Crain's Detroit Business, March 25, 2019 issue by Crain's Detroit Business

Opening Day: Another rebuild year dawns for Tigers Page 3

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New angel investing group targets Oakland Co.

HOSPITALITY

REDEVELOPMENT

All eyes on the Morouns in FCA assembly plant deal

By Tom Henderson thenderson@crain.com

For the second time in two months, a new angel-investment group has launched in metro Detroit, whose plans include offering incubator space for portfolio companies and holding monthly daylong pitch events where 30-40 companies will make presentations seeking investment capital. On April 9, the first meeting of Doron York: the Birmingham Expects to have Angels will be 50 attendees. held in downtown Birmingham, on the second floor of the former Borders bookstore on Woodward Avenue. That follows the launch of the Detroit-based Woodward Angels in February at the Shinola Hotel, with Dan Gilbert one of the founding members. The double launches fill a gap in the region for individual investors who want help making early stage investments in startups. The Birmingham group will be affiliated with City Side Ventures LLC, an investment firm founded in 2015 and headquartered in the former Borders building, which now houses a Walgreens Pharmacy on the first floor. City Side Ventures is raising a fund of $10 million to invest in early stage companies. It expects to have a first close of at least $4 million on that fund, the Great Lakes Angels Fund, by the end of April. Originally, last June, the goal was to raise a fund of $18 million, but it was later decided to finish fundraising sooner and later raise a second fund. Doron York, the chairman and CEO of City Side Ventures and a founding member of Birmingham Angels, said he expects to have at least 50 attendees at the first angel meeting. Members of the angel group will be able to co-invest in deals with the limited-partner fund.

A 25-story hotel and condominium skyscraper constitutes the first phase of a $310 million project planned for 3.78 acres of vacant land at Woodward and Mack avenues in Midtown. The second phase, a 30-story multifamily tower seen in the background, is expected to contain 250 apartments. INFORM STUDIO LLC

Despite flurry of projects, large-scale hotel eludes city

The Bonstelle Theatre (right) is being incorporated into a project with a 12-story boutique hotel.

A 154-room Cambria Hotel is planned at 600 W. Lafayette Blvd.

HAMILTON ANDERSON ASSOCIATES/PATRICK THOMPSON DESIGN

CHOICE HOTELS INTERNATIONAL

Among the reasons: Cost, lack of available spots for big hotel By Kirk Pinho kpinho@crain.com

SEE ANGELS, PAGE 17

The slew of new hotel rooms proposed for greater downtown Detroit last week is another positive sign for a rebounding hospitality and tourism industry in a city that was bankrupt just five years ago and whose hotel rooms were less than 50 percent occupied on any given night a decade ago. But the fact that the 536 rooms are

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in three separate buildings serves as another reminder that the city has not gotten one thing that experts say is needed: a large-scale hotel that will help lure big conventions and major sporting events. Among the reasons for that: enormous cost and relatively few available places that make geographic sense to build one, said Michael O’Callaghan, executive vice presi-

dent and COO of the Detroit Metro Convention & Visitors Bureau. And because convention goers generally like to be near their events, that’s putting the city at a disadvantage. In less than 24 hours last week, new details were revealed about one project totaling 154 rooms and two more totaling 382 rooms. SEE HOTELS, PAGE 21

In April 2007, trucking magnate Manuel “Matty” Moroun snatched up the shuttered 2.1 million-squarefoot Budd Wheel plant, a rectangle-shaped 80-acre site on the city’s CHAD east side that had LIVENGOOD been closed for good in 2006 as the decades-long retreat of corporate capital and people from Detroit was escalating. In the acquisition, the billionaire businessman did just what he’s done for decades — he speculated that someday Detroit would have a reversal of fortunes. That day has arrived. Twelve years later, the Moroun family is sitting on what’s arguably the hottest piece of industrial real estate in Detroit — the linchpin to unlocking $2.5 billion of investment by Fiat Chrysler Automobiles to modernize the adjacent Jefferson North Assembly Plant and convert two engine plants across Mack Avenue into the first new assembly plant in the city since Jefferson North came online 27 years ago. FCA wants the Moroun-owned parcel as part of 200 acres it needs for new vehicle storage, employee parking and staging trucks delivering parts to both assembly plants. This move comes two years after the Moroun family’s Crown Enterprises said it spent $10 million to demolish the century-old Budd Wheel plant and turn the site into a logistics hub for FCA to ship new vehicles by truck or rail. Once it was complete, the site quickly filled up with FCA’s hot-selling Dodge and Jeep SUVs being pumped out of Jefferson North. And now, the transnational automaker headquartered in Auburn Hills, which reaped $4.1 billion in profits last year, wants the city of Detroit to acquire the land from the Morouns — and then hand it all over as part of a taxpayer incentives package for its mega-investment. SEE MOROUN, PAGE 19

INSIDE

Behind the business of Michigan cannabis << Who will be pot’s big players when recreational marijuana fires up? Page 10 Cannabis business program to launch Page 12

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

CALENDAR

State grant to help Flint revitalize commercial corridor Michigan’s Department of Environmental Quality has awarded Flint a nearly $500,000 brownfield grant to revitalize and safely reuse properties along a commercial corridor, the Associated Press reported. The state says contaminated land along Flint’s Saginaw Street will be redeveloped with housing and commercial space. The grant will be used to perform environmental assessments, remove contaminated soil and install vapor mitigation systems. A printer, warehouse, gas station, auto service and furniture repair shop were among the businesses that once operated in the area. As part of the city’s Choice Neighborhoods Initiative, Norstar Development USA will construct 62 homes and one or more commercial buildings along the corridor. The redevelopment is pegged at $21.6 million. The project is being supported with $750,000 from the Flint Housing Commission and $600,000 from the city of Flint. Norstar, based in Buffalo, N.Y., in December received $18.3 million of a U.S. Department of Housing and

FLINT & GENESEE CHAMBER OF COMMERCE

Michigan’s Department of Environmental Quality has awarded Flint a nearly $500,000 brownfield grant to revitalize and safely reuse properties along a commercial corridor.

Urban Development grant to build 300 mixed-income housing units, MLive reported. The grant is from $30 million in HUD funding received by Flint to help improve housing in the city.

Munson Medical Center nurses reach contract

Nurses at Munson Medical Center in Traverse City reached a tentative three-year agreement with hospital management after forming a

1,200-member union in 2017, the Michigan Nurses Association said in a news release last week. The agreement safeguards staffing levels, limits mandatory overtime and boosts recruitment of quality registered nurses, according to the release. Nurses at the 442-bed hospital — the largest in northern Michigan — were represented by the Michigan Nurses Association. The Okemos-based union represented Uni-

versity of Michigan nurses in negotiations that led to a three-year contract that was ratified in October. Before the Munson Medical Center agreement becomes final, it must be ratified by a union vote, expected in the coming days. It would go into effect upon ratification. “We are very pleased to have reached this agreement," said Dianne Michalek, vice president of marketing and corporate communications for Munson Healthcare. “We feel strongly it takes into account what is best for our entire health care team, our patients and our community.” Munson nurses, who made news last Christmas for helping cancel $8.9 million in medical debt, first tried to unionize 17 years ago, according to the release. The union’s formation in August 2017 was the “largest successful organizing drive since Michigan went ‘Right to Work’ in 2013.” More details of the agreement will be released once the contract is ratified, the union said.

Loan repayment program puts doctors in underserved areas

Newly graduated doctors have an opportunity to cut $75,000 from their medical school loans in exchange for working in underserved areas, thanks to $5 million in state

CLASSIFIEDS

DEALS & DETAILS

MARY KRAMER

OPINION

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RUMBLINGS

WEEK ON THE WEB

funding approved last year. Under the MIDOCs program, medical graduates will receive the $75,000 if they commit to working for two years after residency in a rural or underserved area in Michigan. “Helping physicians to stay in our state to practice medicine will make Michigan a healthier place in the long run and ensure access to care in all communities,” Robert Gordon, director of the Michigan Department of Health and Human Services, said in a statement. “It will also empower medical students to choose a career based on impact rather than financial necessity, allowing them to commit their career to helping the underserved.” MIDOCS also will add eight additional graduate medical education residency slots in medically underserved areas of Michigan. The federal government has a residency funding cap in place that limits the ability of hospitals to fund training programs for doctors.

FUTURE WORK of

WHAT MICHIGAN COMPANIES CAN DO TODAY TO PREPARE FOR HOW WE WILL WORK IN THE FUTURE Industry 4.0, workspace transformation, IoT, the war for talent. We all read the headlines about what’s possible in 5, 10 or 15 years, but what investments should companies be making today - in processes, technology and people - to innovate and leap ahead? Hear from local business leaders about the investments leading Michigan companies are making right now, in 2019, to compete for years to come.

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KASCO CONSTRUCTION

Credits Team and Talent for 30 Years of Steady Growth

Since its founding in 1989, Kasco Incorporated has maintained a reputation for performing quality work, while providing unrivaled service, on every project. The company has accomplished this through dedicated, client-centric management and an exceptional team of construction professionals. A mid-sized company, Kasco specializes in building and renovating healthcare, educational and ﬁnancial institutions, as well as managing construction projects for eldercare, religious, commercial and industrial clients.

management is why its clients entrust the company with their most complicated projects, time and again.

A foundation of hard work and top talent When Kassab founded Kasco 30 years ago, his strategy was to hire, challenge and reward highly motivated, hardworking, skilled professionals to create an entrepreneurial culture conducive to success. For decades, Kasco has remained competitive with larger ﬁrms, securing contracts with many prominent healthcare groups, including Beaumont Health,

Mendelson Kornblum Orthopedics, MKO Ofﬁce Building, Livonia, Mich.

Stephen Kassab, President and CEO of the Royal Oak-based ﬁrm, said his four equity partners and Kasco’s staff of talented specialists demonstrate meticulous attention to detail, extensive technical and practical experience and a passion for efﬁciency. “It’s the dedicated employees at Kasco who are responsible for our company’s excellent reputation for trustworthy, outstanding construction contracting and management,” said Kassab. And Kasco’s hands-on, careful and reliable project

Beaumont Health, Proton Therapy Center, Royal Oak, Mich.

Ascension Health, University of Michigan Health System, Trinity Health, Henry Ford Health System and Metro Health. Because the company works with such distinguished clients, it is continually attracting top talent.

Kasco’s leaders believe in empowering employees, promoting healthy work-life balance, and rewarding them with highly competitive, robust compensation and beneﬁts. The result is a loyal workforce, with over half of Kasco’s employees having greater than 17 years of service. “We care about our people and in return they care about the work they do,” said vice president and partner Mike Engle.

Three decades of excellence in project management Kasco’s work is far-reaching and its clients go beyond healthcare. The company manages projects throughout Michigan, including the Detroit, Ann Arbor and Grand Rapids areas, for clients that include Michigan Schools and Government Credit Union, First State Bank, Hillel Day School, the Felician Sisters, University of Michigan, CSI Co-op, Eastern Michigan University and the Detroit Institute of Arts, among many others. In 1990, Kasco managed its ﬁrst large-scale project, the renovation of Cranbrook Educational Community’s historic Greek Theatre, originally built in 1915.

“Even in 2008, when most companies were laying off employees, we were adding them,” Kassab said. And he and his partners place a high premium on their staff’s contributions and hard work.

In 2017, the company successfully completed the Beaumont Proton Therapy Center in Royal Oak. The 30,000 squarefoot facility contains one of the most advanced cancer treatment technologies available and is one of only 26 of its kind in the U.S.

“We understand that we are only as successful as our employees,” added Tom Buchanan, Kasco partner.

Rory Clark, a senior project manager with Trinity Health, afﬁrmed Kasco’s reliable performance. Over the last

Beaumont Health, Medical Ofﬁce Building, West Bloomﬁeld, Mich.

Leading-edge facilities for pioneering medicine Kasco prides itself on how it constructs and renovates medical buildings, speciﬁcally working with minimal impact in hospital spaces in close proximity to patients and medical testing equipment. Roughly 70 to 80 percent of the company’s projects are medical buildings. 15 years, Clark said, Kasco has completed “a multitude of complex projects for us in most of our facilities,” involving intricate, highly technical upgrades to radiology and operating rooms, and additions to the group’s Woodland Cancer Center and other hospitals. As part of Kasco’s project management commitment, the company builds sincere relationships with subcontractors and vendors, and considers them critical partners in the building process. “Because we truly value our clients, we only seek partners who operate like we do,” partner Scott Davis said. One such partner is Guardian Plumbing, whose owner, Tony D’Ascenzo, described Kasco as “one of the few companies where a handshake actually means something.”

