Crain's Detroit Business, June 10, 2019 issue by Crain's Detroit Business

Arts advocacy group Creative Many to shut down Page 3

JUNE 10 - 16, 2019 | crainsdetroit.com

Tigers’ attendance near MLB worst Page 3

DETROIT

UNREFINED ARGUMENT

In pet coke fight, Marathon points fingers at dusty neighbors By Chad Livengood clivengood@crain.com

At Marathon Petroleum Corp.’s refinery in Detroit, a chunky black substance refined from heavier Canadian crude oil drops from two cylindrical towers into a football field-size pit. A crane built over top of the 30foot walls of the pit scoops up the petroleum coke and moves it around the pit as sprinklers mounted around the top edge of the walls shower the soot-like substance with water to prevent dust from escaping the storage pit. When the pet coke has cooled off enough, the crane operator scoops up a load and dumps it into a hole

The Marathon refinery in Detroit has been at the center of a battle over dust. LARRY PEPLIN FOR CRAIN’S

that feeds a covered conveyor belt. The pet coke travels inside the conveyor belt tube to an enclosed building, where it’s dropped into 40 semi-trucks daily that haul the coke to power plants in Monroe and Toledo, which burn it for energy. Before the tractor-trailers leave the loading building, the wheels are power-washed to wash away any lose pet coke dust that may have coated the truck and trailer in the loading process. Across Oakwood Boulevard from the refinery, front-end loaders scoop up and dump asphalt millings at neighbor Edward C. Levy Co.’s Cadillac Asphalt plant, kicking up dust that can be seen from atop of the glowing 200-foot tower at the Marathon plant that defines the skyline of industrial southwest Detroit. SEE PET COKE, PAGE 24

HEALTH CARE

WSU tab for physician group bankruptcy may top $16M UPG to shrink footprint as it emerges from Chapter 11 By Annalise Frank

Wayne State University is fronting what could potentially total more than $16 million in payments for the School of Medicine’s faculty practice, University Physician Group, to rebuild after bankruptcy. U.S. Bankruptcy Court in Detroit last Monday approved UPG’s reorga-

nization plan and exit from bankruptcy after the nonprofit medical practice suddenly filed for Chapter 11 bankruptcy protection in November. After “extensive negotiations” with UPG, Wayne State agreed to provide financial assistance under a restructuring support agreement, according to a version of the reorganization plan submitted April 9.

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Need to know  Court OKs nonprofit practice’s reorganization plan and its exit from bankruptcy protection  It suddenly filed for Chapter 11 in November  UPG on “path to be a leading urban academic practice,” CEO says

Wayne State is, in essence, acting as a bank, providing exit financing to UPG for general unsecured creditor claims (it’s excluding claims by Wayne State and an affiliated nonprofit Fund for Medical Research and Education). A 15-year term loan from Wayne State will be used to pay 80 percent of unsecured claims that are currently

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projected at approximately $10.7 million, but could rise as court proceedings are finalized, according to a document in U.S. Bankruptcy Court in Detroit. The Detroit university is also providing a revolving loan of at least $2.5 million that could range up to $7.5 million for UPG’s working capital needs. SEE WSU, PAGE 22

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MICHIGAN BRIEFS

INSIDE

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

Enbridge seeks court order on Mackinac Straits tunnel deal Enbridge Energy Co. is seeking a court order that its deal with former Gov. Rick Snyder's administration to build a utility tunnel under the Straits of Mackinac to house its Line 5 oil pipeline is legally enforceable after negotiations with Gov. Gretchen Whitmer broke down last week. The Canadian oil pipeline giant filed a legal action last Thursday in the Michigan Court of Claims, seeking a judge’s ruling to counter the legal opinion Attorney General Dana Nessel issued in March that a hastily passed lame-duck law authorizing the tunnel was unconstitutional. An Enbridge executive said the court action was prompted by Gov. Gretchen Whitmer’s insistence on the existing Line 5 pipeline being shut down in two years — three years before Enbridge’s earliest target date for building a $500 million tunnel and new pipeline. Nessel’s opinion has the force of law unless a court says otherwise. Enbridge’s legal action comes after weeks of talks with Whitmer to salvage the tunnel project, which were intensified last week after Nessel first told Crain’s that she would go to court

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OPINION

to shut down Enbridge’s pipeline by the end of June if no resolution were reached over the tunnel project. Guy Jarvis, executive vice president of liquids pipelines for Enbridge, said Whitmer wants the company to shut down the existing Line 5 pipeline within two years, leaving a three-year gap without the flow of Canadian crude oil and natural gas liquids to refineries in Michigan, Ohio and Ontario. “It does appear that they’re holding firm to that requirement, which we do not see as being a viable solution forward,” Jarvis said in a conference call with reporters. Enbridge is seeking a court order to validate its previous agreement with the Snyder administration to do engineering and preparation work this summer in the Straits of Mackinac waterway between Michigan’s Lower and Upper peninsulas. Enbridge’s engineers estimate the earliest a tunnel could be in service is 2024. Whitmer has been pushing for a faster timeline, amid concerns that the 66-year-old twin 20-inch pipelines at the bottom of Lake Michigan are at risk of a rupture.

Michigan tourism campaign touts summer escapes

Michigan’s state travel agency has kicked off a new marketing campaign to attract summer visi-

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called “Pure Sounds of Michigan.”

