Crain's Detroit Business, May 13, 2019 issue by Crain's Detroit Business

PlanetM grants fund Beaumont drug delivery robot Page 3

Nonprofit sewing hub finds a home thanks to Carhartt Page 4

MAY 13 - 19, 2019 | crainsdetroit.com CANNABIS AND EMPLOYMENT

GROWING CONCERN Marijuana is legal now, but Southeast Michigan employers aren’t relaxing drug screening policies By Dustin Walsh dwalsh@crain.com

Despite the recent legalization of recreational marijuana use and a tight labor market, Southeast Michigan employers remain sober in their stance on drug testing. Employers have reached deep into the talent attraction quiver to find employees in a labor market where there are more job openings than job seekers, including higher wages, better benefits, and more, but relaxing drug screening policies isn’t on the table for most. Many companies, such as utilities DTE Energy Co. and Consumers Energy, are under the directive of federal rules — marijuana is still considered a Schedule 1 narcotic under federal law and federal contractors are required to do drug screening for all narcotics — or safety liability has them reticent to remove screening. Others just aren’t ready to openly welcome drug users into their ranks. As a result, workers or potential workers in Michigan are failing employment drug screening for marijuana at an increasing rate. Some industries, such as retail and restaurants, have ditched drug testing to

maintain a workforce, but most have kept policies in place post-legalization. Employer-required drug test failures for marijuana use have increased from 1.9 percent of all drug tests in 2008, when Michigan voters approved a measure to legalize medical marijuana

use, to 3.3 percent of all drug tests in 2018 when a similar bill to legalize recreational adult-use marijuana was passed, according to the latest data by the largest U.S. drug testing lab Quest Diagnostics Inc. SEE MARIJUANA, PAGE 21

BOROJOINT VIA ISTOCK

AUTO INSURANCE

MANUFACTURING

No-fault overhaul would drive 5-Hour Energy founder preps water-purifier venture up employer health costs By Chad Livengood clivengood@crain.com

A long-sought overhaul of Michigan’s nofault auto insurance law that would allow motorists to shed mandatory medical coverage would almost certainly lead to a cost shift to the health plans of private and public employers. The Republican-controlled Legislature’s pending legislation — which rocketed out of both chambers last week — requires a driver to have health insurance that covers auto accidents in order to opt out of buying Personal Injury Protection, the required unlimited medical benefits that lawmakers are targeting to rein in premiums. crainsdetroit.com

Employees who elect to rely on their private health insurance to cover medical procedures stemming from auto accidents will leave employers with an added health care liability — “and that’s going to increase prices” for health coverage, said Tony Kaylin, vice president at the American Society of Employers. “In the long run, what’s going to happen is it could have some major negative impact if a large number of employees drop their (auto) medical coverage on their employers,” said Kaylin, whose Livonia-based organization provides human resources support for 800 employers in Michigan. SEE NO-FAULT, PAGE 19

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NEWSPAPER

By Dustin Walsh dwalsh@crain.com

The low-profile billionaire behind energy shot brand 5-Hour Energy longs to solve the world’s fresh water shortage. Manoj Bhargava, founder and CEO of the Farmington Hills maker of the highly caffeinated drink maker Innovation Ventures LLC, has poured a substantial sum of his reported $1.5 billion net worth into creating a desalination device that could turn seawater into freshwater. But his latest venture, Hans Power and Water LLC, is aiming smaller — at consumers concerned with drinking water contaminants like lead, arsenic, PFAS and chlorine. The com-

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pany’s product, the Hans Premium Water Appliance, is a whole-home water purifying system. Last month, the company secured township board approval to construct a 500,000-squarefoot plant to build the systems in Lyon Township on a 30-acre plot of land on Bhargava Grand River Avenue near I-96. The plant is expected to initially employ 200 when it opens next year. SEE WATER, PAGE 21 19 S I N E S S // M A Y 1 3 , 2 0 CRAIN’S DETROIT BU

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MICHIGAN BRIEFS

INSIDE

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

MI resorts may get break as U.S. to add seasonal worker visas Mission Point Resort, a sprawling historic resort on the sunrise side of Mackinac Island, opened for business April 26 prepared for the throng of tourists arriving by ferry as tourism season heats up. But familiar faces will be missing at least early in Mission Point’s summer — the Jamaicans who work the resort’s grounds, tidy the rooms and cook in its kitchens. The 61-year-old resort finds itself without its usual temporary seasonal employees this year as it was awarded none of the 33,000 H-2B worker visas afforded to seasonal employers from the U.S. government. The resort applied for 127 of the temporary work visas to round out a staff of nearly 300, said Liz Ware, vice president of sales and marketing and daughter of owners Dennert and Suzanne Ware, who bought the resort in 2015. But a reprieve could be on the horizon for Mission Point and many others in northern Michigan’s hospitality industry as the Trump administration will allow an additional 30,000 H-2B visas for seasonal work through September. A joint rule was published Monday by the Department of Homeland Se-

curity and Department of Labor Details of the plan were in a draft rule obtained by the Associated Press. It would benefit oyster shucking companies, fisheries, loggers and seasonal hotels, including Trump’s own Mar-aLago club in Florida. All use the visas to hire migrants for temporary work they say Americans won’t do. The H-2B visa program permits employers to hire foreign workers to perform nonagricultural labor on a onetime, seasonal basis. Employers who would “suffer irreparable harm” without the additional workers can request the visas, but only for seasonal workers who were already granted H-2B status in 2016, 2017 or 2018. H-2Bs are really vital for seasonal destinations on Mackinac Island,” Ware said. “There are only about 500 people living on the island yearround, but about 3,000 jobs in the summer. It’s very difficult to find anyone (in the U.S.) to come here for only a few months to work. Add low unemployment and a strong economy and people just don’t want to do these jobs. They don’t want to do the housekeeping, the dishes, they just don’t want to do this work.”

Health care company Concerto to close Michigan offices

Citing the termination of a “key contract,” health care company Concerto plans to close three offices in Michigan

CALENDAR

MISSION POINT RESORT

Mission Point Resort applied for 127 of the temporary work visas to round out a staff of nearly 300.

and lay off more than 150 employees, it said in a notice filed with the state. Concerto of Michigan Inc. will cease operations in Southfield, Center Line and Kalamazoo, resulting in “nearly all” employees in the market losing their jobs, according to the notice filed earlier this month. The employees will be terminated as of June 30. The number affected in the Southfield office is 54, 10 in Center Line and 75 in Kalamazoo, according to the notice. There is also a “modest number” of home-based employees who will lose jobs, according to the notice. Concerto of Michigan is under the umbrella of California-based Concer-

22nd Annual

toHealth Inc., which provides health care to dual-eligible Medicare and Medicaid patients. Concerto of Michigan moved its main metro Detroit office from the New Center One building in Detroit to Southfield to accommodate growth, officials said in January 2018. At the time, the company said it had grown its patient base 400 percent year-overyear to 10,000 and its staff by 33 percent. The main office in Southfield houses care managers and the network management team in a 15,493-square-foot space at 18000 W. Nine Mile Road, Suite 800, under a five-year lease, Crain’s reported in 2018.

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You can’t buy a Tesla in Michigan, but the manufacturer is making it easier for Detroit area customers to get their electric vehicles maintained and repaired. The carmaker has set up a service center in Toledo, nearly on the border between the two states. The company said the new service site is able to conduct all repair procedures for Tesla vehicles, including software diagnostics, hardware adjustments and parts replacements, Automotive News reported.

CORRECTION A story on Pages 21-23 of last week’s issue gave an incorrect number for how many temporary steel supports were added to the Miller Road bridge in Dearborn. The correct number is 524. The county’s public services department provided Crain’s with an incorrect figure.

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TECHNOLOGY

PlanetM grants fund Beaumont Hospital drug delivery robot By Annalise Frank afrank@crain.com

The Moroun family’s Crown Enterprises Inc. would swap land that once housed the former Budd Wheel plant at Mack Avenue and Conner Street on Detroit’s east side. LARRY PEPLIN FOR CRAIN’S

DEVELOPMENT

LAND DEAL DEBATE

Michigan’s mobility business development arm is funding drug delivery by robot at Beaumont Hospital in Dearborn. Ann Arbor-based startup Bedestrian is getting $100,000 through PlanetM’s Mobility Grant program to test its wheelchair-sized autonomous delivery vehicle in a round of grants expected to be announced Monday. It will transport pharmaceuticals from the hospital’s pharmacy lab to its cancer center. Bedestrian is among five enterprises PlanetM selected in a latest round of funding. Its yearlong, $1.9 million grant program aims to help mobility companies test and deploy their technology. Others getting a share in this $440,000 round include an autonomous shuttle at Oakland University

Detroit EDC, council postpone votes on Moroun land swap, other issues as details of FCA deal trickle out By Kirk Pinho kpinho@crain.com

and Annalise Frank afrank@crain.com

FCA US LLC will have to wait a few more days before it finds out whether it will get a series of key city approvals on land swaps and community benefits agreements from Detroit’s elected and appointed leadership. The Auburn Hills-based automaker is weighing what it and the city say is a $2.5 billion investment expected to bring nearly 5,000 new jobs to Detroit, an effort that involves a complex series of real estate transactions, taxpayer incentives and community benefits. The city Economic Development Corp. board unanimously voted Thursday morning to table until Tuesday a decision on whether to swap some of a 116.6-acre package of publicly owned land for the 82.2-acre Budd Plant property owned by the Moroun family’s War-

ren-based real estate company Crown Enterprises Inc. Also Thursday, City Council’s Planning and Economic Development Committee deferred votes by a week on the Fiat Chrysler deal ahead of a potential May 21 full council approval vote, it would allow more public hearing time and consider items on the deal’s community benefits provision, land swaps arranged to give FCA the land it needs to make its investment, industrial facilities tax abatements and steps needed to sell a parking garage whose proceeds would help fund the city’s land deals. Detroit is on a tight timeline to get this deal done. F. Thomas Lewand, Mayor Mike Duggan’s group executive for jobs and economic growth, said Thursday that it will “greatly impact” the FCA project’s construction and hiring schedule if the negotiated agreement doesn’t pass City Council by its May 21 meeting.

“Another week wouldn’t kill the deal, but it would have to only be a week. Make or break, next week for this whole deal. Chrysler has made that very clear to us.”

BEDESTRIAN

Ann Arbor-based startup Bedestrian will test out its robotic vehicle, B1, at Beaumont Hospital in Dearborn using a $100,000 grant through PlanetM, Michigan’s business development arm for mobility.

Bankrupt LightRx aims to sell remains of spa chain

and secure prescription drug delivery in rural Battle Creek. Launched in October 2018, the mobility grants have been given to startups so far. But starting with an upcoming June 1 application deadline, PlanetM is expanding the opportunity to larger companies in an effort to reduce limitations on the innovation it draws in, said Amanda Roraff, operations manager at PlanetM.

By Jay Greene

Delivery by robot

Matt Walters

SEE LAND, PAGE 20

HEALTH CARE

jgreene@crain.com

LightRx Face and Body, a fast-growing Farmington Hills-based medical spa that offers laser fat treatments and other nonsurgical procedures, has filed for Chapter 11 bankruptcy protection after an expected injection of financing failed to materialize from Chinese investors. But owner and founder Richard Morgan says that he has secured promises from a group of metro Detroit-area investors to buy the company out of bankruptcy later this month. The plan is to keep open about 25 of the remaining 42 clinics, including five in Southeast Michigan and two others in greater Michigan. At one time, LightRx had 88 clinics nationally. Over the past six months, LightRx has faced the wrath of dozens of customers who complained to the state

Need to know

 LightRx files for bankruptcy protection, reorganizing, keeping seven body and face care clinic offices in Michigan  Michigan AG’s office, Better Business Bureau received dozens of complaints, launched investigation  Owner and President Richard Morgan says he will sell LightRx to Detroit-area investors

Attorney General’s office and Better Business Bureau of Southeast Michigan about poor results and a refusal to honor contracts. The company has closed at least six clinics in Michigan since last fall and several dozen others in the other 21 states where it does business, Crain’s reported in February. SEE LIGHTRX, PAGE 20

One of LightRx’s shuttered clinics in Livonia.

Bedestrian’s pilot delivery at Beaumont Hospital starts this summer, said Shadi Mere, the startup’s CEO. He declined to disclose how much it will cost. The effort is supported by Toyota-affiliated automotive and mobility supplier Denso Corp., which has its North American headquarters in Southfield. Bedestrian created its autonomous vehicle B1, unveiled at the 2019 North American International Auto Show in Detroit, as a solution for last-mile deliveries in urban settings. It can go up to 15 mph, but will navigate the hospital at walking speeds, Mere said. It has three compartments that can be heated and cooled on demand, and microphones and speakers for interaction with people. SEE ROBOT, PAGE 18

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

CARHARTT INC.

Dearborn-based workwear brand Carhartt Inc. has donated third-floor space above its Detroit store at 5800 Cass Ave. to the Industrial Sewing and Innovation Center.