Ready for the next 30 years Kasco has secured new and repeat business based on its reputation as an exacting, proficient and trustworthy service provider. It’s a formula that continues to serve the company well as it looks forward to its fourth decade. Kassab is optimistic about the company’s continued growth and fully confident in Kasco’s team. “My partners are phenomenal at what they do, and I know our leadership is highly qualified to drive growth. The future looks great.” To learn more about Kasco Construction and view its projects, visit kascoinc.com.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

OPINION EDITORIAL

An embarrassment at Wayne State T

hree board members at Wayne State University gave a stunning public display of how not to handle their duty to oversee the institution last week. The trustees — Michael Busuito, M.D.; Dana Thompson; and Sandra Hughes O’Brien — used a board meeting to read statements blasting university President M. Roy Wilson. Thompson called for him to leave town. The behavior of the three belligerent trustees is an embarrassment to the 150-year-old institution. They clearly do not understand meddling in day-to-day operations is not part of that job. The board’s bylaws are clear: It is the board’s responsibility to “receive proposals from the administration for discussion and action.” The board did that when it reviewed and unanimously approved moving forward on a letter of intent for an affiliation between Wayne State’s medical school and Henry Ford Health System. Now it’s the administration’s job to move forward on those negotiations. Wilson and executives at the university’s medical school have been doing that job, negotiating and vetting a deal to help secure the medical school’s financial future, improve its reputation, and lure new talent and research money. Now the bloc of trustees wants to go back to the drawing board on something they’ve already approved. Trustees have a responsibility to minimize risk for the institution. Publicly upbraiding Wilson for doing his job has increased the risk to the university’s brand and reputation. The orchestrated scolding seems intended to embarrass and frustrate Wilson into resigning, letting the university off the hook for a contract extension the board gave him late last year and which the three trustees opposed. Even if Wilson acquiesced and quit, good luck finding a top-notch replacement after this demonstration of how the board treats its chief executive. So far Henry Ford Health seems to be taking the position that it will wait and see if Wayne State can get its house in order, but you could forgive the health system’s leaders if they were to decide that they have had enough of the circus. Beyond the individual behavior of the trustees, we must look to the political parties that nominated them for the statewide ballot. In at least one case, a potential conflict was clearly overlooked: Should an employee of the University of Michigan like Thompson, for example, be elected as a trustee of Wayne State? The two institutions compete for students, talent and research dollars. Recently, UM was also rumored to be considering the purchase of a hospital within the Detroit Medical Center group. That’s a conflict. The political party decision-makers clearly aren’t devoting as much time to vetting “bottom of the ballot” nominees — who are often good political soldiers or donors — as they are for top offices. They should do more. As for the situation at hand, it’s beyond time for party leaders, such as Gov. Gretchen Whitmer, to turn up the political heat on Wayne State’s board. It’s a nuclear option, but she has the power to remove elected board members from office for “misfeasance or malfeasance.” We’re not sure this situation rises to that level, but there is real damage being done. It requires action.

COMMENTARY

Tax cuts for college grads unfair I

n recent weeks, an idea floated on these pages by Rob Cleveland has garnered the consideration of Gov. Gretchen Whitmer. It involves providing a large, temporary and targeted personal income tax cut to graduates of Michigan universities and colleges. There is much wrong with this idea, though it is nice to see that both Mr. Cleveland and Gov. Whitmer recognize that taxes impact both personal and business location decisions. Cleveland’s thesis is that talent is a key consideration for companies looking for their next facility, arguing that “there are not enough people in most places to do the work companies need.” His solution is to offer a zero percent personal income tax rate to Michigan residents in the first full year after they graduate from college, then

OTHER VOICES Michael LaFaive

gradually increasing the rate over the next five years. The logic is graduates will likely stay if taxed less. This proposal is profoundly unfair, only directly benefiting those who already have a leg up on most Michiganders. Most Michigan residents — 71 percent of those 25 years of age or older — do not possess a four-year

degree. But under this plan, they will effectively cross-subsidize the fortunate minority who do. This, in addition to the $1.5 billion Michigan taxpayers already spend subsidizing universities. The plan will be ineffective as a development tool. Cleveland argues that a decade ago “with a national unemployment rate of 10 percent, companies had little problem finding available employees.” What happens, however, when we have another national recession and companies have little difficulty in finding employees? If the last recession is any indication, our efforts will have just subsidized the next generation of college-educated Michigan workers moving to Florida and Texas. SEE GRADS, PAGE 9

No time for inertia on new threat to Michigan’s water W

e take so many things for granted. Like filling a glass of water from the tap. Easy. Accessible. Cheap. Flint changed that. When the lead crisis erupted, people all over the country were testing their tap water — in their homes, their workplaces, their schools. Now there’s another water-quality threat — PFAS. The hot spots are mostly in West Michigan, affecting residents with well water, but now we read frequently about contamination in other parts of the state and country. PFAS stands for a class of chemicals used for such things as firefighting foam, nonstick surfaces

MARY KRAMER Group Publisher

like Teflon and food wrappers. It’s considered a “forever” chemical because it will stick around in the environment, well, forever. And it spreads in groundwater pretty quickly, potentially contaminating

the source of drinking water for millions of Michigan residents. Richard Rediske, who helped evaluate problems in West Michigan, told MiBiz, a West Michigan business publication, that it can take generations to eliminate the chemical risk. Rediske teaches environmental chemistry and is a senior program manager at Grand Valley State University’s Robert B. Annis Water Resources Institute. Unfortunately, there’s no universal federal standard for what’s safe and what’s not. Testing for PFAS isn’t easy. And earlier this month, The Detroit News reported that the state’s plans to create its own testing

labs have been delayed at least a year. Meanwhile, private labs — in Michigan and elsewhere — have been overwhelmed by demand for the reportedly complicated testing. If there’s one thing we learned from Flint, it’s inertia is the enemy of solving the water problem. Let’s think of some out-of-the-box solutions. Example: Michigan has experts and labs in its state-supported universities. Could the state create a SWAT team across several state programs to accelerate testing? Given ties to GVSU, I’m biased in favor of the Annis Institute, but other state schools have labs and stu-

dents eager to learn about environmental threats. Marshaling the assets Michigan could apply to the problem could alleviate more pain down the road. Tapping the expertise in Michigan’s own universities could be a win-win for residents and the environment.

MORE ON WJR Listen to Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

Continental Services continues acquisition spree By Annalise Frank afrank@crain.com

Food service provider Continental Services took over a Canton Township-based corporate dining, market and cafe company, expanding its holdings with its fifth acquisition in a year and a half. Troy-based Continental announced Monday it had acquired Sterling Services. It did not disclose terms for the deal that closed Jan. 18. Continental, the largest food management company in Michigan, is owned by Boston-based private equity firm New Heritage Capital LLC. Steve LaPorte, president of Continental’s refreshment services group,

Need to know

JJCompany acquires Canton Town-

ship-based Sterling Services

JJAdding Sterling’s automated mini-market program Fresh at Work, Continental now has 330 markets JJAcquisition is Continental’s fifth in a year and a half

told Crain’s last year that the company is on a “very aggressive” five-year growth plan. “We’re being opportunistic in the marketplace,” corporate President Matt Hubbard said last week. That expansion continues with the

acquisition of more than 30-year-old Sterling Services, which has a consumer-facing brand called Fresh at Work that operates mini-markets in offices, using automated self-checkout technology and salads, sandwiches, chips, medications and other necessities. Continental will have a total of 330 automated markets when it brings on Sterling’s 70 Fresh at Work markets to add to its own Market Twenty 4 Seven brand. Whether branding changes is “really going to be client-driven,” Hubbard said. Continental also gained 160 employees to add to its 1,800, he said. The Sterling Services leadership will

also join Continental, the release said. Sterling Services offers corporate dining management, coffee service, catering and food service consulting, according to a news release. It got 50 percent of its revenue from dining as of 2017, according to reporting by VendingMarketWatch. “We are really excited that they have such a stellar lineup of brands of their own,” Hubbard said. “They’re very client-centric like us, so we’re excited about the opportunity to find opportunities to merge our brands with their brands and bring the best offerings to customers.” Continental bought Fern-

dale-based United Vending & Market Services in November, Roseville-based Metro Vending Services Inc. in April last year, Brighton-based 24 Hr. Vending LLC in January 2018 and Wixom-based Satellite Vending Co. in September 2017. Continental’s brands include Forte Belanger, Co.Cuisine, and Continental Cafe and Catering. The company recorded revenue of $112 million in 2017, according to Food Management's Top 50 Contract Management Companies list for 2018, the most recent year available. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

GRADS FROM PAGE 8

Florida and Texas, for the uninitiated, have no personal income tax carveouts for college students because they impose no personal income taxes on anyone. By at least one measure, their overall tax burdens are lower than Michigan’s too. In 2009 Mackinac Center scholar Michael Hicks conducted a statistical analysis on what drives interstate migration, with a focus on Michigan. He found that for every 10 percent increase in the personal tax differential between Michigan and other states, an additional 4,700 people leave the Great Lakes State. In other words, the 11.5 percent increase on the personal income tax that the state imposed in 2007 may have already chased away tens of thousands of potential workers. In another analysis, we used IRS data from 2000-08 to examine Michigan migration patterns. We found that during this period, Michigan lost a net 68,000 residents to Florida alone, the top destination state for our citizens. Texas ranked second. Targeting tax relief to a few future college graduates will do little to reduce the outflow. Someone else will have to pay for what is essentially the indirect subsidy Cleveland wants. If that involves tax hikes elsewhere it will just cost us jobs and people. In addition, the proposed tax relief plan for graduates has few limitations. You need only be a graduate with a bachelor’s degree or higher and a Michigan resident with an income tax return. But college degrees tell us little about how productive and useful these graduates are to the economy. Does it strain credulity to suggest that Michigan taxpayers will just be subsidizing the lives of over-educated retail clerks? Cleveland also argues that providing tax relief to recent graduates will help them pay their huge school debts. But he offers no evidence they would responsibly do that instead of, say, buy a bigger television or travel more. Taxes matter to almost everyone, not just recent graduates. Showering youngsters with fiscal favors is unfair to everyone else, economically unwise, and ineffective even on its own terms. A nearly costless alternative? Adapt Gov. Rick Snyder’s proposal to have the federal government issue 50,000 (perhaps more) visas to college educated workers. The world represents a big labor pool: Let’s tap it. Michael LaFaive is senior director of fiscal policy at the Mackinac Center for Public Policy.

Congratulations Karen! Your recognition as one of Michigan’s most Notable Women in Human Resources is well-deserved.

Karen Baldwin, CSP, SHRM-SCP Vice President, Director of Human Resources

34977 Woodward Avenue, Birmingham, MI 48009 248.530.6200 greenleaftrust.com

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FOCUS CANNABIS

THE MARIJUANA MARKET The business landscape of cannabis begins to take shape By Doug Henze | Special to Crain’s Detroit Business

November and use became legal Dec. 6. However, the ith the clock ticking for Michigan’s Depart- state has until this December to draft final rules and ment of Licensing and Regulatory Affairs to grant the first licenses. develop regulations for recreational mari- Here’s an early look at some of the players — of all sizjuana businesses, investors are moving forward with es — in or trying to enter the cannabis space, including state and local permit applications and real estate ac- medical marijuana providers and those hoping to quisition. sell recreational products in what’s expected State voters, who OK’d medical marijuana use in 2008, to be one of the nation’s most lucrative legalized the recreational use of cannabis this past markets, beginning on Page 11.

Interested in cannabis business news? Tell us With the legalization of recreational marijuana proceeding in Michigan, Crain’s is planning to launch a periodic email newsletter about the cannabis business. If you’re interested in receiving that newsletter after it launches, go to http://crainsdetroit. com/cannabis and sign up.

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A look at the early players in the cannabis space Emerald Growth Partners

Location: Detroit What they do: Founded by CEO Randall Buchman in 2018, the company is completing a 50,000-squarefoot cultivation facility in Harrison Township and expects to hire as many as 60 employees once the grow operation is complete and licensed. What they’re doing in Michigan: EGP also plans to build another 30,000-square-foot facility and a 10,000-square-foot processing lab in Harrison Township. The company is awaiting state prequalification for 12 provisioning centers throughout Michigan and has obtained or is seeking municipal approvals.

Harvest Health & Recreation

Location: Headquartered in Tempe, Ariz., the company has 140 facilities in 12 states and projects it will have more than 100 provisioning centers in 14 states by 2020. What they do: Founded in 2011, with the first location in Phoenix, Ariz., the company operates cultivation, production, distribution and provisioning operations. The CEO of the company, which has 683 employees, is Steve White. What they’re doing in Michigan: The company recently announced an $850 million deal to acquire Chicago-based Verano Holdings, which is pursuing licensing in Michigan as a cannabis provider. Harvest’s Website lists Bedford as a “coming soon” provisioning location.

Grown Rogue International Inc.

Location: Headquartered in Medford, Ore. What they do: Founded in 2007 as a medical cannabis operation, the now-recreational marijuana provider has 11 locations and 45 employees in Oregon and California. The CEO is Obie Strickler. What they’re doing in Michigan: Grown Rogue plans to open a 3,000-square-foot provisioning location in Midtown Detroit by the end of

the year and a 1,500-square-foot location in Hazel Park by the third quarter. The company, in the final stages of state licensing, expects to convert a 19,000-square-foot Detroit warehouse to a cultivation center, also by third quarter. Plans include a cultivation center in Acme Township, near Traverse City, in first-quarter 2020, as well as possible locations in Ann Arbor and Saugatuck. Michigan operations initially would trade in medical marijuana, converting to recreational sales when the state allows it.