State to allow commercial solar panels on more farmland

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Enbridge’s Line 5 pipeline runs under the Straits of Mackinac.

tors, the Associated Press reported. The Meanwhile in Michigan campaign is building on a national cable advertising blitz that started in March. It will use radio, billboards, Chicago buses, TV and social media to get the message across. It will target 20 Midwestern markets ranging as far away as St. Louis, Milwaukee, Pittsburgh, Kentucky and Cincinnati. The Pure Michigan agency said the ads describe the state as a peaceful and scenic getaway from hectic daily routines. “Meanwhile in Michigan is really about taking the time to slow down and relax with a perfect escape in

Pure Michigan,” said Dave Lorenz, vice president of Travel Michigan, part of the Michigan Economic Development Corp. A special focus of the $2.5 million campaign will be the state’s off-thebeaten-path destinations such as Silver Lake Sand Dunes and Au Sable River Dunes. The website michigan.org/hidden-gems offers itineraries that will enable visitors to design their preferred summer trip. The campaign runs through Aug. 26. Also part of the Pure Michigan campaign, Travel Michigan in May released a free collection of ambient sounds from 10 state parks

Michigan officials have decided to allow solar panels for larger commercial solar arrays to be built on more farmland around the state. Gov. Gretchen Whitmer and Michigan Department of Agriculture and Rural Development Director Gary McDowell announced last week that the department has decided to allow land enrolled in the Farmland and Open Space Preservation Program to be used for such solar power projects. McDowell said in a statement the change “will not result in a loss of usable farmland” and will provide a “new opportunity for Michigan’s farmers to diversify.”

CORRECTION Heiko Wenczel is head of the Epic Detroit Innovation Lab. A story in the June 2 issue misspelled his name. The article also misstated Ford’s creative agency: It is Imagination.

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NONPROFITS

Creative Many’s closure will leave statewide gap By Sherri Welch swelch@crain.com

Creative Many will shut down at the end of the month, leaving Michigan without a statewide advocacy group for arts and culture for the first time in over 20 years. That gap is something the Michigan Council for Arts and Cultural Affairs, the state’s lead agency for arts and culture policy and funding, plans to broach with leaders of associations and membership groups in the creative sector late this month. While it had programmatic funding, Creative Many lacked unrestrict-

Need to know

J Detroit-based Creative Many to cease operations at end of June J Closure follows inability to find way to support operations, advocacy, as well as programs J State arts council to convene meeting to discuss advocacy gap

ed operating dollars and the ability to fundraise enough to keep pace with operating costs, said Interim President and CEO Steve Wilson. “That was a red flag I saw early on,” Wilson said.

Wilson, the former head of the Frey Foundation in Grand Rapids and the Ruth Mott Foundation in Flint, was named interim president and CEO of Creative Many last fall when Jennifer Goulet stepped down after leading the agency for nine years. Creative Many tried to cut its way out of its funding issues, eliminating its communications department and two staff positions (leaving it with five employees) and downsizing its advocacy program in January, Wilson said. Its board also considered refocusing on its core mission around advocacy and exiting program work, he

said. Beyond arts advocacy, Creative Many had taken on other programs, providing wraparound services for artists and smaller arts organizations with support from Wilson funders including the Kresge Foundation, New Yorkbased Ford Foundation and others. Those programs included, for example, a series of workshops on profes-

sional practices on everything from intellectual property rights to setting yourself up as a business as an artist. But it was all to no avail, Wilson said. The decision to cease operating was difficult, knowing it would cost five staff members their jobs and Michigan a statewide advocacy voice for the arts and cultural sector, said Creative Many’s vice chairman, Arnold Weinfeld, who is interim director of the Institute For Public Policy and Social Research at Michigan State University. SEE CREATIVE, PAGE 24

DEVELOPMENT

Detroit has few ways to prod District development By Bill Shea bshea@crain.com

and Kirk Pinho kpinho@crain.com

SPORTS BUSINESS

Tigers slump takes a toll

LARRY PEPLIN FOR CRAIN’S

The Detroit Tigers played Tampa Bay at Comerica Park on Tuesday.

Attendance, revenue slide continues as rebuilding team struggles By Bill Shea bshea@crain.com

If game attendance is the proverbial canary-inthe-coal mine for a team’s popularity with fans, then the bird is gasping and wheezing in Detroit. The Tigers, a team slogging through a rebuilding process and on pace for its third consecutive 98-loss season, are averaging nearly 4,000 fewer fans per game after 30 games at 41,083-seat Comerica Park this season. That’s a decline of nearly 20 percent per game compared with the first 30 games of last season, and means the team is taking in millions of dollars less than in past seasons. After Thursday afternoon’s 6-1 loss to Tampa Bay, which drew an announced crowd of 21,442, the Tigers are averaging 16,701 a game. That ranks 27th among Major League Baseball’s 30 clubs. Detroit averaged 20,563 fans through first 30 games of 2018, and 23,212 for the full slate of 81 home games. That means they’re currently down 3,862 per game, or 18.7 percent, year over year. The attendance figures provided by the team

LARRY PEPLIN FOR CRAIN’S

The Tigers are averaging nearly 4,000 fewer fans per game after 30 games at Comerica Park this season.

