Crain's Detroit Business, May 6, 2019 issue by Crain's Detroit Business

Media mogul Nancy Tellem makes change in Detroit Page 21

Restoration Hardware aims for Birmingham Page 3

MAY 6 - 12, 2019 | crainsdetroit.com REAL ESTATE

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Apartment titans battle over who’s 100 years old By Kirk Pinho kpinho@crain.com

Most times, a business centennial anniversary is something to celebrate. But in the case of Jonathan Holtzman and his former company, Southfield-based Village Green Cos., it’s something to litigate. A new federal lawsuit Holtzman and his Farmington Hillsbased City Club Apartments LLC multifamily apartment company filed against Village Green asks the court for monetary damages and to stop the latter from claiming 2019 is its 100th anniversary. The dispute is the latest chapter in a years-long drama between Village Green and Holtzman, who was bought out for an undisclosed sum in June 2016 by Dallas-based Compatriot Capital Inc., which is the real estate division of Sammons Enterprises Inc., a $71 billion firm. There are also ongoing battles in other states over Holtzman ownership of a pair of apartment properties, the lawsuit says. Sammons through Compatriot owns Village Green, the CEO of which is Diane Batayeh, who said early last week that the company has not been formally notified of the complaint over the centennial. “We are therefore not taking any action unless and until we receive that,” she said in an email to Crain’s. “We have no way of knowing what is motivating our former CEO to make false allegations about us and cannot control his activities nor perception.”

Questions of history

Jacob Lewkow for Crain’s

Jonathan Holtzman is noticeably upset. In an hour-long interview, he rattles off years of business significance from memory. “Sammons and CCI (Compatriot Capital Inc.) didn’t exist in 1919. They weren’t even born in 1919. How dare they say they are 100-year-old company? How dare they do it? It is an absolute lie,” he said. “Holtzman & Silverman (a Village Green predecessor) began in the early 1930s. Diane Batayeh was not born in 1931, neither was CCI or Sammons. Those companies didn’t exist in 1931.” Holtzman also contends that Village Green’s property management has suffered in the years since his departure, claiming that the company’s “reputation in the industry has waned and it has gone from a premium provider of services to a low-cost ‘commodity service’ beset by cost-cutting and mismanagement.” SEE CENTENNIAL, PAGE 28

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TRANSPORTATION

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a Whitmer’s plan, which hinges on 45-cent fuel tax increase. But it would amount to $31 per vehicle in a county with more than 177,000 registered

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

MICHIGAN BRIEFS

INSIDE

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

Kellogg to replace CFO; earnings drop 36.5% in first quarter Kellogg Co. said Thursday that it will replace its chief financial officer and reported a 36.5 percent decline in first-quarter earnings attributed to higher costs and a strong U.S. dollar. The Battle Creek-based breakfast foods and snacks maker said Amit Banati, president of Kellogg Asia Pacific, Africa & Middle East, will replace CFO Fareed Khan on July 1. Khan and Banati will work together in a formal transition through the end of June, the company said in a news release. The packaged-food giant reported first-quarter earnings of $282 million and revenue of $3.52 billion, shy of the $3.54 billion analysts had estimated. Khan joined Kellogg (NYSE: K) in February 2017, following stints as CFO at US Foods and United Stationers, as well as in a variety of finance, business and leadership roles at USG Corp. Khan arrived at Kellogg at a time when the company was undergoing significant cost restructuring under its Project K and Zero-Based Budgeting programs, and played a key role in the completion of those programs, the release stated. He also helped to drive the adoption of a new strategy, which included revitalizing

key brands through targeted investment, and reshaping Kellogg’s portfolio through M&A, Kellogg said in the release. Banati joined the maker of Frosted Flakes, Pop-Tarts and Eggo waffles in March 2012 as president of the company’s Asia Pacific operations, and his responsibilities expanded into the broader AMEA region in July. Under his leadership, AMEA has stabilized developed markets and expanded Kellogg’s portfolio and presence in emerging markets, Kellogg said. He began his career in finance at Procter & Gamble, before moving to Cadbury Schweppes, where he was the CFO of Cadbury Schweppes Asia Pacific, the release stated. Thereafter, he served in a variety of general management roles at Cadbury Schweppes, Kraft Foods and Mondelez.

Flint water scandal prosecutor out

A special prosecutor who spent three years leading a criminal investigation of the Flint water scandal has been fired, apparently part of the fallout from the recent discovery of 23 boxes of records in the basement of a state building, the Associated Press reported. Todd Flood’s contract was terminated April 16. The Michigan attorney general’s office told a judge about the records on Friday as it seeks a sixmonth freeze in the case against

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Packaged food companies like Kellogg Co. have struggled with surging costs, while consumers have shifted to healthier foods and trendier upstart brands.

Michigan’s former health director, Nick Lyon, who is charged with involuntary manslaughter. “It recently became clear that discovery was not fully and properly pursued from the onset of this investigation,” Solicitor General Fadwa Hammoud said in a written statement. “The decision to terminate Mr. Flood’s contract reflects our ongoing commitment to execute the highest standards in the prosecution of the Flint water crisis. Our standards demand a full accounting of all evidence that may inform the People’s investigation.” Flood, who was hired in 2016 by then-Attorney General Bill Schuette, declined to comment on the criticism when reached by phone but released

a statement defending his work. “This complex case of official wrongdoing and betrayal of public trust has been prosecuted with the utmost attention to the professional standards that justice demands,” he said. “I walk away knowing that I gave everything I had to give to this case. The people of Flint deserved nothing less.” Fifteen people have been charged in the Flint water crisis, which includes how Flint’s water became contaminated with lead as well as a related outbreak of Legionnaires’ disease in 2014-15. No one has been convicted of a felony. Seven people, including key environmental regulators, have pleaded no contest to misdemeanors, and their records will be

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wiped clean. A Flint-area judge is expected to soon decide whether to affirm or throw out a decision to send Lyon to trial for the deaths of two people who had Legionnaires’. But Hammoud’s team now wants a six-month timeout while the contents of the 23 boxes are reviewed.

CORRECTION J A story on Page 3 of the April 22 issue incorrectly listed nurse practitioner among the high-demand careers that do not require a bachelor’s or higher degree. The story should have listed licensed practical and licensed vocational nurses among the high-demand, high-growth careers identified by the state. And it should have said the Detroit Area Pre-College Engineering Program’s pilot program with Wayne County Community College District includes exploration of certified nursing assistant careers.

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ARTS AND CULTURE

MOT in position to capitalize on rising demand for property By Sherri Welch swelch@crain.com

The downtown Detroit property the Michigan Opera Theatre acquired decades ago when few others were venturing into the city is now a hot commodity. That’s presenting opportunities for the cultural institution, which has a nearly 100-year-old building to care for and the legacy of its late founder David DiChiera to keep alive. After fielding interest over the past year, MOT invited 30-40 local and outof-state developers to submit proposals for mixed-use development of the 0.8-acre surface parking lot next to the Detroit Opera House, between Madison and Broadway streets, and the seven-story, Detroit Opera House Parking Center at the corner of Broadway and John R streets. Depending on those proposals, the

Need to know

 MOT invited 30-40 developers to submit proposals for surface lot next to Detroit Opera House, nearby seven-story garage  Looking for mixed-use proposals with elements like hotel, office space, residences, retail  Will retain ownership of properties; will pick plan by September

project could cover one or both sites and include a mid- to high-rise tower housing a hotel, office space, apartments, condominiums, ground floor retail/restaurants and underground parking, MOT said. The sites are within walking distance of Detroit’s sports arenas, the Detroit Athletic Club, the QLine, Woodward Avenue and Grand Circus Park. They’re also a mile or less from the riverfront and the Detroit Symphony Orchestra and not far from the Detroit Institute of Arts a little further up Woodward Avenue. The historic Detroit Opera House, which DiChiera brought back to life, is not included in the property offered for development. “Obviously we find ourselves in a hot spot in Detroit,” MOT Chairman Rick Williams said. “We have many needs and projects underway that are expensive,” including updates to the historic Detroit Opera House, he said. “To the extent we can work with a developer to help us achieve those things, that’s where we want to be.”

Once-desolate neighborhood DiChiera launched MOT in 1971 and moved it downtown into the building now known as Music Hall Center for the Performing Arts in what was then a desolate neighborhood. MOT’s presence saved the historic site from demolition and planted the seeds for what is now a thriving entertainment district. At the end of 1988, MOT purchased the nearby historic Capitol Theatre and launched fundraising to renovate it and reopen it as the Detroit Opera House. SEE MOT, PAGE 28

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A deal-maker makes mark across country BRANDY BAKER FOR CRAIN’S

Nancy Tellem is renovating the historic home at 110 East Ferry St. with hopes of turning it into a community meeting and workspace in Detroit. She is executive director of the office of the CEO for Metro-Goldwyn-Mayer and is making a mark on Detroit while navigating rapid change in the media and entertainment landscape.

Media mogul Nancy Tellem transforms in Detroit amid digital transformation

be shared and leased by the Pistons for its G hen Arn Tellem joined the Detroit PisLeague team. tons organization in 2015, there was a It may be taking Detroit awhile to catch on big bonus for Detroit that wasn’t in his conthat Nancy Tellem is a deal-maker, too. But tract with Pistons owner Tom Gores: Tellem’s her deals are hatched elsewhere — in Hollywife, Nancy, moved here, too. wood, New York and even Bentonville, ArkanArn Tellem’s local impact is clear: In four sas. years as vice chair of Tom Gores’ Detroit PisToday, Nancy Tellem is working on both tons organization, he negotiated the deal to coasts. Commuting almost weekly to Los Anmove the Pistons from Auburn Hills to Little geles, she is executive director in the Office of Caesars Arena in downtown Detroit. He MARY the CEO at Metro-Goldwyn-Mayer, focusing hatched a deal with Henry Ford Health Sys- KRAMER on the film company’s long-term strategy in a tem to create a multi-purpose training center, Group media world turned upside down with digital community activities space and sports medi- Publisher and streaming players eclipsing the traditioncine center on the northern fringe of Midtown. And just last week, Wayne State University an- al film producers and distributors. nounced it would build a basketball arena that would SEE TELLEM, PAGE 8

“I’m not clear on the business model, but I am clear that this will be a place where ideas are generated and exchanged.” Nancy Tellem

DEVELOPMENT

RH eyes Birmingham store in $140M project By Kirk Pinho kpinho@crain.com

The anchor retail tenant for a mammoth downtown Birmingham development is slated to be a signature store by RH, the company formerly known as Restoration Hardware — presuming a critical financing hurdle can be cleared. The Corte Madera, Calif.-based luxury home-furnishings retailer (NYSE: RH) is anticipated to lease 55,000 square feet in the planned $140 million development west of Old Woodward Avenue and north of Willits Street on about 4 acres at the

Need to know

 Luxury home-furnishings retailer would close its Somerset location 

Project hinges on public financing vote

 City stresses that all costs will be paid out of parking system funds

north end of the city’s swanky central business district, the company and developers told Crain’s. The two-phase project — part of a four-headed joint venture that’s a veritable who’s-who of commercial real estate executives in Birmingham — in the end would include a series

of components, including 25 rental residential units, 27,000 square feet of office and a total of 65,000 square feet of retail space across multiple buildings as well as about 1,150 parking spaces. An existing parking deck and surface lot with about 745 spaces would be demolished; a parking mitigation plan is in place that would include shuttle services, Lyft and Uber, according to Ron Boji, president of Lansing-based developer The Boji Group who is part of the development team, Woodward Bates Partners LLC, working on the project. About 350

spaces off Big Beaver Road in Troy have been secured. But the project only moves forward if a key public financing component can be secured in three months. “If the vote does not happen, then no phases happen,” said Boji, whose other partners in the project are John Rakolta Jr., chairman and CEO of Detroit-based construction giant Walbridge Aldinger Co.; Paul Robertson, chairman of Bloomfield Hills-based homebuilder Robertson Bros.; and Victor Saroki, founder of Birmingham-based Saroki Architecture. SEE RH, PAGE 29

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Legionnaires’ cases increase in state in 2018, but death rates drop By Jay Greene

jgreene@crain.com

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Legionnaires’ disease cases rose last year in Michigan with 633 confirmed in 2018, a 67 percent increase from 2017, with no single obvious explanation. Mortality rates declined to 5 percent last year from 7 percent in 2017 because of faster detection of symptoms and use of newer antibiotics. During 2018, there were 32 confirmed Legionnaires’ disease deaths, a 14 percent increase from 28 in 2017. State officials say those numbers are probably low as state officials were not able to confirm all the deaths with relatives. Infectious disease experts are still investigating why there was such a massive spike, but there appear to be multiple causes and include an aging population with more people at risk for the disease because of compromised immune systems, said Shannon Johnson, surveillance and infectious disease epidemiology section manager with the Michigan Department of Health and Human Services. Causes of outbreaks may vary. For example, while they may have a flashpoint tied to poor water treatment at a health care facility, hotel or large building, other risk factors include water-use reduction techniques that lead to stagnant water, aging plumbing infrastructure and a warmer, rainier climate, said the U.S. Centers for Disease Control and Prevention. The CDC said also said rising numbers may be a result of better testing and reporting. Nationally, Legionnaires’ cases reported to CDC have risen 550 percent since 2000 to 7,500 annually in 2017. The CDC said Legionella pneumophila may be underreported because of similarity to common pneumonia. Since 2003 in Michigan, confirmed Legionnaires’ cases have increased 304 percent from 128 to 633 in 2018, according to the MDHHS. From 2003 to 2007, Legionnaires’ cases averaged 125 per year. Legionnaires’ disease got its name in 1976, when a group of people attending an American Legion convention in Philadelphia became infected, although it was present before 1976. Legionnaires’ can normally be treated with a course of antibiotics over a fiveday period. Jeffery Band, M.D., former corporate epidemiologist at Beaumont Health and a national infectious disease expert, was at the CDC in the late 1970s during the original Legionnaires’ outbreak. “Each year it is going up, and no one knows for sure why that is happening,” he said. “This is primarily occurring in the East Coast and Midwest.” Band said the doubling of cases the past year in Michigan is somewhat of a mystery but that there isn’t any one cause or significant point of origin to point a finger at. It is not due to an outbreak, but more about an aging population with more patients compromised by chronic diseases are placing more people at a higher risk to contract Legionnaires’. For example, patients in 2018 who came down with the severe pneumonia-like disease were confirmed to live in 51 of 83 Michigan counties — affecting more urban areas and a greater number of geographic areas of the state than usual — including the city

Need to know

Cases of Legionnaires’ disease increase by 67% in 2018, expected to rise during rainy, summer months 

 Mortality rates drop to 5% from 7% because of more effective identification and treatment  Many health care facilities investigated for origin or association of Legionnaires’, but the bacteria is ubiquitous

ease as part of the diagnosis of pneumonia. Later, he said, pulmonary doctors, emergency physicians and office-based family physicians and general internists took notice and now routinely test patients with severe pneumonia, he said. “Awareness among physicians, even patients, is probably another driving factor” in the increase in Legionnaires’ case confirmations, Band said.

Genesee outbreak

Grant

Gordon

of Detroit with 116 cases, Macomb County with 102, Wayne County with 89 and Oakland County with 80, said the MDHHS. In 2017, Legionnaires’ was found in only 45 counties and Detroit. So far in Michigan through March 31, Michigan officials report 54 confirmed cases of Legionnaires’ compared with 52 cases during the same period in 2018. During the warmer summer months, Johnson said cases of Legionnaires’ will begin to increase. The legionella pathogen is known to multiply in water systems such as cooling towers, whirlpool spas and decorative foundations, which can be breeding grounds if not properly cleaned. Legionella can also cause a milder illness called Pontiac fever. Transmission occurs when mist or vapor containing the bacteria is inhaled. Most people exposed to Legionella do not get sick. However, people 50 years or older, current or former smokers, and people with a weakened immune system or chronic disease are at increased risk with symptoms that include fever, shortness of breath and coughing. Besides Michigan’s “significant increase,” Johnson said the CDC has tracked similar increases in other Midwest and upper Northeast states such as Ohio, Pennsylvania and New York. “The CDC is doing more research to find out why there are regional increases,” she said. Like in previous clusters in Michigan, Band doesn’t believe the CDC will come up with a specific reason why Legionnaires’ has been increasing. Besides the change in population risk, he said the primary reasons for Michigan’s 67 percent increase in 2018 are improved identification, diagnosis and testing of patients by health care professionals, and the aging infrastructure of public and private water delivery systems that breeds more pathogens. A greater public investment in the nation’s aging water infrastructure is necessary, he said. “There is so much sediment and bio-film (in older pipes and plumbing) that chlorine can’t penetrate it” that is needed to disinfect the water, making occasional spikes in Legionnaires’ almost predictable. Over the years doctors and other health care professionals have become more adept at identifying the different types of pneumonia, Band said. In the late 1970s, infectious disease specialists like himself first started to take notice of Legionnaires’ dis-

During the deadly 2014-2015 outbreak in Genesee County, when 12 of 91 people, or 13 percent, affected by Legionnaires’ died, the MDHHS claimed McLaren Flint Hospital was the source of some of the infections. McLaren and other experts, however, linked the outbreak, which is the subject of more than a dozen lawsuits involving health care facilities and former state and city officials, to changes made in the city of Flint’s drinking water system in April 2014 where cost-cutting and negligence led to tainted water full of lead and other toxins. McLaren Flint CEO Chad Grant has vehemently defended the hospital and the $2 million-plus efforts it has done to improve its water-quality system the past three years. “Though we respect the responsibility MDHHS has to protect the public’s health, we strongly disagree with their assertion that two of 26 cases of Legionnaires’ Disease in Genesee County have a connection to our facilities,” Grant told Crain's in an email. “Has the number of patients we see in our ED with pneumonia and Legionnaires’ disease symptoms increased in recent years? Yes. Has the number of Legionnaires’ tests ordered and diagnoses made by our doctors remained high? Yes. Does this mean these cases are associated with our hospital? Absolutely not,” Grant said. MDHHS officials told Crain’s that two of the possible Legionnaires’ associated cases in 2018 in Genesee County have been connected to McLaren Flint because patients told the state that they had been at McLaren at least 10 days before onset of Legionnaires’ symptoms. The Genesee County Health Department also has investigated other hospitals, nursing homes and other health care facilities for similar alleged problems and are monitoring the situations, said John McKellar, Genesee County health officer. McKellar declined to discuss any of the other health care facilities, which he described as hospitals, nursing homes, clinics and senior living centers. In 2018, Genesee County recorded 26 confirmed cases of Legionnaires’, compared with 13 in 2017. The 26 cases were the most since the Legionnaires’ outbreak of 2014, when the county had 40 cases, and in 2015 when it had 46 cases. The numbers dropped down to 17 in 2016. “I wish I had an explanation” for the 50 percent increase in 2018, McKellar said. “There is such an interest in it now. There is more testing going on, so we are more likely to find it.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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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 Y 6 , 2 0 1 9