D. Savage LLC (DBA Viola Detroit)

Location: Headquartered in Detroit, the CEO is Al Harrington. The company has three employees but expects to have as many as 70 by the end of 2019. What they do: Formed in 2017 and affiliated with Viola companies in Colorado, California and Oregon, the company holds a license for a Detroit provisioning center. The 1,500-squarefoot center, expected to open this month in a 50,000-square-foot building on Jefferson Avenue, will be part of a larger operation there. What they’re doing in Michigan: Pending state and local approvals, D. Savage expects to add a 5,000-squarefoot processing center and as much as 43,000 square feet of growing space. The company is hoping to build a 5,000-square-foot provisioning center in Warren and is evaluating additional operations in Detroit and Ann Arbor.

Green Peak Innovations

Location: Headquartered in a 60,000-square-foot facility in Windsor Township, near Lansing. What they do: Green Peak received pre-qualification from the state in July 2018 for cultivation, processing and provisioning center licenses, receiving the cultivation licenses in December and a processing license in February. The CEO is Jeff Radway. What they’re doing in Michigan: Green Peak processed its first harvest last month and plans to open the first of 19 Skymint provisioning centers this summer at an undisclosed location.

Michigan Pure Med (DBA Common Citizen)

Location: The company, doing business as Common Citizen, was founded in 2016 and is headquartered in Detroit. Company CEO Michael Elias said plans are to relocate to Marshall by the end of the year. What they do: Michigan Pure Med, which expects to employ 130 people by year’s end, operates 10 provisioning locations across the state, as well as two processing labs. What they’re doing in Michigan: The company is building a 1.2-millionsquare-foot greenhouse in Marshall.

Minimum Investment Requirement: $1,000,000 in Michigan $2,000,000 outside of Michigan. Assets under custody of LPL Financial and TD Ameritrade, and Charles Schwab *As reported in Barron’s March 10, 2018. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices, and other factors. **As reported in Forbes September 13, 2018. The rankings, developed by Shook Research, are based on in-person and telephone due diligence meetings and a ranking algorithm for advisors who have a minimum of seven years of experience. Other factors include client retention, industry experience, compliance records, firm nominations, assets under management, revenue generated for their firms, and other factors. For fee-only status see NAPFA.org

ACT Laboratories Inc.

Location: Headquartered in Lansing, the CEO and founder is Jeff Nemeth. What they do: The company, incorporated in 2013, is a safety-testing lab that evaluates growers’ and processors’ marijuana for pesticides, microbials and other contaminants. ACT, which has 40 employees, also has testing laboratories in Ohio, Pennsylvania and Illinois and plans to open additional labs in California, Massachusetts and New York in the next several months. What they’re doing in Michigan: The company operated a 5,000-square-foot lab in Michigan from 2013 until this past December, when ownership changes required ACT to reapply for a license. That lab is closed pending approvals.

Grassroots Cannabis

Location: The Chicago-based company was founded in 2014 by CEO Mitch Kahn. What they do: Grassroots, which has 400 employees, operates in 11 states. The company grows, processes and sells cannabis products. Its retail brand is called Herbology. What they’re doing in Michigan: Grassroots is trying to secure final approvals to bring Herbology locations to five Michigan communities: Warren, Ann Arbor, Battle Creek, Bangor and Portage. The company is considering adding other Michigan markets to its retail network. SEE CANNABIS, PAGE 12

Kitch Drutchas Wagner Valitutti & Sherbrook

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

SPECIAL REPORT: CANNABIS

A rendering of a future Pleasantrees dispensary planned by Emerald Growth Partners.

Green Peak plans to open the first of 19 Skymint provisioning centers this year.

EMERALD GROWTH PARTNERS

GREEN PEAK INNOVATIONS

CANNABIS FROM PAGE 10

The Reef

Location: Detroit What they do: Established in 2015, the 5,000-square-foot provisioning center employs 24 people. Tony Czuchra has been CEO since 2018. What they’re doing in Michigan: The provisioning center plans two to three additional locations and hopes to add growing and processing facilities in the future.

Utopia Gardens

Location: Detroit What they do: Founded in 2017, the 3,000-square-foot provisioning center employs 14 people. Stuart Carter is the CEO. What they’re doing in Michigan: Utopia Gardens sells edibles, flower and other medical marijuana products. The company is looking at retail expansion opportunities in Michigan and hopes to open growing and processing centers in Detroit in the next three to eight months.

The Greenhouse of Walled Lake

Location: Walled Lake What they do: The Greenhouse, licensed in October 2018, opened for business Feb.1 as a 2,000-square-foot provisioning center. The CEO is Jerry Millen. What they’re doing in Michigan: The company, which has 15 employees, offers cannabis products, including edibles, extracts, tinctures and topicals. Two more stores, expected to be in the 3,000-squarefoot-to-5,000-square-foot range to handle recreational products in the future, are in the works. Plans are to operate a total of five to six stores, along with grow and processing operations, eventually.

The interior of the Greenhouse of Walled Lake dipsensary. NICK KOMIC PHOTOGRAPHIC INC. DBA: DETROIT PHOTO SOURCE

Stearns Management LLC (DBA Mary Jane’s Therapeutics)

Location: Headquartered in Sterling Heights, the CEO is Candius Stearns. What they do: The company is awaiting licensing for a 1,500-plant grow facility in Vassar. Stearns has a lease on a 20,000-square-foot vacant building to house the operation. What they’re doing in Michigan: Once the grow operation is established, the company intends to add processing and provisioning businesses.

Arbors Cos.

Location: Headquartered in Ann Arbor, the group includes Arbors Well-

ness, founded in January 2017, and Arbor Kitchen, established in July 2017. The CEO of both companies is James Daly. What they do: Arbor Kitchen operates a 2,880-square-foot processing facility that makes edibles sold at provisioning centers, including Arbors Wellness. Arbors Wellness operates a 4,736-square-foot store selling flower, cartridges and concentrates, in addition to edibles. Together, the separately located companies have 25 employees. What they’re doing in Michigan: The group has completed construction of a 4,800-square-foot cultivation center in the Ann Arbor area. Pending local and state approvals, the group expects operations to begin at Arbor

Farm in the next several months.

The Curing Corner

Location: River Rouge What they do: Founded in May 2018, the 1,200-square-foot provisioning center sells flower, edibles, concentrates, patches and other products for medical marijuana patients. The CEO is Robert McKinnon. What they’re doing in Michigan: The company, which has nine employees, is considering expanding operations to include additional provisioning outlets and possibly a growing operation.

LivWell Enlightened Health

Location: Headquartered in Denver,

the company has 16 locations, including provisioning centers and production facilities, in Colorado and one in Oregon. The CEO of the company is John Lord, while the CEO of a Michigan affiliate it has established, LivWell Michigan, is Tom Lauzon. What they do: Founded in 2009, LivWell’s customers include medical and recreational users. Products include edibles, topicals and concentrates. The company has more than 650 employees. What they’re doing in Michigan: LivWell says its role in Michigan is that of a “licensing partner and part owner,” but the company will not identify specific business plans for the state yet.

Lake Superior State to launch cannabis business program By Anisa Jibrell ajibrell@crain.com

Starting this fall, Lake Superior State University in Sault Ste. Marie will offer a new business degree to equip students to work in the growing cannabis industry. The 124-credit bachelor of science in cannabis business program will be offered through LSSU's Lukenda School of Business. The move comes on the heels of the launch of the university's cannabis chemistry program, according to a news release. The university will also offer an associate degree program in cannabis science and students can opt in

for an American Chemical Society-endorsed degree. The planning process for the new program started three to four months ago and it was approved March 15, according to LSSU President Rodney Hanley. Hanley pointed out the program is not specific to the cannabis industry, but that students who graduate from the program will also be eligible for a range of business opportunities in all fast-growing industries. He said although there are very few textbooks on the cannabis industry, people are “living the textbook on a day-to-day basis,” which is what he believes separates the

new degree from other programs. In the U.S., the cannabis market is set to outpace the health care and technology sectors, creating more than 500,000 jobs by 2022, the LSSU release said. Estimates in Michigan predict legal cannabis spending could surpass $1.3 billion in 2022 and employ almost 28,000 people. “Preparing students for tomorrow is our goal, and with a projected annual growth rate of over 28 percent and sales reaching $47 billion in the next decade, LSSU Cannabis Business graduates will have the skills and knowledge to take the lead in this emerging industry,” Lukenda School of Business Professor Ralf

Wilhelms said in the release. The new program blends business management courses with “cannabis-specific business functions and operations,” including classes such as Cannabis Business Policy and Cannabis Economics with attention to cultivation and dispensary operations that are designed to arm students with the knowledge to navigate state, federal, provincial and international laws as they pertain to the cannabis industry. The new cannabis program consists of 14 courses (45 credits) of common business courses such as accounting, business law and micro and macroeconomics, as well as 17

courses (47 credits) that cover topics including consumer behavior and cannabis law. When the cannabis chemistry program was announced in January, the school had 24 applications within 36 hours, said Hanley. Northern Michigan University in 2017 launched its medicinal plant chemistry degree program, designed to meet demand in the cannabis, herbal extract and natural product industries. It aims to “prepare students for success in the emerging industries relating to medicinal plant production, analysis, and distribution,” according to the online program description.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

CALENDAR TUESDAY, MARCH 26 2019 MICHauto Annual Meeting. 8 a.m. Detroit Regional Chamber. Jim Tobin, chief marketing officer and president of Magna Asia for Magna International, will share his perspective on the automotive industry’s impact on next-generation mobility transformation and how it will change the talent pipeline’s needs. Detroit Athletic Club. $20 members. $40 nonmembers. Contact: Maggie Greaney, phone: (313) 596-0482. Economic Prospects for the U.S. and Regional Economy in 20192020. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Stuart Hoffman, SVP and senior economic adviser, PNC Financial Services Group Inc., will share his insights on the U.S. econoHoffman my’s 2019 and 2020 direction and will forecast indicators such as jobs and the unemployment rate, interest rates, the stock market and consumer spending, including vehicle sales. Westin Book Cadillac. $45 members, $55 guests of members. Website: econclub.org Workforce: Solving for Jobs, Mobility and Equity in an Era of Rapid Change. 4-7:30 p.m. University of Michigan Poverty Solutions. Event will feature leaders in the field of workforce development and economic mobility including a keynote address from Greg Foran, Walmart U.S. president and CEO, and Julie Gehrki, Walmart vice president of philanthropy, and closing remarks from Garlin Gilchrist, lieutenant governor of the state of Michigan. Free. Ross School of Business, Ann Arbor. Website: annarborusa.org/ events/work-force-solving-for-jobsmobility-and-equity-in-an-era-ofrapid-change

UPCOMING EVENTS Manufacturing Summit: The State of the 2019 U.S. Manufacturing Industry. 5:30-7:30 p.m. April 3. Michigan Manufacturing Technology Center. Summit will examine how U.S. trade policy shifts are expected to impact manufactur-

ing and open opportunities. Speakers: Attorney James Reid IV from Maddin Hauser; attorney Chad Silver from Silver Tax Group; attorney Michael Marsalese; Shelly Stobierski from the Michigan Manufacturing Technology Center; Chuck Werner from the Michigan Manufacturing Technology Center; and Marc Lasceski from Oswald Companies. The Detroit Club. Free. Contact: Theresa Payne, email: tpayne@the-center.org; phone: (888) 414-6682; website: www.the-center.org/Events/ Manufacturing-Summit Makers Mingle: A Celebration of Manufacturing Technology. 9 a.m.-noon. April 5. Michigan Manufacturing Technology Center. Interactive educational session will focus on the latest Industry 4.0 technological advancements in manufacturing. Industry experts will discuss how to identify relevant and affordable technologies to support business goals using advanced manufacturing innovations. Speakers: The Michigan Manufacturing Technology Center’s Industry 4.0 team: Chuck Werner, lean program manager; George Singos, business leader adviser; Russ Mason, lean program manager; Michael McGray, IT manager. Michigan Manufacturing Technology Center, Plymouth. Free. Contact: Charlie Westra, email: cwestra@ the-center.org; phone: (888) 4146682 The Rapid Innovation of Marketing. 6-8 p.m. April 11. American Marketing Association Detroit. Event features Casey Hurbis, CMO of Quicken Loans. The Madison Building, Detroit. $50 members; $60 nonmembers. Contact: Whitney Swistock, Hurbis email: connect@ amadetroit.org; phone: (248) 7971976 Professional Development Seminar: Manage Conflict & Deal with Difficult Issues. 7:30-10:15 a.m. April 16. Detroit Economic Club. Topics include: How to create a climate where healthy, productive conflict exists; how to deal with disruptive conflict in a timely and effective manner; recognizing strengths and

areas for improvement around tackling difficult issues; building a climate for productive conflict and strategies, tactics and actions to encourage healthy conflict to obtain better team results. Lawrence Technological University. $45 members, $55 guests of members. Website: econclub.org Oakland County Annual Economic Outlook Luncheon 2019. 11 a.m.-1:30 p.m. April 26. Oakland County. Oakland County Executive L. Brooks Patterson’s Economic Outlook Luncheon will feature University of Michigan economists Gabriel Ehrlich and Donald Grimes present their three-year forecast on the county’s economic future. Troy Marriott. $50. Contact: Sandra O’Connell, email: oconnells@oakgov.com; phone: (248) 858-7647 A Conversation with PGA Tour Commissioner Jay Monahan. 3:306:30 p.m. May 2. Jay Monahan, commissioner of the PGA Tour, will discuss the Rocket Mortgage Classic, the tour’s first-ever event to be held in Detroit, and the emphasis placed on charitable impact in the communities in which the tour plays. Detroit Golf Club. $45 members, $55 guests of members. Website: econclub.org Fully Human: 3 Steps to Grow Your Emotional Fitness in Work, Leadership, and Life. 11:30 a.m.-1:30 p.m. May 15. Detroit Economic Club. Susan Packard, c o - f o u n d e r, Scripps Interactive Networks and HGTV, tells how organizations can revitalPackard ize and shift their leadership practices to build effective, supportive and winning teams. The Masonic. $45 members, $55 guests of members. Website: econclub.org To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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COM M U N IT Y We travel your roads and live on your streets so we know well what is important to your community. Local knowledge and personal understanding – it’s all connected.