are tickets sold and not actual fans through the stadium turnstiles, so the actual number of people in the seats is likely lower. The team tracks actual turnstile attendance but doesn’t disclose those numbers. There’s a financial price for losing fans at the ballpark. While the Tigers resolutely decline to discuss money matters, it’s possible to cobble together a generalized snapshot of the unrealized revenue with known data. The Chicago-based Team Marketing Report annually polls major league teams for ticket and concession prices to create a Fan Cost Index that compares how much it costs to take a family of four to a game. In the case of the Tigers, it’s possible to extrapolate that data and reduce it to a single fan’s spending. Based on TMR’s published numbers — an average price of $28.31 plus a $5 beer, $4.75 soft drink, $5 hot dog, $19.19 for a Tigers hat, and $10 for parking — an individual fan is worth $73.05 to the Tigers. SEE TIGERS, PAGE 25

Detroit has few options to compel the Ilitch family to complete the sprawling publicly subsidized District Detroit as it was first proposed five years ago. That’s because the political leaders who approved the deals enabling the district failed to put effective accountability measures into the legislation and contracts. “This is just another indication of how cities and states tend to be really crappy negotiators when they’re working sports development deals,” said New York-based journalist Neil deMause, co-author of the book “Field of Schemes” and a website focused on public funding for sports venues. “You need to be very careful when someone is promising something, that it’s contractual and not just in a press release. As we’ve seen

Need to know

J Criticism has mounted on progress on the publicly subsidized District J Political leaders failed to put accountability measures into legislation, contracts J Last month, Olympia and DDA agreed to benchmarks in planned $40.9 million redevelopment

in too many cities, it’s something Detroit and the state didn’t negotiate well when District Detroit was planned.” There’s been a groundswell of criticism of the Ilitches because their Olympia Development real estate business got nearly $400 million to build Little Caesars Arena, which they promised would anchor up to 50 blocks of new housing, retail, restaurants and bars, offices and green spaces. The arena was built on time, along with a few offices and parking garages. No housing. No parks. At least not yet. A few small third-party tenants have deals to move into the district. SEE DISTRICT, PAGE 22

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Skyscraper construction hits pieces of Hudsonâ&#x20AC;&#x2122;s foundation Kirk Pinho

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As they so often do, the past and the future are colliding. Workers building what should end up as the stateâ&#x20AC;&#x2122;s tallest skyscraper are drilling into the foundation of what sat before on the site: the J.L. Hudsonâ&#x20AC;&#x2122;s department store downtown, more than two decades after it was imploded and more than a century after it opened. The foundation pieces are breaking drill bit teeth, delaying work a little, but not enough to cause concern. â&#x20AC;&#x153;Hitting obstructions is a very normal part of drilling caissons,â&#x20AC;? said Joe Guziewicz, vice president of construction for Dan Gilbertâ&#x20AC;&#x2122;s Detroit-based Bedrock LLC real estate development, management, leasing and ownership company, which is developing the $909 million project. Caissons are part of the foundation that will ultimately support the tower that could rise up to 912 feet in the air, and the so-called â&#x20AC;&#x153;blockâ&#x20AC;? â&#x20AC;&#x201D; a smaller multiuse building to the north with an activated alley separating the two. Pieces of the old foundation as well as other materials have caused more than 300 hours of whatâ&#x20AC;&#x2122;s known in the industry as delayed obstruction time so far â&#x20AC;&#x201D; but thatâ&#x20AC;&#x2122;s common for a large new development in a major downtown environment, Guziewicz said. He declined to say how many obstruction hours were projected when construction first began. â&#x20AC;&#x153;This is normal,â&#x20AC;? he said. â&#x20AC;&#x153;But itâ&#x20AC;&#x2122;s kind of cool, some of the old foundations that we have dug through and cut through.â&#x20AC;? One construction industry expert who spoke on the condition of anonymity said itâ&#x20AC;&#x2122;s not surprising that the old tower foundations remain because when the building was imploded in 1998, it wasnâ&#x20AC;&#x2122;t known what would happen with the site in the future. Steve Berlage, president and COO of Detroit-based Sachse Construction, said it varies on a case-by-case basis whether foundations of existing structures are still there when new ones are built on top. â&#x20AC;&#x153;When you demo a building, sometimes youâ&#x20AC;&#x2122;ll pay the expense and demo the foundations. Sometimes itâ&#x20AC;&#x2122;ll be required,â&#x20AC;? he said. â&#x20AC;&#x153;Other times itâ&#x20AC;&#x2122;s still there.â&#x20AC;? However, when the building that is now known as Ally Detroit Center (formerly One Detroit Center), one of Detroitâ&#x20AC;&#x2122;s newest high-rises, was built in the early 1990s, deep foundations were not hit during new foundation drilling. Those caissons go down about 120 feet. Bedrock and contractor Southfield-based Barton Malow Co.â&#x20AC;&#x2122;s work is all so that more than 150 caisson holes can be drilled into the floor of the roughly 40-foot deep, 2-acre-wide chasm another 80 to 100 feet, making what will eventually be holes 120 to 140 feet below street level at Woodward and Gratiot avenues downtown. Of the 105 required for the nine-story portion of the development, 74 are completed, Guziewicz said. Those holes, roughly 5 to 7 feet in diameter, are expected to be completed by the end of August, when work on the roughly 50 to 60 tower caissons begins. Some of those caissons will be 8 feet in diameter. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll actually start building a vertical structure on the block caissons when we are doing the tower caissons, but it wonâ&#x20AC;&#x2122;t be above grade for a while,â&#x20AC;? he said. â&#x20AC;&#x153;The target is for early spring

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Workers are drilling more than 150 caissons to support the new Hudsonâ&#x20AC;&#x2122;s site development and are hitting portions of the old department store buildingâ&#x20AC;&#x2122;s foundation when doing so.