Clothing manufacturing hub finds home with Carhartt in Midtown By Annalise Frank afrank@crain.com

An effort by a local coalition of clothing makers to create a nonprofit industrial sewing center in Detroit is coming to life in space donated by workwear company Carhartt Inc. The Industrial Sewing and Innovation Center (ISAIC) will aim to grow the city’s clothing manufacturing industry from above Carhartt’s Midtown retail shop on Cass Avenue, according to a news release. The ISAIC effort is two-pronged. Its nonprofit institute oversees a nationally recognized apparel industry apprenticeship program that will be implemented at its Cass Avenue facility, as well as through Detroit nonprofit The Empowerment Plan and others. ISAIC also aims to start a clothing-making factory late this year in the third-floor, 13,800-square-foot space at 5800 Cass Ave. The manufacturing operation will provide contract sewing services for other companies, starting with 10 employees and building to 24 by the end of the year, Jen Guarino, chair of ISAIC’s board and vice president of manufacturing at Shinola/Detroit LLC, told Crain’s. The factory will share profits with employees in some way and could possibly be worker-owned, but its structure hasn’t been finalized. As part of its donation, Dearborn-based Carhartt is also giving the nonprofit 12 sewing machines and other manufacturing equipment — a gift that ISAIC valued at $113,000. Tony Ambroza, chief brand officer at Carhartt, said in the release that now “is the right time and place to build and grow the apparel industry.” The nonprofit’s goal is to build an ecosystem for innovative fashion design and manufacturing — one that creates employable, skilled tradespeople and utilizes newer manufacturing technologies such as robotics. “ISAIC will serve the rapidly

Need to know

JJIndustrial Sewing and Innovation

Center to operate training nonprofit, clothing manufacturing company JJIdea has gained steam with support from Carhartt, Shinola and others JJGoal is to build a Detroit ecosystem for fashion innovative, design and manufacturing

“ISAIC will serve the rapidly changing apparel industry by providing a peoplecentric environment, ongoing learning, equity in growth and a commitment to ethical practices.” Jen Guarino

changing apparel industry by providing a people-centric environment, ongoing learning, equity in growth and a commitment to ethical practices,” Guarino said in the release. “Carhartt’s contribution to ISAIC reflects the company’s long held commitment to providing apparel for workers and supporting the work they perform. We couldn’t think of a partnership more ideal than this.” As it works toward starting operations in Midtown this fall, ISAIC is seeking $5 million through philanthropic channels, Guarino said. That amount — to be supplemented by factory revenue — would fund the apprenticeship program for three years and get the factory to a point where it could be self-sustainable by year three. It needs $2 million for its first year. Guarino declined to disclose the

foundations it is pitching for funding. In addition to Carhartt, the initiative’s partners are, according to its website: the city of Detroit, Detroit Economic Growth Corp., Design Core Detroit, Urban Manufacturing Alliance, The Makers Coalition, The Empowerment Plan, Henry Ford College, College for Creative Studies, Goodwill Industries Greater Detroit, Focus: Hope and United Way. ISAIC’s board includes Christian Birky, founder of Detroit-based sustainable menswear brand Lazlo LLC; Brenna Lane, co-owner of Detroit Denim; Cal McNeil of the Council of Fashion Designers of America; and David Merritt, founder of Detroit fashion brand Merit Goodness. The organization plans to announce its executive leadership in June. As of last fall, the ISAIC effort had garnered support from Carhartt, Detroit Denim, Lazlo and Shinola. Jeffry Aronsson, a former CEO of Donna Karan International and native Detroiter who has spent three decades in New York City’s luxury apparel industry, also has undertaken an effort that seeks to scale up Detroit’s fashion apparel industry. He first spoke about growing Detroit as a fashion and manufacturing hub at the 2017 Detroit Homecoming event, and has worked with Mayor Mike Duggan since to recruit big clothing brands to establish a manufacturing presence in the city, Crain’s reported last year. ISAIC has been involved in the city’s and Aronsson’s discussions, Guarino said. “The companies that are interested in coming to Detroit to potentially have manufacturing here — one of their biggest concerns is the workforce … We want to be a part of ensuring we have the workforce to attract the industry,” she said. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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OPINION EDITORIAL

COMMENTARY

This may be best shot Michigan’s actuary problem at no-fault reform G

he breakneck push by Republican state legislators on bills aimed at cutting Michigan’s highest-in-the-nation auto insurance premiums clearly has momentum that hasn’t been seen recently on an issue that goes back decades. It’s also turning into a confrontation in which the legislative leadership and Gov. Gretchen Whitmer are flexing muscles while still new in their offices. This appears to be the best opportunity Michigan has had to fix this broken system that profits several industries at the expense of everyday motorists. Whitmer has threatened vetoes, first over mandatory rate rollbacks. After House Republicans added measures that would require those, Whitmer said the bills need to take steps to eliminate the influence of factors unrelated to driving that insurers use to set rates — credit scores, gender, city of residence and others. Those factors do have a disproportionate impact on insurance rates in areas where people are poorer and especially in the city of Detroit, where residents can pay several times as much for insurance as drivers in rural areas and where it is estimated half of motorists are driving uninsured and many illegally use a suburban address to save thousands of dollars. Curbing the use of nondriving factors would help with this problem, but it’s a tricky path to negotiate. Few states restrict the use of nondriving factors, and none bars insurers from using city of residence — the factor that would help Detroiters the most. Whitmer has also implied that she wants insurance reform tied to a plan to pay for Michigan’s $2.5 billion-a-year road funding shortfall. This would make negotiation on an issue with many powerful constituencies even more difficult. The no-fault debate is a complicated one that touches health care, law, insurance and other industries as well as consumers. The current bills cost each side something, but will help Michigan’s economy by putting more money in everyday consumers’ pockets and getting more drivers insured, which benefits everyone. One sign that this is a golden opportunity to change the law is that Oakland County Republicans, who have long been on nofault backer L. Brooks Patterson’s side on the issue, have favored the bills — a sign that the dam is ready to break. The Legislature is close to the goal line on an issue that has confounded the state for years. Later in the summer, the Capitol is likely to be occupied by court-ordered redistricting, so the time is now. The powers in Lansing shouldn’t squander this opportunity to finish the job.

ov. Gretchen Whitmer’s request for a study of the impact of non-driving factors on auto insurance rates and whether no-fault plans that coordinate medical benefits with health care plans are appropriately reduced exposes a little-known secret about the state Department of Insurance and Financial Services. The state department charged with ensuring auto insurance premiums are actuarily justified has just one actuarial scientist who can perform the type of study the Democratic governor has requested. And, unlike most large states with complex multibillion-dollar auto insurance industries, Michigan’s one actuary is a contractor. The insurance department has a full-time contractor embedded in its Office of Rates and Forms to carry out one of its core oversight responsibilities of making sure the premiums auto insurance carriers charge are mathematically justified by past claims of injuries and vehicle damage — for hundreds of ZIP codes and census tracts across the state and rates from 300plus insurers. Kevin Dyke carries the title of “chief actuary” and has been a contractor for the department for eight years. But according to Dyke’s LinkedIn profile, his primary area of work is health insurance, which has been a much larger regulatory responsibility for DIFS since implementation of the federal Affordable Care Act and Michigan’s state-level health insurance marketplace. Dyke makes no mention of auto insurance rate review in his duties on LinkedIn. Michigan’s insurance department hasn’t had an actuary on staff for at least a dozen years, according to annual staffing reports the agency files with the National Association of Insurance Commissioners. “DIFS has historically contracted with a number of firms as needed to review auto insurance rate filings and assist with other auto insurance related reviews,” said Chad Arnold, director of the department’s Office of Policy, Research and Communications. “As with other department processes and procedures, DIFS continually reviews staffing levels to make sure they are

CHAD LIVENGOOD clivengood@crain.com

adequate for current and future needs.” Critics of DIFS think the lack of an on-staff actuary and a staff of 10 employees in charge of reviewing the rates of $18 billion in property and casualty insurance policies is by design. “Isn’t that ridiculous?” said state Sen. Jeff Irwin, an Ann Arbor Democrat. “This gets back to the point I keep trying to make to people: We don’t regulate rates in Michigan. The department is invisible.” Comparable large states with nofault auto insurance have far more actuaries to help govern their insurance industries. New Jersey, which is also a no-fault state, had a property and casualty insurance volume of $20 billion in 2016 and four actuaries on staff. Massachusetts is also a no-fault state with a file-and-use system that is similar to Michigan’s regulatory scheme for insurance companies. In 2016, Massachusetts had just under $14 billion of property and casualty insurance volume — and four actuaries on staff. Michigan’s insurance department has not yet decided how to tackle Whitmer’s directive to study whether non-driving factors unfairly charge motorists more for auto insurance based on their gender, marital status, education level, occupation, credit score or ZIP code. “As such, the process of evaluating whether the directives will be completed by in house staff or with the assistance of a contractor has not yet been determined,” Arnold said in an email. It’s not uncommon for state insurance departments to contract with actuarial firms that specialize in auto insurance pricing and claims, said Jim Lynch, chief Actuary for the Insurance Information Institute, a Washington, D.C.-based industry group.

States that require insurers to get prior approval from the state insurance department to impose rates on motorists typically need more actuaries on staff, Lynch said. “In general, the more work you require the department of insurance to do, the more people you’ll need to do it,” Lynch said. The House-approved no-fault reform bill pending in the Legislature would make Michigan a file-and-approve state for five years of mandated rate reductions, likely requiring more staff at DIFS to flyspeck rates and claims data. Nationally, Michigan is one of just 10 states without a full-time actuary among its insurance department’s internal staff, according to the NAIC’s annual staffing reports. Ohio’s insurance department had 13 actuaries on staff in 2017, according to the report. And Ohio’s 8.4 million drivers were charged $1.5 billion less in total liability premiums in 2016 than Michigan motorists, according to the NAIC’s annual report for that year, the most recent data available. Among the 10 states without an actuary on staff, Michigan is the largest. The others include Arkansas, Delaware, Kentucky, Mississippi, Tennessee and Wisconsin. Even Hawaii (two) and Puerto Rico (four) have actuaries on staff of their respective insurance regulatory agencies. What stands out here is Michigan has America’s highest car insurance premiums. But there’s just one internal watchdog checking the math behind those premiums, which just about everyone from Detroit to DeTour agrees have become an economic burden. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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It’s spring — and time to talk policy T

he weather doesn’t feel like it, but it is definitely spring. And spring in Detroit means it’s time to head up to Mackinac Island for the Detroit Regional Chamber’s Mackinac Policy Conference. Last week, Detroit Chamber CEO Sandy Baruah and conference Chair and Consumers Energy CEO Patti Poppe stopped by our office to fill us in on the latest agenda. You can tell Patti is absolutely interested in covering Detroit issues but really sees this as an opportunity to bring the entire state together. She is quick to point out that edu-

KC CRAIN Publisher

cation is not just a Detroit problem but a real statewide concern. This year, for the first time, an entire afternoon at the conference will be

dedicated to education. If you know Patti, you know what a dynamic leader she is. She’ll have a big impact on this year’s conference. She plans to make sure people aren’t just talking up there. She wants to get things done. She told me last week: “There is a crisis in Michigan in our education system — one that is apparent throughout our state and not located in one region. ... We want to make Mackinac a catalyst to have this important conversation statewide. Change is possible even when it’s hard, and it is so necessary for

our kids.” The event takes a bit of heat every year for not being held in Detroit. My response is always the same. It couldn’t be nearly as effective if folks were close to the office during the day and drove home at night. Part of the magic is that everyone is together on an island with nowhere to go and nothing to do except discuss issues and try to solve problems afflicting Detroit and the state of Michigan. Many of the city’s biggest and most pressing controversies have been addressed or solved on Macki-

nac island. The conference is a must-attend for policy makers and businesspeople alike. Baruah said he’s “eager to see what happens with the state’s impeding infrastructure and education issues. We create an environment to get things done.” I’m looking forward to getting up there to support Patti in her work to make our communities and state a better place. KC Crain is publisher of Crain's Detroit Business and president of Crain Communications Inc.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

Let caregivers supplement medical marijuana shortage

ichigan has 300,000 registered medical marijuana patients in its system, but patient access to medical marijuana is limited in the state. A marijuana supply shortage and an imbalance within the supply chain are primarily to blame, but there is a solution. Under the existing legal framework, Michigan licenses marijuana growers to sell either 500 plants (Class A), 1,000 plants (Class B), or 1,500 plants (Class C). As of March 18, Michigan has issued only three Class A licenses, one class B license and 13 Class C licenses. Even with advances in technology allowing for shorter plant growth cycles, the number of available medical marijuana plants for Michigan’s 300,000 patients is not nearly enough to keep up with current demand. Compounding things, Michigan has only 11 licensed marijuana processors for packaging and labeling, four licensed marijuana testing facilities, and five licensed marijuana transporters. As one example of the logistical problems this creates, consider the town of Houghton in Michigan’s Upper Peninsula. Houghton has only one licensed provisioning center, but depends on a transporter from downstate to supply it with its product, hardly an ideal situation for patients or a provisioning center. Currently, Michigan has fewer than 60 licensed provisioning centers that are required to service all 300,000 patients, not nearly enough in a state that spans 100,000 square miles. In January, Butzel Long law firm filed a state court complaint on behalf of its client, The Curing Corner, seeking to remedy Michigan’s medical marijuana supply shortage. In the complaint, the firm requested that Michigan allow its licensed medical marijuana caregiver network to supplement Michigan’s dwindling supply of medical cannabis by providing excess caregiver products to state-licensed provisioning centers. Under Michigan regulations, a caregiver may grow 72 plants to supply up to five patients, plus the caregiver if they are a patient as well. Caregiver products do not require state testing. In response to the lawsuit, Michigan’s Medical Marihuana Licensing Board signed a resolution on Jan. 16

OTHER VOICES Michelle Donovan

granting caregivers the right to provide their product directly to the state’s licensed dispensaries. Before receiving a caregiver-grown product from a provisioning center, patients must sign a waiver acknowl-

edging they know that the product had not been tested in one of the state’s four licensed testing facilities. The resolution, however, was a stopgap measure only, as it expired March 31. Butzel Long, on behalf of its client, The Curing Corner LLC filed a subsequent lawsuit to continue the status quo of the Jan. 16, 2019, resolution. After March 31, the state’s licensed caregivers have been required to provide any excess product to licensed growers or licensed processors, who will then have the product tested before transferring the product to a provisioning center. This additional layer will undoubtedly delay — and in

some cases prevent — patient access to product. Michigan’s medical marijuana caregiver network has been effective in supplying patients with products for 11 years. Until we see an appreciable increase in the number of licensed growers, processors, transporters and provisioning centers, or at least a significant increase in the rate at which state applications are being acted upon, Michigan should allow its caregivers to continue supplementing the state’s supply of medical marijuana from licensed provisioning centers. From an economic and patient

health standpoint, the benefits far outweigh the risks. In November of 2018, Michigan began competing with other states to attract investment in its burgeoning cannabis industry. On a state and local level, we must do more to expedite and streamline the medical marijuana licensing process and minimize barriers for patients, even if it means leaving the current resolution in place. Stay tuned. Michelle R.E. Donovan is a shareholder and co-chair of the Cannabis Law Specialty Team at Butzel Long.