DEALS & DETAILS CONTRACTS JJKirco Manix, Troy, a construction company, has been selected by BJ’s Wholesale Club Holdings Inc. , Westborough, Mass., a wholesale club operating 216 clubs and 138 gas stations in 16 states, to construct 100,000-square-foot clubs and gas stations at 29101 John R Road, Madison Heights, and at the corner of Eureka Road and Racho Boulevard, Taylor, as the company expands into eastern Michigan this year. Websites: kirco.com, bjs.com JJVelocityEHS, Ann Arbor, a soft-

ware company, has a partnership with Kinetica Labs, Ann Arbor, developer of occupational safety and health technology, to incorporate video-based, sensorless motion-capture technology to its Humantech ergonomics software platform. Websites: ehs.com, kineticalabs.com

EXPANSIONS JJDenso Products and Services Americas Inc., Southfield, an affiliate of Denso Corp., a mobility supplier, is opening a new distribution center in

Jeffersonville, Ind. The location will be fully operational this summer. Denso also recently opened a distribution center in Rancho Cucamonga, Calif. Website: denso.com/us-ca/ en

NAME CHANGES JJNeuman

Anderson Grieco McKenny P.C., Birmingham, a business litigation law firm, has rebranded to Altior Law. Website: altiorlaw.com Submit Deals & Details items to cdbdepartments@crain.com

FISHBECK , THOMPSON, CARR & HUBER engineers | scientists | architects | constructors

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

CRAIN'S LIST: LARGEST MICHIGAN BUSINESS INSURANCE AGENCIES AND COMPANIES Ranked by 2018 revenue Company Address Rank Phone; website

Top executive(s)

Revenue ($000,000) 2018

Premium Revenue volume ($000,000) Percent ($000,000) 2017 change 2018

Employees Jan.2019 Michigan/ Total U.S.

Worldwide employees Jan.2019

Insurance category

H.W. Kaufman Group Inc./Burns & Wilcox Ltd. 30833 Northwestern Highway, Farmington Hills 48334 (248) 932-9000; www.hwkaufman.com

Alan Jay Kaufman chairman, president and CEO

$2,250.0

$2,100.0

7.1%

$2,250.0

274 1,735

2,023

Insurance Company

Auto-Owners Insurance Co. Inc. 6101 Anacapri Blvd., Lansing 48917 (517) 323-1200; www.auto-owners.com

Jeffrey Tagsold chairman and CEO

1,871.7

1,782.2

5.0

7,306.5

2,866 5,175

5,175

Insurance Company

Acrisure LLC 5664 Prairie Creek Drive, SE, Caledonia 49316 (800) 748-0351; www.acrisure.com

Gregory Williams president, CEO

1,200.0

859.0

39.7

8,800.0

640 6,018

6,298

Insurance Company

Amerisure Mutual Insurance Co. 26777 Halsted Road, Farmington Hills 48331 (248) 615-9000; www.amerisure.com

Gregory Crabb president and CEO

839.3

838.9

0.0

839.3

350 718

718

Insurance Company

AmeriTrust Group Inc. (formerly Meadowbrook Inc.) B 26255 American Drive, Southfield 48034-6112 (248) 358-1100; www.ameritrustgroup.com

Kenn Allen president and CEO

632.2

715.5

-11.6

609.6

323 798

798

Insurance Agency, Insurance Company

Marsh & McLennan Companies Inc. (MMC) One Towne Square, Suite 1100, Southfield 48076 (248) 945-5600; www.mmc.com

Nina Maggart managing director & head of office

146.0 C

126.0 C

15.9

227 NA

Insurance Company

Brown & Brown of Detroit 35735 Mound Road, Sterling Heights 48310 (586) 977-6300; www.bbdetroit.com

Todd Piersol, Jason Vandeberghe, Angela Garner, EVPs

68.2

64.8

5.3

403.5

555 8,321

8,321

Insurance Agency

Arthur J. Gallagher & Co. 30150 Telegraph Road, Suite 408, Bingham Farms 48025 (248) 203-0626; www.ajg.com

Bryan Hirn and Ryan Isaacs, area presidents

65.8

58.0

13.5

240 NA

30,362

Insurance Agency

Marsh & McLennan Agency LLC - Michigan 3331 W. Big Beaver Road, Suite 200, Troy 48084 (248) 822-8000 and (734) 525-2463; www.mma-mi.com

Becky McLaughlan, president and CEO Health & Benefits; Dan Hale, president and CEO, Property & Casualty Alan Chandler, president and CEO

40.6

38.8

4.7

1,686.0

150 150

150

Insurance Agency

39.5

34.5

14.5

225.0

157 162

161

Insurance Agency

LSG Insurance Partners

Jay Schreibman president and CEO

37.4

37.0

1.3

1,706.1

97 115

115

Insurance Agency

Kapnick Insurance Group 1201 Briarwood Circle, Ann Arbor 48108 (888)-263-4656; www.kapnick.com

Jim Kapnick CEO

33.3 D

29.7

12.2

310.0

177 177

177

Insurance Agency

Hylant Group Inc.

Patrick McDaniel, MI partnership leader; Michael Nixon, senior VP, SEMI Employee Benefits Leader

31.9

28.9

10.4

472.0

160 703

703

Insurance Agency

AssuredPartners Inc.

Melissa Armatis and Joel Clark, profit center leaders; Maureen Gallagher, managing director

21.1 E

11.2 E

88.4

378.0

100 5,299

5,299

Insurance Agency

The Huttenlocher Group

David Huttenlocher CEO

17.5

14.3

22.4

150.0

112 112

112

Insurance Agency

KIG Korotkin Insurance

Kenneth Korotkin president

8.9

8.3

7.2

64.5

50 50

Insurance Agency

Ralph C. Wilson Agency Inc. 26026 Telegraph Road, Suite 100, Southfield 48086 (800) 638-1174; www.rcwa.net

Stefano Vannelli president, CEO and owner

8.5

8.6

-1.2

222.0

55 55

Insurance Agency

Johnston Lewis Associates Inc.

Jay Sawmiller, president and CEO

6.6

5.7

15.8

58.0

47 47

Insurance Agency

Oswald Companies

Catherine Kosin, senior VP, Michigan market leader

6.5

6.8

-4.4

59.0

29 400

400

Insurance Agency

Capital Insurance Group

Robert Moglia Jr., president

6.3

0.0

27 27

Insurance Agency

Allied Insurance Managers Inc.

Jayson Bass, CEO; Bill Sheldon, president

4.9

4.7

3.9

33.4

32 32

Insurance Agency

Wilshire Benefits Group

David Sokol president and CEO

4.2

3.8

9.5

88.0

21 21

Insurance Agency

Goodman Venegas Insurance Agency Inc.

M. Paul Venegas, president; Regina Goodman, co-owner

4.0

3.7

8.1

35.0

16 16

Insurance Agency

Cornerstone Municipal Advisory Group LLC

Mark Manquen founder, president

3.9

3.7

4.2

183.8

20 21

Insurance Agency

NuStar Insurance Agency

John Chevalier, CEO; Stephen Chappell, president

3.8

32.5

57 43

Insurance Agency

Valenti, Trobec, Chandler Inc./VTC Insurance Group

W. Long Lake Road, Troy 48098 10 1175 (248) 828-3377; www.vtcins.com

S. Telegraph Road, Suite 100, Bloomfield Hills 48302 11 2600 (248) 332-3100; www.lsgip.com

W. Big Beaver Road, Suite 400, Troy 48084 13 2401 (248) 643-8750 ; www.hylant.com Biddle Ave., Wyandotte 48192 14 3099 (734) 283-1400; www.dalymerritt.com W. Huron, Waterford Township 48328 15 1007 (248) 681-2100; www.hgway.com Northwestern Highway, Suite 400, Southfield 48033 16 26877 (248) 352-5140; www.getkig.com

E. Maple Road, Troy 48083 18 575 (248) 528-2400; www.johnstonlewis.com Woodward Ave., Suite 201, Bloomfield Hills 48304 19 39572 (248) 433-1466; oswaldcompanies.com W. Square Lake Road, Bloomfield Hills 48302 20 1263 (248) 333-2500; www.capitalinsuranceagent.com S. Blvd. E., Suite 110, Rochester Hills 48307 21 1055 (248) 853-0930; www.alliedinsmgr.com Wilshire Drive, Suite 330, Troy 48084 22 901 (248) 269-2116; www.wilshirebenefits.com Livernois, Suite 170, Troy 48083 23 2800 (248) 740-9090; www.goodmanvenegas.com West Big Beaver, Suite 220, Troy 48084 24 50 (248) 878-2100; www.cornerstonemunicipal.com Orchard Hill Place, Suite 130, Novi 48375 25 39555 (248) 380-6190; www.nustarinsurance.net

This list is an approximate compilation of the largest such agencies and companies in Michigan. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available.

B Meadowbrook Insurance Group announced in October 2018 that it had changed its name to AmeriTrust Group Inc. C Includes Marsh, Mercer and Oliver Wyman figures. D Kapnick Insurance Group acquired A.E. Mourad Agency of Madison Heights in October 2018. 2018 figures include A.E. Mourad. E AssuredPartners' 2017 revenue figure represents revenue from its Daly Merritt Insurance subsidiary. The 2018 figures also include J.P. Clark Agency, which AssuredPartners acquired in 2018, and AssuredPartners' risk management unit. LIST RESEARCHED BY CHUCK SODER

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Detroit winery plans to open tasting room in old Stroh’s building

SPOTLIGHT

By Annalise Frank afrank@crain.com

Wine drinkers can grab a glass while mingling with old Stroh’s Ice Cream equipment starting May 3. Detroit Vineyards, which claims to be the city’s first winery in 60 years, has taken up residence in the former ice cream factory on Gratiot Avenue in Detroit. It has been producing wine in the building across from the main Eastern Market district since last year, but is now planning to open its winery and tasting room to the public. The wine, mead and cider maker is moving from a 1,200-square-foot winery near Gleaners Community Food Bank of Southeastern Michigan on Detroit’s east side. It started renovating its new 12,000-square-foot home connected to Detroit City Distillery last April. It has been ramping up production — from 2,500 cases (12 bottles per case) in 2017 to 10,000 cases in 2018 — and is in negotiations with a wholesale distributor. The Detroit Vineyards team decided to leave the old Stroh’s pumps, tanks and piping in the 3,000-squarefoot tasting room and build them into the design, founder and general manager Blake Kownacki said. The expansive room has a long bar, floating tables for mingling, a spot for live entertainment and windows that let customers peek into barrel-storage and production rooms. Detroit Vineyards will offer samples, wine and mead by the glass and bottle, cider on tap and private event space. Not at the start, but eventually, Kownacki wants to sell charcuterie and finger foods. He’s also hiring staff, aiming for a total of 15 part-time employees and five full-time. Kownacki and Claes Fornell, investor and professor emeritus of business

Stone

Shanks

Ford hires new CFO

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Detroit Vineyards plans to open its tasting room and winery at 1000 Maple St. in Detroit’s Eastern Market May 3. It shares the former Stroh’s Ice Cream factory building with Detroit City Distillery, which resides in the large white tower seen behind Detroit Vineyards’ wooden front door.

administration at the University of Michigan’s Ross School of Business, founded Detroit Vineyards in 2014. In 2011, Kownacki and John Burtka had pursued an idea to create and build a 10-acre vineyard and winery on Belle Isle. That idea, under the moniker Detroit City Cellars, was scuttled amid opposition. Kownacki said a “few million” dollars have been invested in the new Eastern Market headquarters, but declined to elaborate on the business’ sales or financing. It’s in a 20year lease with the building’s owner, an entity tied to neighboring Kaps Wholesale Foods. Detroit businesses selling its wine include House of Pure Vin in downtown Detroit and Supino Pizzeria in Eastern Market. Detroit Vineyards sources the great majority of its grapes from southwest Michigan, the Traverse City area and Old Mission Peninsula, but it also planted its first vineyard in Detroit in 2015. It now has 2 acres scattered

around the city where planting is planned or vines are creeping upward. On one three-quarter-acre lot, in Detroit’s Morningside neighborhood, the company plans a community planting day May 18. The current Detroit vineyards could produce 500 cases once they mature enough for full production, Kownacki said. He wants to ramp up Detroit production toward a goal of 10 acres. “We like to work with local organizations, so we don’t technically own the land, we just plant the vineyards there. We use it as a training ground to teach the community,” Kownacki said. He also wants to drive agritourism, popular in western and northern Michigan, to Detroit. They will install a map in the tasting room so people can find their Detroit vineyards and visit. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

Ford Motor Co. announced Thursday that Chief Financial Officer Bob Shanks plans to retire from the company at the end of this year and will be succeeded by Tim Stone, a finance executive who served 20 years at Amazon Inc. and as CFO of Snap Inc. Stone, 52, will join Ford on April 15 as a company officer and assume the role of CFO on June 1, Ford said in a news release. He will report to Ford President and CEO Jim Hackett. Stone announced Jan. 15 that he would be resigning as CFO of Snap to pursue other opportunities, the company said in an SEC filing. Reports about Shanks retiring first surfaced last month. Shanks, 66, was named the automaker's CFO in April 2012.