next year for stuff to start poking above grade, first with the block.â&#x20AC;? In a statement last month, Bill Emerson, CEO of Bedrock, said: â&#x20AC;&#x153;Complex foundation work has been in progress and will continue. The structure will begin rising above grade once the complicated foundation work is completed.â&#x20AC;? The end product is expected to be more than 1 million square feet and at least double the height of the original building on the site, which was 25 stories and reached up to 410 feet following multiple expansions across an entire city block, according to Historic Detroit, which tracks Detroit building and architecture history. It was 2.124 million square feet, or the size of a dozen Walmart Supercenters, which average about 177,625 square feet. Michael Hauser, the marketing manager for Michigan Opera Theatre who has extensively researched the old Hudsonâ&#x20AC;&#x2122;s property, said in an email that the building had four basements. â&#x20AC;&#x153;In the early 1990s, Southwestern Associates (then owners of the building) disconnected the fire suppression system, which as a result, flooded the entire fourth basement. It took months to pump that water into the city sewage system back in 1996. It was referred to by the engineers overseeing this as â&#x20AC;&#x2DC;Lake Hudson,â&#x20AC;&#x2122;â&#x20AC;? Hauser said. The new building is designed by Detroit-based Hamilton Anderson Associates and New York City-based Shop Architects PC. A groundbreaking was held in late 2017 and demolition and excavation work has been ongoing ever since. But the project has been on the books for years, ever since Gilbert, the billionaire founder of Quicken Loans Inc. and Rock Ventures LLC, moved the former downtown from the suburbs and helped jumpstart a

sputtering downtown. The first conceptual rendering of the development came in March 2015 when it was inadvertently leaked in a YouTube video discovered by the Detroit Free Press. Then, rumors began swirling about precisely how large the building would be, eventually with multiple sources confirming to Crainâ&#x20AC;&#x2122;s discussions of a building reaching 60 stories in October 2016. By February 2017, the first incarnation of the plan was revealed, with a tower reaching 734 feet, eclipsing the 727-foot Detroit Marriott at the Renaissance Center by a mere 7 feet with a total cost of $775 million. Then in September 2017, another 66 feet were tacked on, bringing the tower to 800 feet, adding a public skydeck and other features which brought the project cost to $909 million. A year later in September 2018, Bedrock publicly confirmed that it was mulling an increase in the tower height to up to 912 feet, saying that a decision would be made by January 2019 just how tall the building would be. However, to date, a final height has not been revealed. But the developmentâ&#x20AC;&#x2122;s website says it will be 912 feet. The project is one of four Gilbert has underway totaling about $2.14 billion. Combined, they received a total of $618.1 million in so-called â&#x20AC;&#x153;transformational brownfieldâ&#x20AC;? tax incentives from the state. The other projects are the $830 million Monroe Blocks project immediately east of the One Campus Martius Building, the $311 million redevelopment of the Book Tower and Book Building on Washington Boulevard, and the $95 million addition to the One Campus Martius building where Gilbert has his Quicken Loans headquartered. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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OPINION COMMENTARY

A history that still surrounds Detroit

wo years ago, Mayor Mike Duggan blew away the audience of the Detroit Regional Chamber’s Mackinac Policy Conference. No surprise there. He’s a terrific presenter. But instead of a more typical “this is progress” slide show of before-and-after photographs of housing, parks and other improvements in the city like he did this year, he offered a history lesson. It was a tour de force presentation of policies, mostly federal housing policies, that helped to accelerate Detroit’s decline in the latter half of the 20th century and put African American residents behind financially because one of the greatest opportunities for wealth building — home ownership — was often denied. Federal loan policies created “red zones” (hence the term “redlining”) where no loans could be issued within minority neighborhoods. That led to a housing squeeze that in turn led to a 1943 race riot where 34 people died. Duggan even quoted a 1934 FHA manual instructing mortgage bankers that “incompatible racial groups should not be permitted to live in the same communities.” The history he described was news to much of the mostly white, business-elite audience. But to African Americans in the room, they — or their parents or grandparents — experienced it. So did Bridgett Davis, a Detroit native, author and filmmaker who now teaches at Baruch College in New York. After writing a couple of novels, she turned to nonfiction — the story of her own mother. The result, “The World According to Fannie Davis: My Mother’s Life in the Detroit Num-

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bers,” is a great read. And it’s timely as politicians, policy makers, civic, business and nonprofit leadership examine how best to ensure that Detroit’s revitalization is “equitable.” As she began to explore her late mother’s history, Davis realized just how black Detroiters had cards stacked against them. Example: Banks wouldn’t issue mortgages to buy homes, leaving them open to shaky land contracts that built no equity and could be canceled by the owner at any time. Even buying the family home in Russell Woods, where Davis grew up, initially required Fannie Davis to find another person with good credit to act as the actual buyer for the land contract. It was several years before the seller trusted Davis enough to have her own name placed on the land contract. Part of the great migration from the South, Fannie Davis and her husband, John, moved to Detroit from Nashville in 1955. Within a few years, and despite economic and policy cards stacked against her, she pushed her family into the middle class by running an illegal numbers game. The price, though, was constant worry of arrest, exposure or losing it all when a number hit big, crashing her own “bank.” “It’s an entrepreneur’s story,”

Detroit native Bridgett Davis (left), an author and filmmaker, and her book about her mother (above).