New website tracks Michigan startup community By Dustin Walsh dwalsh@crain.com

The Michigan Israel Business Accelerator will launch a new online portal this month designed to be a home base for Michigan’s startup community, funders and startup services. The database website, StartupMichigan.tech, is designed and licensed from Israel’s Start-Up Nation Central, a nonprofit dedicated to tracking more than 6,000 startups in Israel. The Michigan site launched Sunday with more than 330 startups, 25 investors and 28 service providers. “If we’re looking as a community to attract innovators and investors

Need to know

JJMichigan Israel Business Accelerator to

launch online portal this month

JJFree for startups to join and for anyone to use JJSite funded by local and national foundations

from all over the world to pick Michigan, we have to make it easy for them,” said Mark Davidoff, chair of Michigan Israel Business Accelerator and StartupMichigan.tech as well as the managing partner for Deloitte & Touche LLP in Detroit. “This portal, this platform, will provide a single ac-

Davidoff

Rizik

cess point for everyone to see, feel and learn about the startup ecosystem here in Michigan.” The site, which is free to use, provides a searchable list of startups, investors and services with pertinent information, such as founding, em-

ployee count, funding and funding stage and contact information. Search results can be saved to users’ personal collection or exported to create their own list. “The ability to edit our own page without going through an intermediary is significant because things are changing all the time,” Chris Rizik, CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, said in a press release. “We often work with investors from outside the state and try to introduce them to Michigan startup companies. But there has never before been a single resource that included the relevant startup business and fundraising in-

formation that StartupMichigan.tech has.” The nonprofit website is now the third licensee from Start-Up Nation Central, joining New Zealand and Thailand. The board of StartupMichigan. tech consists of business and government leaders from around the state, including: Beth Chappell, executive chair at RediMinds Inc.; Gahl Berkooz, vice president of data, analytics and monetization at ZF Group; Matt Elliott, Michigan market leader at Bank of America Merrill Lynch; Faye Nelson, director of Michigan programs at W.K. Kellogg Foundation; John Walsh, president of the Detroit Downtown Partnership; Jeff Mason, president and CEO of the Michigan Economic Development Corp.; among others. The site is funded by the MEDC, William Davidson Foundation and the Ralph C. Wilson Jr. Foundation, the Paul E. Singer Foundation and the New Economy Initiative and will be operated by the Michigan Israel Business Accelerator. The Israel accelerator recently expanded itself, rebranding from the Michigan Israel Business Bridge in 2017 with funding from the MEDC. The organization will host an invitation-only kickoff event at the Shinola Hotel in Detroit on May 20. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Crain’s wins 11 awards

THE BRAINPOWER BEHIND BETTER BATTERY POWER. If you own something that’s powered by batteries — and who doesn’t — you should know about Dr. Leela Arava. The associate professor at Wayne State University is driven by an unstoppable passion to uncover new, inventive ways to make batteries more efficient, more powerful and more sustainable. And that starts with turning obstacles into opportunities. For Arava, his first obstacle was growing up with a scientific mind in a remote village in India. He didn’t have access to a research laboratory until he was 22 years old, but when he got his chance, he took full advantage of it. Arava developed a passion for batteries that he turned into a career as a researcher in the United States. And because his struggles weren’t so long ago, today Arava offers to middle school and high school students something he never had — an open door to learn in his lab. His journey eventually led to an opportunity — a grant from the National Science Foundation to develop the next generation of batteries. Ones that offer better performance for consumers and cost-effectiveness for manufacturers, leaving as little of an environmental footprint as possible. The ubiquitous lithium-ion batteries were just too expensive. And with 52 percent of the budget-draining cost coming from cathode recycling, they were not as safe, nor efficient.

WARRIOR STRONG

Arava knew the importance of an economical battery went well beyond the boardroom. So he set to work to find the perfect material. And with sulfur, Arava smelled an opportunity. A waste product in the petroleum industry, sulfur could be used in lithium-sulfur batteries as a plentiful, cost-efficient, environmentally friendly power source. But Arava was still faced with his biggest barrier: Sulfur transforms from solid to liquid and then back to solid, and that chemical reaction clogs up lithium-sulfur batteries, preventing them from completing a single charge cycle. Arava knew creating a change required a catalyst. He saw one of lithium-sulfur’s unique traits as an opportunity, where others didn’t. Arava developed a catalyst to speed up the chemical transformation and stabilize it. This breakthrough created the first rechargeable lithium-sulfur battery. The boy from a one-room schoolhouse in India had created an innovation that will resonate from Wall Street to the most remote corners of the world. Arava turned an obstacle into a lasting impact. And that’s Warrior Strong.

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Crain’s Detroit Business won 11 awards at the annual awards program of the Society of Professional Journalists Detroit Chapter on Thursday. Work honored included an upclose look at how Detroit’s Amazon HQ2 bid was assembled, a story on the price of potholes in Michigan and cover design by David Kordalski, among others. Crain’s received these honors: General news reporting, first place, Chad Livengood and Kirk Pinho, “The bid for Amazon HQ2: Email chain shows 6-week sprint behind Detroit’s pitch.” General column writing, first place, Chad Livengood. Consumer/Watchdog/Investigative Reporting, first place, Chad Livengood, “Brightmoor to Novi: The long ride for low-wage workers.” Sports reporting, second place, Bill Shea, “In ’68 marketing push, what to do with Denny McLain?” Explanatory story, second place, Annalise Frank, Kurt Nagl, Chad Livengood, “The Price of Potholes.” Consumer/Watchdog/Investigative Reporting, third place, Chad Livengood, Amazon tax incentives. Editorial cartoon, second place, Dan Saad. Cover design, third place, David Kordalski and Andrea Levy, “American Dreamers.” Page one design, newspapers, third place, David Kordalski. Spot or Breaking News Report, fourth place, Kirk Pinho and Chad Livengood, “Sources: Ford pursues deal to buy, redevelop, Michigan Central Station.” Sports reporting, fourth place, Bill Shea, “Money-making mascots.”

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

Judge Keith remembered for a legacy of mentorship By Dustin Walsh dwalsh@crain.com

Judge Damon Keith is revered for his role in protecting civil rights and civil liberties. But Keith, who died April 28 at 96, is also remembered for helping launch dozens of legal careers over multiple generations, especially among African American attorneys. Keith served more than 50 years in the federal courts, first appointed to the U.S. District Court in 1967. Keith came to prominence in a wiretapping case against President Richard Nixon and Attorney General John Mitchell in 1971 — a case that led to the Nixon administration suing Keith personally and was finally settled by the Supreme Court. All the while, Keith created and shepherded strong relationships within Detroit’s legal community, starting careers that ended in leadership at prominent law firms in Detroit and elsewhere — and beyond. Among those who clerked for Keith include former Michigan Attorney General and Gov. Jennifer Granholm and Harvard Law Professor Lani Guinier. Alex Parrish, board member, partner and co-leader of the mergers and acquisitions practice at Detroit-based Honigman LLP, called Keith a “substitute dad” — a common sentiment among those he mentored. Parrish clerked for Keith after graduating from Harvard Law School in 1981. Keith also led Parrish to securing the job at Honigman 34 years ago after Parrish decided to return home from practicing law early in his career in Washington, D.C. “He had a remarkable ability to make time in his life for lots of people; he followed my career along with many others,” Parrish, 62, said. “When I decided to come back to Detroit, I had many options at firms, but he really pushed for Honigman. He thought as one of the top firms in town, it would be good to have an African American join the firm and diversify its leadership.” Ernest Greer, co-president of the ninth-largest law firm in the U.S., Miami-based Greenberg Traurig LLP, spent one year in Detroit between 1991-1992 clerking for Keith. He said Keith defined for him what it was to be a member of the community — and not just the legal community. “He mentored his clerks over and beyond just the legal work,” Greer, 52, said. “He took his time to focus on life’s work. He taught me what it is to be a man and a father; how I should take care of my family and children. About being a citizen of this world and a citizen in the community.” Greer waxed lyrical about the annual soul food luncheons Keith would host for his current and former clerks and community members. Keith held his 32nd annual luncheon in February. The event honored William Pickard, chairman of Global Automotive Alliance and longtime fast-food restaurant franchisee, and welcomed newly elected leaders Gov. Gretchen Whitmer, Lt. Gov. Garlin Gilchrist and Secretary of State Jocelyn Benson. Keith is well-known locally for working to bridge racial divides in Detroit over his career, Parrish said. That expanded to organizing leaders in the city around causes. For example, Keith led a group of local business and community leaders in raising $1 million in three months’ time

in 2014 to keep the Charles H. Wright Museum of African History in Detroit open. “He had this credible voice with the white legal community and the white business executives,” Greer said. “When there were causes he thought were worthy to support, he would pick up the phone. So while he focused on African American excellence, he also focused on making sure he provided a platform to be insightful to the white community who may have not understood the black community.”

For many in Detroit and beyond, Keith’s legacy will serve as a reminder of what an attorney and judge can be. “Damon Keith was a legal giant in every respect,” said Michael McGee, CEO of Detroit-based Miller, Canfield, Paddock and Stone PLC. “More than that, he was a great man and a great exemplar to young lawyers of how to be a lawyer. When we all grew up, we all wanted to be like Damon Keith.” RICARDO THOMAS/THE DETROIT NEWS VIA AP

Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Federal judge and civil rights icon Damon Keith speaks in Detroit in a Dec. 15, 2013, file photo. Keith died April 28. He was 96.

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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 Y 6 , 2 0 1 9

OPINION OTHER VOICES

Ways to break down barriers to equitable growth

hough the economy is humming in many metropolitan communities, not all groups are seeing the benefits of the economic upswing. Those that are highly educated are considered the “winners,” while those who are socially and geographically disconnected, or lack relevant credentials, are marginalized. In an effort to address this disparity, community leaders across the country are searching for effective strategies to close these equity gaps. While leaders in fast-growth coastal economies are being challenged to spread growth’s benefits more broadly and equitably, leaders in Detroit, Cleveland and many other major Heartland metros where labor markets are tightening, are also tasked with developing strategies for inclusive economic dynamism that extends to marginalized populations. Recent analysis from the Brookings Institution suggests that achieving meaningful, inclusive growth, particularly by race, remains elusive in most cities. Only a few major metros, including Charlotte and Los Angeles, are making progress on a wide range of relevant metrics. Even in cit-

AMY MEYERS &JOHN AUSTIN ies perceived to be “coming back,” growth is not yet broadly shared. A recent analysis by Detroit Future City found that, despite the clear signs of new economic life in the city, the African American middle class had diminished. The challenge of sharing job and income growth is greater in older industrial communities. Against this backdrop, a new Upjohn Institute report, “Building Shared Prosperity: How Communities Can Create Good Jobs for All,” provides insight into several promising strategies. Helping community residents attain and retain good jobs requires addressing many barriers, from reliable and affordable transportation,

to access to child care, to basic financial services. But perhaps the most important factor affecting labor market success is access to community-based resources that connect disadvantaged workers with employers, fostering worker-employer relationships that result in greater success for all. Such services include two emerging strategies: Neighborhood Employment Hubs and Employer Resource Networks. Neighborhood Employment Hubs: These initiatives, seeded with philanthropic support, aim to connect local job seekers and workers with local employers, bringing employability skills, job placement assistance, and job training services to pockets of the community with low labor participation and high unemployment. The Hubs are located at trusted neighborhood organizations, such as housing complexes, libraries, or community centers. Like traditional employment centers, they offer workforce development services, such as skill assessment and career exploration, but they also provide financial support services — including transportation, child care, and help obtaining uni-

TELLEM FROM PAGE 3

And she remains executive chairman of a digital interactive media company Eko, an Israeli startup with a studio in New York. Late last year, Eko formed a joint venture with Walmart Inc. to develop original content. That deal includes a $250 million investment by Walmart in Eko, whose interactive storytelling allows plot twists directed by how the user interacts with the story. Back in Detroit, Nancy Tellem’s local profile will grow since she bought a historic building last year in Detroit’s cultural district — a block from the Detroit Institute of Arts and College for Creative Studies and three blocks from Wayne State. She intends to transform the 1887 Queen Anne home into a business accelerator and co-working space for local creatives and media-focused entrepreneurs. “I’m not clear on the business model, but I am clear that this will be a place where ideas are generated and exchanged,” Tellem says on a recent tour of the building, pointing out spaces where a podcast studio could be built and individual studios could occupy an upper floor. The main floor, though, is for convening, for speakers, for sparking ideas. She’s inspired by membership and co-working spaces like Soho House that has outposts in New York and other cities, and The Assembly in San Francisco that caters to women with classes and community-building offerings. Community is a theme that Tellem comes back to again and again when she talks about the new project, which she has dubbed Ett hem-Detroit — Swedish (a nod to her husband’s roots) for “a home.”

SEEDS OF PEACE

Arn and Nancy Tellem take the stage at the Seeds of Peace gala in New York City.

It’s likely Tellem will bring some of the savvy and connections she has built over the past 35 years working in film, television and digital entertainment to help Detroit entrepreneurs. More than a decade ago, while serving as president of the CBS Network Television Entertainment Group, she was described as the most powerful woman in network TV, and, according to the Hollywood Reporter, “a linchpin of the executive team that has orchestrated one of the great turnaround stories in network television history.” Steve Ballmer recruited her in 2012 to build a studio to create programming for the Xbox; the studio was shuttered after just a couple of years, but the experience with the digital world took hold. In 2013, she joined the board of the privately held MGM, and in February

was named to represent the board in the Office of the CEO. In short, she’s pretty busy. And finds the entertainment business — with all its messy disruption — an exciting place to be. “Living outside the Hollywood bubble has been good,” she told me. She can better see opportunities than if she were living in the midst of the angst that pervades the entertainment capital. Example: Last year, Netflix disrupted the film business with “Roma” — a black and white film, streamed first through Netflix, with limited theater distribution — the reverse of a typical film’s path. The disruption was enough to prompt Steven Spielberg to propose that such films be banned from Academy Award nominations. Says Tellem: “I’m embracing the change, but there’s a lot of fear in Holly-

forms and tools — at familiar and accessible locations. The staff at Hubs include liaisons with knowledge of local employers’ needs and hiring policies (which employers, for example, are willing to hire ex-offenders) and offer one-on-one career advice and job placement. Employer Resource Networks begin with employers’ demand for workers. Because of limited resources, small and medium-sized employers often struggle to meet goals such as employee training, support, and retention. The Employer Resource Networks assist employers in pooling their resources towards meeting these shared goals, thereby creating a stronger work culture for employees and employers, alike. Participating employers pay membership dues to fund case managers, known as Success Coaches. These Success Coaches work with employees to resolve work and personal issues and develop suitable solutions to problems that contribute to absenteeism, ultimately resulting in less employee turnover. Participating employers meet regularly, in an employer-led setting, collaborating

to resolve talent issues, review promising practices, and reorient program efforts. Both Neighborhood Employment Hubs and Employer Resource Networks recognize that individuals are more successful in employment and training programs when there is a holistic rather than siloed approach to work-life issues. Success is more likely when assistance covers these many facets and is embedded in the neighborhoods and workplaces where marginalized populations can access services. The Upjohn Institute continues to explore how to improve the work of the Neighborhood Employment Hubs and Employer Resource Networks, but based on outcomes achieved so far, we recommend that communities consider these options as effective strategies to close equity gaps.

wood. Former partners who once looked to Netflix as a distributor see it as a competitor.” Big changes are happening in production and distribution. Companies like Disney are taking distribution in-house, creating their own streaming services or new alliances. MGM, she thinks, can embrace the change, too. “We’re smaller, more nimble.” MGM has remarkable assets, Tellem says, including “an extraordinary library” with titles that include everything from “Gone with the Wind” to the Rocky and James Bond franchises. It also has the library of United Artists, which celebrated its 100th anniversary recently. A more recent success was producing the Hulu series “The Handmaid’s Tale.” So how did the super sports agent and the powerful entertainment exec meet? Arn and Nancy Tellem will celebrate their 40th wedding anniversary this fall. They met in 1974 while both were interning for Democratic congressmen from California: she, for Ron Dellums, and he, for Jerome Waldie. Their actual meeting was on a tour of the White House during a time when Washington was consumed by the Watergate hearings and Richard Nixon’s resignation. Both went on to law school: She at University of California’s Hastings College of Law, he at the University of Michigan. Her career started in television, his in sports. And while building enviable careers, they raised three sons, now adults. And it’s clear that they both retain the socially and politically progressive values they had when they met. But as their careers have grown to make them each powerful in their own spheres, the egos have never kept pace. Detroit’s No. 1 “power couple” are down to earth. Last week, the Tellems were hon-

ored in New York by Seeds of Peace, a nonprofit that annually brings teens from regions in the world with violent conflicts — Northern Ireland, Israel and the Middle East — to a summer camp in Maine with the goal of creating opportunities for change that can last in lifelong networks of camp alumni. (It’s hard to demonize a person you’ve been raised to hate when you just had breakfast together.) The Tellems have been involved in the nonprofit since 2012, with Arn bringing basketball to the camp — with a few pro players he happens to know. The fundraiser in New York — Whoopi Goldberg was the emcee — was a lovefest, with at least 70 friends, family and admirers traveling the globe to share the evening and a guest list that included Pistons owner Tom Gores, Pistons players, major figures in Detroit’s Jewish community and friends and family from both coasts and Israel. Meanwhile, back in Midtown, Sue Mosey is looking forward to the impact of Ett hem-Detroit. Tellem bought the building from Midtown Detroit Inc., the nonprofit led by Mosey that has been a catalyst for the revitalization of the area from Grand Boulevard south to I-75. “She had the resources and the vision,” Mosey said of Tellem. “I think Wayne State and CCS intersect on that corner, and I’m sure what happens next will be cutting edge. We thought the use was ‘additive’ and nobody else would be in the position to make it happen.”

Amy Meyers is the deputy director of administration of employment management services at the W.E. Upjohn Institute. John Austin is director of the Michigan Economic Center and a research fellow with W.E. Upjohn Institute.

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 Y 6 , 2 0 1 9

Tax changes on student loan repayment programs needed

“I

t’ll be a while before I buy a home.” Those were the words of my former student, Don Glazier. Glazier, now a consultant at PricewaterhouseCoopers, graduated from Wayne State University in 2018 with an accounting degree — and over $75,000 in student loan debt. Since 2008, the level of student loans in the U.S. has more than doubled. In Michigan alone, the amount of student debt has soared from $20 billion in 2008 to over $45 billion in 2018. If this crisis is not dealt with, the impact of it may cast a pall over our economy for years to come. Progressive politicians have captured the minds and attention of the younger generations with suggestions of wholesale relief of student loan debt or free college tuition for all, although neither of these alternatives appears feasible in today’s highly polarized political environment. The private sector has been quick to respond to this issue, with some companies already offering student loan repayment as an employee benefit. However, programs of this nature often generate significant tax burdens for the employee. (A single person making $50,000 a year who received a $10,000 loan discharge would face an incremental tax bill of at least $2,200 on their federal tax bill alone.) Further, the average millennial has 7.8 jobs before the age of 31, so broad adoption of student loan repayment programs as an employer perk may be unlikely. There is a middle ground that I believe could create a win-win-win outcome for employers, employees and the federal government. Similar to our current tax treatment for health care insurance benefits, the IRS should treat employer repayment of student loan debt in the same fash-

Deadline extended for Crain’s Excellence in HR Awards Know an HR professional or team delivering incredible results for their business? You have more time to nominate them for Crain’s Excellence in HR Awards. Human resources leaders are the nerve centers of their businesses. Though they often operate behind the scenes — sometimes boxed into stereotypes about pizza parties and paperwork — HR professionals take care of people, control costs, keep things in compliance and help organizations achieve their strategic goals. Awards will be given in six categories: Overall Excellence / HR Team of the Year; Compensation and Benefits; HR Innovator; Employee Experience; Diversity and Inclusion; and Finding and Growing Talent. The deadline to nominate an individual or team has been extended to Tuesday, May 7. Visit crainsdetroit.com/nominate for more information or to nominate. Questions? Contact special projects editor Amy Bragg (313) 446-1646; abragg@ crain.com.