BorgWarner hires new CFO

Nowlan

BorgWarner Inc. hired Kevin Nowlan as its new executive vice president and chief financial officer, the Auburn Hillsbased auto supplier announced last week. Nowlan, 47,

who resigned from Troy-based Meritor Inc. to take the new job, replaces interim CFO Thomas McGill effective April 1, according to a news release. McGill took the job after longtime finance executive Ron Hundzinski retired. Nowlan had been with Meritor since 2007 and worked for General Motors before that. He has an MBA degree from the University of Michigan. McGill will be transitioned to vice president and controller effective April 1, succeeding Anthony Hensel, who will become vice president of special projects.

New president for IAV Automotive Engineering

IAV Automotive Engineering Inc. has chosen a new president it hopes will hasten the engineering services supplier’s work in mobility. Mike Kenhard, 46, oversees North American product and services growth, according to a news release last week. Kenhard Northville-based IAV aims to continue its powertrain development and software work while embedding itself in the automotive mobility space. Kenhard joined IAV in January, coming from a position as director of engineering at Plymouth-based AVL Powertrain Engineering Inc. The last permanent president was Andrew Ridgway, a former General Motors Co. executive who left IAV in February 2017 and is now vice president of thermal systems for Auburn Hills-based TI Automotive.

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SERVICES

GHD

BeneSys, Inc.

Helm LLC

GHD has recently named Peter S. Swanson, P.E. as Principal/Vice President in their Farmington Hills, MI operations. With 25 years of experience, Mr. Swanson leads GHD’s Detroit area environmental consulting team. Mr. Swanson is responsible for client services related to transactional due diligence, remediation, compliance, and PFAS mitigation. He is an active member of the Engineering Society of Detroit, Michigan Association of Environmental Professionals, and Michigan Manufacturers Association.

BeneSys, Inc. is pleased to announce the hiring of Tim Mulligan in the role of Senior Vice President, Operations. Tim has over 20 years of experience in the insurance and financial services sectors, most recently at Health Plan Services where he was responsible for all aspects of their services supporting large US Health Care Payers. Tim’s focus will be on improving and optimizing operations in our service delivery departments throughout all our office locations.

Helm LLC has promoted Lorne Dubrowsky to president, which the Plymouth-based company announced in September 2018. Dubrowsky, 45, was promoted to president as part of the Banyan Technologies Group acquisition of Helm that was announced in September 2018. In his new post, Dubrowsky will oversee all of Helm’s strategic planning, financial objectives and growth initiatives. He will continue to be based out of Helm LLC’s Plymouth, Michigan, headquarters.

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C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

ANGELS FROM PAGE 1

“As we met with potential investors the last few months, a lot of high-networth individuals and family offices said they didn’t necessarily want to invest in a fund, but they wanted to be able to take part in deal flow and to syndicate deals,” he said. Ironically, though the fund is named after the Great Lakes Angels, that Southeast Michigan group, which was founded in 2002 by David Weaver, stopped holding monthly meetings after Weaver joined City Side last year to help raise a fund. Weaver, the chief investment officer for the Great Lakes Fund, said that the problem with the Great Lakes Angels was that while it held monthly meetings for two or three early stage companies to make pitches for capital, investors were on their own for subsequent due diligence, and few deals were consummated. “Everyone had to do it on their own, and it didn’t get done,” he said. City Side Ventures will do due diligence and handle back operations for the angels, as well as manage a website that introduces angels to companies and tracks how portfolio companies are doing. Both the Woodward Angels and the Grand Angels charge $2,000 for the first year’s membership. Doron said there will be three membership levels for the Birmingham Angels at prices yet to be determined. Providing back-office support follows the model of the Grand Rapids-based Grand Angels, considered the most active angel investor group in Michigan. It is doing the due diligence and back-office support for the Woodward Angels, as well as for the Kalamazoo-based Ka-Zoo Angels, which launched in 2017. The Birmingham Angels will partner with Jeff and Rich Sloan, whose StartupNation, an entrepreneurial support company, shares the office space with City Side Ventures. The brothers’ venture-capital arm, Aria Ventures, is also based there. The second floor has more than

8,000 square feet, big enough to serve as incubator space for several portfolio companies. It also has event space for 250, where the monthly pitch meetings will be held. When asked if, since most angel groups hold pitch events for two or three companies, it is overly ambitious to be planning on events for 30 to 40, York said: “We get 20 companies a week saying we want to be there. Don’t listen to all the venture capitalists who say there are no deals in Michigan. There are all kinds of deals. There’s no problem getting 30 a month.” “I’m thrilled to hear there is yet another angel group, and equally thrilled that it’s going to be in Oakland County,” said Skip Simms, senior vice president at Ann Arbor Spark and managing member of the Michigan Angel Fund, a limited-partner investment arm of the Ann Arbor-based Michigan Angels. Thanks to a grant from Ralph C. Wilson Foundation, Simms has held about a dozen meetings around the state in the last year and a half, offering what he calls “Angel Investing 101,” to inform high-net-worth individuals about the investment class and how to get into it. He said a meeting in Detroit a year or so ago eventually led to the formation of the Woodward Angels. “The groundwork that has been done is paying off,” he said. “I had someone ask me recently, ‘Can you have too many angel groups?’ Absolutely not. The more money on the street, the better. As venture capitalists started investing in later-stage companies, that left angels and family offices to pick up the slack.” The Grand Angels hope to announce an affiliation with another angel group in the state in the coming months, and Simms said a group has held several meetings in hopes of launching a Grosse Pointe angel group soon. Pietro Sarcina, former president of the Great Lakes Angels, will be president of the Birmingham Angels. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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Proposals sought for City of Design competition By Kurt Nagl knagl@crain.com

Designers from around the world are being called to submit plans for creative public installations that would go up in three Detroit neighborhoods later this year. Nonprofit Design Core Detroit is accepting applications through April 14 for the first Detroit City of Design Competition, said Olga Stella, executive director of the nonprofit. She expects 40-60 applications for the program. Three winners will be selected, and each will be given $15,000 for material costs and a $5,000 stipend to execute the design. The winning designs will be exhibited downtown in September before being transported to the Grandmont Rosedale, Hope Village and Southwest Detroit neighborhoods. “Part of what we want is to have design visible in neighborhoods across the city, not just downtown,” Stella said. Detroit became the first U.S. city to win UNESCO’s “city of design” designation in 2015, joining 30 other cities

around the world. The nonprofit, supported by the John S. and James L. Knight Foundation, is funding its inaugural design competition through a $300,000 grant it received from the foundation last year. Design proposals come in all shapes and sizes, Stella said, but there are a few general guidelines. Winning designs should have elements of “off-grid lighting” that encourage walkability, welcome users with disabilities and can be scaled to operate as a larger system, according to a call for entries document. Bonus points for incorporating seating or games and using sustainable materials. For safety purposes, the designs must be transparent inside and out. Winners will be chosen by a jury composed of nonprofit and community representatives, as well as Caitlin Malloy-Marcon, the city’s deputy director of the Complete Streets Program. The city is not directly involved in the competition. For more information on the competition, and to apply, visit DesignCore.org.

To find out more about our audience, reach out to Kate Rozek at krozek@crain.com or 313-446-0485 *The Media Audit

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

TIGERS FROM PAGE 3

Detroit Tigers starting pitcher Michael Fulmer was lost for the season to an unexpected elbow injury requiring surgery. ASSOCIATED PRESS

The dollars and cents of Michael Fulmer’s Tommy John surgery By Bill Shea bshea@crain.com

A Detroit Tigers season already expected to be challenging got worse when starting pitcher Michael Fulmer was lost for the season to an unexpected elbow injury requiring surgery. Specifically, Fulmer will undergo ulnar collateral ligament reconstruction, better known as Tommy John surgery — named for L.A. Dodgers pitcher Tommy John upon whom the pioneering procedure was first performed by Dr. Frank Jobe in 1974. The operation grafts a healthy tendon from elsewhere in the body to the elbow, replacing a damaged or torn tendon. Fulmer, 26, is expected to need a year or more of rehab for his rebuilt right pitching arm. He was the 2016 rookie of the year and a 2017 all-star before needing a number of minor surgeries to his arm and knee, which hampered his performance. Losing his production is something the Tigers will have to deal with on the field, and off of it there are financial implications. His elbow problem is a

workplace injury. First, Fulmer is due $2.8 million this season, and all baseball contracts are fully guaranteed. He gets paid whether he pitches or not. Baseball teams will take out insurance on large contracts, but deals like Fulmer’s salary — modest, in baseball terms — often aren’t worth the expense, which can cost as much as 7 percent of the contact’s value in premiums. A team gets only 60 to 80 percent of the salary back via a contract insurance policy, according to a 2016 Washington Post story on the topic. Based on what’s known about the Tigers’ revenue streams — $277 million, by Forbes’ more recent estimate — paying Fulmer to miss a year isn’t much of a fiscal hardship for the team. His surgery necessitates at least a year of rehab, so he’ll miss all of 2019 and possibly some of 2020. He remains under team financial control, per baseball’s collective bargaining agreement, and doesn’t become a free agent until 2023 when he’s age 30. His surgery cost will be covered by baseball’s workers’ compensation policy, and the player won’t be billed,

the team confirmed. MLB’s workers’ comp policy through a private insurer covers all team employees, not just players. It’s unclear what Fulmer’s surgery will cost, and the procedure can vary by doctor and hospital. The New York Times in 2013 quoted a baseball executive, speaking anonymously, saying insurance company reimbursement for the costs of Tommy John surgery, including the fees for the surgeon, the anesthesia and the operating room time, ranged from $13,087 on a $25,075 claim, and $10,255 on a $38,076 claim, the newspaper said. The Tigers said Fulmer’s procedure was recommended by sports orthopedic Surgeon Dr. James Andrews in Alabama. It’s unclear if Andrews will perform the surgery. The procedure has a high success rate, with pitchers often returning to the mound with a higher velocity on their pitches. Tommy John returned in 1976 and went on to pitch until age 46 in 1989. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

NEW

FROM PAGE 3

NEW VOICE: Jay Allen, a longtime public address announcer in Grand Rapids, is the new ballpark public address announcer. He replaces Bobb Vergiels, who has retired to Florida after 15 seasons, but continues to do PA work for the Tigers’ spring training home, Joker Marchant Stadium in Lakeland, Fla. NEW FACES: The Tigers spent $15.5 million to sign free-agent shortstop Jordy Mercer, second baseman Josh Harrison, and pitchers Matt Moore and Tyson Ross. UNTIL NEXT YEAR: Pitcher Michael Fulmer, the 2016 rookie of the year and a 2017 all-star, was lost for more than a year to an elbow injury requiring Tommy John surgery. TURF TIME: Comerica Park’s entire grass field was replaced after last season. CONCESSIONS: Among new ballpark concessions are a Coney dog eggroll,

BILL SHEA/CRAIN’S DETROIT BUSINESS

The Detroit Tigers displayed promotional university hats at a media event Thursday. French onion burger, banh mi, and an al pastor hot dog. MERCH: Among new merchandise lines at the ballpark are Pandora charms, Alex and Ani bracelets, and a DKNY sports line. HAT MANIA: Four schools have been added to the popular college hat ticket package: University of Michigan-Dearborn, Kalamazoo College, Northwood University and Rochester College. FELINE FIX: The Tigers will offer a

“Caturday” logo T-shirt on May 18 as a ticket promotion that aids the Ferndale cat shelter. RULE CHANGES: Inning breaks have been shortened; teams are permitted only five mound visits instead of six; waiver trades have been eliminated and July 31 will be lone trade deadline; All-Star games in extra innings will start each new inning with a runner on second; the home run derby winner now gets a $1 million prize.