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FOCUS

CRAIN’S MICHIGAN BUSINESS: DOWNTOWNS

DOWNTOWNS AS DESTINATIONS Lights were strung overhead, ornamental trees were planted, landscaping replaced unsightly fencing and bike racks were installed in the Bates Alley project in Kalamazoo.

CITY OF KALAMAZOO

Alleys up: Neglected passageways are transformed into public spaces By Tom Henderson | thenderson@crain.com

Inside this special report

owntown alleys have a new motto: “We’re not just for Dumpster diving, anymore.” Across Michigan and the country, downtown alleys are being lit with overhead lights and repaved or rebricked, their walls painted with bright murals. Bistros and craft breweries are setting out alleyway tables and chairs, and retailers are welcoming shoppers in through backdoors once used only for deliveries. Nationally, the Santee Alley in Los Angeles’ Fashion District has about 150 stores selling a wide range of items along its two city blocks; Printers Alley in Nashville is a historic nightclub and entertainment hot spot; and the Alley Gallery in downtown Louisville has been turned into an outdoor gallery featuring the work of local artists. SEE ALLEYS, PAGE 15

 Alleys up: Neglected passageways are transformed into public spaces. This Page

 Crowdfunding partnership spurs placemaking projects across Michigan. Page 9  Showtime: Michigan’s restored golden-age theaters are places to see and be seen. Page 10  Want a more vibrant downtown? Local zoning laws may need an update. Page 11  Big plans for small village of Spring Lake. Page 14

The Bates Alley project was a dingy alley that ran behind some businesses on E. Michigan Avenue in Kalamazoo.

 How Howell turned its downtown into a destination. Page 14

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

SPECIAL REPORT: DOWNTOWNS

Crowdfunding partnership spurs placemaking projects By Tom Henderson

Commercial Real Estate Telecom Business Transactions Tax

thenderson@crain.com

Dana Walker, the director of the North Branch-based Michigan Downtown Association, uses the term “placemaking” for what she says is a main driver behind the renaissance of downtowns in both large and small cities around the state. “About 10 years ago, the thought of placemaking came into people’s consciousness,” Walker said. “People started choosing where to live first, then finding a job there. People want to live where there’s culture, retail, entertainment, parks and events, and they want to walk or ride their bikes or their scooters around town.” Her nonprofit organization was formed in 1980 to help what were then struggling downtowns statewide, which many perceived as beyond saving. Even the most thriving downtowns today, including Traverse City, Grand Rapids and Royal Oak, were largely devoid of cars on their streets or in their parking lots; pedestrians were few and far between; and for-sale and for-rent signs proliferated in the windows of long-closed stores and offices. Founding a Michigan Downtown Association then might have seemed akin to naming a committee to help the captain run the Titanic after the iceberg struck. Today, the nonprofit has 180 members, including chambers of commerce, townships, villages and cities, and many central business districts have undergone a dramatic resurgence. The Michigan Economic Development Corp. has bought into placemaking wholeheartedly, through what it calls its Public Spaces, Community Places program, a partnership begun in 2014 with Patronicity, the Detroit-based crowdsourcing platform. The MEDC matches the amount raised by crowdsourcing for individual placemaking projects by up to $50,000. To date, the program has funded 203 projects, raising $7.5 million from 39,000 donors, with matching MEDC funds of $6.3 million. Projects have been funded or are raising funds across both peninsulas. They include dog parks in Milford and Battle Creek; a veterans’ war memorial in Negaunee; a park and soccer field in Lansing; a playground in Bangor; a fitness park in Big Rapids; a community theater in Benton Harbor; a pocket park in Lapeer; a bike park in Grand Rapids; a skate park in Owosso; a new reading room in the library in Iron Mountain and a zip line in Muskegon. The program has been such a success that Patronicity has since formed similar crowdsourcing partnerships with the Massachusetts Development Finance Agency, the Indiana Housing & Community Development Authority and the Boston Main Street Foundation. “It’s the little program that could,” said Katharine Czarnecki, senior vice president for community development at the MEDC. “The original intent was, let’s relieve some of the burden on local governments to fund new places. But don’t do it from top down. ... We’re not saying to community X, ‘We want you to do this.’ It’s the community saying, ‘We want to do this,’ and if they do it, we’ll help fund it. Even if someone

Construction PATRONICITY

A Patronicity campaign helped convert a former drill shop into a community center and curling clubhouse in Calumet Township, in the U.P.

Czarnecki

Walker

gives just $5, it gives them a sense of ownership. “People want to be connected. They want to be outside with their friends or going to unique retail stores. Going to the mall, which is the same anywhere in the U.S., just isn’t appealing.” She said the MEDC is now looking at expanding the crowdsourcing-state match concept to funding the growth of small businesses. The Michigan Municipal League began its placemaking outreach to cities and towns in 2012 in what it called the MIplace Partnership, with the Michigan State Housing Development Authority as the lead sponsor. The effort was designed to develop walkable, mixed-use areas in communities, with help from faculty and students from the Michigan State University School of Planning, Design and Construction. The program has involved 22 cities. Projects include improving the waterfront in Boyne City, a new shopping hub called Heritage Plaza for Cadillac, a three-mile greenway along three miles of a former CSX railroad line in Flint, creating a food innovation district around the farmers market in Holland, developing a block on Baraga Avenue in downtown Marquette and designing a park on a vacant cityowned parcel of land in Traverse City.

DDAs, TIFAs and Public Act 57 Walker credits a 1975 state law, Public Act 197, also known as the DDA Act, for starting the resurgence of the state’s downtowns. Downtown Development Authorities sprung up across the state to take advantage of the law allowing what were called Tax Increment Finance Authorities to capture the year-to-year growth in property values and reinvest that money in public facilities. “As communities started forming

DDAs, there was a need for an organization to represent those DDAs and to spread the word on their importance, particularly with legislators in Lansing,” said Walker about the birth of her organization. TIFAs, and consequently DDAs, had been criticized in recent years by Republican politicians in Lansing who questioned whether or not they worked. “The last two years have been tough on DDAs. There was a movement to gut them,” said Walker. A new law was lobbied for by the MDA and MML and sponsored by state Sen. Ken Horn (D-Frankenmuth) to replace the previous legislation. Public Act 57 was passed in 2018, signed by Gov. Rick Snyder and took effect on Jan. 1 this year. The law attempts to address Republican criticism by requiring uniform reporting by TIFAs across the state, including debt incurred, direct or indirect subsidies and development benefits in jobs created and projects completed. Another change in state policy allows the MEDC to play a larger role in helping small towns revitalize their central business districts. In April, the Michigan Strategic Fund approved a request by the MEDC to help communities with fewer than 15,000 residents by modifying terms of its Michigan Community Revitalization Program, which provides grants, loans and other economic assistance to communities for redevelopment. Previously, the program only allowed the MEDC to fund a maximum of 25 percent of a project’s cost. Now, for smaller communities, it can fund up to 50 percent. Because of smaller populations, there is often less incentive for developers to do projects there. Czarnecki said that development programs that are available in larger communities, such as the federal community block grants the MEDC administers, have more red tape and qualifying conditions, making them onerous or impossible for small communities. The change now allows the MEDC to give up to 50 percent to a maximum grant of $1.5 million per project. And it can provide loans or take equity to a total of $10 million on a project. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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SPECIAL REPORT: DOWNTOWNS

W Z By

thend

Showtime: Michigan’s restored golden-age movie theaters are places to see and be seen JOHN ROBERT WILLIAMS

A prominent theater renovation has been at the State Theatre in downtown Traverse City, which reopened in 2007 after a renovation spearheaded by filmmaker Michael Moore. By Tom Henderson thenderson@crain.com

rab some popcorn: Despite a home entertainment revolution, the downtown movie theater is back. Many of Michigan’s revived downtowns are anchored by restored old theaters. They draw crowds of patrons hungry for an alternative experience to driving to the cineplex and waiting in long lines for tickets and popcorn. Most of them are architectural masterpieces, some dating to the late 19th century. Some had long been shuttered before being bought and brought back to life; others had limped along, in need of attention and renovation, before being bought and spruced up. The most expensive renovation has been the $37 million spent on the 1,500-seat Capitol Theatre in downtown Flint, which reopened in December 2017. It was built as a vaudeville house for the W.S. Butterfield chain in 1928, a two-and-three story building housing both a theater and retail and commercial space. Architect John Eberson described the design as 15th-century Hispano-Italian, and the interior was supposed to bring a Roman courtyard to mind. It was one of what were called his atmospheric theaters, which included the Grand Rex in Paris and the State Theatre in Sydney, Australia. The Capitol showed its last film in 1976, was placed on the National Register of Historic Places in 1985 and stopped holding concerts in 1996. For years, as Flint continued a

VOGUE THEATRE

The 935-seat Art Deco Vogue Theater was built in downtown Manistee in 1938 and closed in 2005. It reopened in 2013, with a second screen added in 2014.

long and steep decline, it was assumed the theater would eventually be torn down, but in 2016, it was bought by the Uptown Reinvestment Corp., a nonprofit organization that oversaw the restoration. “It was probably going to be a parking lot, and it was saved,” said Jeremy Piper, a Flint lawyer who is chairman of the Cultural Center Corp., the parent organization for the Flint Cultural Center. The Whiting, a performing arts venue in the cultural center, manages the Capitol’s operations, programming and marketing.

The State Theater booms The most prominent and successful theater renovation has been at the

State Theatre in downtown Traverse City, which reopened in 2007 after a renovation spearheaded by filmmaker Michael Moore. It helped fuel the continued rebirth of Traverse City, providing customers for the fine-dining restaurants up and down Front Street and helping give more prominence to the Traverse City Film Festival, which Moore founded in 2005. The festival brings thousands to the city in later July and early August for screenings of upwards of 100 movies at a variety of venues. Run by volunteers, the theater shows first-run films as well as midnight classics and kids’ matinees for 25 cents. The State traces its history to 1916,

when the Lyric Theatre opened. It was destroyed by fire in 1923 and rebuilt and reopened later that year. The Lyric was destroyed by fire again in 1948 and a new theater built on the site in 1949 and christened the State. The theater closed in 1996 and wound up in the hands of the Rotary Charities, which donated it to the film festival in 2007, the year its renovation was complete. The State’s success led to the opening in 2013 of another downtown theater, the Bijou, a project that renovated the Con Foster Museum building, which had been built by the Civil Works Administration in the 1930s but had sat vacant for years. Traverse City is also home to the City Opera House, which was built in 1892 for $50,000. The building was added to National Register of Historic Places in 1972, fell on hard times and was given to the city in 1980. The City Opera House Heritage Association, a nonprofit, has restored the downtown building to its Victorian grandeur, preserving its fresco paintings and gold-leaf accents, and it is now home to a variety of events, including musical concerts, the National Writers Series, the Traverse City Film Festival, conferences and weddings. Here are some other cities where old theaters are playing a starring role:

Cheboygan The Kingston Theatre, an Art Deco building that opened downtown in

1920 with 1,063 seats, has continued to remain in operation. It is now part of the Northern Michigan Cinemas chain, which operates other theaters, most of them much newer, in northern Michigan, including Bellaire, Petoskey and Gaylord. The Kingston has been updated with digital projection equipment and shows first-run movies.

Frankfort The Victoria Theater opened in downtown Frankfort in 1923 with 592 seats and was later renamed the Garden Theater. The building fell into disrepair and from 1980 on, because of a failed steam-boiler heating system, it operated only in the summer. In 2008, the Garden Theater was purchased by a group of community members who began a complete renovation, including restoring the entrance area to its original Art Deco beauty. Michael Fitzhugh, who did the architectural work at the State Theatre, also did the architectural work at the Victoria, this time pro bono.