OTHER VOICES Matthew Roling

ion — exempt from Social Security, Medicare and/or other federal income taxes. This would allow employers the freedom to structure repayment programs that align with their employee

retention goals and allow employees the opportunity to tackle student loan debt without fear of the tax man. We, the taxpayers, would see substantial benefits from fewer loan defaults and the collective economic effect of an entire generation with more disposable income. Not all of our college graduates are fortunate enough to work for Big Four CPA firms. Add that to the fact that even those who do are deferring major purchases and we should all stop and take note. By treating employer-sponsored student loan repayments in a similar fashion to health care premiums, we could make significant progress to-

GETTY IMAGES/ISTOCKPHOTO

ward addressing this thorny issue. My hope in writing this is that pragmatic and compromise-minded politicians will heed the call.

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Matthew X. Roling is the accounting department chair in the Mike Ilitch School of Business at Wayne State University.

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TWENTY IN THEIR 20S

Meet the class of 2019 PAGES 10-11

Josh Bartelstein Kristin Shaw Robert Reaves Martin LaRouere PAGES 12-13

Sam Hamburger Sherelle Hogan Bo Shepherd Matthew Mastay PAGES 14-15

Sheleen Sahi Margo Dalal Desiree Kelly PAGES 16-17

Josh Bartelstein, 29

Kirsten Craig

Vice President of Strategy, Chief of Staff, Palace Sports & Entertainment

Tapan Kataria

rn Tellem, the former power sports agent who now is Detroit Pistons owner Tom Gores’ chief dealmaker in Detroit, calls Josh Bartelstein his “right arm” and has high praise for him as his chief of staff. “I fell in love with him,” Tellem said. “I see in him the potential to be the next Bob Meyers.” Meyers is a former Tellem intern

pending sale of the Palace of Auburn Hills, and has been the day-to-day liaison on the ongoing Major League Soccer expansion bid that Gores is a part of along with Detroit real estate mogul Dan Gilbert. Bartelstein, 29, and Tellem, 65, often have breakfast and dinner to discuss ongoing business and future projects. “It’s helping him craft the strategy for the enterprise,” Bartelstein said. “My job is to help him think high level.” Crunching the economics of an idea, making projects work on time and on budget, that’s the core of his role. “There are always issues. My job is to be a problem-solver,” he said. “I like how broad it is and how I get to be involved in so many things.” Bartelstein is aware of the weight of Tellem’s accolades for him and the comparison to Meyers, a three-time NBA executive of the year. He’s also aware that he leapfrogged much of the career ladder-slog to get to such a job in the sports industry in his mid20s — impressive even for a product of the prestigious Phillips Exeter Academy and a Michigan sports management grad who was a senior captain of the Wolverines’ 2013 Final Four team. “It’s incredibly high praise. I’m lucky I got to skip steps to help run things now. It’s been a transformative two or three years. I’m trying to work hard, put my head down and grind,” he said. — Bill Shea

“There are always issues. My job is to be a problem-solver. I like how broad it is and how I get to be involved in so many things.” and sports agent who went on to be the general manager of the Golden State Warriors that have won three of the past four NBA championships. Tellem took the role as vice chairman of Gores’ Palace Sports & Entertainment that oversees the Detroit Pistons in 2015 and Bartelstein was his first hire. He plucked the former University of Michigan basketball player out of a leasing job in Chicago at the suggestion of Bartelstein’s father, a respected former rival agent. Tellem has tasked Bartelstein with high-profile jobs, including oversight of budgeting and construction of the team’s $65 million, 175,000-squarefoot headquarters that will open in September. “It’s a monster of a project, three years in the making,” Bartelstein said. He also is deeply involved in the

Reed Fenton PAGES 18-19

Herasanna Richards Marc Langlois Shelby Langenstein Ashlee Trempus PAGE 20

Steven Mazur and Eric Huang Collin Mays

About the photographs The old & the new: Photographer Jacob Lewkow took this year’s portraits at the historic Detroit Club, founded in 1882 by 10 Detroit businessmen and moved to its current Wilson Eyre-designed clubhouse at Cass and Fort streets in 1892.

How the class was selected Twenty in Their 20s honorees were selected from nominees by Crain’s editorial staff. They were selected based on professional accomplishments and nonprofit and civic involvement with the aim of recognizing a diverse range of people and industries.

Kristin Shaw, 28

Manager of Digital and Social Media, Cobo Center

ristin Shaw is passionate about Detroit, urban planning and the environment. And she’s converged her enthusiasm for those things in her multi-hat, behind-the-scenes role at Detroit’s Cobo Center. She calls herself Cobo’s “graphic designer, videographer, photographer, producer, director and screenwriter.” For two years, Shaw has created content and messaging for the exhibition hall’s 65,000 social media followers and 120 video signs across the sprawling building, including the enormous digital boards on Cobo’s exterior. Since 2016, Shaw’s work has generated $1.75 million in digital marketing revenue.

That’s key for a facility that has struggled with solvency, even with the recent deal to put Chemical Bank’s name on the building. The money contributed to small profits the past two years. Perhaps more importantly, Shaw is also the project manager on the 2.4 million-square-foot building’s successful green conversion and leads Cobo’s green team — a role that taps into her environmentalist passions, especially sustainability and reclamation. Last year, she formalized a donation program that she described as “a pipeline for leftover show materials to be diverted from landfills/incinerators by redistribution into the De-

Robert Reaves, 29 Director of Institutional Effectiveness, Wayne State University School of Medicine

s director of institutional effectiveness at Wayne State University’s School of Medicine, Robert Reaves is working to unite communities and help the university and the city of Detroit come together. Reaves, 29, started at Wayne State in July 2016 as an accreditation specialist during an especially challenging time for the university’s medical school. In 2015, the school had been put on accreditation probation by the Chicago-based Liaison Committee for Medical Education. The LCME said the medical school needed to improve in at least 12 major areas, including addressing an inadequate curriculum, lack of supervision of medical students in clinical clerkships at hospitals and too few minority students. “I worked closely with the vice dean

of medical education (Richard Baker, M.D.) and assistant dean of continuous quality improvement and compliance, Jason Booza,” said Reaves, who earned his MBA from Wayne in 2015. Along with medical school dean Dr. Jack Sobel, “we were working with other vice deans to develop strategic action plans for all the citations by the LCME.” Several committees were established to continue improvements, including a C-suite institutional effectiveness committee in April 2018 and a 40-member curriculum committee that needed to be overhauled. “The IEC focused on long-term strategic planning to address all the major issues. It also focused on accountability and infrastructure, monitoring the overall performance of the school,”

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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 Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

Martin LaRouere, 29 Manager, Transaction Services (Financial Due Diligence), PricewaterhouseCoopers LLP troit community and economy.” That included more than 100,000 pounds of materials from January’s North American International Auto Show. The effort saw more than 30

Since she was hired in 2014, the Wayne State grad has led Cobo’s efforts to get environmental certifications, such as Green Meeting Industry Council’s APEX Certification

“It doesn’t make sense to me why people aren’t passionately working toward cleaning up the mess that we’ve made.” full-grown trees replanted at Detroit Zoo exhibits and 90,000 square feet of carpet sent to local churches and organizations such as Habitat for Humanity. Food, clothes, electronics and swag from the show are recycled. Shaw also championed the addition of honeybee hives, from nonprofit group Bees in the D, atop Cobo’s 10,000-square-foot green roof.

three times, and an upcoming LEED Gold certification. “It doesn’t make sense to me why people aren’t passionately working toward cleaning up the mess that we’ve made,” Shaw said. “It’s a really happy circumstance that I got into a position that allows me to learn about these problems and how to help solve them.” — Bill Shea

ften the youngest person in the room at PricewaterhouseCoopers, Marty LaRouere was used to having to prove to others that he belonged there. That changed in 2018 when LaRouere was chosen by PwC U.S. Deals Leadership to be the first U.S. employee to lead a newly formed initiative to grow and develop PwC’s Deals practice in India. LaRouere admits the four-month secondment was a stretch assignment and definitely outside his typical day job. In India, he trained, instructed and mentored employees on how to provide additional services to clients and deliver more complex analysis. His efforts resulted in a $1.2 million increase in year-to-date revenue over the previous year, a 78.4 percent year-to-date growth rate in total hours incurred by the India group and an incremental $600,000 of year-

to-date revenue over budget. The key to his success, according to LaRouere, was taking the time to build relationships with a more than 100-person team including learning

“Team building is part of who I am.” about and assimilating into Indian business culture. “Team building is part of who I am,” said LaRouere, a University of Detroit Jesuit High School alumni who still lives by the school’s mission to be “men for others,” at work and in volunteer service. “The groundwork for business should be a healthy respect for the person across the table. I found the people of India to be welcoming,

friendly and inclusive. They accepted me even though I was bringing change. These are the most positive business relationships I’ve had.” The success of his India initiatives helped LaRouere segue into his next assignment as project leader on an M&A transaction for a new PwC Deals client, a multinational business operating in South Africa in the industrial products industry. The client, recognizing the beneficial transaction advice and consultation provided by LaRouere, extended the engagement by two additional months, resulting in an increase of 123 percent over expected revenue for the firm on the project. “I’m most proud of my overall progression as a business person. It really is a journey,” LaRouere said. “You have to throw yourself in there — no hesitation — and move through the situations that are a stretch for you.” — Laura Cassar

“We had a situation where everyone, the top leadership team, worked together on solutions.” Reaves said. “We didn’t have anything like that before. We had a situation where everyone, the top leadership team, worked together on solutions.” By October 2017, the LCME notified Wayne State that it was fully compliant with accreditation standards and approved the medical school through 2023. “It was a very large change and all the deans and vice deans, and the support people, everyone helped win back accreditation,” he said. In July 2018, Reaves was promoted to the first-ever director of institutional effectiveness. In his new role, Reaves works with the medical school’s 10-member executive team to update its long-term strategic plan that will address fiscal performance, accountability, administrative infrastructure and environmental chal-

lenges. Reaves is involved in several community activities, including volunteering at the Institute for Leadership and Diversity at the Ilitch School of Business and the Michigan Opera Theater. He also is a member on the National LGBTQ Task Force. He also helped create “The D and the Leader in Me” youth leadership development program, a joint initiative between the Ilitch School of Business and the Detroit Police Department. “It has been an amazing opportunity to work with so many people who are committed to the school (and the) city of Detroit; (it) reinforced my own commitment to the city and the school of medicine,” Reaves said. — Jay Greene

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

Sam Hamburger, 28 Director of Acquisitions, Bedrock LLC

ou have to wonder if Dan Gilbert’s director of acquisitions will ultimately work himself out of Detroit properties for the billionaire to buy. Sam Hamburger, a University of Michigan graduate, worked his way up the Quicken Loans Inc. and Bedrock LLC food chain to lead the real estate and mortgage mogul’s acquisitions department, which has grown to five people. Last year alone, the 28-year-old was involved in Gilbert’s acquisition of 23 properties, he said, including several for one of the most high-profile projects on the Detroit docket in the coming years. Hamburger was a key player in the Wayne County/Rock Ventures LLC/ City of Detroit deal that ended up with Gilbert building Wayne County’s new $533 million criminal justice complex at I-75 and East Warren Avenue in exchange for about 15 acres of prime downtown land that previously was going to be the site of the

Wayne County Consolidated Jail. “It was an extremely dynamic process in terms of the political ramifications, the real estate ramifications, certain approvals that were needed by the Wayne County Commission,” Hamburger said. “That was a team effort of 15-20 people that focused on this almost exclusively to get the deal done.” (The ultimate development plan for the Gratiot Avenue/I-375 jail site is “still fluid,” Hamburger said.) Jim Ketai, chairman of Gilbert’s Bedrock, told Crain’s that Hamburger has been “a very valuable asset” to the company. “He started here as an intern, and we saw the potential in him because he was very eager to learn,” Ketai said. “Sam is someone who is never afraid to ask a question and wants to be included in everything he possibly can. While his focus is on acquisition and he is our director of acquisitions, he gets himself involved in other aspects of the business. He is a rock star.” — Kirk Pinho

“He started here as an intern, and we saw the potential in him because he was very eager to learn. Sam is someone who is never afraid to ask a question and wants to be included in everything he possibly can.” — Jim Ketai, chairman of Bedrock

Sherelle Hogan, 28

Executive Director, Pure Heart Foundation

hen Sherelle Hogan was just 6 years old, her mom was taken to prison; her dad followed two years later. She spent most of her youth without a parent. Her dad died when she was 10, and her mom cycled in and out of prison until she was 14. Through it all, she bounced between houses, staying with family and friends. She was sexually abused for years and bullied by other kids. She was failing school, making up stories about where her parents were (off on job assignments) and struggling with the idea that it was somehow her fault they were in prison. But things finally turned around when she connected with a mentor through a summer camp program. “When she came into my life, she was this huge light,” said Hogan, who went on to graduate from high school with a 3.7 grade point average before earning a bachelor of arts in psychology from the University of Michigan-Dearborn. Three years later, while working at FCA US LLC, Hogan realized something was missing. Not only wasn’t she working in her field of study; she wasn’t fulfilling her purpose. She quit her job and started the nonprofit Pure Heart Foundation in 2015 to help children whose parents were incarcerated to break the cycle of incarceration and go on to successful lives by enabling them to communicate and supporting them. To give the kids voice, she launched a poetry program with a $4,500 grant from the Osborn Alliance, operating from public space at a Matrix Human Services community center in northeast Detroit. Two-thirds of the 20 kids she worked with the first year were cousins on her father’s side. Over the past three years, she’s added a host of other programs, including sessions for kids to write letters to their parents, mental health counseling, mentoring, tutoring, recreational outings with partners like the Detroit Pistons, parenting classes and care packages with sup-

“When (my mentor) came into my life, she was this huge light.” port from companies like Kroger Co. The nonprofit has served over 2,500 children and families and has another 3,000 on a waiting list.

About 85 percent of the kids it’s working with are in Detroit. The rest are from elsewhere in Michigan, and a handful in Atlanta and Texas were signed up by their parents who heard Hogan speak at their prisons. Word of what she is doing has spread. Pure Heart has 150 volunteers (all background-checked, Hogan said) helping to administer its programs. Hogan is doing it all on a cash and in-kind budget of just $68,000 this year. — Sherri Welch

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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 Y 6 , 2 0 1 9

TWENTY IN THEIR 20S We are pleased to announce the recipients of the 2019

Bo Shepherd, 28 Co-owner, Woodward Throwbacks

s a design student at Detroit’s College for Creative Studies, Bo Shepherd got into the habit of picking through illegally dumped piles of trash in Brush Park — years before the new residential development boom arrived in one of Detroit’s oldest neighborhoods. Riding around the city on a bike, Shepherd saw “raw material” and starting making household products and furniture out of the rubbish. Five years later, Shepherd and her business partner Kyle Dubay have turned their “anti-landfill” passion into a full-fledged business, Woodward Throwbacks. They take reclaimed lumber, doors, windows, cabinets, trim and other household relics from early 20th-century Detroit and give them a new life in restaurants, office spaces and residential homes. For several years, they ran Woodward Throwbacks out of a single-car garage stall at a home in Brush Park as a side hustle to Shepherd’s day job designing interiors for Chevy cars for General Motors Co. They upgraded to a three-car garage at her house in Corktown, but quickly ran out of space as the business expanded from producing small home decor items to larger-scale designs. In August 2017, Shepherd quit her job at GM as Woodward Throwbacks got into custom design work, such as LinkedIn’s new downtown office, along with a wholesale line of licensed Faygo throwback wall-mounted bottle openers and bottle crates made of reclaimed wood from razed Detroit homes. uses its inventory for custom Shepherd, 28, made the “It’s like that saying ‘they home, retail and office intemove from corporate America to a 24,000-square-foot don’t make it like they used rior designs. Shepherd, who moved to woodworking workshop in Detroit from Middletown, the former Garrity Dodge to.’ But I think it’s kind of N.J., at age 18 to attend coldealership building on Jocool that I get to save it.” lege, said architectural salseph Campau Avenue in Hamtramck. Woodward Throwbacks works vage feels like “my life purpose.” “It’s like that saying ‘they don’t “I think the only thing they had in with demolition contractors in Decommon were they’re both troit to salvage antique and vintage make it like they used to,’” she said. male-dominated fields,” she said of doors, mantels, hardware and furni- “They definitely do not. But I think her two early career paths in automo- ture. The company sells its rescued it’s kind of cool that I get to save it.” tive design and architectural salvage. treasures directly to customers and — Chad Livengood

Matthew Mastay, 29 atthew Mastay’s personal experience with the health care system has inspired his career in the field. “Way back when I was in elementary school I got treatment from a speech pathologist for my dyslexia,” said Mastay, now 29. “Because of that, when I went to Central Michigan University I thought I would go into speech pathology. Health care interested me from an altruistic perspective. When I reached the clinical side my last year at Central I realized I would burn out quickly because of was projecting my own wants” onto treatment of patients. After earning his bachelor’s degree in communication disorders in 2013, he pursued a master’s of public administration degree from Oakland University and completed his studies in 2015. Mastay’s first job in health care was in Henry Ford Health System’s revenue cycle department, where he led a team that helped improve the efficiency of the revenue recovery team, which re-

“Health care interested me from an altruistic perspective.” sponded to insurance company denials. He reorganized how the staff worked, categorizing bills that were denied for similar reasons instead of by payor. The recovery team increased responses to denials by 25 percent over a four-week period, he said. Since January 2018, Mastay has been medical center development project manager, where he has helped to oversee two new construction and operational improvement projects for outpatient centers in Royal Oak and Bloomfield Township. Bloomfield is expected to open later this year and Royal Oak during the summer of 2020. Henry Ford owns 28 medical centers in Southeast Michigan. Besides the construction and de-

for Outstanding Women Law Students.