Right now, the Tigers are firmly entrenched in the shadows. They’re coming off two 98-loss seasons, and baseball insiders widely predict they’ll lose at least 90 game of their 162 games again this year — for example FanGraphs has them finishing 68-94 while USA Today predicts 64-98. And that was before the Tigers lost key pitcher Michael Fulmer for the season to an elbow injury. It’s in places like Toledo, Lakeland, Erie and Comstock Park that Detroit’s future success is being groomed. The Tigers’ minor league system is being restocked courtesy of the draft and a series of trades that saw expensive stars such as Justin Verlander and J.D. Martinez dealt for young prospects who, ideally, will develop into good major leaguers while remaining under team financial control, i.e. cheap. Several baseball analysts have ranked the Tigers’ farm system as middle of the pack, which is an improvement over years prior when it was depleted from win-now philosophy trades in a bid for a World Series. Keith Law’s 2019 ranking of all 30 MLB farm systems ranked Detroit at No 18, which is two spots better than in 2018, and Baseball American puts Detroit’s minors at 15th, and that’s up 15 spots from 2015. “As far as (minor-league) players are concerned and the talent level, we’re probably better now than we’ve been easily in the last 10 years,” said Tigers General Manager and Executive Vice President Al Avila during an in-game interview on a March 18 Fox Sports Detroit spring training broadcast. He also noted that the team has four players in Baseball America’s top 100 prospects list: pitchers Casey Mize, Matt Manning and Franklin Perez, and shortstop Isaac Paredes. So that part appears to be working. The proof will come in two or three years when the kids are supposed to debut at the major league level. Detroit’s new strategy also is to sign veteran free agents to relatively inexpensive one-year deals as stop-gaps to fill out the roster and to help mentor the young players. After all, you still have to field a team, so the Tigers spent a combined $15.5 million to add shortstop Jordy Mercer, second baseman Josh Harrison, and pitchers Matt Moore and Tyson Ross. The intent is that if these rental players show some spark, they can be traded this summer for another batch of prospects — perhaps accelerating the five-year plan to contend again for a World Series. At least one longtime Tigers player also is on the trade block: Nick Castellanos, 27, is due nearly $10 million this season, and is an unrestricted free agent in 2020. That means he’s a likely trade candidate, if Detroit can gin up a deal that gives it some worthwhile prospects. “Our goal as far as putting the team together is, get the young guys that are ready to play and put them into competition and mix them in with some good veteran leadership, guys that have been around, guys that we know will teach the right way to play the game but still have enough in the tank to still go out there and give you a good performance,” Avila said. Detroit’s rebuilding strategy has also been to rein in spending, and it’s easy to understand why: The cash outlays haven’t produced a playoff team since 2014. Currently, Detroit’s Opening Day payroll is expected to be $106.6 million, which ranks 21st among MLB’s 30 clubs. Three seasons ago, it ranked

fourth at $201 million. The 2019 league average for payroll is $126.4 million, according to salary tracking site Spotrac.com. The Tigers haven’t disclosed amounts, but have said they’ve been spending on off-field investments to hasten the new era, including putting more money into scouting and analytical technology. Avila said the team has doubled its major league scouting staff to 12 scouts. “It’s one thing to bring in talent, but you also have to be able to develop them, too. We’ve really across the board added to every aspect of the organization from technology, personnel and baseball talent in a little less than 2-1/2 years,” Avila said during the broadcast. Through 2015, the Tigers were known as one of the laggards when it came to modern analytics. Since 2016, Jay Sartori, an ex-Apple executive and former Toronto Blue Jays assistant general manager, has led a maturing analytics team. It now has a batch of Rapsodo sensors — they retail $4,500 each with additional fees for data subscriptions and other accessories — that use camera and radar technology to measure just about every aspect of a pitcher’s motion and pitch, providing real-time data via tablets. Data from those and other analytical systems are collected in the organization’s internal system called “Caesar” and launched in 2016. The technology is used for both the major leaguers and the prospects. “We’re able to teach and develop on the spot when guys are doing the bullpen and batting cage,” Avila said. “After the game we have a lot of video and information for them. It’s getting to learn how to use the technology, understand the metrics and analyzing the information and be able to put it to good use, for two purposes. One is for better player performance and the other one is for basically competing against the other team.” Veteran baseball writer Emily Waldon, who writes about the Tigers’ minor league system for The Athletic Detroit, has been watching Detroit’s rebuild first-hand. While praising last year’s draft, which landed them pitcher Casey Mize with the top overall pick, she noted that the Tigers still have a ways to go. “I would say it’s probably moving a little slower than expected,” she said. “There’s still a lot of work that needs to be done.” In the meantime, the team’s front office will try to convince fans to buy tickets with the usual blend of perks, discounts and promotions, from bobbleheads (Game of Thrones Ron Gardenhire!) to unique concessions (Coney dog eggrolls!) to theme nights (Caturday!) to merchandise (DKNY leggings!). There’s new turf on the field and new broadcasters in the TV booth, with Matt Shepard taking over the Fox Sports Detroit play-by-play role, with ex-Tigers Kirk Gibson rotating with Jack Morris as in-game analysts, in the wake of last season’s Mario Impemba-Rod Allen confrontation that saw them both ousted from the network. But short of winning, the team’s attendance likely will continue to decline. TV ratings have tumbled significantly, and ballpark attendance since 2013 is down nearly 40 percent to last season’s 23,212 per game. “We’re still trying to win every single game on the field,” Avila said. “Gardy prepares the team and coaching staff to win the game every day that we go out there.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

MOROUN

The Moroun family’s Crown Enterprises Inc. has said it spent $10 million demolishing the former Budd Wheel plant in 2017 to build a finished vehicle storage and shipping yard for Fiat Chrysler Automobiles’ Jefferson North Assembly Plant (background).

FROM PAGE 1

It’s a pretty audacious move on FCA’s part — asking taxpayers to buy a parcel of land the Morouns recently redeveloped for FCA and likely helping the company break a multiyear lease with Crown Enterprises, the Moroun family’s real estate development firm. This reversal of fortunes has put the Morouns in an interesting position to play a decisive role in bringing 4,500 manufacturing jobs to the Motor City — and possibly earn some good will for a company that has shouldered its share of public scorn over the years. That’s if the Morouns can reach a favorable deal with the city before FCA’s 60-day deadline on April 27. After all, the Morouns didn’t get rich by giving things away. Insiders close to the negotiations with the Morouns are optimistic the family’s third-generation leader, Matthew Moroun, is going to do a deal with Mayor Mike Duggan. One sign that Duggan’s land assemblage challenge may be further along than he has acknowledged is the city has already bulldozed a berm along St. Jean Street that will become part of the Mack Avenue plant property the city plans to give to FCA. Another sign is the Michigan Strategic Fund board will likely vote before the April 27 land assemblage deadline on a state tax incentives package for the Mack Avenue plant and other FCA capital investments in Southeast Michigan, according to two sources involved in the deal.

LARRY PEPLIN FOR CRAIN’S

Duggan himself has boasted about his record of striking deals with Matthew Moroun — starting with a land swap in 2015 that helped expand Riverside Park. After prodding Matthew Moroun to put temporary windows in the train station, Duggan pushed the Grosse Pointe businessman to sell Michigan Central Station to Ford Motor Co., a blockbuster $90 million deal that nobody thought the elder Moroun would ever do. But this isn’t Matty Moroun’s myway-or-the-highway business enterprise anymore. The 91-year-old billionaire has largely handed over the reins of his CenTra Inc. and related trucking companies, Crown Enterprises and the Detroit International Bridge Co., to his son. And the son has been consciously trying to change the public image

that took root surrounding the Morouns with the train station, countless other derelict properties that sat vacant for years and, of course, their Ambassador Bridge and epic decades-long battle with the governments of Canada and Michigan over planned construction of a new Detroit River span. And let’s not forget the Ambassador Gateway connection ramps debacle with the Michigan Department of Transportation that landed a then-84-year-old Matty Moroun in the county jail for a night for contempt of court. While respecting his father, Matthew Moroun has tried to portray himself as the softer Moroun. “I’m different from my dad. He was born poor with a chip on his shoulder. I was born rich,” Matthew Moroun told journalist Charlie LeDuff last year for a Detroit Free Press profile. “He’d bang on the table and take

the position that he’s ‘entitled to it under the law, so you’ve got to give it to me.’ I’m trying to build a bridge, so I need friends.” Representatives with the Morouns’ Crown Enterprises declined to comment, citing the ongoing negotiations. Just what it will cost the city to acquire the 80 acres from the Morouns remains to be seen. Duggan has declined to disclose how much he’s budgeted for land assemblage. As one of Detroit’s largest land owners, the Morouns could be in line for some land swaps with the city to help fill out the footprint of other industrial land the family wants to redevelopment (like they did in 2015 with the construction of a new 500,000-square-foot warehouse in the I-94 Industrial Park). For decades, Matty Moroun and his son have been making strategic

real estate purchases throughout the city — some to fulfill their own purposes like land in Delray they bought to try to block construction of a new bridge and some with the financial wherewithal and patience that can pay long-term dividends. A recent example of this is Crown Enterprises’ purchase of the polluted wasteland that is the former McLouth Steel plant in Trenton. The jury’s still out on whether they can tear down that hulking remnant of a different era in Detroit’s industrial might and repurpose the land alongside the Detroit River’s Trenton Channel. By all accounts, Matthew Moroun doesn’t want to get blamed for blowing up this deal Duggan has forged with FCA. And by selling or swapping the land at Mack Avenue and Conner Street, he could buy his family business some goodwill with new Gov. Gretchen Whitmer — after spending the last eight years fighting a very expensive and mostly losing war with her predecessor. The Morouns still need cooperation from Whitmer’s government if they ever hope to build a replacement span for the Ambassador Bridge, which turns 90 years old this year. For the future of Matthew Moroun’s enterprises in this city, some political goodwill with the governor may be just as valuable as collecting land or profits from his dad’s investment in Detroit when nobody was buying abandoned auto plants in Detroit. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Wednesday, April 24 9 – 11:30 a.m. | The Fillmore, Detroit

Individual tickets: $80 • Reserved table of 10: $850

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■ Why high-end destination malls are thriving

CEO, Agree Realty Co.

Jennifer Skiba Vice President, Bedrock

■ What makes an “Internet-resistant tenant” ■ How malls and downtowns alike can benefit from “experience”-based retail ■ What types of retail investment can best help Detroit neighborhoods ■ An entrepreneur’s story of opening a retail business in a Detroit neighborhood

Alessandro DiNello

President and CEO, Flagstar Bank

Kristi Trevarrow

Executive Director, Rochester Downtown Development Authority

Scottie Lee

Vice President, The Taubman Co.