trepreneurs of Color. That focus will also be part of the theme at Detroit Homecoming VI in September. Bridgett Davis will be one of our speakers. Now living in Brooklyn, she’s eager to be part of the Detroit conversation. In her book, Davis recounts thriving black-owned businesses that were eliminated in urban renewal projects or by policy decisions and policing. The book also leaves you wondering just how far the determined and talented Fannie Davis could have gone if doors to legitimate enterprise were open to her. It’s a fascinating read, one that should be required of those working on the equity issues in Detroit. Bridgett Davis told me recently when we spoke by phone. “To me, that’s the heart of it all — entrepreneurship. That’s what will really help Detroit. Detroit had been a beacon for black ownership of businesses. Detroit now can be a brand for black entrepreneurship.” According to a Detroit Future City report released in February, Detroit

would need 27,700 additional African-American middle-class households to consider its growth equitable. Middle-class is defined as a household income between $46,000 and $115,000. Owning a business is certainly one big path to that middle-class life. And that’s a focus of many programs, from Motor City Match to the foundation-infused En-

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Ease path to scholarships after schooling

irtually every sector of Michigan’s leadership network is now acutely aware of the growing crisis of student debt and its negative impact on our economy. From government, to business, to nonprofits and philanthropy, we are all impacted in some manner, yet we are not yet leveraging our significant resources to change the system. Crain’s Detroit Business first reported on St. Clair County’s innovative student-debt relief program in June of 2016. In response to the growing chorus of voices concerned about talent retention and talent attraction, we were the first foundation in America to flip the traditional scholarship business model on its head and began using scholarships paid on the back-end of a college career as a way to help lure college grads back home and to remove some of their debt burden. The traditional front-end scholarship business model is like a sacred cow in the world of philanthropy. It’s the king who isn’t wear-

OTHER VOICES Randy Maiers

ing any clothes. Service clubs, churches, community groups, foundations and numerous other giving vehicles donate millions of scholarship dollars annually without much strategic thought on the outcome. U.S. Sen. Gary Peters and U.S. Rep. Paul Mitchell both quickly realized the potential economic impact these back-end scholarships could have, and are working in both the Senate and House on legislation that would formally recognize these debt relief programs and eliminate the tax burden of such payments. For each of the last four years the

Council of Michigan Foundations, with support from the Council on Foundations, has organized high-level meetings in Washington, D.C., with staff from the U. S. Treasury to discuss changes to the tax code. In annual meetings with members of Congress and the Senate, from both parties, we have found broad acceptance and enthusiastic support for back-end debt payment programs. In April, foundation leaders from Michigan, Ohio, Illinois and Indiana gathered in Fort Wayne for peer learning and strategic discussions over the role of philanthropy in student debt relief along with attracting and retaining college graduates. This is not just a Michigan issue or a Midwest issue. I’ve received inquiries from community leaders from New York to California. This past April the Michigan Chamber of Commerce announced its own initiative, working directly with businesses, to address student loan repayments and also support

future college savings accounts. In early May Matthew Roling used this space to speak on behalf of the private sector and call for action to have the IRS treat these back-end payments as exempt from Social Security, Medicare and other federal income taxes. He is absolutely correct. Private businesses in Michigan should be rallying around this issue. The unintended ripple effect of student debt is real. Too many recent college grads can’t afford a down payment on a new home or a new car. The average applicant to our program with a bachelor’s degree has student debt of just over $34,000. While Detroit and Grand Rapids are enjoying a well-deserved time of growth and prosperity, I contend that regions like Port Huron, Bay City, Muskegon, Marquette and Flint are better indicators of Michigan’s overall economic health. The growing crisis of student debt will be a burden to those regions. Now that this issue has the attention of our elected officials, the

chamber community, philanthropy and the private sector — now what? This issue is far too large for any one sector to address and make progress in. What we should strive to avoid is any one sector, from Michigan’s government leadership, to business, to philanthropy, viewing this issue and possible solutions from only their perspective and without the input of a much larger constituency. Michigan should continue to lead the dialogue on talent and the appropriate changes to Treasury regulations that would formally recognize these back-end loan repayment programs across every sector. We need a bigger stage and the clout of leadership in Detroit, Grand Rapids and Lansing. We need to come together across every sector of our economy and demand a resolution to this issue. Randy Maiers is president of the Community Foundation of St. Clair County.

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

Investing in infrastructure spurs economic vitality

hroughout our history, economic development has always followed infrastructure improvements. Towns sprung up along the railroad. Freeways became the links between economic centers. From Thomas Edison and his lightbulb to the information superhighway, infrastructure investment has always mattered. Much of the infrastructure conversation in Michigan recently has centered around the roads. There is no doubt that our roads need attention. We fervently hope that Gov. Gretchen Whitmer and our State Legislature can reach agreement on a plan to upgrade our road systems. Macomb County Executive Mark Hackel recently estimated that my home county alone needs $2.3 billion to bring all of our roads up to the quality we expect. While we are investing in our roads, however, we cannot forget about the critical infrastructure that is hidden below ground. Our sewer and water lines are aging and need investment. Our stormwater systems need upgrading so that we can improve water quality in our magnificent Great Lakes. In Macomb County, we saw firsthand in 2017 what can happen if our sewer lines are not properly maintained and operated. That was the year of the giant sewer line collapse and resulting sinkhole on 15 Mile Road in Fraser. The sewage of nearly 500,000 people — and of more than 40,000 businesses ranging from corner stores to auto plants — passed through that damaged line. Since that incident, we have been moving on multiple fronts, inspecting our decades-old system of sewer interceptors and making plans for improvements in our stormwater management program. Utilizing a series of state SAW (Stormwater, Asset management and Wastewater) grants we have conducted inspections on most of our major underground pipes in Macomb County. No surprise, we found a few areas

OTHER VOICES Candice Miller

that need attention now and have developed a plan for preventative maintenance. These state grants were a boon to local communities — but they only paid for the inspection, not the maintenance work.

