Wayne W. Bradley, Sr. – Detroit Community Health Connection Dick & Phyllis Breuer – Detroit Public Television Sharon Cahill – McLaren Macomb Healthcare Foundation Rob Casalou – Make-A-Wish Michigan Kyna Collins – The Children’s Center Sean Cotton – Detroit Zoological Society Shery and David Cotton – Detroit Zoological Society Angela Cusmano – The Salvation Army Michael J. Damone – Presbyterian Villages of Michigan Foundation Robin Damschroder – Arbor Hospice Foundation Tarik Daoud – Lawrence Technological University Marie DeLuca – St. John Providence Health System Foundation Gary Dembs – Association of Fundraising Professionals Greater Detroit Chapter Denski Family – Canton Community Foundation Janice DiBattista – St. John Providence Health System Foundation

Jan Dolan – Oakland Community College Foundation Glen Donovan – Children’s Hospital of Michigan Foundation Martha Lynn Doty – St. Vincent and Sarah Fisher Center Kirk and Nancy Dyer – Henry Ford Health System Nancy Eavy – Arbor Hospice Foundation Matthew Epelman – Pre Professional Health Society Cathy Gillis – Forgotten Harvest Paul and Mary Glantz – Wayne State University Steve and Margo Goodman – Jewish Federation of Metropolitan Detroit Gary Granader – Ronald McDonald House of Detroit Edward Gwilt – Walsh College George Haggarty – Beaumont Health System Cheryl Haithco – Association of Fundraising Professionals Greater Detroit Chapter Shirley and Edward Hirsch – Detroit Zoological Society Beth Howell – Lawrence Technological University Jane Iacobelli – Children’s Hospital of Michigan Foundation Don Jesmore – Henry Ford Village Foundation Jack Kaufman – Jewish Family Service Karen Kelly – Common Ground Carmen Kelly – St. Frances Cabrini Clinic of the Most Holy Trinity Church Jerome Kempf – Marian High School Mary Ellen King – Mercy Education Project Sandra Kirtley Campbell – Planned Giving Roundtable of Southeast Michigan Michael and Jennifer Klieman – Oakland University Michael and Zina Kramer – Oakland University Kim Lahti – University of Michigan-Dearborn Stacy LeVigne – The Children’s Center Gene Lovell – Macomb Community College Foundation Sara Majoros – Common Ground Rita Margherio – Children’s Hospital of Michigan Foundation Robbyn Martin – St. John Providence Health System Foundation

Ron May – Oakland University Dr. M. Melissa McBrien – Marian High School Marc D. Melamed – LEAVE A LEGACY, Southeast Michigan Jerry W. Mollien – University of Michigan-Dearborn Susan Monroe – Arbor Hospice Foundation Edward Moylan – Siena Literacy Center Roger and Coco Newton – The Michigan Theater Meg Otto – Arbor Hospice Foundation Randy Pagel – McLaren Macomb Healthcare Foundation Sandy Pedersen – Henry Ford Health System Dennis Pheney ® 6WDU»VK )DPLO\ 6HUYLFHV Julianne Princinsky – Girl Scouts of Southeastern Michigan Dr. Vidya Ramanathan – Freedom House 2I»FHU 5LFKDUG 5RGGHQ – The Holley Institute Catherine Rutledge – The Holley Institute James Saltalamacchia – WRCJ 90.9 FM Teresa Saputo – Ronald McDonald House of Detroit Gerry Scaduto – Macomb Community College Foundation Robert Schwabel – Marian High School Scott Seabolt – Detroit PAL Queen Simpson – Detroit Inter-Alumni Council Art Smith, FAIA – Lawrence Technological University Karen Sweeney – Crittenton Foundation Michael Tardiff – Arbor Hospice Foundation Robin Tobin-Murav – Kadima Roland Trombley – Henry Ford Health System Deborah Virgiles – Ronald McDonald House of Detroit Marlene Visconti – Macomb Community College Foundation Kathy Walgren – Common Ground Barb Weir – First Step Daniel Westra – The Children’s Center Eric & Lisa Widner ® 6WDU»VK )DPLO\ 6HUYLFHV Ken Wilson – CARE House of Oakland County Alfred Wooll – Arbor Hospice Foundation Sam Yamin – Beaumont Health System

Thank you to the 2014 AFP National Philanthropy Day Sponsors Presenting Sponsor Crain’s Detroit Business Broadcast Sponsor Detroit Public Television Diamond Sponsor Michigan.com Platinum Sponsors Beaumont Health System Wayne State University Gold Sponsor Henry Ford Health System PNC Bank Silver Sponsors Barris, Sott, Denn & Driker, P.L.L.C Children’s Hospital of Michigan Foundation Cranbrook Educational Community MGM Grand Detroit

Michigan Humane Society Plante Moran, PLLC St. John Providence Health System St. Joseph Mercy Oakland 6WUDWHJLF 6WDI»QJ 6ROXWLRQV Walsh College WDET 101.9 FM Bronze Sponsors Arbor Hospice Comerica Charitable Services Group Community Foundation for Southeast Michigan Crittenton Hospital Medical Center Foundation DELFINGEN Detroit Institute of Arts Detroit Zoological Society Forgotten Harvest Gleaners Community Food Bank of Southeastern MI

Hammond and Associates, LLC Henry Ford Village Foundation Honigman Miller Schwartz and Cohn LLP Lawrence Technological University The Henry Ford Macomb Community College Foundation McLaren Macomb Healthcare Foundation Michigan Theater Oakland Community College Oakland University Presbyterian Villages of Michigan Foundation Ronald McDonald House of Detroit Rose Hill Foundation The Salvation Army, Eastern Michigan Division 6WDU»VK )DPLO\ 6HUYLFHV University of Michigan-Dearborn

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