Jevona Watson

Owner, Detroit Sip

MODERATORS: Kirk Pinho

Reporter Crain’s Detroit Business

Chad Livengood

Reporter Crain’s Detroit Business

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C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

CMU

pation in the Programs through CMU as our Public Entity,” said Harrison. Officials for Central Michigan declined comment. DMC and UP did not respond to an interview requests. Officials for the Michigan Department of Health and Human Services gave Crain’s the following statement regarding questions on the talks it has had with Central, DMC and Wayne State: “The department is actively reviewing the information provided from multiple parties on this issue and has no comment at this time.” Central Michigan also has reached an agreement with DMC and Children’s

Hospital to send several dozen thirdyear medical students for training to DMC, possibly replacing Wayne State medical students, said Jack Sobel, M.D., dean of the Wayne State medical school, who said he learned of the arrangement only two weeks ago. Central Michigan and DMC declined comment. Sobel said he has discussed the situation with George Kikano, M.D., dean of Central’s medical school. Kikano told Sobel Central would move students to DMC in July, Sobel said. A statement from Matt Lockwood, Wayne State’s vice president of communications, said: “This came as a

complete surprise to us. We are very concerned about this situation. We are investigating the full impact to Wayne State” on medical student training and Medicaid funding. Under the proposal, Central Michigan would pay DMC for medical student clerkships, said a source at Wayne State knowledgeable about the arrangement. WSU does not pay DMC for students under the current teaching contract arrangement. WSU has about 120 to 130 medical students training at DMC. Sobel said he is concerned Wayne State might have to find other hospitals to train some of its medical students if there is no availability at DMC. He said he hasn’t yet discussed the situation with DMC. UP President Mary Lu Angelilli, M.D., suggested in a recent email to pediatrician members that UP was forced to work with Central because “WSU terminated its relationship with (University Physician Group) in October 2018 without notice to UP.” UPG, the medical school’s nonprofit faculty practice plan, filed for bankruptcy in November. It is expected to emerge from bankruptcy this summer as a smaller 100 to 200 physician group. It currently is honoring all agreements and has a five-year contract with DMC and operates a multi-specialty clinic in downtown Detroit, UPG officials have said. “We now have no agreement that

Wayne State, said the start of the search to replace Sobel was delayed by almost six months because he asked the university’s board of governors to extend his contract to help with the dean recruiting process. Last December, Wilson’s contract for three years until

change roils the health care system and expectations for clinical, research and teaching success have grown. For example, Medicaid and private health insurance expansion has cut the uninsured rate to under 8 percent from 14 percent, creating the need for more medical providers; value-based reimbursement programs are paying providers for quality, which has required providers to use more complicated electronic health record systems to document improvements; and the trend toward using interdisciplinary teams of doctors, nurses, dentists, social workers and mental health professionals has changed training and how doctors practice medicine. The average tenure of medical school deans also has dropped by more than half as the growing responsibilities of the job lead to stress and burnout. Over the past five decades, average tenure has been cut to 3.5 years from 6.7 years, which means medical deans now have roughly the same career longevity as professional boxers, Harris said. “The role itself has become increasingly complicated and broad,” Harris said. “There are multi-mission parts to the role. There is the academic affairs part, teaching, research, and the clinical service programs to run, and dealing with hospitals if you don’t own them.” Medical school deans also must take on the title of “fundraiser-in-chief” because of the ever-growing need to raise millions of dollars of charitable donations to support teaching and research. They also must be adept at overseeing management of academic faculty practice plans to generate revenue for operations. “It is harder to find deans willing to serve because there are fewer available doctors who are interested in becoming deans, and there have been major expansions and new medical schools built” that have increased demand, he said. From the late 1960s to 2005, the number of allopathic medical schools in the U.S. held steady at 125. Since then, at least 27 new ones have opened,

including three in Michigan since 2010, and more are in the making. “There are not many new leaders seeking to become deans. A lot of qualified doctors don’t want to mess with it. They can make more money (in clinical practice),” he said. But dean salaries also have been increasing, which has helped alleviate the shortage somewhat, Harris said. Depending on the size of the institution and responsibilities, deans at medical research institutions can earn $600,000 to more than $1 million. Deans at Duke and Johns Hopkins medical schools earn well in excess of $1 million annually, he said. In Ann Arbor, Marschall Runge, M.D., dean of the University of Michigan Medical School and CEO of the U-M Health System, was paid a base salary of $922,066 in 2017. Another newly hired dean, Harold Paz, M.D., at Ohio State University, may have set the top end for base salary at $1.45 million. By contrast, WSU's Sobel earned a base salary in 2018 of $386,976. Parisi, who was dean from 2009-2015, earned $423,908 in 2014-2015. At OU-Beaumont, Folberg, in his last contract, earned $531,957 in base pay. Wilson, who has hired many medical administrators over the years, is aware of difficulty in finding a high-quality dean and the price to be paid. “I think I have some inside tracks (to potential deans who might be available). Even with that it will take a while,” he said. “I don’t think I will have to convince someone. People will love to have the opportunity to lead in this situation.” Despite recent controversies at Wayne State, including the off-and-on dispute the past 10 years with Detroit Medical Center about various clinical and administrative contracts and other professional issues, and the nearloss of accreditation for its medical school, Wayne State continues to be well thought of nationally, Harris said. Wayne State also is engaged in negotiations for a major affiliation with Detroit-based Henry Ford Health Sys-

FROM PAGE 3

However, a Wayne County judge ruled last fall that UP couldn’t seek other partners until it formally terminated its relationship with Wayne State, a process it completed in February. Wayne State and UP have battled the past three years in court, through emails and in public settings over who is to blame for the deterioration of their longstanding relationship. UP was formed in the early 2000s as the clinical practice group of the WSU medical school’s department of pediatrics. On Jan. 16, Wayne County Circuit Court Judge Lita Popke ruled that UP was within its rights to terminate its relationship with Wayne State, but the process it took to change its bylaws was improper. She ruled a new vote must be taken on bylaws that allow UP to affiliate with a university other than Wayne State. On Feb. 1, UP physician members completed voting to approve new bylaws and articles of incorporation that allowed it to affiliate with another university. But UP signed an affiliation with Central effective Jan. 1, according to an Feb. 27 email from UP Administrator Marc Harrison to Kathy Stiffler of the MDHHS. “ We have established a relationship with CMU effective 1- 1-19 and would ask your approval to move our partici-

WAYNE STATE UNIVERSITY

Wayne State might have to find other hospitals to train some of its medical students if there is no availability at DMC.

DEAN FROM PAGE 3

Harris, who specializes in medical school and health sciences dean searches, said it is somewhat unusual and complicates the search to have two medical school deans leave their positions at the same time in a single metropolitan market, especially one as competitive as Detroit. But for different reasons that were mostly out of their control, school officials at WSU and OU-Beaumont acknowledge starting their search for deans later in the school year than they would have liked. As most schools’ academic years run from August through May, universities like to begin the yearlong search in September to have a dean picked by early spring. For example, WSU’s second year class begins April 15 this year. Harris said the average search now takes at least nine months and can stretch to 15 months or more. Complicating appointments is that sometimes deans accept jobs, only to back out later to take a better offer, a reality that happens more often because of growing turnover, he said. In a surprise announcement in early January, Robert Folberg, M.D., announced he would be resigning as founding dean of OU-Beaumont after a successful 10-year run. He has told friends he wants to spend more time with family. He will continue on the school’s faculty as a tenured professor in foundational medical studies, pathology and ophthalmology. Duane Mezwa, M.D., who has been with Beaumont more than 40 years, has been named interim dean. Much less surprising was the announcement in late January that Jack Sobel, M.D., 76, would be stepping down after a new dean is appointed at Wayne State. Sobel, who originally was interim dean after Valerie Parisi, M.D., resigned in June 2015, is working on a three-year contract that expires July 31. He has agreed to stay until a new dean is appointed. M. Roy Wilson, M.D., president of

M. Roy Wilson: Hopes to have dean in place before September.

was extended 2023. “The first thing a candidate will ask is how long I will be president. My status needed to be firmed up” before the search process began, Wilson said. Wilson said he hopes to have a new dean in place before September, but he acknowledged it could take longer because of the complex process and intense competition. Currently, at least 23 medical schools also have openings for deans, said the American Association of Medical Colleges. They include heavyweights such as the University of Arizona, the University of Florida and the University of Kansas. James Lentini, provost and senior vice president for academic affairs of Oakland University, who will be leading the OU-Beaumont search, said the partners are optimistic they can find a good match. He said Folberg has assembled top-notch faculty, developed a solid curriculum and has graduated many doctors who have helped to forge a budding reputation for the medical school. “There never is a perfect time for these things to happen,” Lentini said. “Searches take a long time. I don’t know if someone permanent will be in for the fall or later.”

Growing more difficult Hiring and keeping medical school deans has become more difficult over the past 20 to 30 years as massive

connects us to these funds,” Angelilli said in the email. “We need independence to avoid falling prey to arbitrary actions like these that affect our patients and our livelihood. Since our contract is not with WSU we are now out of the program. This means $10 million a year to UP. It is important that we remedy this situation quickly and we are looking into all of our options.” Wayne State officials worry that a loss of the administrative fees attached to Medicaid funding would mean it would have to halt several programs it has created to help the poor in Detroit. “If the Medicaid dollars are going to Central Michigan it is not staying in Detroit and impacts our ability to serve our population,” said a WSU source, who asked to remain anonymous. But in a previous interview, Wayne State officials said they never have halted the $10 million in Medicaid enhanced funds to UP, even though UP owes Wayne State $11 million in a dispute over their salary reimbursement agreement. Under the agreement, Wayne State pays pediatrician faculty salaries and benefits and UP reimburses Wayne State for its clinical services share of the paychecks. For efficiency, Wayne State then cuts a single paycheck to faculty that covers physicians’ clinical, teaching and education payments.

tem. If approved, a WSU-HFHS affiliation could further disrupt the 100-year-old relationship with for-profit DMC, which is owned by Dallas-based Tenet Healthcare Corp. But Wilson ultimately believes an affiliation between the two nonprofit health organizations could greatly expand teaching, research and clinical services to serve Detroiters and greatly benefit Wayne State. “There is no question (disputes and uncertainties) will be a major consideration to the future dean” at Wayne State, Harris said. “Where does the authority begin and end with the medical school? How much beholden (is WSU) to DMC and Henry Ford, which have divergent missions of filling beds?” Wilson also acknowledges uncertainty will be something Wayne State will have to address in interviews with potential deans. But the university also has a long list of achievements, he said. Founded in 1868, WSU medical school has grown to the largest single-campus medical school, with 1,200 enrolled students. Some 55 percent of its graduates stay in Michigan and 42 percent of all practicing doctors in the state graduated from Wayne State. In research, WSU was the birthplace of AZT, the first FDA-approved drug to treat AIDS, and attracting more than $180 million in total research. “We are going through a period of uncertainty,” Wilson said. “Not everybody fits that personality. They need to be comfortable with that ambiguity. Some just want to build programs. We are not in that situation. We are a bit resource-constrained. We need to make judicious use of resources.” As 2020 arrives, Wilson said Tenet might choose to sell DMC. “They might exercise rights (agreed upon in 2010 when DMC was converted to a for-profit hospital) and break up DMC. Sell parts of it. The new dean needs to be comfortable with that and help guide this situation into a bright future,” he said.

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

A pair of skyscrapers at Woodward and Mack avenues in Midtown planned to be constructed in the next couple of years would drastically alter Detroit’s skyline. INFORM STUDIO LLC

crainsdetroit.com Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

REPORTERS

HOTELS FROM PAGE 1

First, the planned $50 million West Elm hotel unveiled its anticipated scale — 12 floors with 154 rooms — on Woodward Avenue and sealed a deal with Wayne State University for a long-term lease of the Bonstelle Theatre to the south, with plans to renovate and restore the 1903 building that is the former Temple Beth El. The internal working title of the project is the Hotel Bonstelle by West Elm, the Brooklyn-based furniture retailer. Then on Thursday by noon, a pair of new luxury hotels were announced. First, the 154-room Cambria Hotel at 600 W. Lafayette Blvd. is slated to rise on a vacant parking lot owned by a joint venture between Detroit-based developers Eric Means and Brian Holdwick, himself a former Detroit Economic Growth Corp. executive. Three hours later, it was revealed that a 228-room luxury boutique hotel — which sources said is a Thompson Hotel — is planned to rise across 16 stories of a 25-story high-rise planned to anchor a $310 million development on a vacant 3.78-acre parcel owned by Ciena Healthcare CEO Mohammad Qazi. Also planned on that site immediately north of the Midtown Whole Foods Inc. store is a 30-story residential high-rise with about 250 apartments and another 12-story building with a few hundred co-living units. The project, which its representatives say is set to kick off in the summer with a ground-breaking ceremony, would also include public space, about 750 parking spaces and up to 100,000 square feet of retail. Yet still, it’s been difficult to land a major large-scale hotel to help Detroit attract big conventions and major sporting events. O’Callaghan said that while a standard Quality Inn or Comfort Inn, for example, costs about $100,000 per room to build ($10 million for 100 rooms) and something like a Cambria Hotel is about $160,000 per guest room ($16 million for 100 rooms), a large convention hotel runs $550,000 per room to build. An 800-room hotel, complete with meeting spaces and other high-end amenities, is $440 million; something

with 900 rooms is $495 million, roughly; and a 1,000-room hotel would be $550 million. “The cost difference is gigantic,” he said last week. That’s because of increased land costs, heights, materials, parking accommodation differences and a variety of other building factors, he said. “It truly is comparing watermelons to grapes.” National real estate firm Cushman & Wakefield used 2017 data last year and determined the average construction cost per room nationally, based on quality, ranging from $115,000 for midscale to $1.5 million for luxury, with “upper midscale" coming in at $148,000,

Cost to build, per guest room Budget-friendly hotel

$100,000

($10 million for 100 rooms)

Smaller upscale hotel

$160,000

($16 million for 100 rooms)

Large convention hotel

$550,000

($550 million for 1,000 rooms)