In our other major project, we are deep into the design stage of expanding and upgrading our Chapaton Pump Station in St. Clair Shores, with construction set to begin in 2020. This project will significantly reduce combined sewer overflows, which have been happening for decades, into Lake St. Clair. While a final price tag on this project is not yet set, this investment will significantly change our relationship with the lake. We will be making a major improvement in the lake’s water quality, which will enhance the quality of life for area residents. All of these investments spur economic activity by ensuring businesses have the foundational support they

need and creating an ever-more attractive place for their potential future employees to live. While we are moving forward on these projects, our progress is slowed by the lack of financial support from the federal government for which we had once been hopeful. I firmly believe there are a few critical areas that the federal government should be involved in. National defense is obviously one. Infrastructure investment — the backbone of our country — is another. Our infrastructure investments have a direct bearing on our ability to support our business community and on our ability to protect the world’s largest collection of

fresh water, the Great Lakes. These must be national priorities. Make no mistake, we are moving on our projects. We are focused on enhancing the quality of life and serving as a critical component of economic activity in our communities. We could, however, do so much more. We have mustered the political will at the local level to take a critical look at our infrastructure and have begun the process needed to improve our communities. We call on our leaders at the state and national levels to do the same. Candice Miller is the Macomb County Public Works commissioner.

WE’RE LOOKING FOR THE LEADERS OF TOMORROW

LETTERS

Retirement wave will impact public sector To the Editor: Mary Kramer’s June 3 editorial on corporate culture and succession planning was spot on. It’s important to add that these issues matter in the public sector too, where a silver tsunami of retirements is anticipated in schools and municipalities over the next several years. Finance directors, assessors and administrators are just an example of positions already in short supply; think of where we’ll be when those who understand water and sewerage systems leave. It is imperative that the next generation of workers be encouraged to enter careers in cities, schools and other local units of government. Public sector work is engaging and rewarding, and includes challenges like strategic planning, advocacy, budgeting and consideration of how smart and green technologies, as well as vehicle electrification and autonomy will change societal norms and infrastructure. Engaging and rewarding is a far cry from dull or monotonous. Check it out. Bob Kittle Co-founder, Munetrix Auburn Hills City Councilman

Want a program that takes fast-risers, promising leaders and mid-level managers to the next level? Then look no further than Crain’s Leadership Academy: a multisession leadership development experience that nurtures the management strengths of its participants and provides exposure to local executives. SESSION DATES: Wednesday, Sept. 25 - 9 a.m. - 5 p.m. Wednesday, Oct. 2 - 9 a.m. - 5 p.m. Friday, Oct. 4 - 1 p.m. - 3 p.m. Friday, Oct. 11 - 9 a.m. - 5 p.m.

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

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FOCUS

CRAIN’S MICHIGAN BUSINESS Q&A

THE NEW GUY ON CAMPUS

New MSU President Samuel Stanley gets a crash course at Mackinac as he prepares to try to bring stability to university By Chad Livengood | clivengood@crain.com

MACKINAC ISLAND — Samuel Stanley Jr. had hardly been the new president of Michigan State University for 24 hours, and his new staff rushed him to Mackinac Island for a marathon meet-and-greet at the Detroit Regional Chamber’s annual policy conference with the state’s business, political, education and philanthropic leaders. The 65-year-old will officially be on the job starting Aug. 1, and he’s the first permanent leader of the East Lansing school since former President Lou Anna Simon quit in January 2018 in the fallout from the Larry Nassar sexual abuse scandal.

Over the past two years, MSU has been through a major leadership upheaval at the administrative and board level over revelations of Nassar’s years of abusing young women at a campus sports medicine clinic. Stanley, the current president of Stony Brook University in New York, sat down for a podcast interview with Crain’s Detroit Business during his whirlwind trip to the Mackinac Policy Conference. Here are highlights of that interview, which can be heard in full on Crain’s Detroit Business podcast channels on Apple Podcasts, Stitcher and other podcast outlets.

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Crain’s: You are the new president who comes in following two interim presidents. Tell us a little bit about why you took this job and a little bit about your background. Stanley: I’m a biomedical researcher

originally by training, so an M.D., actually, by my education. For the past 10 years, I’ve been president of Stony Brook University in New York ... an AAU (Association of American Universities) school, one of the best 62 research institutions in the country, just like Michigan State. While I was there, I had the chance to really work with an amazing team and do some amazing things in terms of student success, sponsored research and economy development. What attracted me to MSU was obviously the incredible scope and impact of the university. With more than 50,000 students, 10,000-plus faculty and staff, this is an institution that has an impact not just on individuals — the students who graduate from it — but on their families, on communities, on the state of Michigan and on the world. ... This is really an attractive place to be and a place, again, where one can have impact. And that really matters to me very much as a university president.

How did you go from the medical field into higher-education leadership?