Howell The city of Howell, which was honored last year as one of three cities to receive the Great American Main Street Award by the National Trust for Historic Preservation, along with Oregon City and Rock Springs, Wyo., has two historic venues, the Historic Howell Theater and the Howell Opera House. SEE THEATERS, PAGE 16

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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 1 3 , 2 0 1 9

SPECIAL REPORT: DOWNTOWNS

Want a more vibrant downtown? Zoning laws may need an update By Tom Henderson

Michigan’s #1 Financial Advisor* Charles C. Zhang

thenderson@crain.com

The Michigan Municipal League has been holding workshops with cities around the state, including Albion, Kalamazoo, Muskegon, Saginaw and Traverse City, about how their zoning codes and local ordinances, enacted with good intentions years ago, are often an impediment to development and to creating cool places in central cities. The workshops are part of a national movement, led by Washington, D.C.-based nonprofit Congress for the New Urbanism, a lobbying and educational organization with 19 state and local chapters in the U.S. Its website proclaims that it “helps create vibrant and walkable cities, towns, and neighborhoods where people have diverse choices for how they live, work, shop, and get around.” CNU, in partnership with the Michigan Economic Development Corp., the municipal league, the AARP Livable Communities program and the Michigan Chapter of the American Planning Association developed a guide titled “Enabling Better Places: A User’s Guide to Zoning Reform.” The goal is to help communities simplify their zoning and create more livable downtowns and adjacent neighborhoods. Richard Murphy is the program coordinator for the civic innovation labs team at the Lansing-based Michigan Municipal League. He said his team helps coordinate MEDC programs in support of development in central business districts and educates local community leaders and politicians on the advantages of changes to long-standing ordinances and codes. Just a few modifications in a community’s zoning codes can spur development, Murphy said. He offered an example: “There’s a vacant lot on Main Street. The building burned down decades ago, and someone wants to build something to fill in the gaps. But zoning requires 15 parking places on site, which makes it impossible for what the developer wants to do. You take out that minimum requirement and you unlock the ability to fill in that hole in the block.” Murphy said since the old codes were written, parking structures likely have been built. Or there are surface lots a block or two away. A lack of onsite parking spaces in downtowns is not worth worrying about and certainly not worth killing a project that can add jobs and tax revenue. As a result of the efforts by Murphy and his team, Mt. Pleasant recently eliminated zoning requirements for a minimum number of on-site parking spaces. In addition to giving developers more flexibility and a better bottom line, eliminating on-site parking creates less stormwater runoff and flooding. Another example? There might be neighborhoods adjacent to downtowns that were built pre-World War II and have 45-foot-wide lots. In the 1950s, zoning was changed to require 60-foot lots. If a house burns or is torn down, nothing can be built there. With many thriving Michigan towns now suffering from a lack of

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In January, Kalamazoo changed its ordinance and now allows smaller lots in neighborhoods ringing downtown.

affordable housing, it’s time to go back to smaller lot requirements. Here are some other examples of development moving forward after cities got more flexible with their old Murphy zoning: JJIn January, Kalamazoo changed its ordinance and now allows smaller lots in neighborhoods ringing downtown, and Muskegon eliminated large-lot requirements in older neighborhoods that once had smaller lots, allowing homes to be built or rebuilt on lots there. JJLast year, after 17 months of heated debate, Traverse City eased some restrictions on so-called granny flats, which are garages or other on-site buildings on residential lots that are converted to apartments and rented out. That creates cash flow for the home owner, and it helps alleviate an ongoing shortage of housing near downtown, an especially severe shortage during the tourist season in Traverse City. JJLudington changed its zoning to support new uses for some of the historic brick industrial and commercial buildings scattered near downtown, which had been sitting vacant because of zoning hurdles, and Ypsilanti made similar changes to allow a vacant late-1800s church to be converted into a performance and events space.

Other recommendations CNU and the municipal league promote several other general principles, including: JJEncroachments into public rightsof-way should be permitted for such things as awnings, signs and sidewalk seating. JJEstablish on-street parking. Not only does that provide a municipality with revenue, it provides easier access to businesses. Traditionally, onstreet parking was eliminated for additional travel lanes, but higher traffic speeds reduced safety and weren’t a commercial benefit.

JJFocus

on streetscapes. Simple changes to the zoning code and street design standards can help transform streets from being primarily places for cars to being places for people. Many downtowns now have one-way streets, their direction reversing on alternating blocks. They should be converted back to twoway, which reduces speeds and leads to more cars pulling to the curb and passengers getting out to shop. JJNarrow the width of travel lanes, which, again, reduces vehicle speed and improves safety and increases business visibility. JJEliminate buffer requirements between businesses or buildings. The adjacency of buildings and businesses creates more of a sense of vibrancy and allows for more commercial density. JJPermit multi-family housing within walking distance of downtowns and main streets. Many commercial districts exclude residential, either in stand alone or mixed-use formats. Multi-family housing should only be excluded on the ground floors along the main street.

Crowd investing Murphy also helps guide small business through the regulations of a law passed in Michigan in 2014 called the MILE Act, for Michigan Invests Locally Exemption. “How can you invest as a citizen in a business on your main street?” he said. The law allows entrepreneurs to use crowdfunding to launch or grow their businesses by exempting them from the state’s complex securities laws. They can raise a maximum of $1 million, and individuals can invest up to $10,000 without having to qualify as an accredited investor. Some successful examples include Earthen Ales, which opened in Grand Traverse Commons in 2016 after raising $26,000; the Detroit City FC, which raised $741,250 to pay for renovations to a soccer stadium in Hamtramck; and the Tecumseh Brewing Co., which raised $175,000 in startup funding. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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SPECIAL REPORT: DOWNTOWNS

Big plans for small village of Spring Lake KIMBERLY VAN KAMPEN

Rendering of the $10 million Epicurean Village project in downtown Spring Lake. By Tom Henderson thenderson@crain.com

In recent years, the western Michigan village of Spring Lake found its downtown looking like those of many small villages around the state. Buildings sat empty and in disrepair, but with a small population of 2,323, it was hard to interest developers in taking on major and expensive projects. Until reVan Kampen cently, a state program to help fund development in central business districts was generally unavailable to cities or towns with fewer than 15,000 residents. That is about to change dramatically for the village. Kimberly Van

Kampen, a summer resident who breeds and trains horses, has committed at least $10 million to several development projects, with demolition on three buildings starting later this month. The largest project is called The Epicurean, a 32,000-square-foot, three-story mixed-use development that will have retail shops and a restaurant on the first floor and 12 apartments on the top two floors. Spring Lake’s history goes back to 1849, when it was spun out as a separate municipality from Norton Township. The discovery of what was billed as a spring of “magnetic water” in 1870 led to the village becoming a magnet for tourists seeking what were thought to be its healing waters. A large hotel was soon erected and mansions sprung up as the rich from Chicago or Detroit moved there or built summer homes. The mineral waters were hardly the only draw.

Abutting the village to the north is the lake the village takes its name from; to the south is the Grand River, wider there near its mouth than the lake. And Lake Michigan and its beaches are just a mile to the west. Van Kampen grew up in the area and has continued to spend her summers there even after moving to Wellington, Fla., where she runs a horse breeding and training business, Hampton Green Farm, which also has an operation near Spring Lake in Fruitport. She trained two horses that competed for Spanish riders in the sport of dressage at the Rio de Janeiro Olympics in 2016. “My father’s family has had a home in Spring Lake since the 1950s, and my mom and dad first dated on a boat on Spring Lake,” she said. Over the years, she bought and rehabbed three old houses in Spring Lake, an early 20th century cottage, a 1920s estate home and, in 2004, her

current home, a large house known as Littlefield that was built around 1900 by Philip Klingman, the founder of Klingman’s Furniture store in Grand Rapids. Having known Spring Lake since she was a little girl, she said as she drove through downtown in recent years, “I said to myself, ‘Why doesn’t anyone do anything?’ Downtown has been neglected for 25 years. I’d drive along and I’d say, ‘There’s so much opportunity here. Why doesn’t somebody do anything?’” She can’t ask that any more. She’s doing something. She stresses she is not a developer by trade, but she is a developer, now. She said one of her sons, Michael Molinari, is a real estate developer and will give her advice and review contracts. “He’s always reminding me, ‘Mom, I have a day job,’” she joked. Van Kampen said that while she loves the area, love alone wasn’t

enough to get her to take this plunge. The traffic volume was. Unlike most small villages in Michigan, which don’t see a lot of traffic, according to the Michigan Department of Transportation, Spring Lake sees 7.5 million cars a year drive past on M-104, the main street through town, either heading toward Grand Rapids to the east or to Grand Haven, Norton Shores and Lake Michigan to the west. Van Kampen has bought six buildings for her downtown projects. A Citgo gas station that had sat empty for years is being rehabbed and will open this fall as a franchise of a family owned business in Muskegon, Brooklyn’s Beans, Bombers and Bagels, bombers being the name of a sandwich. She also bought a Victorian mansion that had sat empty and deteriorating for years, which was built around 1880 by Francis Lilley, a native of England who moved to Spring Lake in 1867 and grew wealthy in the lumber business. Van Kampen plans to move the house to a nearby park and rehab it as a bed and breakfast, hoping to open it in the summer of 2020. She said she hopes to have The Epicurean in operation next summer, too. She said she has about half the retail space leased out to three businesses, a bistro and bakery, an ice cream shop and a women’s clothing boutique, and is in negotiations with several restaurateurs for a large restaurant on the ground floor. “This would be a big deal for any size community,” said Christine Burns, the village’s manager. “But it’s a particularly big deal for a village of our size. It’s huge. The properties she bought had been vacant a considerable length of time and all had their own set of challenges. Kim has been a pleasure to work with, and she’s got a passion for historic preservation.” Burns said Van Kampen’s projects have spurred interest from other developers. “Since they found out about her projects, I’m getting a lot of inquiries from other developers. It’s been a lot of work, but it’s fun stuff.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

How Howell turned its downtown into a destination Tom Henderson thenderson@crain.com

In 2005, officials in the city of Howell decided they needed to do something to create a buzz for their town, to give people a reason to be there at night, or to pull off I-96 and come visit. The city wasn’t exactly struggling. The vacancy rate was only about 7 percent downtown. Other small and Edgerly mid-sized cities around the state might have considered that something to shoot for. But, according to Cathleen Edgerly, director of Howell’s Downtown Development Authority, downtown office space was mostly filled with those offering professional services — attorneys, Realtors, accountants and the like. Those who worked there left at five. There was little cul-

CITY OF HOWELL

Howell’s mix of business includes retail shops, fine dining, bistros, bars and burger joints, a craft brewery and a co-working and incubator space.

ture, not much to do, no reason for anyone nearby to say: “Hey, let’s go to Howell tonight.”

“The city was doing well as the county seat, but it was a place people drove past. They didn’t stop,” said

Edgerly. “The city wanted downtown to become a destination, and for that they needed to diversify the mix.” So politicians and the Downtown Development Authority embarked on a marketing campaign, got the word out they were offering a variety of incentives to businesses willing to relocate or open there and helped entrepreneurs apply for state grants or loans through various programs at the Michigan Economic Development Corp. Today, the vacancy rate is 1.5 percent, among the lowest in the state, and downtown is busy seven nights a week. Both the movie theater and opera house have been remodeled and reopened. (See related story, Page 10.) The mix of business includes unique retail shops, fine dining, bistros, bars and burger joints, the Aberrant Ales craft brewery and the Frontal Lobe co-working and incubator space. The city has also embarked, with help from the Patronicity crowd-sourcing platform and the

MEDC, on what it calls its Hidden Alleys project, converting five public and two private alleys into pedestrian byways and places for area businesses to set out tables and chairs and open back doors into their establishments. (See related story, Page 8.) Last year, Howell was one of three cities in the U.S. given the Great American Main Street Award by the National Trust for Historic Preservation. The others were Oregon City, Ore., and Rock Springs, Wyo. “It was a huge reward. It got people asking, ‘What’s next?’” said Edgerly. That will, she hopes, include more commercial space, more residential units downtown and perhaps some easing of old, outdated zoning that needlessly gets in the way of development. “What can we do to ease development and create a pathway to success?” she said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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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 1 3 , 2 0 1 9

SPECIAL REPORT: DOWNTOWNS the MEDC matching that. Just off the 500 block of Brush alley is a green space now known as Brush Park Flint, which hosts a variety of events. One early successful commercialization effort in Buckham Alley came in 2013, when Tim Goodrich signed a lease on a space off the alley that used to be a clock-repair shop. He now has a thriving custom boot-making business called Sutorial.

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Ypsilanti Organizers are crowdfunding with

a goal of $30,000 for something they are billing as the Go! Ice Cream Alley downtown. Go! Ice Cream is a small-batch ice cream company that wants to build out its kitchen and provide an old-fashioned soda fountain and community gathering place in the alley. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

The Howell DDA organized a project in 2017 to turn a downtown alley into Peanut Row Alley, a pedestrian plaza and outdoor art gallery with a life-size chess board, planters and bistro tables and chairs. The project soon expanded into what Howell bills as its Hidden Alleys, five public alleys and two private alleys, and the list of downtown businesses selling their goods in the alleys includes the Uptown Coffeehouse, Dairy Queen, M Street Baking Co., Finding Roots art gallery and the Carriage House Designs florist.

Jackson

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skating rink and stage, and the DDA has been recruiting developers to create between 36 and 54 residential housing units in several buildings along the alley. Moloney’s Alley Irish Pub offers outdoor seating on the alley during good weather.

Howell

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CITY OF JACKSON

The Downtown Jackson Alleyway project cuts through three blocks in the middle of the central business district.

ALLEYS FROM PAGE 8

Across Michigan, alleys have been or are in the process of being converted to gathering places and centers of commerce, many of them funded by the Public Spaces Community Places program, a partnership begun in 2014 between the Michigan Economic Development Corp. and Patronicity, the Detroit-based crowdfunding platform. As projects reach their local funding goals, the MEDC provides matching grants. The first project in 2014 was the Midtown Green Alley in Detroit’s Midtown, which also involved Shinola and Midtown Detroit Inc. The alley runs behind Selden Standard, the acclaimed restaurant. The project involved removing debris and trash, cutting down weeds and saplings, and putting in permeable paver bricks, rain gardens and LED lighting. “We walked that space before and it was blight, garbage, mattresses. You go see it now and there’s a sense of community,” said Katharine Czarnecki, senior vice president of community development at the MEDC. “What’s nice about these alley projects is they’re pretty easy to do. There’s not a huge financial lift.” “Alleys can either separate us or pull us together,” said Ebrahim Varachia, president of Patronicity. “The Green Alley? You wouldn’t have wanted to walk it. It was littered with garbage, broken concrete, glass. We take dark, scary spaces and turn them into vibrant spaces.” The crowdfunding goal of $50,000 was surpassed at $52,290, with the MEDC kicking in $50,000 and Shinola $100,000. Here are some other alley conver-

sion projects around the state, some completed and some in progress:

Charlevoix The Junior Main Street Committee, made up of Charlevoix High School students, launched a $6,000 crowdfunding campaign in March for what they were calling the Hoop Skirt Alley project downtown and announced at the end of April that they raised $9,000. That was matched by $5,000 by the Charlevoix Main Street Downtown Development Authority and the MEDC. There will be a ribbon cutting in June, with plans to have benches, tables, a giant human-scale chessboard, scooter parking and self-watering planters.