CONGRATULATIONS

to our scholarship winners and many thanks to our generous sponsors! Erin Emory

University of Michigan Law School Kim Cahill Scholar

Marie Bonnici

Wayne State University Law School Dawn Van Hoek Scholar

Clarissa Kewin Western Michigan University Cooley Law School WLAM Foundation Scholarship

Emily Wacyk Paski

Michigan State University College of Law WLAM Foundation Scholarship

Alexis Smith

Wayne State University Law School WLAM Foundation Scholarship sponsored by: Women Lawyers Association of Michigan Foundation

Allison Kruschke

Michigan State University College of Law General Motors Scholarship

Jacqueline Yee

Wayne State University Law School General Motors Scholarship sponsored by: General Motors Corporation

Hillary John

University of Michigan Law School Dickinson Wright Scholar sponsored by: Dickinson Wright Women’s Network

Stephanie Moore University of Detroit Mercy School of Law Florence King Scholar in Patent Law

WOMEN PATENT LAWYERS

sponsored by: Women Patent Lawyers

Project Manager, Henry Ford Health System

Women Lawyers Association of Michigan Foundation Awards

sign oversight, Mastay also is working with a six-member team of executives charged with improving patient experiences and staff productivity. Mastay said whatever they learn may be implemented at Henry Ford’s other medical centers. “The whole goal is to have a better patient experience,” Mastay said. Many of Henry Ford’s outpatient centers were originally designed to separate practices in the building by specialty. Family medicine and orthopedics, for example, might have their own front desks and waiting areas. “We created fuzzy lines between clinics and have a central waiting room for patients to be flexible,” he said. “You can walk in and (be directed) to other clinics.” Mastay also is involved with several community groups, including the Midwest Chapter of the American College of Healthcare Executives, GenERGY and the Detroit Windsor MedHealth Cluster. — Jay Greene

Emily Garcia University of Detroit Mercy School of Law John Dalton & Mary Lou Peacock Scholar sponsored by: Peacock Law Firm

Brianna Potter University of Michigan School of Law Masco Scholarship sponsored by: Masco Corporation

Tanya Elzy Western Michigan University Cooley Law School Dobrusin Law Scholarship sponsored by: the Dobrusin Law Firm Striving to secure the full and equal participation of women in the legal profession in furtherance of a just society.

www.womenlawyers.org 120 N. Washington Square | Suite 110A | Lansing, Michigan 48933 | 517.372.3320

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

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Sheleen Sahi, 29

Margo Dalal, 26

CEO and Founder, SAHI Cosmetics

Executive Director, Detroit Community Wealth Fund

ost entrepreneurs have an “aha” moment that motivates them to make their dream a reality. For 29-yearold Sheleen Sahi, that moment came in the form of a brain tumor. Sahi always had an obsession with beauty and a frustration with the limited products available to women of color like herself. After emergency brain surgery in August 2015 to re-

her Desai team encouraged her to do one more, for Steve Case’s Rise of the Rest, with a $100,000 prize. Sahi won first place. Next came making connections. With an arm covered in lipstick and eyeshadow swatches, Sahi attended Gen Beauty Expo in Toronto. She was handing out her business card and asking women to follow her on Instagram

“You have to take advantage of every opportunity.” move a hemorrhaging tumor on her pituitary gland, Sahi — a biology major and former materials engineer at Ford Motor Co. — realized nothing compared to the passion she felt for beauty and fashion. Three days after the surgery, she was back in her MBA Operations class at the University of Michigan’s Ross School of Business, but in her spare time she started using her science background to formulate cosmetic products based on skin undertones. Sixteen months later, the day after she completed her MBA, Sahi walked into Desai Accelerator, a 16-week program for startups that provides funding, mentorships and resources. Since then, Sahi said, “The hustle never stops.” First came the funding, including an investment of $25,000 as part of acceptance into Desai and another $27,000 when she took the top prize at the Michigan Business Challenge. The Zell Lurie Founders Fund at UM made a seed investment of $100,000. And then, just when Sahi thought she was “over” doing pitch competitions,

when an older European man approached her and asked about her company. He turned out to be Marcelo Camberos, the CEO of ipsy, a cosmetics subscription service. He liked her pitch and put Sahi Cosmetics in two of ipsy’s monthly subscription Glam Boxes. Word started to spread. A fellow entrepreneur from Desai introduced her to the Target Takeoff Accelerator Program team. While her luxury line wasn’t right for the mass merchant, they liked her innovative idea enough to help her seal the deal she was working on with Macy’s, getting her into two Los Angeles stores on a one-month contract. “Macy’s is a great platform to tell our story,” Sahi said. “You have to take advantage of every opportunity.” This summer Sahi will open a flagship store in metro Detroit that will both sell products and offer services. “I never anticipated so many diehard fans.” Sahi said. “To know that someone is using my product every single day is what I’m most proud of. I’m part of their morning routine and that’s really satisfying to know.” — Laura Cassar

argo Dalal heads up a fund that lends to democratically owned Detroit businesses. The 26-year-old Virginia native has spent years working to increase ownership in marginalized communities in Detroit. She first visited the city the summer of its bankruptcy nearly six years ago while on a cross-country bicycling tour organized to get to know cooperative enterprises. Dalal’s principal job is executive director of the nonprofit Detroit Community Wealth Fund. But she’s been busy: She helped raise $120,000 for families facing tax foreclosure through the Tricycle Collective. And an idea she once scribbled in a notebook has become a Belle Isle kite festival attended by 5,000. She co-founded the Detroit Community Wealth Fund in 2016 with support from a New Yorkbased community development financial institution, The Working World. It’s received more than $80,000 so far from its national network and $25,000 this year in a gift from Patti Aaron. The Detroit fund educates and loans to entrepreneurs whose ventures give all employees an “equal say” in how the business operates and the opportunity to become member-owners. This alternative business model is foundational for equitable economic development, in Dalal’s eyes. “How do we reduce risk for low-income earners to start busi-

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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 Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

lal, 26

Desiree Kelly, 29

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nesses? ... How do we actually transition to a post-capitalist society where people have agency and have the ability to be self-reliant? ... That’s what we’re working on,” she said. It’s completed one loan so far: $25,000 to southwest Detroit-based cleaning cooperative Cleaning in Action. Two more are in process. Co-ops are well-known nationally, but relatively uncommon in

“How do we reduce risk for low-income earners to start businesses?” Detroit. Dalal counts about six of them in the city. She’s looking to build local support for the cause, including by launching the Detroit Coalition for Economic Democracy and by starting to build an idea for a cooperative thrift business. In the course of her work, she talks with business owners, but also with various players in Detroit entrepreneurship and development such as Invest Detroit, Build Institute and Detroit Economic Growth Corp. “Even if they haven’t heard of co-ops, which is rare, but if they haven’t, I feel like I blow their mind,” she said. “If they have, they want to know more, because we’re doing something that is similar enough, but also very different. I think that is appealing to people who are thinking about impact investing.” — Annalise Frank

rowing up, artist Desiree Kelly — known for her portraits and diversity of work — dreamed of combining her passions to become the art director at a big music magazine. After graduating from Wayne State University with a graphic design degree, Kelly got a job as production manager at the Detroit Metro Times. It seemed like a solid first step on the path to reach her goal, and the best way to have a sustainable career. But she soon learned the hard lesson of dreams versus reality. “I learned I didn’t have a voice; there was no creativity,” Kelly said. “I was just the hands for what the clients wanted.” In 2014, she left her “sustainable career” and began her own company, Desiree Kelly Art. The biggest challenge, Kelly said, was not knowing where to start. In her new venture she was not only the artist, but also an entrepreneur with a product to market and sell. She had no agent, no gallery; she was “100 percent alone and on my own. It was tough.” Kelly hit the road, touring local art fairs and festivals throughout the Midwest. “I met people, I got perspective directly from the consumers,” Kelly said. “I learned what people want. The more I sold, the more I was inspired to create.” The perseverance paid off. While Kelly was plugging away, something had happened. Her work was being talked about. Family and friends shared stories of people naming her as their favorite artist. And then she got a surprising phone call.

The cast from the movie “Detroit” was coming to town for the world premiere and they wanted to visit Kelly at her studio. While Kelly had been busy creating art, she had arrived. “A turning point happened a few years ago,” Kelly said. “I knew I reached a new level when closing my first $40,000 project.”

Intellectual Property Experience

In Your Corner.

“It’s cool to be a part of history.” Kelly’s work has appeared on beer cans and buses, in shoe stores, restaurants, hospitals and public spaces. From local branding — for example, FootLocker Inc. murals and dressing room art — to emotional portraits like one of Detroit rapper Big Sean depicting him with his mother and grandmothers — Kelly enjoys the versatility of her work. Last year she was commissioned to create artwork for Beaumont’s “Women’s Health” campaign. Her series of murals celebrated women and represented 24 patients and their stories. With her wide variety of work, Kelly does have a favorite project. She was commissioned by the Charles H. Wright Museum of African American History to create a painting for its permanent collection that will incorporate Aretha Franklin artifacts, such as vinyl records and a Cadillac hood ornament. “It’s cool to be a part of history,” Kelly said. “It’s a piece that will be seen for a hundred years.”— Laura Cassar

Contact Charlie Gray at cfgray@varnumlaw.com n n

Patent and trademark prosecution Freedom to operate, novelty, and state of the art searches and opinions Intellectual property license agreements Metropolitan Ranking Intellectual Property Litigation 2019

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

Kirsten Craig, 29 President, Activate Inc.

ometimes you chase that dream job and other times you stumble upon it. For Kirsten Craig, president and founder of Activate Inc, it was definitely the latter. Craig did not know experiential marketing existed until she accidentally landed a job in it after a post-college move to Los Angeles. A screen arts and cultures major from University of Michigan, Craig thought she was accepting an event production job. But Craig quickly fell in love with her newfound career. In 2013, when Detroit declared bankruptcy, Craig decided to take that love and experience back home. She started Activate in a 500-square-foot room with a mission to produce unforgettable experiential marketing campaigns, reduce waste in the industry and to embrace Detroit’s diversity. Over the last six years, Activate has grown from a one-person company to a team of 25, with women making up more than half the staff. Activate is a member of the Women Business Enterprise National Council and a proponent of women’s entrepreneurship. After seeing a tremendous amount of waste at trade shows she attended, Craig developed a new format for experiential management where Activate stores, redesigns, refabricates and redeploys its clients’ existing marketing assets in new ways for every experience. This sustainability effort resulted

in over $2 million in savings for Activate clients. “We’ve been able to leverage the available warehouse space in Detroit at affordable rates,” Craig said. “Being resourceful is my superpower.”

“We’ve been able to leverage the available warehouse space in Detroit at affordable rates. Being resourceful is my superpower.”

The biggest challenge Craig has faced with Activate is finding new employees quickly enough to keep up with the company’s rapid growth. Activate now operates out of a 75,000-squarefoot facility in Ferndale. The larger team allows Activate to make a bigger impact and pursue bigger accounts. They design and execute in-person experiences and campaigns at trade shows, festivals, concerts, sports venues and more for companies including Coty, DSW, Bayer, Anheuser-Busch, Pier 1, Hollister and over a dozen NFL teams. Activate will exceed $11 million in revenue in 2019. “I’m most proud that I have been able to do what I love while providing jobs for 25 families in the metro Detroit area,” Craig said. — Laura Cassar

Reed Fenton, 29 Principal, EIG14T (814 CRE, LLC)

eed Fenton has developed a $250 million real estate portfolio in just a few short years. Fenton, who started Troy-based 814 CRE LLC (branded as EIG14T) with his childhood friend Jeff Julius in August 2014, says the company’s 1.5 million-square-foot portfolio of new and acquired real estate also has another $50 million under construction and $50 million slated to break ground this year. In all, 30 buildings are slated to come online in 2020 and another 50-plus the following year, he said. Fenton says KinderCare Education LLC — which bought Fenton’s father Patrick’s Troy-based Rainbow Child Care Center last year — is EIG14T’s primary tenant, occupying more than half of its space, but he plans to diversify the tenant base in the coming years. “We target tenants that are in education, health care, wellness, swim schools, other forms of healthier restaurants, any

“Our long-term plan, and it will take some time to get there, is that we will start creating centers not backed by big-box or groceries stories, but 3- to 10-acre developments that are epicenters for families.” tenant that really caters to young families,” Reed Fenton said. “Our long-term plan, and it will take some time to get there, is that we will start creating centers not backed by big-box or groceries stories, but 3- to 10-acre developments that are epicenters for families.” “Reed has done an impressive job of building a team of highly skilled project managers, engineers and architects and has created an enviable culture in the development business,” said Edward Wujek, senior vice president of advisory and transaction services in the Southfield office of Los Angeles-based CBRE Inc., which advises Fenton and EIG14T on site selection in various markets around the country. “Their business is rapidly diversifying both in the tenant category and geographically, now pushing west of the Missis-

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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 Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

Tapan Kataria, 23 Director, Backstage Capital, Detroit

sippi all the way to the west coast. The organization he’s built is impressive using any measure, but particularly so for someone his age.” In October 1993, Patrick Fenton was a member of the Crain's 40 Under 40 class for growing what was at the time was called Rainbow Rascals Learning Center Inc., then based in Southfield. — Kirk Pinho

nant ssis-

the curriculum. When my team and I heard about the lack of computer science education in Detroit, we put together an event called Code Detroit, part of Startup Week, and hosted a four-day event at Wayne State to bring more than 3,000 Detroit Public School kids in and introduce them to coding,” he said. His commitment to diversity in tech made his next move a natural one.

“Out of 40 other Techstars-related events in the U.S., Startup Week Detroit is regarded as the most diverse of its kind.”

Last November, Kataria joined the Detroit operation of Backstage Capital, a Los Angeles-based business accelerator and incubator with other operations in Philadelphia and London, England. Detroit’s accelerator currently hosts seven startups founded by minorities, who are undergoing three months of extensive mentoring and company acceleration. “The excitement for me is I get to sit down with founders and help them bring their vision to life. Helping them grow their business has been a great experience. There is so much going on here. Detroit is at a point where it has had four unicorns in the last three or four months, which has never happened before,” he said, “unicorn” referring to the term used for startups that reach $1 billion in value. — Tom Henderson

US ON

CONGRATULATIONS

@ crainsdetroit

ighhas said sacased tion

apan Kataria didn’t wait until last year, when he graduated from the Eli Broad College of Business at Michigan State University, to become a business entrepreneur. In 2013, he founded Creating Memories Entertainment, turning a hobby into a business he still runs, offering DJ services across the Midwest for Indian weddings and special occasions. His next venture was Zest Meal, a company he founded in January 2016 and ran until June 2017, a platform for people in Detroit to order meals made by chefs at more than 50 neighborhood restaurants. That was a partnership with the Michigan State University Product Center. “I had dropped out of school to run the business, but it became clear the supply-chain logistics were not going to work, so I went back to school,” he said. Since January 2017, Kataria has been chief of staff for Techstars Detroit Startup Week, a five-day mentoring and educational event sponsored by Quicken Loans for would-be entrepreneurs and those who have launched startups. Kataria said Startup Week Detroit is regarded as one of Techstars’ most diverse events. In 2017, 53 percent of attendees were female and 63 percent were a minority. And his work has helped bring tech education to an even broader cohort. “Some teachers in the Detroit school district mentioned students are interested in coding/computer science but they lack the resources to implement this in

aid. e, is grocen-

KRISTIN SHAW Crain’s 2019 Twenty in Their 20s

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

Marc Langlois, 29 Lighting Designer, Detroit Institute of Arts

arc Langlois got into lighting design at the Detroit Institute of Arts by happenstance, when he was an intern in the prints, drawings and photographs department. The museum’s lighting technician was out on medical leave. Langlois, who holds associate degrees in graphic and web design, agreed to step in. “The first day we started, I fell in love with lighting,” Langlois said. “Once I saw what I could do to a piece of art with lighting, I was blown away.” Over the past five years, he’s made a name for himself as one of only a handful of museum lighting designers around the country. He was mentored by local lighting designer Robert White, who designed the award-winning lighting at the Qatar National Convention Centre and the McNamara Terminal at Detroit Metropolitan Airport. Today, he is responsible for lighting every piece of art at the museum and the environment around them in a way that helps tell the story the

Herasanna Richards, 25 Legislative Associate, Michigan Municipal League

s a college intern in then-Gov. Rick Snyder’s office, Herasanna Richards heard the governor say something that has cemented the Nashville, Tenn., native in the mitten. “You can be a small fish in New York. But you can be a big fish in Michigan,” the governor told interns at a lunch on the last day of her internship in the summer of 2014.

Emerging Industries Training Institute and Operation ABLE of Michigan to help prepare Detroiters for jobs in the hospitality industry through work-readiness, food safety and customer service training. Richards said she learned how integral municipal government can be to lowering barriers to starting, expanding or maintaining a small business.

“There’s so much opportunity.” “That is so true,” Richards said. “We’re really in a place where there’s so much opportunity.” Richards, 25, opted against taking her Michigan State University degree in political science and communication back to Tennessee — or venturing to New York, Chicago or some other big city where millennials flock. At age 23, Richards leaped from grassroots political advocacy work in Lansing to a big fish job with the Michigan Restaurant & Lodging Association standing up the first trade group for Detroit restaurants in half a century. As executive director of the Detroit Restaurant & Lodging Association, Richards was tasked with building up a membership base and advocating for the interest of restaurants in Detroit, where restaurateurs wrestle with ordinances and licensing regulations, workforce shortages and access to public transit for lower-wage workers. At the DRLA, Richards helped create the DRLA Workforce Alliance, a partnership with nonprofits such as ProStart MI, Detroit Food Academy,

Not knowing much about the restaurant business, Richards found that bringing together restaurateurs and other hospitality business owners helped identify common issues. “The more you get people talking about the same things, the more they realize their problems are very, very similar; they often realize they have gaps that the other person can fill,” she said. Richards has parlayed her two years at DRLA into a new job as a lobbyist for the Michigan Municipal League, the Lansing-based advocacy organization that represents cities and villages. She remains based in Detroit, focused on energy and environmental policy issues and municipal services. “As easy as it would be to live in some place where everything’s picture perfect and great, if I know I can contribute something and I know I can bring a new idea, a fresh perspective, a new kind of energy and do something that can really make this a better community for all of us, then why wouldn’t I?” she said. “There’s so much opportunity.” — Chad Livengood

“The first day we started, I fell in love with lighting. Once I saw what I could do to a piece of art with lighting, I was blown away.” artists had in mind when they created the pieces. From a conservation standpoint, he’s also charged with minimizing the damage light exposure can do to historic pieces on display. His work ranges from changing light bulbs when needed to designing lighting for individual pieces of art to working with exhibition de-

Shelby Langenstein, 27

Chief People Officer, Emagine Entertainment Inc.

n 2010, Shelby Langenstein held a job so many teenagers do: an usher at a movie theater. Less than eight years later, she would become the top human resources executive for Emagine Entertainment — a career trajectory spurred by a little bit of luck, knowhow and determination. She was the first human resources hire for the fledging theater group in 2015. When she became manager of human resources, while still a student at Oakland University, the company was contracting out its payroll and other personnel functions and relied on its COO to make top-line human resources decisions. “I was literally still in college and started with absolutely nothing,” Langenstein said. “After reviewing the resources we were leveraging from the (professional employer organization firm), I felt I could do better internally.” Langenstein quickly developed recruiting materials, an employee handbook and secured payroll software. Then she began to review how the company managed its talent. That’s when she discovered a female manager was significantly underpaid compared to her male peers, despite managing a busier, more profitable theater. Langenstein recognized the manager’s pay had been overlooked as a longtime employee of Emagine. “I don’t think companies intentionally want to pay people less, but when you’re not doing a compensation comparison or reviewing your profit centers, it can happen,” she said. “It was clearly not right, so once I had it in front of me, it became a big thing for me to fix and brought awareness to the company.” Langenstein secured a raise for the manager, who is now the highest-paid manager in the company. She’s now working on developing

“I want to make an impression on our people that they can do work they enjoy.”

a certification program for theater managers while overseeing more than 1,500 workers at 22 locations. “People leave people, not jobs,” Langenstein said. “If I hire people to just scoop popcorn, that’s not fulfilling. I want to provide an experience and make an impression on our people that they can do work they enjoy. That’s what’s going to retain employees.” — Dustin Walsh

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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 Y 6 , 2 0 1 9

TWENTY IN THEIR 20S

signers on major exhibitions in the two-year run-up to their public opening. As part of that, he considers nuances like how to reduce glare, how a stained glass window might have appeared when it hung in a building and how lighting can help transport visitors to the flight deck of Darth Vader’s ship, with a view of the stars in the ship’s window behind him. Langlois has been the lighting designer on the two most successful exhibitions the DIA has hosted in the past 20 years: Diego Rivera and Frida Kahlo in Detroit and Star Wars and the Power of Costume. He’s also leading museum-wide conversion of its 6,000 or so light fixtures to LED — a move that is showing early savings of 30 percent or more in energy costs — while still keeping aesthetics and conservation in mind. With the idea of paying it forward, Langlois is now interviewing intern candidates interested in lighting design or in exploring it. — Sherri Welch

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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.