I got a very large grant from the federal government — about a $30 million grant for biodefense and emerging infectious diseases (that’s my area of specialty). And I realized while running that I actually became more interested in other people’s research than I was in my own. That led to a transition in my career to more administration. I became the vice chancellor of research at Washington University in St. Louis, and I did that job for about 4 1/2 years before Stony Brook University came looking for a new president. I never dreamed I would become a university president someday. ... But it’s been an incredibly rewarding career. Where do you intend to take Michigan State? In the (post-Nassar) healing process, what are the steps you need to take to bring back some sense of normalcy to this campus?

It’s very important that I begin by listening and learning. ... When I do

DALE G. YOUNG

New Michigan State University President Samuel Stanley, Jr., at the Crain’s Detroit Business podcast booth on Media Row at the Grand Hotel during the Detroit Regional Chamber’s annual Mackinac Policy Conference.

“It’s very important that I begin by listening and learning. ... When I do start, the first thing I’m going to do is meet with so many constituents on campus, and that includes survivors as well. ...”

start, the first thing I’m going to do is meet with so many constituents on campus, and that includes survivors as well. ... I want to hear their thoughts and I want to know how they assess progress that has been done in this area. ... Ultimately, we’re not going to forget what happened with Nassar or any other issues that have taken place with sexual violence on campus. ... But we’re going to use that to drive a culture on campus — a culture of acceptance, a culture of safety, a culture where people respect each other. And that’s my goal, to help Michigan State arrive at that destination.

Michigan State is a billion-dollar organization, it’s one of the state’s largest employers — certainly in the Lansing area — and then with the University Research Corridor with Wayne State University and the University of Michigan, there’s a pretty good partnership in research and development. Do you have some thoughts about where you want to take that? And is that constrained to East Lansing? Or do you think the university could have a mission further beyond the footprint of campus?

I think the mission ... will go beyond Lansing. ... I look forward to working

with M. Roy Wilson, the president of Wayne State University who’s a former medical school classmate of mine. He and I have known each other since our days at Harvard Medical School together. And then Mark Schlissel, of course, is someone I’ve gotten to know through AAU. I look forward to working with both of them to really put the power of Michigan State University behind Michigan’s three major state universities pushing economic development for the state. 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 // J U N E 1 0 , 2 0 1 9

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

“[T]o say Detroit is coming back is true. To say that Detroit is back might be a reach at this point.”

In Your Corner. Contact John Kenny at jmkenny@varnumlaw.com

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ASSOCIATED PRESS

Q&A

Dick DeVos talks public-private partnerships, leadership, Detroit By Adam Finkel | Special to Crain’s Detroit Business

ick DeVos isn’t sitting still in Grand Rapids. His private investment firm, The Windquest Group, is based in downtown Grand Rapids, in an office designed by his wife, current U.S. Secretary of Education Betsy DeVos. His immediate family is one of several owners of Alticor, ranked as the third-largest family owned company in the state by revenue, which is estimated to be around $9 billion, just behind Meijer and Gordon Food Service. In his office are mementos of involvement with sports teams (his father purchased the Orlando Magic in 1991 for $85 million), his passion for sailing, a cabinet that stores Boxed Water is Better, a Windquest investment, and a plaque for The ArtPrize, the art festival envisioned by his son, Rick DeVos.

What reasons for connection can you envision between the Detroit and west coast family investment community?

One would be to share opportunities that are Michigan-based to the extent that family offices are interested — as we are as a family — in taking care of our own communities and investing in our own communities, which I think most of us already do through philanthropy. There may be opportunities for some direct investing and to the extent that family offices can work together within our Michigan neighborhood that could be interesting. We oftentimes get overlooked by the major funds or the other players.

His family supports Endeavor, which promotes entrepreneurship in Detroit. Windquest-funded Neurocore has offices in Sterling Heights and West Bloomfield Township. His boxed-water company sells its products in Whole Foods and Meijer locations in the Detroit area. And Coppercraft Distillery, another Windquest portfolio company, announced on April 1 a multi-year right sponsorship with the Detroit Tigers, which included the rebranding of the right field bar and signage at the ballpark’s Bourbon Bar. In an interview, the former candidate for governor and Republican Party stalwart discussed those businesses, the connectivity between the Detroit and Grand Rapids business community and Michigan’s current political picture. This interview has been edited for length and clarity.

People like Steve Case have identified the Midwest as being rich with opportunity, which I would agree with. The families here could probably do a better job of leading forward. I’d also say that I think some of the family offices could work together maybe effectively on public policy matters. Some of those could be partisan, but some of them could be distinctly good public policy. CEOs and businesses are very much influenced by their business model or by their own financial demands, whereas families can take, you know, maybe a little bit longer-term point of view with regard to public policy and there may be opportunities for like-minded family

Corporate matters including business formations, mergers and acquisitions

Experience assisting companies based outside the U.S. in compliance matters involving the Committee on Foreign Investment, Federal Trade Commission, U.S. Department of State, and Bureau of Industry and Security

Assists clients in resolving tax disputes with the IRS and Michigan Department of Treasury Tier 1 Metropolitan Ranking Corporate Law and Commercial Litigation 2019

CONNECTION TO

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

offices to work together on a public policy agenda. That could be positive for Michigan. It may be in the way of advocating for change or to resist ill-advised change within the state. What is your view on Detroit?