East Lansing The East Lansing Art Gallery opened in 2016 with painted murals in the parking lot and the pedestrian alley that is a pathway to the Broad Art Museum. The project since expanded to other alleys in the city, with planters, landscaping, overhead lighting, game tables and a bean-bag toss area.

Flint The Flint Alley Fest will be held in Buckham and Brush alleys on July 13, with 12 bands on three stages, with a focus on Flint-based musicians. The festival started in 2011 when improvements in Buckham Alley had begun. The nonprofit Friends of the Alley did an MEDC/Patronicity campaign in 2017 to do the same overhead lighting and improvements in Brush Alley that it had earlier done in Buckham, with the Friends raising $50,000 and

In 2014, Jackson got a grant of $6,000 from the Michigan Municipal League for the Downtown Jackson Alleyway project, which cuts through three blocks in the middle of the central business district to the Grand River waterfront, adjacent to the Grand River Brewery and the Grand River Farmers Market. In 2017, a new bar and restaurant called the Dirty Bird opened at the corner of Michigan Avenue and the alley, with a patio and event space in the alley. Since then, a business incubator called Lean Rocket Lab and a coffee shop, Fortress Coffee, have opened on the alley and a new bar is in the works.

Kalamazoo The Bates Alley was a dingy little alley that ran behind some businesses on E. Michigan Avenue, connecting the entertainment district and the Homer Stryker School of Medicine. It is dingy no more. In 2017, it surpassed its goal of raising $100,000 by $5,000, which included a $50,000 match from the MEDC and held a ribbon cutting last October. Lights were strung overhead, ornamental trees were planted, landscaping replaced unsightly fencing and bike racks were installed. It’s not just a pedestrian promenade. The Olde Peninsula Brewpub & Restaurant and Green Top Tavern, both of which face Michigan Avenue, now have outdoor seating on the alley, with outdoor seating for a total of six bars and restaurants planned.

Sault Ste. Marie Moloney Alley cuts an L-shaped path though a 6.4-acre parcel in downtown, acting as a bridge between the Soo Locks tourist attractions and more traditional downtown businesses. Planning began in 2013, with funding by the city’s downtown development authority and the Michigan State Housing Development Authority. Once a plan was in place, two buildings adjacent to the alley that had been eyesores for years were sold and rehabilitated. The alley includes patio seating for adjacent restaurants and access to a

Real Estate Experience

In Your Corner.

Contact Ed Gusky at esgusky@varnumlaw.com n

Real estate development, transactional and finance law Mergers and acquisitions, corporate structuring Tier 1 Metropolitan Ranking Real Estate Law and Real Estate 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 1 3 , 2 0 1 9

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The Delft theater opened in downtown Marquette in 1914.

THEATERS FROM PAGE 10

penter at the theater, and from 19551957 he was an actor and stage manager, portraying Othello in the Shakespeare play. By the 1990s, the building had suffered decades of neglect, and community activists raised $4 million to begin restoration. Jones returned twice to star in fundraisers.

In 2014, the movie theater, which opened in 1928, had fallen on hard times. It had been closed, bought, reopened, closed and bought several times over the years before Tyler DePerro, a Toledo native looking for a theater to buy and renovate, decided on Howell. The theater now serves as a host to indie productions and showings of old classics. DePerro also added two stages to showcase regional artists, a cafe in the lobby and rental apartments on the second floor. The Howell Opera House is a three-story Victorian building that was designed by Almon Varney, a prominent Detroit architect, and built in 1880 for $11,000. The first floor was retail with an 800-seat theater on the second floor until the fire marshal closed it to performances in 1924. For more than 70 years, the building served as storage for a local hardware store. In 2000, the Livingston Arts Council bought the opera house and renovations began. The first floor now hosts special events such as parties with fundraising of $10 million to $12 million continuing for a planned renovation and reopening of the theater on the second floor.

The Delft theater opened downtown in 1914 with a seating capacity of 650 after a group of investors raised the then-huge sum of $250,000 to open five Delft theaters across the Upper Peninsula. The name and the architectural style of the buildings came from the city of Delft in the Netherlands. It was later converted to five screens and operated by Carmike Cinemas before closing in 2012. Tom Vear and Jen Ray, a husband-and-wife team, bought the theater and reopened it as a bar and bistro in 2017, thanks in part to a community development block grant of $481,000 from the Michigan Economic Development Corp. It still offers movies nightly. Across the street from the Delft is the Nordic Theater, which operated from 1936 to 1994 and then was converted to a bookstore. A community group is fundraising to reopen the theater as an art-house cinema.

Manistee

Port Huron

The 935-seat Art Deco Vogue Theater was built in downtown Manistee in 1938 and closed in 2005. After the success of the State Theatre in Traverse City, Michael Moore announced in 2011 that he would help a group in Manistee rehab the Vogue, and it reopened in 2013, with a second screen added in 2014. Until the theater reopened, there was no movie theater in Manistee County and those in the city had to drive more than 30 miles to the nearest multiplex. The rehab cost more than $2.6 million, most of it charitable contributions. Manistee is also home to the Ramsdell Theatre, built by local attorney and philanthropist Thomas Jefferson Ramsdell to be one of the best opera and vaudeville houses of the day. When it opened in 1902, the classic Colonial-design building had 1,200 seats on the orchestra level, with two balconies and boxes. The theater closed in 1930, was reopened as a movie theater by the Butterfield Theatres in 1936, then taken over by the city in 1941 to serve as an armory during World War II. After the war, the theater reopened for a variety of live performances. In 1953, an aspiring actor named James Earl Jones started his career as a car-

Sperry’s department store was an iconic landmark in downtown Port Huron, built in 1893 and playing the same role there that the Hudson’s Department Store did in downtown Detroit, hosting Thanksgiving Parades and generations of kids eager to sit on Santa’s knee. As Port Huron hit hard times, so did Sperry’s, and the building closed in 2006 after a series of tenants tried to make a go of the place, the last of which was House of Denmark. In 2016, after a $10 million renovation, the building was reopened by Chuck Reid, a developer from Holland and Grand Rapids, as the Sperry’s Moviehouse 12, a 12-screen boutique movie theater which has venues ranging from 27 to 44 seats, with viewers able to order food delivered to their seats from the restaurant on the second floor. Downtown had been without a first-run theater since the Huron Theatre closed in 1990. An Art Deco exterior was built around the front of the building to give it a period feel, and interior light fixtures were reused after being retrofitted with modern LED technology.

Marquette

Tom Henderson: (231) 499-2817 Twitter: @TomHenderson

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

CRAIN'S LIST: LARGEST GREATER MICHIGAN PUBLICLY HELD COMPANIES Ranked by 2018 revenue Rank

Company; fiscal year end Address Phone; website

Top executive(s)

Revenue ($000,000) 2018

Revenue ($000,000) 2017

Percent change

Net income Exchange/ ($000,000) Ticker 2018/2017 symbol

Stock price 52-week high/low Type of industry

Dow Inc. (12/2018) 2211 H.H. Dow Way, Midland 48674 (989) 636-1000; www.dow.com

James Fitterling CEO and director

$49,697.0

$36,099.0

37.7%

$2,932.0 $1,432.0

NYSE DOW

$57.39 $54.30

Chemicals

Whirlpool Corp. (12/2018) 2000 N. M-63, Benton Harbor 49022 (269) 923-5000; www.whirlpoolcorp.com

Marc Bitzer chairman, president and CEO

21,037.0

21,253.0

-1.0

(183.0) 350.0

NYSE WHR

167.54 99.40

Household appliances

Stryker Corp. (12/2018) 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.com

Kevin Lobo chairman and CEO

13,601.0

12,444.0

9.3

3,553.0 1,020.0

NYSE SYK

199.85 144.80

Health care equipment

Kellogg Co. (12/2018) One Kellogg Square, Battle Creek 49016 (269) 961-2000; www.kelloggcompany.com

Steven Cahillane CEO

13,547.0

12,854.0

5.4

1,336.0 1,254.0

NYSE K

74.98 53.14

Packaged foods

SpartanNash (12/2018) 850 76th St. SW, Grand Rapids 49518 (616) 878-2000; spartannash.com

Dave Staples president and CEO

8,064.6

7,963.8

1.3

33.6 (52.8)

NasdaqGS SPTN

26.99 15.30

Food distributor

CMS Energy Corp. (12/2018) One Energy Plaza, Jackson 49201 (517) 788-0550; www.cmsenergy.com

Patricia Poppe president, CEO and director

6,873.0

6,583.0

4.4

657.0 460.0

NYSE CMS

56.30 42.52

Energy

Diplomat Pharmacy Inc. (12/2018) 4100 S. Saginaw St., Flint 48507 (888) 720-4450; www.diplomatpharmacy.com

Brian Griffin CEO and chairman

5,492.5

4,485.2

22.5

(302.3) 15.5

NYSE DPLO

28.74 5.16

Health care services

Perrigo Co. plc B (12/2018) 515 Eastern Ave., Allegan 49010 (269) 673-8451; www.perrigo.com

Murray Kessler C president and CEO

4,731.7

4,946.2

-4.3

131.0 119.6

NYSE PRGO

84.94 36.28

Pharmaceuticals

Universal Forest Products Inc. (12/2018) 2801 E. Beltline NE, Grand Rapids 49525 (800) 598-9663; www.ufpi.com

Matthew Missad CEO and director

4,489.2

3,941.2

13.9

148.6 119.5

NasdaqGS UFPI

39.41 24.14

Building products

Steelcase Inc. (2/2019) 901 44th St. SE, Grand Rapids 49508 (616) 247-2710; www.steelcase.com

James Keane president, CEO and director

3,443.2

3,055.5

12.7

126.0 80.7

NYSE SCS

19.35 13.10

Office furniture

Herman Miller Inc. (6/2018) 855 E. Main Ave., PO Box 302, Zeeland 49464 (616) 654-3000; www.hermanmiller.com

Andi Owen president and CEO

2,381.2

2,278.2

4.5

128.1 123.9

NASDAQ MLHR

40.65 28.66

Office furniture

Wolverine World Wide Inc. (12/2018) 9341 Courtland Drive NE, Rockford 49351 (616) 866-5500; www.wolverineworldwide.com

Blake Krueger chairman, president and CEO

2,239.2

2,350.0

-4.7

200.1 0.3

NYSE WWW

39.77 28.08

Footwear

Gentex Corp. (12/2018) 600 N. Centennial St., Zeeland 49464 (616) 772-1800; www.gentex.com

Steven Downing president and CEO

1,834.1

1,794.9

2.2

437.9 406.8

NasdaqGS GNTX

25.41 17.80

Auto parts and equipment

La-Z-Boy Inc. (4/2018) One La-Z-Boy Drive, Monroe 48162 (734) 242-1444; www.la-z-boy.com

Kurt Darrow chairman, president and CEO

1,583.9 D

1,520.1 E

4.2

80.9 85.9

NYSE LZB

39.15 25.30

Home furnishings

David Provost president, CEO and director

912.2

776.2

17.5

284.0 149.5

NASDAQ CHFC

59.46 34.60

Banking

Chemical Financial Corp. (Chemical Bank) F (12/2018) 235 E. Main St., Midland 48640-0569 (989) 839-5350; www.chemicalbankmi.com

Spartan Motors Inc. (12/2018) 1541 Reynolds Road, Charlotte 48813 (517) 543-6400; www.spartanmotors.com

Daryl Adams CEO and director

816.2

707.1

15.4

15.0 15.9

NasdaqGS SPAR

19.45 6.70

Construction machinery and heavy trucks

Neogen Corp. (5/2018) 620 Lesher Place, Lansing 48912 (517) 372-9200; www.neogen.com

John Adent CEO and president

402.3

361.6

11.2

63.1 43.8

NasdaqGS NEOG

97.38 50.60

Health care supplies

Meritage Hospitality Group Inc. (12/2017) 45 Ottawa Ave. SW, Suite 600, Grand Rapids 49503 (616) 776-2600; www.meritagehospitality.com

Robert Schermer Jr. CEO and director

312.6

235.8

32.6

9.0 6.4

OTCPK MHGU

19.89 14.01

Restaurants

Independent Bank Corp. (12/2018) 4200 E. Beltline, Grand Rapids 49525 (616) 527-5820; www.IndependentBank.com

William Kessel president, CEO and director

175.6

140.8

24.7

39.8 20.5

NasdaqGS IBCP

27.10 20.18

Regional bank

Mercantile Bank Corp. (12/2018) 310 Leonard St. NW, Grand Rapids 49504 (616) 406-3000; www.mercbank.com

Robert Kaminski Jr. president, CEO and director

160.1

143.1

11.8

42.0 31.3

NasdaqGS MBWM

38.47 26.40

Regional bank

Macatawa Bank Corp. (12/2018) 10753 Macatawa Drive, Holland 49424 (616) 820-1444; www.macatawabank.com

Ronald Haan president and CEO

86.5

75.1

15.2

26.4 16.3

NasdaqGS MCBC

12.92 8.81

Regional bank

Isabella Bank Corp. (12/2018) 401 N. Main, Mt. Pleasant 48858 (989) 772-9471; www.isabellabank.com

Jae Evans president, CEO and director

74.8

69.2

8.1

14.0 13.2

OTCQX ISBA

27.65 22.25

Regional bank

MBT Financial Corp. (12/2018) 102 East Front St., Monroe 48161 (734) 241-3431; www.mbandt.com

H. Chaffin president, CEO and director

61.8

57.7

7.2

17.7 10.6

NasdaqGS MBTF

12.49 8.75

Regional bank

Mackinac Financial Corp. (12/2018) 130 S. Cedar St., Manistique 49854 (888) 343-8147; www.bankmbank.com

Paul Tobias chairman and CEO

59.6

48.4

23.2

8.4 5.5

NasdaqCM MFNC

17.58 12.60

Regional bank

Fentura Financial Inc. (12/2018) 175 N. Leroy St., Fenton 48430 (810) 629-2263; www.fentura.com

Ronald Justice president, CEO and director

44.6

39.1

14.1

10.1 8.7

OTCPK FETM

23.00 19.30

Regional bank

Want the full Excel version of this list Ñ and every Crain's list? Become a Data Member: CrainsDetroit.com/data SOURCES: S&P Global Market Intelligence, (Marketintelligence.spglobal.com) and SEC filings. This list of publicly held companies is an approximate compilation of the largest companies headquartered in Michigan outside of Wayne, Oakland, Macomb, Washtenaw and Livingston counties that have stock traded on a public exchange. 52-week highs and lows are for period ending April 2, 2019. Information was provided by the companies or from public documents. NA = not available.