Ashlee Trempus, 28 Founder and CEO, SignOn

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

shlee Trempus wanted to become a doctor, but during her freshman year at Grand Valley State University, her life took an unexpected turn. Doctors diagnosed her with two conditions: dysautonomia, an illness that disrupts the nerves in charge of maintaining nonvoluntary body functions, including heart rate, along with adrenal insufficiency, a condition when adrenal glands don’t make enough of certain hormones, such as cortisol, a steroid hormone that is released in response to stress or fear, Trempus explained. “I got super sick and was homebound and I had to leave school, but I didn't want to be known as that sick girl,” Trempus said. In 2010, she took spring semester off and returned home to Grosse Pointe Farms. That summer, she took one class — American Sign Language — which sparked a passion and a career. “I enjoyed it so much that I took all of the classes available there, and the teacher was really willing to work with me,” she said. As part of her American Sign Language interpreter program, Trempus began searching for ways to connect with the deaf community online to meet the program’s requirements. She came up empty-handed — so she created one. Founded in 2015 and launched in 2016, SignOn is an ASL immersion program for anyone interested practicing sign language one-on-one with a deaf ambassador, or learning about deaf culture. Flash forward to January, the company has total of 34 K-12 schools, colleges and universities using SignOn, with over 2,200 users. In 2019, the business cleared $200,000 in revenue, Trempus said. This year, the company has a partnership lined up with Washington,

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“We really just want to continue ... to provide (students) with access to deaf mentors.”

D.C.-based American Society for Deaf Children, where the organization will provide a package of five 30-minute SignOn sessions to 500 families with their membership to the ASDC. “We really just want to continue spreading out all over the country to provide (students) with access to deaf mentors,” Trempus said. — Anisa Jibrell

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TWENTY IN THEIR 20S “As two shorter men, we could never find clothes that fit well.” — Steven Mazur “It’s an amazing feeling to wear something that is actually made for you for the first time.” — Eric Huang

“Most employers think apprenticeships are only for the skilled trades or manufacturing, but now we’re tapping into different markets like IT and health care.”

Steven Mazur, 28, and Eric Huang, 28

Collin Mays, 28

Co-founders, Ash & Erie

sh & Erie Inc., the clothing retailer that caters specifically to short men, is going through a growth spurt. Since launching in 2015, the online-only company has sold more than $2 million worth of clothes and hopes to double or triple its revenue this year, while adding employees. Friendsturned-business partners Steven Mazur and Eric Huang founded the company to solve a problem that’s vexed them since adulthood. “As two shorter men, we could never find clothes that fit well,” Mazur said. “(Our goal is) to make sure every short man in American knows who we are.” Ash & Erie sells custom-fit dress shirts, flannel, jeans, sweaters, T-shirts and jackets for men 5-feet 8-inches tall and below, with waist sizes ranging from 28 to 38 and in-seams from 25 to 29. Mazur and Huang met through Venture for America in 2013 and worked together at Waymark, which gave them insight into building a business from the ground up before breaking off on their own. “We really bootstrapped the company in the early days,” Mazur said. “We were young entrepreneurs with student loans.”

The pair caught a break in 2017 when they landed an appearance on the hit ABC show Shark Tank. In dramatic TV fashion, Mark Cuban initially declined a deal before agreeing to invest $150,000 for 25 percent stake in the company. The investment has allowed Ash & Erie to ramp up production and meet demand from a large market of short men — an estimated 30 million men in America are below 5-foot-8. The company, based at 1555 Broadway St. in Detroit, is looking to expand offerings and staff in the coming months. They have five full-time employees and plan to add another three or four by the end of the year. And Ash & Erie just signed Muggsy Bogues — the shortest player ever in the NBA, at 5-foot-3 — to rep its brand. Sales are up and excitement is growing at the company. For Mazur and Huang, that means they’re making good as chance entrepreneurs. But more importantly, it means their solution to a perennial problem is working. “It’s an amazing feeling to wear something that is actually made for you for the first time,” Huang said. — Kurt Nagl

Business Development Coordinator, Southeast Michigan Community Alliance ollin Mays is an activist. He has served as a district director for former state Sen. David Knezek, was a manager in the Wayne County Government Juvenile Justice department and organized a scholarship between his family and the United Negro College Fund. But his work as the business development director of the Southeast Michigan Community Alliance has been the most impactful. Mays leads a staff of 12 to knock down barriers to employment for the disadvantaged and the region’s working poor. Since joining SEMCA in 2017, Mays and his team have helped eight new employers launch apprenticeship programs, increased registered apprenticeships by 60 percent and secured $1 million in new funding for the Skilled Trade Training Fund. Mays said the organization is making headway in getting employers on board with apprenticeship programs, despite resistance since the Recession to taking on the often-expensive programs. “Most employers think apprenticeships are only for the skilled trades or manufacturing, but

now we’re tapping into different markets like IT and health care,” Mays said. “Employers are realizing it’s needed and wanted in the region.” Mays was promoted to his current role in October 2018 and oversees a new program called the Business Resource Network, a consortium of local companies working with Michigan Works! to increase job retention and productivity. Companies contribute $7,000 to join the program, and the program administrators distribute funds to help employees with issues that could impede their ability to work, such as transportation or child care. Employees of those companies can also work with a professional success coach to alleviate non-financial problems. The program, which Mays directs for Monroe and Wayne counties, has paid for new tires for a worker and prevented another from losing a home to foreclosure. “This is just a way that employers can say, ‘We value you as an employee and as a person,’” Mays said. “This program helps keep people working and keeps employers from the expense of turnover.” —Dustin Walsh

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

FORUM

Chad Livengood:

Could service tax replace gas tax? Page 22

ILLUSTRATION FOR CRAIN’S BY DANIEL ZAKROCZEMSKI

MAY 2019

TRANSPORTATION

The road-funding divide By Chad Livengood

clivengood@crain.com

ivingston County gets $123 per registered vehicle from the state to fund county and local roads in one of the fastest-growing areas of Michigan. Half the roads are in poor condition. Keweenaw County, Michigan’s least-populated county at the tip of the Upper Peninsula gets $773. There, 76 percent of roads are in good or fair condition, The disparity is a result of a road-funding formula that was originally devised during Harry Truman’s presidency. For decades, Michigan has long had a divide between rural and met-

ropolitan areas in how fuel taxes and vehicle registration fees get divvied up to fund repair and maintain roads. The state formula counts miles of primary and local roads, but treats the miles the same for a four-lane artery the same as a two-lane country road. Under Gov. Gretchen Whitmer’s $2.5 billion road-funding proposal, the gulf would widen between Up North and downstate counties, even while more money is dedicated to heavily traveled roads in Southeast Michigan, a Crain’s analysis of the proposal shows. For the past quarter-century, Michigan policymakers, education researchers and business leaders have measured K-12 spending in public schools on a per-student basis. Crain’s analysis applies that same

Gap between urban, rural areas is a gulf that would widen under Whitmer’s plan

standard to local roads — taking into account the number of registered vehicles — amid the red-hot debate in Lansing over whether to raise taxes, issue new state debt or slash budgets of state agencies to address a deepening infrastructure crisis. Under Whitmer’s plan, combined state funding for Keweenaw County’s road commission, cities and villages would rise $239 per vehicle — or 24 percent — to $1,012 for each of the 2,080 registered passenger and commercial vehicles in a peninsula county jutting out into Lake Superior a 10hour drive from Detroit. In Livingston County, the exurbs of Detroit would see total annual funding for local roads increase by 25 percent or nearly $5.5 million under

Whitmer’s plan, which hinges on a 45-cent fuel tax increase. But it would amount to $31 per vehicle in a county with more than 177,000 registered passenger and commercial vehicles and nearly 600 miles of roads in poor condition, the Crain’s analysis shows. “Nobody’s losing out on this,” said Paul Ajegba, director of the Michigan Department of Transportation. Crain’s analysis shows Michigan’s median per-vehicle funding, which was $228 for Isabella County in the 2018 fiscal year, would rise to $284 per vehicle in 2021 in the county that’s home to Central Michigan University based on the Whitmer administration’s distribution to heavily used primary roads in counties, cities and villages. SEE ROADS, PAGE 22

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CRAIN’S FORUM | MAY 2019

If Whitmer’s gas tax increase is dead, sales tax on services, anyone?

Republicans are vowing emocratic Gov. Gretchto restore the taxpayer suben Whitmer can’t get sidy for the tourism industhe legislative engine to try, illustrating just how turn over on her 45-cent difficult it would be for lawgas tax increase. makers with pet spending Nearly tripling the priorities to slash hundreds 26.3-cents-per-gallon fuel of millions of general fund tax is deemed too much by dollars to pay for replacing Republicans who think Michigan’s broken transthere’s still waste in state CHAD portation infrastructure. government after eight LIVENGOOD On road funding, Chatyears of control by a CPA named Rick Snyder — and too bur- field and other lawmakers are condensome by many of Whitmer’s fel- tinuously hung up on the fact that the low Democrats concerned about its 6 percent sales tax on gasoline does impact on the wallets of the working not go toward roads. About 73 percent of the 6-cent tax is constitutionpoor. But nobody is disputing Michigan ally earmarked for schools, while 24 needs to be spending $2 billion more percent goes to cities, villages and townships, and the rest to the general annually on roads. Yet it seems cutting that much out fund. With gas hovering near $3 per galof an existing $10.7 billion discretionary general fund has about as lon, this amounts to 18 cents per galmuch odds as a 45-cent gas-tax in- lon that’s constitutionally siphoned off. crease passing. Chatfield and several of his predeJust look at the gnashing of teeth by House Speaker Lee Chatfield and cessors have contemplated how to fellow northern Michigan Republi- get rid of this sales tax on gasoline to can legislators over Whitmer’s pro- ensure all taxes at the pump are dedposal to cut $5 million from the $36 icated to roads without blowing a million annual Pure Michigan adver- nearly $1 billion hole in the budgets of schools and municipalities. In May tising campaign.

ROADS FROM PAGE 21

But in Michigan’s 10 most-populated counties, where three-in-five Michiganians reside, the combined average increase under Whitmer’s plan would be $70 per vehicle less than what Isabella County would get — and less per vehicle than the money distributed to the state’s 65 least-populated counties, the Crain’s analysis shows. In Macomb County, where 1,200 miles of local roads are rated in poor condition, cumulative local road funding through Act 51 amounts to $136 per vehicle. Whitmer’s plan would boost overall local road funding to $175 per vehicle. “Jesus almighty,” state Sen. Peter Lucido, R-Shelby Township, said when told how Macomb County compares to rural counties in per-vehicle distribution. “How unfair is it to give less to those counties that are contributing more to the (Michigan Transportation) fund?” While the Democratic governor’s 45-cents-per-gallon tax hike to raise $2.5 billion annually for roads has been declared dead-on-arrival in the Republican-controlled Legislature, what’s not off the table is changing the way Michigan distributes road funding through Act 51 — a law first adopted in 1951 with a formula that’s been amended six times over the past seven decades. Steve Wasylk, deputy director of Livingston County Road Commission, has no qualms with the way Act

51 distributes money to the counties. “To fix a mile of road, it still costs the same whether you’re in Livingston County or Iosco County,” Wasylk said. “(Rural counties) get more money per capita, but their total money is quite a bit less.” Metro Detroit politicians have long contended Wayne, Oakland and Macomb counties are donor counties in how much fuel tax and vehicle registration taxes their motorists pay compared to they money they get back through Act 51. “The higher-density counties are donor counties,” Orion Township Supervisor Chris Barnett said. “Act 51 needs to be dusted off and reconfigured.” The state of Michigan collects no data on fuel taxes to prove or disprove the donor county argument. The 26.3cent tax on gasoline and diesel fuel is levied at the wholesale level, so there’s no way to track retail tax receipts on a county-by-county basis, according to the Treasury Department. Oakland County, Michigan’s largest single economy, got $144 per vehicle for its road commission, cities and villages in the fiscal year that ended Sept. 30. If Whitmer’s funding program were to come to fruition, Oakland County’s per-vehicle share would rise to $188. “We need to keep more money in the higher-density populated areas,” said former state Rep. Mike McCready, now the economic development director for Oakland County. “We’re creating the revenue. And we have more issues because of the volume of trucks and cars on the roads.”

Consumer services such as haircuts are not subject to Michigan’s 6 percent sales tax. GETTY IMAGES/ISTOCKPHOTO

2015, voters soundly rejected a 1-cent increase in the sales tax that would have solved this problem. Four years later, here’s how to make the schools and cities whole and get rid of the sales tax on gasoline: Expand the 6 percent use tax to the final sale of consumer services such as haircuts, lawn mowing, ski

LARRY PEPLIN FOR CRAIN’S

The bridge on Miller Road in Dearborn is propped up by steel supports.

Crunching the numbers The Crain’s analysis examined the total Act 51 dollars that flowed to the cities, villages and county road commissions in each of Michigan’s 83 counties in the 2018 fiscal year and how much more each county would get from the state in the 2021 fiscal year if Whitmer’s plan were funded. The total funding by county was then divided by the number of registered passenger and commercial vehicles in each county to give policymakers look at how the money is divided up at the local level on a per-user basis. Ed Noyola, deputy director of the County Road Commission of Associ-

lifts and tax preparation. There’s at least $1 billion worth of use-tax revenue that could be collected from more than $10 billion in untaxed for-profit services, according to the Michigan Department of Treasury’s annual tax expenditure report. Michigan has one of the broadest

sales/use tax exemptions for services in the country, taxing 48 of 285 different services, according to the Federation of Tax Administrators’ state-bystate annual report. Services already taxed in Michigan range from taxidermy and tuxedo rentals to cell phone service and photocopying.

ation, said Act 51 has “never been funded properly” by lawmakers for anyone to conclude it’s tilted in favor of rural counties. “No one has proven to me that Act 51 is not working fairly and equitably,” Noyola said. Noyola points to the federal funding system for interstate highways in which so-called donor states support rural states that don’t have enough users to fund the cross-continental infrastructure themselves. “If we didn’t give Iowa and Wyoming more money, they’d never have an interstate system,” he said. From county to county, per-vehicle funding can vary wildly. In south-central Michigan, Jackson County received $152 per vehicle in 2018 to support its transportation infrastructure along the busy Interstate 94 corridor. Jackson County’s southern neighbor, Hillsdale County, received $210 per vehicle and has one-third as many drivers and no interstate highway running through it. Hillsdale County’s per-vehicle funding would rise to $272 if the Legislature approved the governor’s plan. To its west, Branch County received $229 per vehicle and would see that grow to $311 per vehicle under Whitmer’s plan, which would increase Jackson County’s share of state funding for local roads to $203 per vehicle. With the exception of Branch, Calhoun, Hillsdale, Gratiot and Sanilac, counties south of M-46 in mid-Michigan currently receive less than $200 per vehicle.

The exception in northern Michigan is Montmorency County in the northern Lower Peninsula, a densely forested and sparsely populated county that has fewer than 9,000 registered vehicles. Montmorency County’s road commission and the village of Hillman — its lone incorporated town — received $61 per vehicle in Act 51 funding in 2018. Whitmer’s plan would boost that by 34 percent to $82. Ajegba, the MDOT director, said the Whitmer administration proposed putting all new tax revenue into a fund separate of Act 51 to avoid altering the “intricacies” of the current funding stream. “You just can’t try to change Act 51 in a vacuum,” Ajegba said.

Real-world impact Statewide, 48 percent of the nearly 132,000 miles of local roads are rated in poor condition, according to the Michigan Transportation Asset Management Council. The economic impact of poor roads at the local level can be seen at the curb’s edge of a couple of prominent employers in metro Detroit. In Dearborn, Wayne County is wrestling with the need to replace the Miller Road bridge, a Depression-era relic built in 1931 to help get Ford Motor Co. employees to the automaker’s sprawling Rouge plant. The T-shaped bridge that intersects with Rotunda Drive carries more than 4,500 vehicles per day over railroad crossing and swampy low-lying area

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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 Y 6 , 2 0 1 9

CRAIN’S FORUM | MAY 2019

And in many ways, the sales tax law has not kept up with technology. For example, Michigan taxes the purchase of a external hard drive for storing digital photos. But Michigan doesn’t tax the purchase of cloud computing space to store digital photos. And that cloud space costs a fraction of what a hard drive costs, result-

timated loss of $122 million in tax revenue each year, according to the Treasury Department). Hair styling and cuts are sales tax-exempt. But hair product bought at the same barber shop or salon is subject to the sales tax. Car rentals at Detroit Metro Airport are subject to the sales tax. But ordering a ride from an Uber driver at the airport is exempted from sales tax because it’s a service. “Why should one of those people pay sales taxes and not the other?” asks Carl Davis, research director at the Institute on Taxation and Economic Policy, a nonpartisan think tank based in Washington, D.C. “There’s no rationale behind it. It’s something that should be corrected.” In 2007, Michigan lawmakers briefly expanded the sales tax to services to help close a $1.7 billion budget deficit and end a government shutdown. Then-Gov. Jennifer Granholm signed the bill before daylight on Oct. 2; it was repealed before Christmas and never took effect. It turned into a political “fiasco” as industry after industry dispatched lobbyists to the Capitol to get exemptions, said Mitch Bean, who was director of the House Fiscal Agency at the time. “What the biggest problem with that was what was included and what wasn’t,” Bean said. Lawmakers exempted lawyers, accountants and golf course green fees while attempting to levy the sales tax on obscure services like psychics, palm readings, “social introduction services” and baby shoe bronzing. A dozen years later, the short-lived sales tax on baby shoe bronzing remains a legendary joke in Lansing. “There were very strange carveouts,” former state senator Gilda Jacobs said.

ing in a dwindling sales tax base. A digital Wall Street Journal subscription through Apple’s App Store triggers a 6 percent tax bill. But buying a home-delivered subscription to The Journal is tax-exempt (the sale of newspapers, periodicals and copyrighted films is exempted from the sales tax, resulting in the es-

Road funding by county 1

A Crain’s Detroit Business analysis of per-driver road funding by county compares the 2018 fiscal year to projected cumulative road funding for 2021 (for the county, cities and villages) under Gov. Whitmer’s plan. The per-vehicle amounts vary wildly between urban areas downstate and less populated counties in the northern Lower Peninsula and Upper Peninsula.