"upscale" coming in at $209,000 and "upper upscale" coming in at $398,000. And in earlier interviews with Crain’s, O’Callaghan said having only the 1,300-room Detroit Marriott at the Renaissance Center puts the city at a competitive disadvantage with other hubs when it comes to landing large conventions, which are economic jolts to the city and region. The visitors bureau says convention delegates, through spending at restaurants, hotels and other businesses, spend nearly 50 percent more per day ($265) than leisure travelers ($178). “With just the RenCen, we are not as competitive as we should be with cities like Nashville and Cincinnati,” O’Callaghan said in an interview last year. (Downtown Nashville alone has three hotels with more than 470 rooms under construction, according to Westbury, N.Y.-based hospitality research company HVS.) It’s not like others haven’t tried

building larger hotels. Operadora de Servicio Para Hoteles de Lujo, a Mexican and European investor group that bought the former Hotel Pontchartrain (now the Crowne Plaza Downtown Detroit Riverfront hotel) out of bankruptcy in 2013, has decided to stop pursuing a project that would have added a 500-room, 28-story second tower to the property after Detroit City Council members suggested the company should sign a neutrality agreement for a labor union to represent hotel workers. It would have cost north of $164 million, but Operadora de Servicio said last year it would be considering new hotel investments in Houston and San Diego instead. Brandon Leversee, a senior project manager based out of Royal Oak for HVS who said Crowne had “a good opportunity” to expand, said large convention hotels require a “relatively high price per key and a high average rate” to succeed. While downtown Detroit’s average daily rate has increased from $127.18 in 2008 to $174.35 in 2018, it’s still not quite high enough to make financial sense for a hotel operator to take on a large project along these lines. RevPAR, which is industry lingo for revenue per available room, has nearly doubled from $66.14 in 2008 to $124.20 last year, according to HVS data, which does not include the RenCen Marriott or the casino hotels. Leversee said he believes a large hotel would need to see the downtown market about 10 to 15 percent higher for RevPAR to start making the financials behind a convention hotel work. “But Detroit is on the right track, especially with these three new hotels,” Leversee said, referring to the Thompson, the Cambria and the West Elm. Regardless of that missed chance, all the new rooms are a net positive for the city. “Don’t get me wrong; the fact that the investors are coming in here with boutique hotels is really making a positive statement about downtown Detroit, but it doesn’t help the convention bureau selling to large conventions,” O’Callaghan said. Holdwick, former vice president of business development for the DEGC who left in June 2015 to work in private development, also said one of

the problems has been that a lot of the new hotels have been going into existing buildings. “You’re kind of restricted by the building itself,” he said. “Plus, building 800 rooms is very expensive.” There are about 5,000 hotel rooms in and around the central business district, ranging from the motels that dot east Jefferson Avenue and other major thoroughfares to the city’s tallest building, the RenCen Marriott. Several have opened in the last year alone, including the 130-room Shinola Hotel by Dan Gilbert’s Bedrock LLC and Shinola/Detroit LLC. The $33 million, 110-room Element Detroit by a joint-venture between Roxbury Group and Detroit-based The Means Group Inc. opened in January, and the $20 million, 98-room Siren Hotel by New York City-based ASH NYC opened in 2018. Others in the planning and development stages include a $34.5 million conversion of the Holiday Inn Express & Suites Downtown Detroit into a Hotel Indigo and a roughly 100-room boutique hotel in the former Standard Accident Insurance Co. building at 640 Temple St., which is undergoing a $65 million redevelopment by Christos Moisides, Gretchen Valade and David Sutherland. An investment group between Moisides, Sutherland and Tony Saunders is also pumping $24.4 million into a renovation of the Hotel St. Regis in the New Center area and Bedrock is including an estimated 100- to 150room hotel in its $311 million redevelopment of the Book Tower and Book Building on Washington Boulevard. Gilbert’s Bedrock is also exploring a conversion of the former Detroit Police Department headquarters building at 1300 Beaubien St. into a roughly 200-room boutique hotel, said Andrew Leber, vice president of hospitality for the Detroit-based real estate development, ownership, management and leasing company. A hotel component is also being considered for the state’s tallest building being constructed on the site of the former J.L. Hudson’s department store site, currently expected to be somewhere between 800 feet and 912 feet in height, costing at least $909 million. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Annalise Frank, breaking news. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter, health care. (313) 446-0325 or jgreene@crain.com Anisa Jibrell, breaking news. (313) 446-1612 or ajibrell@crain.com Chad Livengood, senior reporter, Detroit rising. (313) 446-1654 or clivengood@crain.com Kurt Nagl, breaking news. (313) 446-0337 or knagl@crain.com Kirk Pinho, real estate. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor, the business of sports. (313) 446-1626 or bshea@crain.com Dustin Walsh, senior reporter, economic issues. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com

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C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 5 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

$20 million redevelopment planned for Milwaukee Junction block

Walters foundation seeks new projects

MARCH 15-21 | For more, visit crainsdetroit.com

pair of local developers has scooped up a block of buildings in Milwaukee Junction for $4.5 million with the intention of investing $20 million into mixed-use redevelopment there. Method Development LLC said it plans to convert five industrial buildings totaling 101,000 square feet into dozens of residential units and several ground-floor retail shops, said Amelia Patt Zamir, co-founder and co-principal of the firm along with Rakesh Lala. The Bloomfield Hills-based developers, whose record includes big projects in Eastern Market, Boston and Washington, D.C., also plan to move their headquarters to Milwaukee Junction as part of the redevelopment, which will be their largest local undertaking yet. “This is one of the neighborhoods that we've been focused on creating a portfolio,” Zamir said. “It’s outside the growth that’s happened in the (central business district) and Midtown. We feel like this was next in the path of growth up the M-1 corridor.” The properties, which are a few blocks east of Woodward Avenue and the New Center area, are among an enclave of artists and designers anchored by businesses including Tangent Gallery and Submerge Records. Once an industrial graveyard, the area is beginning to bloom with development, including The Platform LLC’s Baltimore Station projects. The Method Development properties tabbed for new life are: J 6540 St. Antoine St.: A four-story, 56,000-square-foot property, formerly the Rusas Printing Building. Plans include ground-floor event space and creative office space on upper floors. J 2863 E. Grand Blvd.: Known as the Maurice Fox Building, the three-story, 24,700-square-foot property was a Ford service station. Plans include 23-24 industrial lofts with groundfloor retail. J 2857 E. Grand Blvd.: Plans for the single-story, 5,700-square-foot building include a new roof, windows and mechanical system, and a ground-floor restaurant. J 2871 E. Grand Blvd.: Residential and retail components are planned at the site of the one-story, 5,000-square-foot building. J 2881 E. Grand Blvd.: The site of the one-story, 9,900-square-foot building is targeted for mixed-use redevelopment. The redevelopment will take place in two phases, Lala said. The first phase will be an $8 million investment in the Rusas and Maurice Fox buildings and 2857 E. Grand Blvd. Lala said they aim to break ground in the first quarter of 2020 and be done by the fourth quarter of that year. The plan for phase one is to first stabilize the Rusas building, which is the only functional one of the portfolio and will serve as Method Development’s new base. The building’s only occupant — a Santa Monica-based scooter maintenance start-

OOMBRA ARCHITECTS

The revelopment of the buildings at (clockwise from left) 6540 St. Antoine, 2863 E. Grand Blvd. and 2857 E. Grand Blvd. looking northwest from Oakland Street will include activation of an adjacent alley.

Detroit digits A numbers-focused look at last week’s headlines:

$200M

Price tag for the planned residential redevelopment at the Northville Downs racetrack

$1.3M

Cost of expansion in Midtown for dog day care Canine to Five

$341.90

Average cost of four to attend a Pistons game

up called Sweep — canceled its month-to-month lease after the developers bought the building. The second phase comes at an expected cost of $12 million but is less concrete at this point, Lala said. It tentatively involves demolition of 2871 E. Grand Blvd. and 2881 E. Grand Blvd., and a ground-up development of an undecided number of rental units and ground-floor retail. That is expected to be done by the beginning of 2023.

BUSINESS NEWS Ford Motor Co. is repackaging a previously announced $900 million manufacturing investment in the Detroit area, boosting the number of jobs added from 850 to 900. Most of the new workers will build a new generation of electric vehicle at Ford’s existing factory in Flat Rock. J Dog day care Canine to Five has wrapped up a $1.3 million expansion of its Midtown building that will grow capacity as it ramps up its focus on resort services. The 10,000-squarefoot addition to the existing 6,000-square-foot day care and boarding facility at 3443 Cass Ave. includes 3,000 square feet of retail space that will be leased to additional tenants, the company said in a news release. J In an effort to keep up with the fast-changing world of automotive technology, the National Science Foundation has awarded $1 million to Macomb Community College’s Center for Advanced Automotive Technology to aid emerging educational needs. J

J Brakeman and Penny Red’s — a beer hall-fried chicken combo by New York-based NoHo Hospitality Group — is scheduled to open Monday at the new Shinola Hotel Development in downtown Detroit. J The Wayne State University Board of Governors approved last Wednesday a long-term lease of the to-be-decommissioned Bonstelle Theatre as part of Detroit-based developer The Roxbury Group’s planned West Elm hotel project. J Nonprofits Focus: Hope, Operation Able, and SER Metro-Detroit have received $510,000 to expand their support for unemployed Detroit residents, in a push to arm them with the skills to secure positions in growing employment sectors. J Proving Grounds Coffee, a downtown Milford coffee and ice cream shop, is planning a second location at 417 S. Washington Ave., where Gayle’s Chocolates sold sweets for 34 years in Royal Oak. J A Lansing-based sports clothing retailer owned by a former University of Detroit Mercy basketball player is set to open its first store in metro Detroit. Moneyball Sportswear will open in a 1,700-square-foot store at 30215 Southfield Road in Southfield.

SUPPLIER NEWS J Auto supplier erae AMS USA Manufacturing LLC plans to invest $17 million into a new manufacturing center in Pontiac in an effort to be closer to key customers. The supplier, a subsidiary of South Korea-based erae AMS Co. Ltd., which supplies driveline systems, chassis and electronics systems and components, will create 137 jobs through the project, according to a news release from the Michigan Economic Development Corp. J Automotive and military supplier Lapeer Industries Inc. plans to lay off 160 employees at a plant in Lapeer. A loss of revenue is forcing the move, according to a mass layoff notice filed with the state. The company has been unable to secure more business following the loss of “a very large customer program completed in December 2018.” J As Mount Clemens-based Concord Tool and Manufacturing Inc. increases its work for Toyota, it’s looking to expand with an $8.8 million investment and 75 new jobs, according to the MEDC.

he Milford-based Walters Family Foundation is seeking new proposals from Michigan nonprofits after funding programs focused on arts education and conservation in 2018. The foundation has funded projects around the region including a microgrant program for entrepreneurs in Eastern Market, and the Detroit Institute of Arts’ “DIA Head Start” program, which aims to connect the museum with underserved preschoolers and parents who haven’t had previous exposure to it. Another project the foundation funded in 2018 was a sustainable public courtyard by Midtown Detroit Inc. within the Selden Innovation Corridor hub for entrepreneurs in the neighborhood, providing a community space that is also environmentally conscious, with permeable pavement and bioswales that help

drainage. The foundation, which made more than $330,000 in grants in 2018. Among the groups receiving funding were Midtown Detroit Inc., the Detroit RiverFront Conservancy, the DIA and the Michigan Education Excellence Foundation. The foundation focuses on initiatives that support “conserving the natural environment, celebrating arts and culture, advancing economic vitality and empowering people to reach their full potential through innovative learning initiatives.” More information is at www.waltersffmi. org. “We want to see more great ideas and more visionary thinking. We encourage organizations to put forth innovative proposals that carry the promise of lasting impact,” Carol Walters said in a press release.

CRAIN’S DETROIT BUSINESS

The Detroit Medical Center operates seven hospitals in metro Detroit and employs more than 11,000 people.

DMC feels effects of cuts from parent company A

s parent company Tenet Healthcare Corp. seeks $200 million in companywide expense cuts, Detroit Medical Center is facing another round of employee reductions, executive bonus reductions and belt-tightening, Crain's has learned. DMC officials said they would not comment on any changes. But longtime executive Tina Louise Wood, who last held the position of COO of DMC Detroit Receiving Hospital, has left the company, several sources who asked for anonymity, told Crain’s. Wood worked for DMC since 2006 in various positions. Earlier this month, several DMC executives had their bonuses cut by 40 percent to 50 percent by orders of Tenet, sources said. Managers and other executives also had their employee evaluations downgraded, which resulted in lower bonus payments, the sources said. Despite several medical accreditation and quality visits the past year by the Centers for Medicare and Medicaid Services and the Accreditation Council for Graduate Medical Edu-

cation, DMC’s overall financial picture was fairly good, especially at DMC Children’s Hospital of Michigan, sources told Crain's. DMC, which operates seven hospitals in metro Detroit and employs more than 11,000 people, is still awaiting decisions from CMS and ACGME. Sources also told Crain’s that a number of employees have left over the last several months either by layoffs or to seek other jobs. For example, many in DMC’s quality department have departed. Cardiology volume also has dropped by more than 30 percent as several top cardiologists last year were fired by DMC and several others left voluntarily, Crain’s reported. Earlier this year, Tenet CEO Ron Rittenmeyer announced the 68-hospital Dallas-based company was embarking on $200 million more in cost reductions and would outsource at least 1,000 employees over the next 12-18 months. Tenet has 115,000 employees at its hospitals, other ambulatory care sites and subsidiaries.

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