B Incorporated in Dublin, Ireland, but has North American base of operations in Michigan. C Succeeded Uwe Roehrhoff as president and CEO on Oct. 8, 2018. D Fiscal 2018 ending in April 2018. E Fiscal 2017 ending in April 2017. F Chemical Bank to acquire TCF Bank in a deal that is expected to close in the late third or early fourth quarter of this year.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

ROBOT FROM PAGE 3

The startup plans to announce a second pilot by the end of the year that will entail navigating sidewalks and streets at a yet-to-be-named college campus. PlanetM funded four additional pilot programs in its latest round: J France-based EasyMile: $103,600 to partner with Continental, Oakland University and the city of Auburn Hills to pilot an autonomous shuttle service at the school. Shuttles would be operated by OU students as part of a university STEM program. J Ontario-based Hi-Ho Mobility: $80,000 to pilot secure prescription drug delivery in rural sections of the Battle Creek area without sufficient access to public transit. Hi-Ho would work with Battle Creek-based Aequitas Mobility Services, which has already been providing non-emergency medical and work transportation for residents in the area. J Germany-based Naventik: $75,000 to launch a GPS receiver in the Detroit area that doesn’t require the usual hardware. Naventik has previously used its technology with Volkswagen in Germany and is now bringing it to the U.S. J France-based Navya: $85,000 to partner with Bestmile, Flagstar Bank and IXR Mobility to offer an accessi-

ble autonomous shuttle around the Detroit Medical Center. PlanetM is requesting around $2 million from the Michigan Economic Development Corp. to continue in fiscal 2020. Its mobility grants come in two categories. One allows companies and startups to test mobility technology on Michigan roads or airspace. Through the other application process, grant winners can use designated testing facilities in Michigan: the American Center for Mobility in Ypsilanti; Mcity, the University of Michigan’s autonomous vehicle testing center; and the GM Mobility Research Center at Kettering University. PlanetM also recently added two more organizations to its roster of testing site partners: Michigan Technological University’s Keweenaw Research Center, which has 900 acres of proving grounds and advertises its poor weather as a plus for autonomous vehicle testing; and the Michigan Unmanned Aerial Systems Consortium, which represents seven Michigan drone testing sites. Applications for pilot grants are open through June 1. Those seeking funding for testing can apply through Sept. 1, with applications evaluated on a rolling basis. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

CALENDAR FRIDAY, MAY 17 2019 Entrepreneurs Forum: Connections. 10 a.m. to 3 p.m. 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

SPOTLIGHT tenure. During early 2019, HAP gained enrollment under Medicare Advantage managed care after signing an innovative primary care-based contract with United Physicians and Oakland Integrated Healthcare.

Michigan names new chief tech officer

Kline

Genord

HAP appoints interim CEO

Health Alliance Plan of Michigan CEO Terri Kline plans to retire this summer after three years overseeing the 570,000-member health plan. She will be replaced on an interim basis by Michael Genord, M.D., HAP’s senior vice president and chief medical officer, while a national search commences, HAP said in an announcement last Tuesday. Officials for HAP said Kline, 60, helped improve the finances of the HMO, which is affiliated with Henry Ford Health System, resulting in a $30 million turnaround during her

Michigan’s Board of Education has chosen Kalamazoo Public Schools Superintendent Michael Rice to lead the state Department of Education, citing his track record of closing the “achievement gap” for minority students and his experience as an educator both in and Rice outside the state, the Associated Press reported. Rice, 56, won the state superintendent job on a 5-3 vote. The board conducted closing interviews with him and two other finalists before making the decision. Casandra Ulbrich, the board president, pointed to Rice’s “stellar reputation” in Michigan. “The combination of his experience and how well he did in the interviews really kind of put him a step above,” she said.

DEALS & DETAILS EXPANSIONS

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

Longtime IT director Jack Harris has been named the new chief technology officer of the Michigan Department of Technology, Management and Budget, after serving in an interim role since August. He replaces Rod Davenport, who left his post in August and now serves as chief information officer of Lansing Board of Water & Light. Harris, 65, was selected after a nationwide search was conducted, DTMB spokesman Caleb Buhs said in an email. He started his new role April 29. “He stood out among the other candidates for his extensive experience and knowledge in public sector IT and his leadership abilities,” Buhs said.

New superintendent for Michigan schools

J Commercial Contracting Corp., Auburn Hills, a construction contractor, has opened a location in the Grand Park Center office building, 28 W. Adams, Suite 201, Detroit. Website: cccnetwork.com

MERGERS & ACQUISITIONS J

National Health Investors Inc,

Murfreesboro, Tenn., a real estate investment trust, has acquired Hampton Manor of Shelby, an assisted living/memory care facility in Shelby Township, for $10.8 million and will lease the facility to an affiliate of Comfort Care Senior Living. The facility has 60 assisted living units. An additional 14 memory care units are under construction with an expected summer 2019 opening. Website: nhireit. com

NEW PRODUCTS J Terumo Cardiovascular Group, Ann Arbor, a cardiovascular surgery technologies company, and Talis Clinical, Streetsboro, Ohio, a health care software solutions provider, released the ACG-Perfusion and ACG-RemoteView Systems in North America to improve clinical and operational outcomes by breaking down data, technology and care team silos. Websites: terumo-cvs. com, talisclinical.com

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainsdetroit.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. CONSTRUCTION

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Gallagher Sharp LLP

Metcom, Inc., a supply chain management firm, announces that Mark Fikany has joined the company as Sales & Business Development Specialist. Mark comes to Metcom with over 30 years of experience in sales and business development, including 22 years in advertising sales. Most recently, he held the position of Group Advertising Director for Hearst Autos where he directed multi-media, content, sales, marketing, management, finance, and production teams for Hearst Men’s and Enthusiasts portfolios.

Commercial Contracting Corporation, an industrial-commercial construction & equipment installation company, announces that John Marinelli joins the firm as Director of Self-Perform Interiors. John brings 24 years of carpentry/ interiors experience providing leadership, estimating, & project management to customers throughout the Midwest. John is known for Commercial/Industrial projects in the fields of Office, Medical, Entertainment, Higher Education, Assisted Living and Historical Remodel.

Gallagher Sharp is pleased to announce that Adam P. Sadowski has rejoined the firm as an Associate after spending four plus years as an Assistant Attorney General in the Michigan Department of Attorney General, most recently in the Complex Litigation Division. He has experience in class actions, civil rights, no-fault PIP, intentional torts, tax appeals, bankruptcy, collections, premises liability, insurance coverage, legal malpractice, and railroad defense. See www.gallaghersharp.com.

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

NO-FAULT FROM PAGE 1

The increased financial exposure employers may face is unknown because nobody know how many drivers will opt-out or purchase less PIP coverage and rely on their health insurance plans to pick up the rest of their bills in the event they’re injured in a car accident. The nonpartisan Senate Fiscal Agency estimates the cost-shift to the Medicaid insurance program for the low-income residents would rise $65.9 million over a 10-year period. But Senate’s analysts also acknowleded “it is difficult to provide a precise estimate of the potential increase in Medicaid costs” because of the uncertain disruption the legislation would bring to the auto insurance marketplace. Kaylin sees a bigger issue looming if Michigan law no longer requires every driver to buy unlimited lifetime medical coverage for auto injuries. “The question is can the employer require the employees have full cov-

“The question is can the employer require the employees have full coverage (for auto accident injuries) if they’re going to work for them as a condition of employment. It’s never been thought of because we’ve always had the health care with auto insurance.” — Tony Kaylin, vice president at the American Society of Employers

erage (for auto accident injuries) if they’re going to work for them as a condition of employment,” Kaylin said. “It’s never been thought of because we’ve always had the health care with auto insurance.” That’s one of several fundamental changes that would occur if GOP legislative leaders can negotiate a deal with Democratic Gov. Gretchen Whitmer on letting drivers pick and choose from multiple levels of medical coverage — or none at all. One aspect of medical coverage for injured drivers the legislation does not address is Michigan residents who work for private companies with self-funded and federally regulated ERISA health plans. State insurance regulators can’t force those health care plans to cover auto injuries, which will likely cause confusion among drivers who want to cancel the medical portion of their auto insurance, said Laura Appel, senior vice president and chief innovation officer at the Michigan Health & Hospital Association. “They’re probably not going to know that their plans exempt auto,” Appel said of workers with self-funded ERISA plans that don’t currently cover auto injuries. The Michigan Health & Hospital Association opposes the two similar Republican-authored bills (Senate Bill 1 and House Bill 4397) allowing motorists to opt out of PIP coverage. “The notion that this is an idea that’s been fully vetted — that we’d

let people out from their PIP benefit entirely — I think is disingenuous,” Appel said. Insurance agent Jeremy MacDonMay 2019 of the Alma-based ald, 13, co-owner Mid-Michigan Agency Inc., said verifying whether a driver has a health insurance plan that covers auto injuries could be a new paperwork headache for agents. “Proving that would be a nightmare,” MacDonald said. “It’s bad enough when I have to verify if someone’s plan coordinates.” Under current law, drivers can get a discount on their auto insurance premiums if they’re able to coordinate their PIP benefits with their health insurance to shift exposure of claims to the health care plan. That process often involves a documented verification that the health plan allows coordination. Many large businesses, including Quicken Loans Inc., have employee health insurance plans that don’t allow coordination of benefits, reducing the employer’s exposure to medical claims. State Rep. Jason Wentworth, chair of a special House committee dedicated to auto insurance reform, said the burden lies with the motorist to opt out of PIP coverage altogether. “It would be on the consumer to prove that their health plan does qualify,” said Wentworth, R-Clare. Thirty-nine other states have laws allowing motorists to use their health insurance to cover medical claims from an auto accident instead of their auto policy, Wentworth said. “To me, it’s a simple process,” he said. Under the House-passed bill, motorists could choose to purchase $50,000 of PIP coverage with an additional $200,000 to cover acute hospital care; $250,000 of PIP coverage; $500,000 of coverage; or an unlimited medical plan. The fifth option is driving without the additional medical coverage, which covers lost wages, home modifications and round-theclock in-home attendant care for critically injured motorists — benefits that aren’t usually available through traditional health insurance plans. “Those are normal choices most states have provided for years,” said Jim Lynch, chief actuary for the Insurance Information Institute, a Washington, D.C.-based industry group. Critics of the bill worry that motorists who elect to buy less PIP coverage could end up being underinsured when an employer health care plan kicks in. Lynch said these kinds of scenarios have not played out in the decades of New Jersey being a no-fault state with a form of PIP choice. “I haven’t seen any cases of that happening,” Lynch said. “If it’s out there, it must be pretty uncommon.” The Michigan Department of Insurance and Financial Services as well as licensed insurance agents will be responsible for educating consumers about changes in their rights under the 45-year-old no-fault act and the different levels of PIP coverage, Wentworth said. “The marketplace and environment will change as this takes place … and open the system up to basically look like 49 other states,” he said. “It’s change, and everybody hates change. But it’s just something they’re going to have to accommodate.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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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 1 3 , 2 0 1 9

LAND

What Morouns would get in deal As part of the land-swap deal with the city of Detroit, the Morouns would get:

FROM PAGE 3

JJ28.45 acres controlled by the EDC at

City officials’ concerns The decision to push back the committee’s judgment came after a lengthy discussion Thursday of the city’s pending agreement with FCA. Several City Council members called the process rushed and lacking in transparency, with council member Andre Spivey saying “you’ve got to respect the process of what we have in place (at City Council).” Other concerns included the lack of a “legally binding, enforceable” number of jobs designated for Detroiters, as City Council member Raquel Castañeda-López put it. As part of its community benefits agreement, FCA pledged to give Detroiters priority for the 4,950 jobs that would be created in the city at its Jefferson North and Mack Avenue assembly plants. Detroit residents will be allowed to apply before the general public, but Castañeda-López and City Council President Pro Tem Mary Sheffield asked why FCA has not committed to ensure Detroiters make up a percentage of its ultimate hires. Buying land from one company to give to another company without allotting a specific number of jobs for Detroit residents is a “poor deal” for the city, Castañeda-López said. FCA would “like all of them to be Detroit residents,” Ron Stallworth of FCA’s external affairs said at the committee meeting. “We would prefer that … but to make a guarantee of a certain number that we don’t know if we could fulfill … it doesn’t make business sense.” Castañeda-López also expressed worries about transferring land to Crown Enterprises, and requested more investment from FCA for noise and air pollution prevention at nearby homes and schools.