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FY18 rank

FY18 FY21

1 Keweenaw 40 Branch

$229

$311

44 Alpena

$22 $287

53 Wayne

$194 $266

79 Oakland

$144

$188

80 Ottawa

$142

$173

81 Macomb

$136

$175

82 Livingston

$123

$154

$61

$82

83 Montmorency

surrounded by city-owned streets that are in poor condition. Most of the bridge’s users are Ford employees and heavy trucks shipping parts and finished F-150s out of Ford’s Dearborn truck plant. The bridge also services U.S. Steel’s Great Lakes Works EGL and a Delaco Steel Corp. processing plant on Miller Road. Last year, Wayne County spent $4 million adding 13 temporary steel supports and making other temporary improvements to buy five more years of life for a bridge built a decade before the U.S. entered World War II. Replacing the 88-year-old Miller Road bridge will cost $50 million, nearly one-third of Wayne County’s total annual budget for heavy maintenance and road construction, said Beverly Watts, the county’s director of public services.

$773 $1,012

Notes: Branch County’s per-driver amount is the median for Fiscal Year 2018. Alpena County’s per-driver amount is the median for Fiscal Year 2021

ct 51

arly ated the Man-

Key to FY18 funding map $50-$200 $201-$250 $251-$325 $326-$550 $550+

80 82

53 40 Crain’s Detroit Business graphic

Jacobs, a Huntington Woods Democrat who voted for the sales tax on services, recalls representatives from the pest control industry lobbying for the exemption under the premise that senior citizens and low-income people would be negatively impacted by a tax on ant and termite extermination. “I really had a hard time making the connection that’s such a critical service that we should be exempting them from the sales tax,” said Jacobs, president and CEO of the Michigan League for Public Policy. As Michigan’s service economy has grown, groups like the league have advocated for ending the tax break on services. “We can’t continue to do more with less in our state. And clearly we have needs with our roads, with our schools and with our talent development infrastructure,” Jacobs said. “And that’s not going to happen with a shrinking pie.” Since the 2007 service-tax meltdown, the Michigan Chamber of Commerce has thwarted other attempts to revive the idea, arguing that taxing business-to-business transactions would create “tax pyramiding” on the input costs of producing commercial goods. “The conundrum is which ones do you pick and which ones do you leave alone? And it’s sort of tainted by that (2007) fiasco,” said Ken Sikkema, a former GOP Senate majority leader and senior fellow at Public Sector Consultants in Lansing. Davis said the solution to avoiding double taxation is to just apply the sales tax to final sales, which would exempt most business-to-business transactions. Expanding the use taxes to services to pay for removing the sales

tax on gasoline would allow lawmakers to convert that roughly 18 cents per gallon of sales tax into a higher fuel tax — to 44.3 cents per gallon — that would not increase the price at the pump and produce nearly $1 billion in new annual revenue for roads. But there are a couple of caveats: This is complicated policy expanding the reach of one tax to remove it from one product (fuel) and then increasing the fuel tax rate in a way that makes it wallet-neutral to appease motorists. In 2007, lawmakers used the use tax to apply a sales tax on services because it doesn’t have as many strings attached as the actual sales tax. Since then, the Legislature has diverted use tax revenue to the general fund to reimburse municipalities for a personal property tax break they delivered to businesses five years ago. If decoupling the sales tax from gasoline were easy, it would have been done years ago. Just ask Speaker Chatfield’s three Republican predecessors. Plus, $1 billion in new revenue for roads is not $2 billion. And based on projections from professional engineers, pavement conditions will only worsen if there isn’t a $2 billion increase in annual spending on roads and bridges. Sikkema, who co-authored a plan for a 47-cent gas tax hike spread over nine years, said any other tax comes with “these other challenges that are problematic.” “The simplest, most straightforward, most logical, most user-orientated (tax) remains the gas tax,” Sikkema said.

“There’s absolutely no way we can replace this bridge with our (current) budget,” Watts said. Under Whitmer’s plan, Wayne County’s roads department would see its annual budget increase by $55.8 million, according to data from the Michigan Department of Transportation. The county-by-county Crain’s analysis shows cumulative local road funding for Wayne County and its municipalities would rise from $194 per vehicle to $266 under the governor’s plan. In suburban townships of metro Detroit, funding upgrades and widening of roads leading to office and industrial parks and residential subdivisions is complicated by Michigan’s municipal laws. Under Act 51, townships don’t receive state transportation funding. Townships can get voters to approve local millages to fund specific road projects. But otherwise, townships such as 38,000-person Orion Township have to apply for a limited pot of federal funding and make requests to the Road Commission of Oakland County. Barnett sits on a committee in Oakland County that decides how to divvy up $10 million in federal funding each year. There’s usually a list of $100 million in critical projects, Barnett said. “There’s many years (Orion Township doesn’t) have one road on the project list, and I’ve got roads like Giddings, Silverbell and Brown that are like war zones,” Barnett said. Giddings, Silverbell and Brown roads are the county roadways sur-

rounding the General Motors Orion Assembly Plant, where the Detroit automaker is making a $300 million investment to build a new electric compact vehicle. During GM CEO Mary Barra’s March 22 announcement at Orion Assembly about the new investment and 400 new jobs it would create, Whitmer said the plant manager told her some trucking companies have refused to pick up finished Chevrolet Sonic and Chevrolet Bolt EV cars from the plant. “I was stunned. ... GM’s making this great investment in new vehicles and some car haulers won’t even come pick them up because the road is so bad leading up to the plant,” Whitmer said in an interview last month. “We were pulling up (to the plant) and I was like, ‘We’ve got to fix this damn road.’ ” GM declined to identify the name of the car hauling companies that have forgone doing business because of road conditions between the plant and I-75. “General Motors is encouraged that local and state officials are discussing options to address deteriorating road conditions in southeast Michigan, specifically the roads directly supporting the GM Orion Assembly Plant,” GM spokesman Tom Wickham said. “Improving road conditions would increase safety for all motorists, as well as reduce costs due to vehicle repairs. It would also reduce the potential for damage to goods being transported to and from manufacturers, warehouses and stores.”

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

Voices

CRAIN’S FORUM | MAY 2019

MICHIGAN ROADS | MAINTENANCE

Lea ben

How to make Michigan roads last longer

n light of the ongoing road-funding debate in our state, I am often asked what we at the Road Commission for Oakland County would do differently if we had adequate funding to address the roads. The answer is a great deal.

more. If one or more of these steps is We have been underfunded for so missed or is postponed, the result is relong that we struggled to properly duced life expectancy for the road. maintain the roads for decades. Of In recent decades, there have been course, we simply haven’t been able to numerous cases where we had to defer reconstruct roads and bridges when many maintenance steps on many needed either or buy new equipment roads. For example, we were forced to when existing equipment becomes eliminate crack sealing altogether old. during the most-lean years. We have However, it is the routine maintebrought it back, but we cannot make up nance that we have had to forgo that DENNIS for those lost years. has had the greatest impact on the sys- KOLAR Why did we stop crack sealing? Betem. It is the cause money was so short that we had What many people don’t realize is to choose between crack sealing and that you don’t just build a road and routine then leave it alone for 30 years. Rather, maintenance safety-critical activities like pothole patching, snow plowing and traffic-sigfor a road to last 30 years, numerous that we nal repairs. maintenance activities must occur at have had to forgo that If we really want our roads to last as specific points in the life of the road. long as possible, we need to maximize These include crack sealing early in has had the the routine maintenance activities. In the road’s life, as cracks begin to ap- greatest fact, that’s what the concept of asset pear. Sealing these cracks prevents wa- impact on management, as it relates to roads, is all ter from getting into the pavement and the system. about. the base, which can quickly destroy a Road-related asset management, as encourroad. Later, needed maintenance includes joint re- aged by the Federal Highway Administration, espair, shoulder regraveling and grading, drainage pouses performing the correct maintenance acrepairs, pothole patching, simple resurfacing tivity at the right time to ensure the longevity of (overlaying with asphalt) and, finally, major re- each road. The analogy I like to use is that to keep your surfacing involving removal of pavement and house in good shape, there are always maintebase repair. If all these steps are taken, at the appropriate nance activities that need to be addressed. And, if times, a road should last its full life expectancy or you defer the maintenance on a house, pretty

Road construction is under way at I-75 and 14 Mile Road.

soon a small roof leak becomes damaged ceilings, damaged walls, damaged floors, etc. The same is true of roads. Of course, if we had more money, there are also many roads in our system that need to be fully reconstructed, and we would certainly pursue many more of those as well. Another challenge that many people don’t realize is that we are also still trying to get tens of thousands of residents out of the mud on the 755 miles of unpaved, gravel roads under our jurisdiction. This is more miles of gravel roads than some Michigan counties have total roads. While much of the road-funding debate has focused on the crumbling paved roads, these unpaved roads are also a significant challenge. Historically, as development came to formerly rural areas, the gravel roads were paved to accommodate the new traffic. That has not been the case for decades, though,

LARRY PEPLIN FOR CRAIN’S

and many formerly rural townships in Oakland County are now bustling suburban communities — except that some are still served by an unpaved road system. Just as we have been forced to defer maintenance on the paved roads, we have had to do the same on the gravel roads. No road-funding increase is likely to give us enough money to pave all the gravel roads that should be paved today, but we could increase the routine maintenance activities that help keep those roads passable. So, while it’s not always glamorous and rarely makes the headlines, it is truly the routine maintenance that additional road funding would allow us to resume that would make the greatest difference on our county roads. Dennis Kolar is managing director of the Road Commission for Oakland County.

MICHIGAN ROADS | INNOVATION

Innovation investments would extend life of roads

he best way to significantly improve Michigan’s crumbling roads and bridges is to incorporate new technology, new ways of thinking and new partnerships to pay for it. Researchers at the three universities in Michigan’s University Research Corridor — Michigan State University, the University of Michigan and Wayne State University — already have a long list of ideas, models and prototypes that could put Michigan on the cutting edge of national technical leadership in these areas.

Take bendable concrete. When used as an upper roadway layer, this material would reduce surface damage evident in our roads and prevent potholes by adding a layer of mechanical flexibility. The material also has been designed with capabilities that can enable concrete pavement to heal small cracks by themselves when exposed to rain water. This can make roads last longer, a key step as Michigan looks to build a transportation network that will last for the next 50 years with minimal maintenance. U-M Professor Victor Li has been the driving force behind this new take on an age-old product. Similarly, reusing end-of-life tire rubber in asphalt is a promising application of recycling technology. Since 2011, seven Lansing-area roadway sections have tested various crumb rubber-modi-

fied asphalt pavements in a joint effort between MSU and the Ingham County Road Department, with funding primarily from the Michigan Department of Environment, Great Lakes and Energy. Sensors that can be installed on and embedded within structures to gather data about the condition of the structures offer another powerful way to extend the life of roads, in this case by alerting officials to places repairs need to be made before major and costly problems develop. At Wayne State, work is being done on estimating the marginal cost of pavement damage by highway users on the basis of practical schedules for pavement maintenance, rehabilitation and reconstruction. Research into the impact that commercial vehicles have on highway infrastructure, best practices for maintaining and ensuring the safety of aging infrastructure, and the incorpora-

tion of infrastructure design and ture for pedestrimanagement. ans, bicyclists, Infrastructure and transit into owners in the state long-term asset are seeking innomanagement vations that will plans also is beensure a higher ing conducted. return on investFinding road ment in safety, STEVEN JEROME funding sources NEERAJ longevity and cost LAURENZ LYNCH outside of taxes BUCH efficiency; at the and public dolsame time, unilars by monetiz- The best way to significantly improve versity researchers ing road data and Michigan’s crumbling roads and bridges is and entrepreinformation the to incorporate new technology, new ways neurs are seeking private sector of thinking and new partnerships to pay real-world opporwould be willing for it. tunities to test to pay for is being their innovations. explored at UM. It’s a partnership The research being conducted by the URC uni- that’s sure to lead to better roads and infrastructure versities is being shared with the Michigan De- if Michigan is prepared to do what’s necessary. partment of Transportation and with county and municipal leaders so that the entire state can ben- Neeraj Buch is a professor of civil and efit from what’s being learned. Business, industry environmental engineering at Michigan State leaders and community leaders also are being University. Steven Lavrenz is assistant professor included in URC conversations on how best to of civil and environmental engineering at address the state’s transportation needs. Technol- Wayne State University. Jerome Lynch is the ogies are being spun out of universities to create Donald Malloure Department Chair of Civil businesses that could become a new state-based and Environmental Engineering at the industry in advanced technologies for infrastruc- University of Michigan.

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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 Y 6 , 2 0 1 9

CRAIN’S FORUM | MAY 2019 MICHIGAN ROADS | FUNDING

Gas tax hike would fuel state budget improvements

here was a lot to support in Gov. Gretchen Whitmer’s 2020 budget proposal. We serve on the Michigan League for Public Policy’s board, and the governor’s budget aligned with much of the League’s Owner’s Manual for Michigan policy agenda and stands to benefit Michigan residents, businesses and local economies.

solution that makes it easiGov. Whitmer’s budget er for parents to work, procalls for $2.5 billion to fix vide for their families and Michigan’s roads and support local economies. bridges, ensuring they are Investing in child care is insafer and properly repaired vesting in our future—the and maintained. Our right care helps improve state’s roads are disgracekids’ ability to learn, affectful and pose dangerous ing their academic and and costly risks to residents BOB professional success as and businesses alike with BILL EMERSON they grow. the damages they cause to RUSTEM The governor has made our vehicles. The longer we wait, the worse the prob- Michigan needs to get back that educational growth a to the tried and true priority, too, as her budget lem gets. invests in preschool, inThe governor also calls user-paid system for creases K-12 per-pupil and for significant investment funding our roads and at-risk funding, and helps in child care in her budget. bridges that we’ve had for make a college degree or She recommends an in- decades. certification more attaincrease in the income eligibility threshold for child care assistance — cur- able for everyone. We hear about workers’ struggles finding rerently one of the lowest in the nation — to expand child care services to an estimated 2,000 liable, good-paying jobs and employers’ diffifamilies. She also is pushing for funding to in- culties in filling them. To help both, the governor has created Michigan Reconnect to provide crease child care provider rates. Child care is a huge expense for Michigan debt-free tuition for up to two years for students families, a barrier to work, and a growing con- over the age of 25 with a high school diploma cern for businesses. Making high-quality child but not a two- or four-year degree. The govercare more affordable is a two-generation policy nor’s Michigan Opportunity Initiative would

offer two years of tuition-free community college or two years of tuition assistance at a public university. Another of the governor’s strategic proposals that will benefit workers and local businesses is doubling the Michigan Earned Income Tax Credit (EITC) from six percent of the federal EITC to 12 percent. The EITC is a bipartisan, pro-work policy that helps boost families out of poverty and has long-lasting benefits for children in families that receive it. In tax year 2017, about 748,500 Michigan families received the credit at an average of about $150. The EITC remains widely popular, with a recent EPIC-MRA poll finding that 61 percent of Michiganders were supportive of the state EITC and that 67 percent favored increasing it. The EITC has had strong bipartisan support, and the governor’s proposed expansion should as well. These are just a few of the many positives in Gov. Whitmer’s budget proposal that could change the landscape of our state and the outlook of our people. But all of these ideas could soon vanish into thin air. As the Legislature began moving their budget bills last week, something essential is missing: new revenue. And without revenue, our state cannot thrive. The crux of Gov. Whitmer’s budget is a proposed gas tax increase, and we can’t make any of the above improvements without it. Michigan needs to get back to the tried and true user-paid system for funding our roads and bridges that we’ve had for decades. A gas tax increase will ensure the people who are using the roads are the ones paying for them, as it was intended. It will also ensure an end to the General

Fund subsidies currently going to roads, freeing up state budget dollars for the EITC, schools, higher education, child care and other priorities. Michigan ranks last among states for highway capital spending. Michigan spends an average of $155 per person annually compared to an average of $300 nationally and $343 in the Great Lakes region. With current gas prices, the typical Michigan driver only pays about $12 a month in the state gas tax. Michigan drivers are already paying an exorbitant and unanticipated cost for our roads, shelling out an average of $562 per year on auto repairs related to poor roads. In addition to reducing car repair costs, the governor’s proposal includes the EITC increase to offset the gas tax’s impact on drivers with lower incomes. We come from different political parties and occasionally divergent ideologies. But whether we’re thinking as political advisors, policy wonks or grandparents, we care deeply about the direction of our state. We wholeheartedly agree that the gas tax is the right solution to improving Michigan’s roads and investing in the state’s other vital programs and services. We urge lawmakers to put party and politics aside and take this bold action to do what’s best for Michigan’s residents, budget and future. Bill Rustem is a former advisor to Republican Govs. Bill Milliken and Rick Snyder and the retired president and CEO of Public Sector Consultants. Bob Emerson is a former Michigan representative, senator and State Budget Director under Gov. Jennifer Granholm.