Package of deals The 116.6 acres being swapped to the Morouns is valued at $10.5 million and an additional $43.5 million in cash is included in the deal that officials and the Auburn Hills-based automaker say

LIGHTRX FROM PAGE 3

But Morgan told Crain’s in an interview that the company aims to stay in business, although without him leading the company. He also apologized to the many customers who got caught in the money crunch and were not served properly. “The answer lies in the bankruptcy. We have customers who have petitioned (for their money back or refunds),” Morgan said. “We are not authorized to give refunds pre-petition. We have (previously) honored many of these claims and feel we have 95 percent resolved.” Morgan said in markets where LightRx has an open clinic, many of those customers have been given refunds or otherwise been taken care of. But in markets where clinics have closed, he said, customers must file claims with the bankruptcy court. On LightRx’s website, seven Michigan locations are listed: Birmingham, Canton, Dearborn, Grand Blanc, Novi, Troy and Okemos. Over the past year, LightRx has closed offices in Shelby Township, Livonia, Brighton, West

1420 Springwells Court (valued at $2.6 million); controlled by the EDC.

JJ14.53 acres controlled by the EDC in the I-94 Industrial Park at 9240 Mt. Elliott St. (valued at $1.27 million). JJ9.74 acres controlled by the EDC in the

I-94 Industrial Park at 6445 Miller St. (valued at $848,549).

JJ4.77 acres controlled by the EDC at 696 Hart St. (valued at $500,000).

KURT NAGL/CRAIN’S DETROIT BUSINESS

As part of the land swap with the city, the Morouns’ Crown Enterprises would receive a large chunk of mostly vacant land in the I-94 industrial park.

is critical to its investment. It’s part of an overall $107.6 million package of land deals for nearly 215 acres of land FCA needs for the project, the city announced last week. During Thursday morning’s Economic Development Corp. board meeting, which lasted a little more than two hours on the 22nd floor of the Guardian Building downtown, board members and others expressed concerns over having just a few days to review certain components of the deal, among other things. Specifics of the real estate swaps were revealed publicly late Friday during a news conference. “We just got several documents,” said Castañeda-López, who attended the meeting and addressed the board. Some also wanted additional community input. Matt Walters, deputy group executive for Duggan’s Jobs and Economy Team, said a delay in the vote doesn’t torpedo FCA’s planned investment. “Another week wouldn’t kill the deal, but it would have to only be a week,” Walters told the board. “Make or break, next week for this whole deal. Chrysler has made that very clear to us.” In addition, if title to some of the properties Crown Enterprises is receiving in the land swap doesn’t ultimately clear, the Morouns receive $21 million cash — $15 million from the city and $6 million from FCA, according to Walters, who later said the city is confident

Bloomfield Township, Ann Arbor and Grand Rapids. Michigan Attorney General Dana Nessel’s office continues to investigate the company’s practices after receiving more than a dozen complaints for poor service and non-completion of promised services, a spokesman said. The AG’s office is responsible for enforcing the Michigan Consumer Protection Act that prohibits unscrupulous business practices, including deceiving, misleading or overcharging customers and failing to refund clients based on terms of an agreement. Over the past several years, fat-dissolving and skin-tightening procedures for body contouring have been marketed in magazines and touted by movie stars. The nonsurgical procedures seem less invasive and appealing when weighed against surgery, but health experts have always recommended people use diet and exercise as tried-and-true methods to lose weight, trim up and feel better. LightRx lists many services that include medical weight loss, body contouring, laser lip, cellulite reduction, skin tightening and resurfacing and laser hair removal. One $999 package per area deal describes “total transfor-

JJ1.06 acres near St. Anne Street (valued at $38,521). JJ4.02 acres at 7529 St. Aubin St. (valued

at $325,000). JJ0.84 acres at 2001 W. Fort St. (valued at $110,000). JJ3.09 acres at 3600 Toledo St. (valued at $310,000). JJ0.25 acres at 1201 Terminal St. (valued at $32,670). JJ0.24 acres at 925 Clairpointe St. (valued at $31,363). JJ2.68 acres at 17140 Mitchell St. (valued at $233,482). JJ45.58 acres at 11111 French Road (valued at $3.97 million). JJ1.35 acres at 12121 Mack Ave. (valued at $117,612).

the titles can be cleared and that the city and FCA won’t have to pay that money. “The Crown Enterprises transaction is really the heartbeat of the entire deal,” Basil Cherian, senior policy adviser to Duggan, said during the meeting. Other meeting attendees were concerned about the Morouns’ plans for other properties included in the deal package, including whether some would be demolished and what one speaker said was its negative effect on the Hubbard Richard neighborhood near the Ambassador Bridge over several decades. “The Morouns have basically decimated our housing stock,” said Jessica Trevino, a resident of the area. “Somehow we are still triumphant. Our property values have been going up and we are very proud of that. “Giving or swapping property to somebody who has done nothing to help the community in the past seems really wrong.” A Crown Enterprises representative was unavailable for comment. Some also said the purchase price for the Crown property was high compared with other properties involved in the FCA plans.

nomic growth, told the board there were components that he wasn’t thrilled about. “There are parts of this deal where I had to hold my nose,” Lewand said without elaborating. “Everything must be in the context of these (4,950 jobs and $35 million in community benefits) headlines, including the less enticing parts of the deal.” A message was sent to a Duggan spokesman seeking additional detail on Lewand’s remarks. The EDC is technically separate from the city government. It is staffed by the Detroit Economic Growth Corp., a nonprofit organization that receives millions in funding from the city through a contract. As part of the $107.6 million in land deals, Detroit would pay $50.6 million, with no money coming from the general fund, and it has requested $57 million in grants and loans from the state to fund the property acquisitions. The $50.6 million consists of $36 million in unallocated bond funding; $7.5 million from the Detroit Brownfield Redevelopment Authority; and $7.1 million from the sale of the Millennium parking garage at 432 W. Congress St.

another $900 million retooling the Jefferson North Assembly plant. In total, nearly 5,000 new automotive jobs are expected to be created in Detroit, the city and automaker announced in February. There are 3,850 jobs expected at the new Mack Avenue assembly plant, 1,100 jobs at FCA’s Jefferson North Assembly plant in Detroit and another 1,500 jobs at its manufacturing plants in Macomb County as part of the overall investment. Various components of the project need additional city approvals, including a $35 million community benefits agreement. If it receives its necessary approvals, construction on the new FCA plant would begin in the second quarter of this year and would mark the first new plant in Detroit in 30 years. The $160 million expected 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, according to documents submitted last week to Detroit City Council.

Not all roses

FCA’s plans

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Before terms of the deal were discussed in detail, Lewand, Duggan’s group executive for jobs and eco-

FCA plans to spend $1.6 billion turning the Mack Avenue Engine Complex into a new Jeep assembly plant, and

mation without surgery.” Crain’s previously reported that the bulk of complaints, which were filed with the Eastern Michigan Better Business Bureau, revolved around problems receiving refunds. Some complaints involved poor service and unfulfilled promises of weight loss or skin rejuvenation.

million with 100 to 199 creditors from Michigan, Florida, Arizona, Kentucky, Texas and more than 10 other states. “The company grew too fast,” Morgan said. “We were experiencing good success going into 2017, during the first half. There was a lot of demand from investors to open clinics. We continued to do that until the end of 2017, when we started to feel growing pains.” In early 2018, Morgan said LightRx decided to continue to add clinics. “We were assured (by Chinese investors we would) get a $15 million equity investment. We had a drop dead date to lose in July, then in late August. But the funds did not come in. The cash flow was really bad. ... The investors dropped out.” Morgan said the company was counting on the $15 million investment to address boost cash flow. “We opened a lot of stores, 40 to 88. The revenue when opening a new store takes time to ramp up. It was not ramping up according with projections,” he said. Among other problems, Morgan said expected growth did not materialize because of an “oversaturation” of competing spas in certain markets. But Morgan said he believes the new

Bankruptcy details LightRx is one of the business names of parent company Body Contour Ventures LLC. The parent company also has 28 other entities that also filed for bankruptcy on Feb. 22, including BCA Acquisitions LLC and American Aesthetic Equipment LLC, according to filings in U.S. Bankruptcy Court in the Eastern District of Michigan in Detroit. Michigan offices of LightRx that filed for bankruptcy include LRX Dearborn, LRX East Lansing, LRX Grand Blanc, LRX Hoffman Estates, LRX Troy and LRX Novi. There also are Premier Laser Spa locations in Greenville, Indianapolis, Louisville, Pittsburgh, St. Louis and Virginia. Body Contours’ bankruptcy filing showed assets of $1 million to $10 million and liabilities of $10 million to $50

Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

buyers will take the company out of bankruptcy and continue the business. “We are very close, near the end of the process. We are hoping to close bankruptcy by the end of this month,” he said. “It has to be sold through the bankruptcy process. We have some American buyers, mainly a group of investors in the Detroit area.” In 2002, Morgan, who started his business career in grocery store management, founded American Laser Centers, but sold the company to investors in 2007, he said. In 2009, he was asked to come back and help turn around the business. But he left again in 2011. Crain’s reported in 2011 that American Laser Centers closed 50 offices and filed for bankruptcy. In 2014, American Laser Skincare, a successor company, also filed for bankruptcy. “I was nowhere near those companies in 2011 and 2014 when they filed for bankruptcy,” he said. Morgan said he plans on helping the company with the transition, but has no definite plans. “I would have loved to have continue to grow the LightRx,” he said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 1 3 , 2 0 1 9

MARIJUANA FROM PAGE 1

Employment experts told Crain’s most businesses are unlikely to bend on drug testing rules unless the drug is legalized at the federal level, something they believe will happen within five years, and as marijuana becomes more mainstream like alcohol. Livonia-based metal stamper and engineering firm AlphaUSA has not and has no plans to adjust its pre-employment drug screening policies because “... our position on drugs in the workplace hasn’t changed” and is as much a cultural issue as it is a safety issue, said David Lawrence, chief administration officer. The company also performs a multipanel drug screening for reasonable suspicion and post-leave of absence, Lawrence said. A job candidate would not get hired if they failed a drug test and an employee would be terminated. Drug test failures for marijuana use have also risen nationally, but failures are more pronounced in the states that have legalized recreational use of the drug. Oregon and Colorado, which both passed recreational adult use in 2014, have seen drug test failures rise from 1.8 percent in 2008 to 4.3 percent last year and 1.6 percent in 2008 to 3 percent in 2018, respectively, according to the Quest Diagnostics Drug Testing Index. Drug tests for marijuana typically include a urine test, which can indicate whether the main chemical in marijuana, tetrahydrocannabinol or THC, has been ingested in the past 30 to 45 days. Darcey McAllister, principal consultant for human resources advisory firm HRT Northwest in Portland, Ore., said companies in Oregon and Washington state also haven’t changed drug testing policies, but have

changed how seriously they take failures. “From an HR perspective, nothing changes,” McAllister said. “If you were testing before, you are testing now. But as time went on, no one talked about it anymore. When it’s new, it’s a big shiny topic, then it fades away. Companies made sure to communicate that just because it was legal, it wasn’t acceptable on the job. But if you can pass the test, the employers here don’t seem to care if you’re using. Just don’t talk about it. It’s more in line with alcohol. I expect the same for companies in Michigan in the future.” While Troy-based Delphi Technologies maintains its drug screening policy of testing pre-employment, a positive test isn’t necessarily damning, said Kristen Kinsley, director of global digital media and integrated content. If a candidate fails a drug test, it’s taken into consideration in the hiring process at the auto supplier, Kinsley said. Regardless, workforce drug positivity — which includes testing for marijuana, opioids, heroin, amphetamines and PCP — hit a 14-year high nationally in 2018, according to the Quest index. “Our in-depth analysis shows that marijuana is not only present in our workforce, but use continues to increase,” Barry Sample, senior director of science and technology at Quest Diagnostics, said in a press release. “As marijuana policy changes, and employers consider strategies to protect their employees, customers and general public, employers should weigh the risks that drug use, including marijuana, poses to their business.” For Detroit-based DTE Energy, the safety of its workers who deal in high-voltage electricity and explosive natural gas, a policy change on marijuana is dangerous. The company doubled down on its communication to employees last year that legality

WATER FROM PAGE 1

Bhargava has installed former Chrysler CEO Tom LaSorda as CEO of Hans Water and Power. LaSorda co-founded with Bhargava Stage 2 Innovations LLC in 2012, a then $100-million investment fund that was dedicated to creating sustainable water initiatives and manufacturing improvements, when LaSorda was still serving as CEO to struggling electric vehicle maker Fisker Automotive. Hans Power and Water plans a soft opening of a storefront in downtown Birmingham at 239 Pierce St. this week. The Hans Premium Water Appliance starts at $9,800 but with a leasing option that starts at $120 a month, said Matt Rouhan, head of insides sales and showrooms for the company. The company also plans to launch a system for light commercial buildings, such as small offices and restaurants, Rouhan said. The reverse osmosis system can remove certain levels of contaminants, such as PFAS and hardness, that plague homes with wells and city water, Rouhan said. While other systems exist on the market that can greatly reduce contaminants, there are very few wholehouse systems like Hans’, he said. The system’s ability to remove at least some levels of PFAS from water may give the company a sales boost as Michigan continues to struggle with widespread contamination of the chemical used in stain repellents and fire retardants. Last week, Michigan Attorney Gen-

HANS POWER AND WATER

The Hans Premium Water Appliance.

eral Dana Nessel issued requests for proposals to outside legal counsel to support the state’s potential claims against manufacturers, distributors and other responsible parties related to PFAS contamination in Michigan’s water table. PFAS is known to cause reproductive, developmental, liver and kidney and immunological disorders in exposed laboratory animals, according to the U.S. Environmental Protection Agency. Bhargava has spent years trying to create and commercialize its “Rain Project,” a modular desalination unit the size of a car called the Rainmaker that uses electricity to distill seawater into fresh drinking water. Bhargava, a Princeton University

doesn’t equate to company acceptance, said Diane Antishin, vice president of human resources. DTE is also a federal contractor, so it remains dictated by federal rules that require employees receive drug testing for work related to the government. Lansing-based CMS Energy also tests employees for drug use, including marijuana. “The safety of our employees and communities is top priority for Consumers Energy given the extremely hazardous nature of working with electricity and natural gas in our daily operations,” the company told employees following legalization. “As stated in our code of conduct, we strictly prohibit the use of unauthorized drugs by all employees, including marijuana and are committed to keeping the workplace free from the effects of substance abuse.” The company's response to a positive test is evaluated on a case by case basis and could range from treatment to termination, a CMS spokesperson said; their internal process did not change with marijuana legalization. Drug test failure rates for marijuana among federally mandated, safety-sensitive workers continues to rise nationally, though at a much slower pace than the general workforce population, according to the Quest index. Marijuana positivity rates for employment drug tests increased to 0.88 percent in 2018 from 0.71 percent in 2014. That’s a nearly 24 percent increase in raw numbers of failures, according to Quest. As drug test failures have risen among that workforce, so has the number of tests proven invalid by people attempting to cheat the test through various means — common cheats are diluting the urine by drinking a higher-than-normal amount of water, substituting urine with a synthetic or another animal or using chemicals, according to Quest Diagnostics.

Despite increased drug test failure rates, companies like DTE don’t plan to create different policies for their safety-related, federally mandated workforce and their white collar office workers not covered by federal rules. “I just can’t see moving to a place where certain employees have different rules,” Antishin said. “That could be bad for our culture.” However, a place where drug testing for marijuana is increasingly going to the wayside is in the retail and hospitality sectors as it faces increased labor shortage pressure from higher paying industries, said Brett Rendeiro, partner at Butzel Long PC in Birmingham. “If they tested, they wouldn’t have anyone showing up to work,” Rendeiro said. “In any job where they strongly suspect marijuana use, bartenders, clerks, gas station attendants, etc., they choose not to test.” Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association, said members reported 6.7 percent in wage inflation last year, resulting in many being unable to afford proper staffing. And because wages are even higher in other industries, retailers ditching drug testing is one way to incentivize a workforce. “For our more engaged and astute operators (drug testing decisions are) research driven given what happened to the hospitality workforce in Colorado after recreational marijuana was legalized,” Winslow told Crain’s in an email. “Large swaths left to work in both manufacturing and retailing segments of the industry making $18-plus (an hour) to start. For others, it is the raw scarcity of an available workforce to meet their staffing needs. There is a de facto reality that the difficult task of properly staffing your establishment in 2019 becomes virtually impossible in the recreational marijuana era.”

dropout and former monk, produced his own documentary on the project in 2015 called “Billions in Change.” In the documentary, Bhargava claims the units can be put on a barge in the ocean and produce between 15 million and 20 million gallons of freshwater daily. “... if you had 100 or 200 barges, let’s say off Southern California’s coast...all the shortfall of Southern California would be covered,” Bhargava said in the documentary. “The answers have to be lower in energy. Then it needs to be made in massive scale. If we have thousands of barges throughout the world, we can address the needs of, you know, ridiculous amounts of people.” As of 2017, Bhargava’s company had created two Rainmaker machines but it’s unclear whether they were ever deployed for use. Bhargava has invested heavily in solving the world’s problems even beyond water under another investment firm, Oakland Energy and Water Ventures LLC, which was designed to invest in energy conservation and water treatment. He also founded and remains the primary funder of The Hans Foundation, which seeks to improve life in his native India. The nonprofit’s goal is to provide clean water, reliable electricity and sufficient food to impoverished regions in India. Bhargava’s inventions implemented in the country include an electric bicycle, a device to improve blood circulation, a graphine lithium-ion battery, farming techniques and a power pack to provide electricity to rural areas. In October 2017, local and state governments in India committed to buying

1 million of the power packs. The organization has also funded several health care initiatives, including opening eye-care facilities and hospitals. Bhargava, who was unavailable to comment for this article, created Innovation Ventures, later the parent of 5-Hour maker Living Essentials LLC, in 1998 after he bought the formula for a drug for hangovers from a New Jersey chemist. The product was later named Chaser and was the start of Bhargava’s success. He created Living Essentials as a new arm to market Chaser. The product later became 5-Hour Energy, which saw great success by putting the product in small two-ounce bottles and selling them in gas stations and convenience stores. The company began distributing the product in 2004 and by 2013, the company was generating annual revenue of more than $1 billion. In a 2014 interview with Crain’s, Bhargava said 5-Hour Energy provided him the opportunity to “be useful” in helping others. He’s taken Warren Buffett’s “Giving Pledge,” vowing to give 50 percent of his wealth to charity, most of which to date has happened in his native India. “The jargon of philanthropy is sustainability,” he said at the time. “Things don’t need to be sustainable; people just need to be helped. If I am poor, if I am starving, I might be dead by tomorrow, I need help today. What we need to do is go to them, ask them what they need, and find a way to give it to them.”

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

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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 1 3 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Key bond question for $140 million Birmingham development heads to voters

State’s first marijuana delivery service begins

MAY 3-9 | For more, visit crainsdetroit.com

he Birmingham City Commission is putting a bond issue to voters for a new $140 million downtown development. Last week’s 6-1 vote following a more than two-hour presentation and Q&A session cements an Aug. 6 ballot question asking whether the city should sell up to $57.4 million in unlimited tax general obligation bonds to cover part of the costs of the development that’s anticipated to bring a new five-story, 55,000-squarefoot RH (formerly Restoration Hardware) luxury home-goods retail store and other uses. The bond sale would pay for a parking deck with about 1,150 spaces, plus a 530-foot extension of Bates Street from its terminus at Willits Street, linking it up with North Old Woodward Avenue. The bond issuance would be paid off through a dedicated stream from the city’s parking system. City Manager Joseph Valentine said last week that the parking structure would be funded with $7 million from the parking system’s reserve funds, which is at about $17.5 million; $3 million from a parking structure special assessment district; and the balance from the bond issue. The overall development would also include 25 rental residential units, 27,000 square feet of office and another 10,000 square feet of retail space across multiple buildings. 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. In addition to Boji, other development partners involved in the Woodward Bates Partners LLC project are John Rakolta Jr., chairman and CEO of Detroit-based construction giant Walbridge Aldinger Co.; Paul Robertson, chairman of Bloomfield Hillsbased homebuilder Robertson Bros.; and Victor Saroki, founder of Birmingham-based Saroki Architecture. “This store is a game-changer for our city,” Saroki said at the meeting. “It is a game-changer for our region and for our state.” Construction on the first phase of the project, which includes the deck and the RH store, would begin in November and take about 30 months. Project backers have said that if the vote fails, the development does not move forward.

BUSINESS NEWS J AxleTech, a Troy-based supplier of commercial vehicles, is being sold again, this time to Meritor Inc. for $175 million. The acquisition from global asset-management firm The Carlyle Group would increase Troybased Meritor’s exposure to after-

RH/SAROKI ARCHITECTURE

A 55,000-square-foot, five-story RH (formerly Restoration Hardware) store is planned for downtown Birmingham in a project that’s expected to bring apartments, office, parking and more retail space.

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

$175M

Expected price of Meritor’s planned acquisition of AxleTech

$57.4M

Amount of proposed bonds for $140 million development in downtown Birmingham

Number of people expected to work at a new nonprofit sewing center in Detroit backed by Carhartt

market, defense and off-highway segments where the company sees an opportunity to expand. J Sweden-based tech company Hexagon AB is building a $16 million technology center in Novi as part of a plan to consolidate its manufacturing intelligence division’s footprint in metro Detroit. The 88,000-squarefoot Technology Center of Excellence will include an 11,000-square-foot showroom and demonstration area, along with a technical training center and 15,000-square-foot laboratory and calibration hub. J Thousands of Detroit’s new LED streetlights are prematurely dimming and burning out in parts of the city and more could fail, according to city officials. The city’s lighting authority, which maintains the LED streetlights in neighborhoods across Detroit, sued San Jose, Calif.-based Leotek Electronics last Monday in federal court, the Associated Press reported. J Owners of a small Mexican restaurant in downtown Detroit plan to open a second location double the size in Eastern Market. Jose’s Tacos is expected to open this summer in a building at 2510 Market Street, which is owned by Sanford Nelson. J After years of operating out of temporary spaces around the city, Detroit clothing brand Détroit Is The New Black is opening its first permanent flagship location in downtown Detroit at 1430 Woodward Ave. Owners spent upwards of $500,000 building out the 2,300-square-foot space. J Fast-casual barbecue restaurant Woodpile BBQ Shack will no longer

open in a redeveloped Woodward Avenue building in Detroit’s New Center. The Clawson-based restaurant exited its plans to open in The Platform LLC’s Baltimore Station project due to a timing conflict with another incoming location. J Paying homage to Detroit roots that date to the 1850s, the Detroit City FC soccer club is heading into the season with Stroh Brewery Co. as its new title sponsor. The Stroh’s logo will be featured on the front of all DCFC jerseys for the season as part of the agreement. J Bob’s Discount Furniture is putting its stamp on the metro Detroit furniture market, with plans to open four locations this month. The Manchester, Conn.-based furniture giant is set to open the new stores on May 23 in Novi at 43460 W. Oaks Drive, Livonia at 13550 Middlebelt Road in the Millennium Park Shopping Center, Taylor at 14544 Racho Blvd. and Shelby Township at 13833 Hall Road. J Ken Holland has taken his talents to Edmonton. The longtime co-architect of the Detroit Red Wings’ hockey success was named general manager and president of hockey operations for the Edmonton Oilers.

NONPROFIT NEWS J The Neighborhood Service Organization has a buyer, MHT Housing Inc., for its Midtown drop-in center for the homeless and is moving forward on its $20 million plan to build a new Detroit shelter and supportive housing. Olympia Development, which had a verbal agreement with NSO for purchase of the Tumaini Center, said it is working on a formal joint venture with MHT. NSO President and CEO Linda Little said the nonprofit plans to break ground in June on the affordable housing component of the project on Mack Avenue, just east of Gratiot Avenue. J The Detroit-based Sphinx Organization, a nonprofit working to foster diversity in classical music, has secured the largest gift in its history, a $3 million donation from the Fund II Foundation in Austin. J Detroit’s lack of safe, affordable housing could become much worse in the next few years, and those most in need are likely to suffer the worst, according to a report by the nonprofit Michigan League for Public Policy, which says that developers might not have the incentive to build housing for the city’s poorest residents.

etroit medical marijuana dispensary Utopia Gardens began deliveries this week. The medical marijuana provisioning center, on East Lafayette Street near Belle Isle, became the first legal medical marijuana delivery service in the state. It applied for state approval at the beginning of the year. Utopia Garden takes delivery orders on its website or from phone-ins with a minimum $45 order for delivery, Donnell Cravens, general manager at the dispensary, told Crain’s earlier this week. The shop does not charge a delivery fee, but largely will limit delivery to the greater downtown area, at least at first. The Michigan Department of Licensing and Regulatory Affairs dictates that shops like Utopia can deliver medical marijuana and marijuana products only to a card-carrying medical marijuana

patient at the address listed on their driver's license. Customers wanting delivery must send the shop a photo of both their state-issued ID and medical marijuana license, Donnell said. The state also dictates that drivers can only deliver 2.5 ounces of marijuana per patient to no more than 10 patients per delivery. Patients are also restricted to a purchasing limit or 10 ounces delivered per month. Utopia Gardens is accepting only debit cards for delivery in an attempt to limit the risk of drivers carrying cash. Detroit’s BotaniQ on Rosa Parks Boulevard in Corktown is also expected to begin deliveries in the this week. The medical marijuana delivery rules were approved by the Joint Committee on Administrative Rules in November.

BILL SHEA/CRAIN’S DETROIT BUSINESS

Workers from FieldTurf work on Thursday to install the new artificial turf inside Ford Field. It’s the third such field used by the Detroit Lions since they began play at the stadium in 2002.

Lions liked turf so much, they bought 2 sets W

ith apologies to Jeffrey Lebowski, the Detroit Lions’ artificial turf at Ford Field ties the room together so well that they bought two of the vast green rugs. One is being installed this month, a replacement for the grass that was put down in 2013 after the stadium’s original fake grass from the stadium’s 2002 opening finally wore out. A second field was ordered as a future replacement to be put down in 2022 or later. The artificial grass comes from Montreal-based FieldTurf, which has supplied the grass for the stadium since it opened at a cost of $500 million in 2002. The Lions didn’t disclose the cost of their new turf, a model called FieldTurf Classic HD from FieldTurf, owned by French flooring giant Tarkett Group Inc. since 2005. The installation began May 2 and is expected to be finished by the end of the month. The Lions held a brief event for reporters to watch turf work Thursday morning.

The Lions previously told Crain’s that they’re replacing the field ahead of its expected lifespan of at least 10 years because of wear and aesthetic reasons. The team said there are no safety or performance issues, but want to ensure the artificial grass performs well and looks good by replacing it now. The turf’s warranty isn’t being used for the replacement, the team confirmed. The original Ford Field turf from 2002 that was pulled out in 2013 was FieldTurf Classic, a product that was improved to the Classic HD model that uses an improved polymer, the company said. “Every component has been tweaked,” FieldTurf Regional Vice President Jamie MacDonald said about the company’s ongoing research into all aspects of its grass products. Segments of the new turf were being stitched together, stretched and rolled by FieldTurf work crews Thursday. The grass lies directly atop the stadium’s concrete floor.

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