MICHIGAN ROADS | BRIDGES

Wayne County running out of Band-Aids for local roads

ayne County maintains 232 bridges across its 43 communities. We are responsible for the maintenance of approximately 1,440 county primary and local roadways and 462 miles of state trunk lines and freeways. It’s the oldest and largest system of roads and bridges in Michigan. It also happens to be the economic and innovation heart of the state.

perienced that last year when we had Sadly, as many key bridges or to temporarily close the Miller Road stretches of road deteriorate further, Bridge. And I could list more. we are simply running out of BandClosures translate to lost time, lost Aids. That includes Miller Road productivity and ultimately a lower Bridge in Dearborn. A temporary quality of life. It means tougher busistructural fix we put in place last year has a maximum life span of five years, ness attraction, less investment from and the clock is already ticking. In a prospective developers and more obfew short years the bridge will need stacles for our employees or customto be closed and reconstructed. ers. BEVERLY But what’s scariest is that most We are asked regularly about what WATTS to do when a bridge is structurally depeople still don’t understand how dramatically the rate of deterioration ficient and in need of repair. Initially, When is outpacing investment. People tell we talk about lane closures and dealing me every day how poor the roads are weight restrictions and detours that with aging in Southeast Michigan, and they are reroute traffic as effectively as possi- bridges, right. But they don’t realize just how ble. there quickly they will get worse, requiring These are the steps we can take to becomes a major reconstruction, or how much keep a bridge open safely and limit point when more expensive it becomes each year inconvenience. But the sobering re- closure is we fail to invest adequately. Ultimateality comes toward the end of the the only ly, I fear that one day, when we close a conversation. safe option. major bridge like Miller Road, viable What do you do next? detours will also be closed due to othWhen dealing with aging bridges, there becomes a point when closure is the only er construction. And as similar situations occur throughout the county and region, congestion safe option. And for the residents, visitors and businesses and gridlock will spread to crippling levels. The good news is that Wayne County will that rely on those bridges, the closure is like a cold slap in the face. Many residents in Western soon have a report as part of a larger 10-year asWayne County are experiencing that today as set management plan. The information from four bridges along Hines Drive (scheduled to that report will help us to invest the money we be reopened later this year) have been closed do have in a more efficient way, applying the since last year. Employees at Ford Motor Co. ex- right repairs at the right time with an emphasis

LARRY PEPLIN FOR CRAIN’S

Last year, Wayne County’s roads department added steel columns underneath the 88-year-old Miller Road bridge in Dearborn to stabilize the structure and give the county another five years before the span has to be replaced.

on preventative maintenance to maximize our funding. The report, however, will make clear the cost to truly fix roads and bridges Wayne County will be in the billions. That won’t include subdivision roads. It won’t reflect the challenges in our surrounding counties. There is no way around the reality that Michigan needs to make a massive investment in its

roads over the next decade. If not, our decades of disinvestment will result in decades of congestion that will do more than just make for a frustrating commute. They will make for a paralyzed economy and a lower quality of life. Beverly Watts is director of public services for Wayne County and served on former Gov. Rick Snyder's 21st Century Infrastructure Commission.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

DEALS & DETAILS

TUESDAY, MAY 7 CONTRACTS  Progressive Mechanical, Ferndale, a mechanical contractor and a certified veteran-owned business, has a $14 million contract to work on the building of a veterans home in Chesterfield Township, outfitting the facility with plumbing, mechanical piping and fire protection. Website: progressivemech.com

NEW SERVICES Kurtis Kitchen & Bath, Livonia, a remodeler, has opened a cabinet refacing division, Home Solutions by Kurtis, in a joint venture with Reborn Cabinets Inc., Anaheim, Calif., a cabinet refacing company. Websites: kurtiskitchen.com, reborncabinets. com  Xperiential Laboratories, Novi, a laboratory, is now certified by the Michigan Department of Environmental Quality to test the chemistry and microbiology of water samples. Website: xperiential.com 

STARTUPS  The Detroit Writing Room, a space for writers, entrepreneurs and creatives that will also offer coaching and editing services, plans to open in June on the second floor at 1514 Washington Blvd., Detroit. Website: detroitwritingroom.com

SPOTLIGHT

CALENDAR

5th Annual Small Business Workshop. 8 a.m.-1 p.m. The Lee Group. The Fifth Annual Small Business Workshop’s theme — “Navigating The Headwinds of Change” — addresses whether a business is ready for a competitive market, in light of potential economic changes. The workshop will feature speakers, panelists, community and corporate partners with information and resources focused on assisting businesses while navigating a potential changing economic landscape later this year. TechTown Detroit. $75; early bird price $65 until April 19. Contact: Lisa Washington, email: meetings@meeting-coordinators.com; phone: (248) 643-6590.

UPCOMING EVENTS 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, co-founder, Scripps Interactive Networks and HGTV, tells how organizations can revitalize and shift their leadership practices to build effective, supportive and winning teams. The Masonic. $45 members, $55 guests of members. Website: econclub.org 2019 Entrepreneurs Forum: Connections. 10 a.m. to 3 p.m. May 17. National Entrepreneurs Association. Keynote speaker will be Carla Walker

Miller, CEO of Walker Miller Energy Services. The kick-off speaker will be Tisha Hammond, small business cheerleader. Two panel discussions on business resources and funding options will include angel investing, crowd funding, micro loans and pitch competitions. Silver Garden Events Center, Southfield. $50. Email: supportstaff@nationalentrepreneurs.org; website: nationalentrepreneurs.org Jump-Starting America – How Breakthrough Science Can Revive Economic Growth and the American Dream. 11:30 a.m.-1:30 p.m. May 21. Detroit Economic Club. Co-authors and MIT professors, Jonathan Gruber and Simon Johnson, share the story of how America once created the most successful economy the world has ever seen and how we can do it again in their new book “Jump-Starting America.” The Masonic. $45 members, $55 guests of members. Website: econclub.org Inside the CEO Mind with Dave Dubensky. 3:30-5:30 p.m. June 11. Detroit Regional Chamber. Dave Dubensky, chairman and CEO of Ford Motor Land Development Corp., the real estate arm of Ford Motor Company, shares the work he is doing in the Detroit region and leadership lessons for aspiring local leaders. The Factory at Corktown. $30 chamber members, $50 nonmembers. Contact: Andrea Rayburn, phone: (313) 596-0340.

Academy of Family Physicians hires CEO

Karlene Ketola has been hired as CEO of the Michigan Academy of Family Physicians, an Okemos-based professional medical organization with 4,200 members. Ketola, who was executive director of the Michigan Oral Health Coalition the past 10 Ketola years, will start her job Monday. “After an exhaustive search with many highly qualified candidates, the MAFP Board and staff are looking forward to an exciting future with Ms. Ketola, an accomplished executive and facilitative leader,” MAFP President Mary Marshall, M.D., R.N., who lead the CEO search, said in a statement.

Alliance Catholic Credit Union hires CFO

Southfield-based Alliance Catholic Credit Union has hired a chief financial officer who comes from another credit union in Saginaw. Michael Bahorski, 48, joined Alliance Catholic April 22, replacing 12year CFO Daniel Davidson, according to a news release. Davidson is moving to the position of executive vice president and chief operating officer.

Bahorski was previously CFO at Team One Credit Union. He also served as vice president, controller at Bank of Birmingham. At Alliance Catholic, he is overseeing finance, accountBahorski ing, internal audit, compliance and risk management, the release said.

Lawyers to fill court vacancies in Macomb, Oakland counties

Gov. Gretchen Whitmer has appointed two lawyers to fill partial judicial terms in Oakland and Macomb counties. Jacob Femminineo Jr., managing partner at Mount Clemens-based Femminineo Attorneys PLLC, replaces Judge Linda Davis in 41B District Court in Macomb County, according to a news release. Femminineo, 49, has been practicing law in Michigan since 1995, specializing in family law, according to his firm’s website. Kameshia Gant will replace Judge Karen McDonald in the 6th Circuit Court in Oakland County. McDonald left her post April 12 to seek election as Oakland County prosecutor in 2020, The Oakland Press reported. Gant, 44, is the owner of Southfield-based Gant Law PLLC.

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Neil Weissman, Managing Director – Investments, was named to Forbes’ 2019 Best-In-State Wealth Advisor list. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC. Neil has been in the financial services industry since 2004. He holds degrees in Materials Science & Engineering from the University of Michigan and Stanford University. The ranking algorithm is based on industry experience, interviews, compliance records, assets under management, revenue and other criteria by SHOOK Research, LLC, which does not receive compensation from the advisors or their firms in exchange for placement on a ranking. Investment performance is not a criterion.

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

CRAIN’S DETROIT BUSINESS

May 6, 2019

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

Sinclair to buy Fox Sports Detroit, sibling networks from Disney Staff and wire services

Sinclair Broadcast Group Inc. agreed to buy Fox Sports Detroit and other Fox regional sports networks from Walt Disney Co., turning the local-TV company into a cable-sports powerhouse, the Wall Street Journal reported. The deal is valued at more than $10 billion, the Journal said, citing unidentified people familiar with the matter. An agreement could be announced as early as Friday, the newspaper said. Disney and Sinclair didn’t immediately respond to requests for comment. The Fox Business Network reported last week that Disney had a “ handshake” deal to sell the networks to Sinclair. Southfield-based Fox Sports Detroit, which locally airs Detroit Tigers, Pistons and Red Wings games, along with 21 sister stations, had been for sale as part of The Walt Disney Co.'s $71.3 billion acquisition of 21st Century Fox's entertainment assets. The regional sports network has about 3.6 million subscribers in Michigan. Fewer than 2,000 Michigan households don't have access to the network, the network has said. Detroit Tigers games are still the top-rated prime-time local cable-satellite show, though the team's ratings have dropped in recent years. Ratings fell 41 percent from 2017 to a 2.64 average household rating in 2018. They've tumbled 71.3 percent since a 2013 peak of 9.59. Major League Baseball has national broadcast rights deals with TV networks, but local broadcast rights belong to the individual teams. In Detroit, FSD pays the Tigers $50 million annually, while spending $25 million each yearly to air Pistons and Wings games. None of the teams nor the network would previously confirm when the broadcast rights contracts end, but Crain's has been told by industry sources that it's 2021. The deals were announced in 2008, but it wasn't said when they would commence. It's unclear what may happen with FSD's basketball and hockey broad-

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CLASSIFIEDS To place your listing, contact Suzanne Janik at 313-446-0485 or email sjanik@crain.com www.crainsdetroit.com/classifieds

cast rights deals, if anything, when ownership changes hands.

Key condition For Disney, the transaction would fulfill a key condition for its already-completed acquisition of 21st Century Fox Inc.’s entertainment assets. Bidders for the sports networks included Among losing bidders was a group that included Detroit Pistons owner Tom Gores through his California-based Platinum Equity LLC private equity firm. Other bidders included John Malone’s Liberty Media Corp., which teamed up with MLB, and Ice Cube’s Big3 U.S. basketball league. The entertainer lined up Will Smith, Serena Williams and Snoop Dogg as content partners for his unsuccessful bid. Disney agreed to sell the properties to get clearance for its $71 billion Fox takeover, a transaction that closed earlier this year. Regulators were concerned that the company would have too much control over sports television if it owned both ESPN and the regional broadcasters. Disney had to sell the networks within 90 days of the Fox deal’s completion in mid-March. Sinclair has been one of the broadcast industry’s most acquisitive companies for years, but this would mark a new direction. It previously focused more on collecting local-TV stations, becoming the dominant company in that area. "Sinclair does not have much experience working in major markets, on the business or production sides," Matt Friedman, a former news producer at WDIV and co-founder of public relations firm Tanner Friedman in Farmington Hills, said in an email. "They will have to get up to speed quickly and not make the mistakes made by radio owners, who grew quickly and acquired stations in big markets, like Detroit, when they were used to much smaller cities. Some of those operators ended up in bankruptcy. It’s a different game here, so to speak — one they will have to learn."

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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 Y 6 , 2 0 1 9

MOT

FROM PAGE 3

It opened its new home to the public in 1996, becoming one of only a handful of American opera companies to own its building. The opening was quite a coup, with the once-flooded lobby of the building restored to its former gleaming glory. During ensuing years of financial struggles, when MOT took on debt to keep the opera alive, it deferred maintenance on the historic building. With a grant of undisclosed amount from Quicken Loans, MOT contracted with Albert Kahn Associates to develop a master plan that will address the needs of the venerable opera house. An undisclosed investment is planned to upgrade to the heating, ventilation and air-conditioning systems, the elevators, restrooms and seats are planned, along with improved access to MOT’s SkyDeck and overhead cover for the rooftop spot which serves as a popular place for weddings, business events and catching Detroit Tigers’ games. MOT’s 1922 building is in constant need of improvement, Williams said. “We’re trying to do things that make the building safer and ... work better for our patrons,” he said. A $50 million campaign launched by MOT in 2015 will help to cover some of those costs. To date, it’s raised $30.2 million, president and CEO Wayne Brown said. But the projects included in its master plan are expensive, Williams said. “To the extent we can cover or offset those costs through this devel-

CENTENNIAL FROM PAGE 1

Village Green denies that, pointing to recent customer service awards. Whether Holtzman and City Club Apartments is ultimately successful in the federal case, which was filed April 19, might not be as much a matter of what Holtzman perceives as “daring” on behalf of Village Green, said Eric Zacks, associate professor of law at Wayne State University Law School. If Village Green was created by merging earlier Holtzman- and Silverman-owned entities, then today’s Village Green “could very well be called the successor to the original — in other words, it would make sense to say that the current company (as the successor by merger) actually had started when the earlier one did in 1919.” A spokesman for Holtzman’s City Club Apartments said that when Village Green was started in 1968, it was not established by merging any business entities. Batayeh said the origination of Village Green is complex. “Lots of companies can evolve in different ways,” she said. “In this case, it’s Holtzman and Silverman. There were lots of different tentacles in those 100 years, and one of those is Village Green and another is Silverman Construction & Realty. You could follow this and everyone would have a right to the 100-year claim. It’s an interesting dynamic to talk about a company rooted in such history and legacy. It’s really about what is your vision for the next 100 years, what is your plan for growing and sustaining the history and legacy?” Zacks said incorporation details will need to be parsed in the case. “It becomes a bit more muddled

COSTAR

Michigan Opera Theatre said it is open to modification of the parking garage, which was built in 2006 and has space for 700 cars.

opment, that’s certainly part of our objective.” The other goal is to create a sustainable source of revenue, he said.

Development interest MOT initially was contacted by a single reputable developer with very specific plans, Williams said. “It was very intriguing, but as we thought about it, we decided doing a rifle shot approach didn’t make any sense,” Williams said, noting MOT saw additional offers of interest after that. So MOT decided to invite a few selected developers to submit proposals that are due by June 10. The nonprofit hopes to pick a proposal by September. “The sites are obviously connectwhen partners create new entities to expand in different directions,” Zacks said. “If the 1960s Village Green entity was in fact brand new at the time and was not, to use the same example, a product of a merger with an earlier Holtzman entity, then from a corporate law perspective the earlier (Holtzman) and later (Village Green) entities would be distinct, and it would be inaccurate to state that Village Green's activities included those prior to the date of its organization or that its operations actually commenced in 1919.” Village Green declined to make its legal counsel available for an interview. City Club Apartments’ legal counsel, the Rochester-based Miller Law Firm PC, would not comment on the case. But beyond that, Holtzman and City Club, which was formed in 2016 after he sold off his Village Green interests in fee-based companies, needs to demonstrate that it was harmed by Village Green claiming it has been in business for 100 years, Zacks said. “In this situation, for example, the plaintiffs may be required to demonstrate that the public have or are likely to confuse and associate Village Green with the Holtzman family and its reputation because Village Green describes, apparently without using the names of any individuals, the earlier activities of some of the founders of Village Green and inaccurately attributes them to Village Green, and that City Club and Mr. Holtzman suffered or will suffer damages as a result. That is obviously a much higher burden than merely showing that the statements are inaccurate,” Zacks said. The case has been assigned to Judge Terrence Berg of the U.S. District Court for the Eastern District of Michigan.

ed. At least for our current use, they are quite symbiotic,” Williams said, noting there’s been interest in doing something that would not only fit with the Detroit Opera House and its purposes but looking at the whole parking situation in that part of the downtown area. It’s likely to include a ground lease or leases, Williams said. “We’re not giving up ownership of the property.” A Birmingham group operating as Franklin Whitehall Advisors is serving as real estate adviser on the project and will help vet the readiness of developers submitting proposals. According to Williams, the group is a partnership between Franklin Consulting Co. LLC in Birmingham and Whitehall Real Estate Interests in Novi. Albert Kahn Associates assisted

Growing portfolio After Holtzman’s June 2016 buyout, Batayeh, who had been president and COO, began running the company. She was named CEO in March 2017 and in November that year told Crain's that her focus was on growing the company, which she relocated to Southfield from its longtime Farmington Hills home. Today, the portfolio is about 40,000 units, with about 10 percent of that under ownership, she said last month. In November 2017, she said the goal in the next several years was to grow the Village Green portfolio to between 50,000 and 60,000 units, which she said 18 months ago is the company’s “sweet spot.” “We have become more profitable, our revenue has grown and we continue to sustain around 40,000 units, with portfolio growth in the Southwest and Northeast,” she said last month. She declined to disclose profit and revenue figures but did say that profit margins have increased 10 percent over the last 18 months. It has been ranked the last two years as the 36th-largest multifamily housing manager in the country by the National Multifamily Housing Council, an industry trade organization for apartment owners and operators. This year's rankings say Village Green has 40,000 units; last year’s said it had 35,000. “I’m very encouraged and excited about our future,” Batayeh said. “The facts will speak for themselves and reality is the reality.”

From building to buyout City Club came to be following the dissolution of Holtzman’s relationship with the company his father started. Sources at the time said

with developing the request for proposals. “We are looking for something that’s going to demonstrate longterm interest,” whether that’s a residential development, an exclusive hotel or something else, President and CEO Wayne Brown said. The development will need to mesh with MOT’s mission of serving as a home for opera, dance and musical theater, and during non-programmatic times, graduations, weddings and other events, he said. “We’re looking for a partner or series of partners ... that respect, celebrate and enable us to convey a really remarkable opportunity not only based on location but also based on the nature of the opera house as a permanent art center and the energy … it brings to downtown Detroit,” Brown said. The ultimate goal is the right combination that will complement the Detroit Opera House campus and also provide long-term support for the opera company, he said. In its consolidated statements of activities and changes in net assets included in its 2018 annual report, MOT reported a $3.4 million decrease in net assets that it said was due to depreciation and changes in generally accepted accounting principles (GAAP) valuation of future pledges. Operating results were not included in the annual report, but MOT said it ended 2018 with a small operating surplus. Revenue totaled $14.6 million and expenses just over $14.5 million, producing an overage of $97,366. MOT’s surface parking lot is primarily used as parking for staff, vendors and visitors to the Detroit Opera

House, MOT said. But it also provides an unspecified amount of revenue from valet parking during performances and leases of the lot for other events. The Detroit Opera House Parking Center, which was built in 2006 and has space for 700 cars, contributed nearly $1.6 million in revenue in fiscal 2018, according to MOT’s consolidated statement, up from $1.47 million the year before, producing $791,000 in net income after costs. “There’s virtually no likelihood we’d give that up,” Williams said. Kraemer Design Group PLC and Lambert Edwards & Associates are the principal long-term tenants of the parking center, Brown said, noting the proposals will have no direct effect on tenants and parking spaces in the tower. He also noted that MOT owns the air rights above the parking center. MOT envisions the coming development as a continuation of what DiChiera began nearly 50 years ago, Brown said. “He had the foresight to create a space and place in the downtown Detroit corridor that would be a magnet for the energy created by the thousands who come downtown,” Brown said. The new development is building on that dream, that aspiration, he said. “It’s not (often) when major cities have the opportunity to show how arts organizations can play a vital role in what defines a city,” Brown said. As for DiChiera, “I think he’s smiling,” Williams said.

Holtzman’s buyout deal from Village Green was worth $40 million, although it’s never been publicly disclosed. Village Green’s seeds were planted in 1919 when Holtzman’s grandfather, Joseph, started one of the first licensed single-family homebuilding companies in Michigan. A Russian immigrant who moved from St. Louis to Detroit in 1914 for a job on a Ford Motor Co. assembly line earning $5 per day, Joseph Holtzman in 1934 partnered with Nathan Silverman, his brother-in-law, and built working-class Detroit homes as Holtzman & Silverman, branching out into the suburbs after World War II. Village Green apartment developments started in 1966 under Jonathan Holtzman’s father, Irwin “Toby” Holtzman, in 1968, with Village Green officially formed two years later, according to state records. The second generation of the families, Toby Holtzman and Gilbert Silverman, continued in the business together and Jonathan and Gilbert “Buzz” Silverman continued the company largely as it was until 1993. That year, Buzz Silverman branched off to create Silverman Cos., selling its home-building business to national home builder Toll Bros. Inc. in 1999. In 2005, Crain's included the Holtzman-Silverman breakup in its 20 top feuds in Detroit area business. The 2016 buyout deal marked the first time Holtzman, who is seen as a demanding business leader with a first-rate temper, was not involved in the company’s day-to-day management and operations since he started buying out former owners’ interests starting in the mid-1980s. Compatriot first took a stake in Village Green at the end of 2011 with a $15 million buyout of the interests of

Chicago real estate investors Ronald Benach and Wayne Moretti, according to court documents.

Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

A new start Holtzman said since the split from Village Green, he has started and conceived his largest development portfolio of his four-decade career, totaling about $250 million under construction in Detroit, Minneapolis and Kansas City, plus another at least $750 million in the development pipeline in Detroit and other cities like Chicago, Cleveland, Cincinnati and elsewhere. The company is building the City Club Apartments CBD Detroit on the site of the former Statler Hotel across from Grand Circus Park. Holtzman said leasing on the 280plus units that started construction in September 2017 should begin leasing units “in the next few weeks.” The project is estimated at about $75 million, and is expected to include what Holtzman described as a suburban pet store opening its first downtown location; a dessert shop; and a restaurant. He also said a major project is planned for the Elmwood Club Plaza at Jefferson Avenue and Chene Street but declined to disclose details pending a formal announcement in the next 60 days, as well as one in the city’s Midtown neighborhood that he also declined to discuss in detail. As for the future in court? That’s anyone’s guess, but don’t expect a short process, Holtzman predicted. “My guess is that these lawsuits will go through and whoever loses, there will be appeals. If I lose, I’ll appeal. If they lose, they’ll appeal.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 6 , 2 0 1 9

FROM PAGE 3

David Stanchak, president and chief real estate and development officer for RH, is on tap to attend Monday’s city commission meeting and discuss the plans with the city’s elected leaders and attendees, according to the project’s principals.

crainsdetroit.com

Shift to stand-alone stores RH currently has a store in the Somerset Collection in Troy that would close once its lease expires at the end of 2022, Boji said. The mall is owned and managed by Southfield-based The Forbes Co. “We are proud to have brought Restoration Hardware to Michigan and have enjoyed a long relationship with Gary Friedman and his company,” Nate Forbes, managing partner of Forbes Co., said in a statement. “It is a testament to the strength of this market that they have decided to remain in Southeast Michigan to open their new free-standing store model that they are introducing nationwide.” Stanchak said in an interview with Crain’s that the closure is in line with a companywide real estate transformation strategy that is shifting away from its older mall and street-level stores across the country. “What we are doing is transforming what was a very sort of nostalgic mall retailer, a seller of nostalgic items, to a full luxury furniture brand,” he said. “That has us moving from smaller legacy stores into large-scale galleries, and that’s how we look at every location in the U.S. This is something we are doing across the country.” The new store, which would take the place of the 23-year-old, 10,000-squarefoot Somerset location, is expected to have features like a barista bar and indoor and outdoor dining in a fifth-floor restaurant surrounded by a garden terrace, according to a press release. In addition, an atrium and conservatory are anticipated. “These stores, it is all about design,” Saroki said in an interview. “They know that they like to, when they can, have some regional influences in their stores, as well, so we are looking at some regional influences of Detroit, Birmingham and Cranbook and at the same time we are being true to their brand, who they are ... Birmingham is where they want to be as a region, as the Detroit market. They know Detroit is an important market to them, and Detroit has a lot of design history.” The company had been in discussions to open a store in downtown Detroit a few years ago but those negotiations ultimately dissolved, Crain’s reported in December 2015. Stanchak said the Birmingham store would be similar to ones in Denver’s Cherry Creek Shopping Center (70,000 square feet) and Seattle’s University Village (60,000 square feet). “But we will have a rooftop café in Birmingham like we do in West Palm Beach, and neither of those in Denver or Seattle have the food and beverage component since they opened before 2015,” Stanchak said. The West Palm Beach store is 80,000 square feet.

Costs paid from parking During Monday’s meeting, commissioners are to consider placing a bond issue on the Aug. 6 ballot that would fund part of the project and be paid off through a dedicated stream of $55 million to $65 million from the city’s parking system.

RH/SAROKI ARCHITECTURE

A rendering of the planned five-story RH store expected to be built on North Old Woodward Avenue in downtown Birmingham.

City Manager Joseph Valentine said the parking structure would be funded with $7 million from the parking system’s reserve funds; $3 million from a parking structure special assessment district; and the balance from the bond issue. “The balance of that cost of the structure would be funded through a bond like we have funded the other structures and the user fees would pay for the debt service on the bond,” Valentine said, noting that the city has a bonding capacity of about $300 million and is at about 8 percent of that capacity. “Even though we are asking the residents to approve the bond, there is no financial commitment from the residents for that obligation. All the costs will be paid out of the parking system,” he said. Public elements of the project include a plaza and a bridge to Booth Park across the Rouge River, plus a splash pad. Bates Street would be extended by about 530 feet to the northeast from its terminus at Willits Street, eventually linking up with Old Woodward. Clinton Baller, a Birmingham resident, has been vocal in his opposition to the project and expects to campaign against a bond issue proposal if it goes for a vote in August. “Very little creative thought has been brought to bear on this project. From land use planning to architecture to financing, the city and its developers are making it up as they go along,” he said in an email. “The city is fixated on parking, and the developers are opportunistic. In a world of winners and losers, the developers will win and city residents will get nothing, having given up four acres of precious public property.” Last month, the commission approved a nonbinding development agreement with Woodward Bates Partners, which was selected to develop the project ahead of another Birmingham mainstay, Ara Darakjian, who has not gone quietly after losing out on the bid.

Process protested Another Birmingham-based developer, TIR Equities LLC run by Darakjian of Pierce Street’s Darakjian Jewelers Inc., has filed a federal lawsuit against the city for what it describes as a selection process rife with favoritism in what it called “an unjust, unfair, and unconstitutional ‘competitive’ bidder selection process.” “The process conducted by Defendants did not provide for any actual competition, as the evidence estab-

lishes that the outcome was predetermined,” the complaint says. It argues that Saroki Architecture and the developer’s parking consultant were involved in early planning stages with the city. “In fact, the ‘sample’ conceptual design that was featured prominently in the City’s Request for Qualifications and Request for Proposal for the Project — which design Defendants later relied upon in ‘evaluating’ the proposals for the project — was created by the architectural design firm of an equity partner in the selected bidder itself ... along with Woodward Bates’ own parking consultants,” the complaint says. “In other words, two important members of the Woodward Bates team (an equity partner and its parking consultant) had been privately working closely with (the city) on the details of the Project long before the City opened the Project up to public bidding.” The city denies wrongdoing. TIR Equities project would have brought with it a 15-story tower — a controversial proposal in a city that generally limits downtown development to no more than five stories, with just a few exceptions — along with underground parking totaling 1,781 spaces; 60,000 square feet of retail; 371 apartments; 22,000 square feet of commercial space; a park, plaza and other features, according to the lawsuit. The tower would be “stepped” downward to reach a four-story height at the street level “to reflect the design and tradition of existing buildings,” the lawsuit says. Troy-based law firm Rossman Saxe PC is representing Karakjian and TIR Equities in the case. Beier Howelett PC in Troy is representing the city. Brian Saxe, partner with Rossman Saxe, said the parties are awaiting a judge’s decision on motions to dismiss the case or proceed with oral arguments. In May 2016, the city issued requests for qualifications to Morningside USA out of Chicago; Woodward Bates Partners; Southfield-based Redico LLC and Birmingham-based architecture firm McIntosh Poris Associates; and TIR Equities. In September 2017, a request for proposals was issued, with proposals from Woodward Bates, Redico and TIR Equities received in January 2018. By May 2018, the city’s Ad Hoc Parking Development Committee recommended Woodward Bates Partners to the city commission, which directed city staff to negotiate

with the developer on the property. By June, TIR Equities was eliminated from consideration.

Chain’s revenue up RH reported $2.5 billion in revenue in its 2018 fiscal year that ended Jan. 31, up from $2.44 billion in the previous reporting period of Feb. 1, 2017 to Jan. 31, 2018, according to the company’s most recent annual financial report submitted to the U.S. Securities and Exchange Commission. The company, which was founded 40 years ago, has several different store models, which include Design Galleries (20 stores, averaging 33,000 leased square feet), Legacy Galleries (43 stores, averaging 8,000 leased square feet), Modern Galleries (two stores, averaging 11,000 leased square feet), Baby & Child Galleries (six stores, averaging 4,000 leased square feet) and Waterworks showrooms (15 stores, averaging 4,000 square feet) and outlet stores (39 stores, averaging 31,000 square feet), according to the report. RH says it occupies about 1.47 million square feet for its stores overall, with initial lease terms ranging from 10-15 years initially and some with 25-year renewal options. It formally changed its name to RH effective Jan. 1, 2017.

‘Destination’ store Robert Gibbs, an urban planner who is principal of Birmingham-based Gibbs Planning Group, said the RH store would be a destination for Southeast Michigan shoppers. He previously consulted TIR Equities with a market study on its project. “A large furnishing store will help reinforce Birmingham as a unique shopping destination in the region, especially as a home furnishings center,” he said. “It has West Elm, Ethan Allen and a number of really nice specialty boutique stores, and those will all reinforce each other.” Gibbs said a general rule is that a destination retailer of 40,000 square feet or more will generally increase retail sales by 5 to 8 percent in the immediately surrounding area. “That will draw people from the entire region,” he said. “That Grosse Pointe customer and Northville-Plymouth customer who maybe just came to Birmingham once or twice a year will instead come three or four times.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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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 Y 6 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Wayne State OKs $25 million basketball arena

Mahindra eyes 2nd plant in Michigan amid USPS bid

APRIL 26-MAY2 | For more, visit crainsdetroit.com

ayne State University plans a $25 million basketball facility that would bring a Detroit Pistons NBA G League team to the city. The university’s board of governors unanimously approved a proposal last Wednesday to build an arena and lease it to the team. WSU’s men’s and women’s teams would also play there. It’s expected to open for the 202122 basketball season. The Pistons, who play at Little Caesars Arena in downtown Detroit, will use the Wayne State facility for an affiliated NBA Gatorade League team that would play 20 or more games there a season under a 30-year lease with an option to extend. Financial terms have not been disclosed. The team also plans to help create sports-related academic programming under the partnership. A specific timeline for the developmental G League to arrive in Detroit has not been determined, the Pistons said. It’s undecided whether this would be a new expansion team or if the Pistons-affiliated Grand Rapids Drive would move, Pistons Vice Chairman Arn Tellem said Wednesday. The existing G League team that plays in Walker, outside Grand Rapids, recently extended its contract with the Pistons through the 2020-21 season. The new Wayne State University basketball arena is expected to be built near the corner of Warren and Trumbull. A contractor has not been selected yet. The architect is Detroit-based Rossetti Associates Inc. Wayne State would construct the building on property it owns at Trumbull and Warren avenues, west of its existing sports facility. At 70,000 square feet, it would seat 3,000 and include office space and locker rooms for men’s and women’s teams, visiting team locker rooms, concessions and ancillary spaces. The planned arena is to be paid for by $20 million in bonds and $5 million in philanthropic dollars and naming rights, according to board of governors officials who spoke during a public session Wednesday afternoon. The school expects yearly revenue of $2.8 million and operating costs of $1.4 million. The arena would add to, not replace, the Matthaei Center athletic facility where Wayne State’s basketball and volleyball teams play. The Pistons moved from The Palace of Auburn Hills to downtown Detroit, starting their first season at the new Little Caesars Arena in fall 2017. Expanding its presence in the city, the NBA team is also building a new headquarters, practice facility and regional sports medicine facility with Henry Ford Health System in Detroit’s New Center area. It is expected to open in September. “As the Pistons plant their flag here, we’ve been blessed with great partnerships,” Tellem said at the conference. “First with Olympia, then with Henry Ford, and now with Wayne State.”

BUSINESS NEWS J Fiat Chrysler Automobiles is seeking up to $160 million in taxpayer in-

ROSETTI

Wayne State University will lease its 70,000-square-foot arena to the Pistons for an NBA G League team. It will seat 3,000 and include office space and locker rooms for WSU men’s and women’s teams, visiting team locker rooms and concessions.

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

$25M

Cost to build a new Wayne State University basketball arena that would be leased by the Pistons

$160M

Tax incentives Fiat Chrysler Automobiles is seeking to partially subsidize a planned $2.5 billion investment in Detroit

Number of stories at the renovated Metropolitan Building, where rooftop bar Monarch Club is set to open

centives to partially subsidize its planned $2.5 billion investment into two Detroit assembly plants. The package of taxpayer incentives, grants and breaks would come from an Industrial Property Tax Abatement, the Good Jobs for Michigan program, a State Essential Services Assessment Exemption and a Michigan Business Development Program grant from the Michigan Strategic Fund. J The city of Detroit has closed on its purchase of 90 percent of the former Michigan State Fairgrounds property after years of inactivity on the site where a massive private redevelopment was previously planned. The Michigan Land Bank Fast Track Authority last week closed its deal to sell the city 142 acres near Woodward Avenue and Eight Mile Road. J Toyota-affiliated auto supplier Denso Corp. has invested in an e-bike startup to push forward its mobility technologies. The Japanese company’s New Mobility Group and another company, Ininvest, led a $20 million Series A funding round in Bond Mobility Inc., according to a news release. J A new industrial park in Detroit focused on the growing and selling of medical marijuana is slated to begin construction this month. Green Cure Wellness Inc. and Southeast Provisioning LLC plan to invest up to $6 million to open five cultivation businesses, two processing businesses and a medical marijuana dispensary. J Organizers of the annual, century-old Detroit River Hydrofest are bringing back Metro Detroit Chevy Dealers Local Marketing Association

as title sponsor and shortening the schedule of the Aug. 24-25 event. Ticket prices are also being lowered. J The Fairlane Club in Dearborn abruptly closed its athletic facility last Wednesday. The longtime club announced the move in a letter to members Wednesday afternoon. The banquet hall part of the club will remain open. J Bingham Farms-based MHT Housing Inc. and the Detroit Catholic Pastoral Alliance broke ground on the $9.5 million project in February on the Gratiot Central Commons. The 52,000-square-foot, four-story mixeduse building on the city’s east side was completed about two months ahead of schedule in early April. J In an effort to boost the global growth of its packaging business, Bloomfield Hills-based TriMas Corp. has acquired Taplast SpA, an Italian maker of dispensers, closures and containers. J Southfield-based Glassman Automotive Group plans to expand its used car business or potentially take on another car franchise after acquiring the nearby property of a former Toys “R” Us store and doubling the dealership’s footprint at 28000 Telegraph Road. J National women’s clothing boutique Fab’rik will take over 1,400 square feet in downtown Birmingham at 123 W. Maple Road in a storefront sandwiched between craft store Paper Source and hair salon Drybar. It is expected to open in the summer or early fall. J The International Union of Operating Engineers 324 members approved a new, five-year road construction contract with the newly formed Michigan Union Contractors Group after a nearly monthlong labor lockout last year stalled projects across Michigan.

HEALTH CARE NEWS J A group of nurses at Beaumont Hospital in Royal Oak, the 1,100-bed flagship hospital of eight-hospital Beaumont Health, has launched a drive to unionize with the Michigan Nurses Association. J Three Michigan health systems are banding together to construct a $48 million medical laundry service center in the Northwest Goldberg neighborhood in Detroit. Henry Ford Health System; Michigan Medicine, the University of Michigan’s health care arm; and St. Joseph Mercy Health System, owned by Livonia-based Trinity Health, have stitched together a joint venture to build the facility.

Mahindra Automotive North America is considering sites in Detroit, Oakland County and Genesee County to build a new assembly plant should the Indian automaker land a $6 billion contract to build next-generation delivery vehicles for the U.S. Postal Service, the company's CEO said. USPS has indicated it will decide this summer which company to award a contract to build 180,000 delivery vehicles over six years to replace its aging fleet of the Grumman LLV that have been synonymous with mail delivery since the 1980s. Rick Haas, president and CEO of Mahindra Automotive North America, said the Postal Service contract could dictate the direction the company takes just over a year after Mahindra began assembly of its first U.S.-built Roxor off-road vehicle at its new plant in Auburn Hills. “If we get a piece of that or all of that contract, that opens a bunch of doors, shuts a few other ones,” Haas said May 1 at a Troy Chamber of Commerce event. “If we don’t get it,

it shuts some doors, opens some other ones.” Mahindra is one of six finalists for the contract, which includes a 20-year parts supply deal. The U.S. Postal Service began the request for proposals process to replace its LLVs in 2015. Haas told an audience of business executives and professionals that the automaker has six different products in development at the Mahindra North American Technical Center in Troy that could be paired with production of a postal service vehicle at a second manufacturing facility. “The question is which ones do you start to push,” Haas said. “It’s going to depend on what happens.” Haas declined to say which sites within Michigan the company is leaning toward. But he indicated they were all brownfield sites that need redevelopment. Economic development officials from North Carolina, South Carolina, Arizona and Wisconsin have all approached Mahindra about building a plant in their states, Haas said.

NADIR ALI FOR THE MONARCH CLUB

The Monarch Club opens May 11 atop the renovated Metropolitan Building, a historic structure that was vacant for 40 years. It offers city views on its open terraces.

New high-rise rooftop bar opening May 11 in Detroit D

owntown Detroit is getting a new bar atop a high-rise, a common feature in many cities that Motown has noticeably lacked. The Monarch Club opens to the public May 11 in the renovated, 14-story Metropolitan Building. Detroit has a few options where members of the public can grab a rooftop drink — including Briggs Detroit on Jefferson Avenue — but the incoming castle- and social club-inspired Monarch Club is believed to be the tallest. The 150-seat venue has three outdoor terraces with varied cityscape vantage points, as well as an indoor bar and several lounge rooms peppered with couches, armchairs and tables. It will also offer space for private events. Its opening comes after an approximately $34 million redevelopment

of the 93-year-old Metropolitan, which was vacant for 40 years. The penthouse floor, now the Monarch Club, likely wasn’t used publicly in “any meaningful way” before, said David Di Rita, founder and principal of Detroit-based developer Roxbury Group. Metropolitan Hotel Partners, a joint venture between Roxbury and The Means Group Inc., renovated the building, and Michigan’s first Element by Westin hotel opened there in January. The hotel use is good for rooftop bar business, Di Rita said. It's harder to drive people upstairs with a less active office or residential building. Di Rita declined to provide a cost for building out the bar. Contractors included Virtuoso Design+Build and Artisan Contracting LLC, both of Detroit.

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SPEAKERS INCLUDE: Allison Maki, CFO, Detroit Lions Tony Michaels, President & CEO, The Parade Company

Nominate a budding leader, colleague, friend or employee that you know for participation in our fifth cohort. Contact Keenan Covington at kcovington@crain.com or visit crainsdetroit.com/leadershipacademy.

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each moment matter. _ PNC can help.

At PNC, we give you ways to get more from your day, like a simple way to see and track payments, or to help you get paid faster with a select PNC checking account.* That means you can make quicker and better decisions, focus on what matters most and get back to making each moment matter. Learn more at pnc.com/momentsmatter

*Next-day funding on card transactions processed by PNC Merchant Services® when deposited into a select PNC Bank business checking account. Certain restrictions may apply. ©2018 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC

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