I am very pleased to see the beginnings of a resurgence in Detroit. I think we and the citizens of Detroit understand this is a very, very big job. And so to say Detroit is coming back is true. To say that Detroit is back might be a reach at this point. There’s a lot of work to be done within the context of Detroit, but we’re very pleased to see a lot of good work happening. SEE DEVOS, PAGE 10

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

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

DEVOS FROM PAGE 9

The more pragmatic city leadership group, led by the mayor, whom I don’t always agree with, but he is ultimately a thoughtful and pragmatic leader who understands that a good growth and expansion economically also provide resources for growth expansion socially in our communities. What challenges do you see in Detroit?

One is the geography of Detroit. It’s just massive. Detroit was the first American city to really get leveled by the automobile. In many ways a lot of the older cities built a much larger and more dense core. But Detroit’s core relative to its size by my observation is relatively modest and there’s not been the kind of density that you experienced in a number of our other great cities in America. And Detroit went horizontal really fast, so that leaves you lots of empty space, lots of open space, lots of what I call connective tissue between the urban core that’s experiencing a very nice renaissance and the suburban areas that have done and have continued to exist quite well without

much attachment to the city of Detroit. Because 20 years ago, “never the twain shall meet” — the suburbs or the city. So I see this coming together, but getting that connective tissue working, that’s a lot of geography, that’s a lot of work to take that in — that energy now that we’re seeing in the city core creating connection to the suburbs. So I think that’s a real issue. Another issue I see for Detroit is going to be a change of mindset. Detroit connected itself to three different ideas, all of which have proven themselves to be a bit problematic. Detroit attached itself to the idea of big business, and that big business was going to be our strength going forward. I think we’ve discovered that big business — certainly reflective of the automobile industry — but that big business isn’t the driver of economic growth that small businesses and entrepreneurship is. I see it happening in Detroit, to be sure, but opening up to entrepreneurship and creativity and innovation is going to be critical to Detroit’s future. Detaching from its big-business mindset is both an emotional and physical matter. Second is big unions, which in my view continue to have a disproportionate influence on politics in the Detroit community ... (while) the unions’

You know. The Motor City has both fueled and felt the power of the Laker Effect. Many of our students not only hail from the Detroit area, but they also return there: as analysts and engineers, biochemists and health professionals, as leaders in business and leaders of communities. Support them. Support us. And see the power of what can be.

We also like to get active (advocating) on behalf of public policy for the state of Michigan that we think would be both good for West Michigan and for Detroit. As you reflect on your work with the ArtPrize, what has that taught you about the role of public-private partnerships to promote a good quality of life in Grand Rapids?

‘I’m hopeful that education is an opportunity for the left and right wing.’ Dick DeVos

membership continues to decline. And so they’re increasingly a paper tiger in that they speak as though we’re back in the ’30s. They represent a slim minority of American and Michigan workers today, and yet they have a disproportionate voice, it seems. ... The third thing was big government. Detroit has had a very great reliance on government. It always seemed to those of us from the west that the first place that Detroit ever went to find help was to Lansing and what they couldn’t get there, they went to Washington. Well, in today’s world if you want to grow and expand as a community you start to look to your private sector. Lansing — I should say — it’s not going to continue to be the source of funding for Detroit that it once was. And so Detroit’s going to need to look at figuring out how it’s going to grow and expand without big government, because if it’s going to rely on big government, it’s going to be strapped, in my opinion, with slow growth, because governments are not growing and expanding nationally and they’re not investing the way they used to — and certainly not for Detroit, because I’m in West Michigan and others now have greater political power and ground power and a balance if you will. So it’s a very different world for Detroit. So I think these are not criticisms of the past. I mean, I say frequently, change is never a criticism from the past. It’s simply acknowledgment that we have to change and these are real (issues) for Detroit to work through. And the fourth is that it’s my hope and prayer that the sad racism of the past in Detroit can be finally put in the past and that Detroit can move forward without race being a factor that lays half an inch underneath a variety of issues. We can set that aside and begin to do what’s best for all of us. ... what’s best for all of us in Michigan. Could Detroit ever be a location of investment interest for Windquest Group?

gvsu.edu/SupportLakerEffect

I never say never. Our focus at this point for The Windquest Group has been on investing in businesses in the Grand Rapids area but that doesn’t mean that we wouldn’t expand our focus or be involved. I have a son-inlaw and daughter living in the Ann Arbor area who are very active with the community, and we have supported an organization called Endeavor which has been very involved in the incubator and startup scene within the context of Detroit.

Other than that they’re critical, nothing yet. The private-public partnerships need to be a partnership, but it requires leadership. And that leadership ... of West Michigan has always come from the private sector, not the governmental sector. The government did its role to help private-sector leadership and community-based leadership. That was not political, not partisan, but that was dedicated to doing what’s right for the community. And so I’m a great believer in public-private partnerships. So long as they’re privately led because I find that government leadership oftentimes is too slow and becomes too political, too bureaucratic and inefficient. What opportunities do you believe exist for bipartisanship when you think about the new administration under Gov. Gretchen Whitmer?

Well, I think there are some opportunities, and I hope there are some opportunities, for bipartisanship. I’m very much interested in and my family has been very much interested in ... criminal justice reform. We’ve been very involved and have been outspoken that we can do better in this state with how we deal with and how we bring back into our communities those who have misstepped along the way and found themselves ensnared in the criminal justice system. We could (and) we’ve got to do better as a moral matter. We’ve got to do that. Certainly also as an economic matter these are many of the very talented people. A lot of them got into trouble because they were pretty talented at what they did. They got caught up just in the wrong lane in the wrong way. And so how can we channel that talent and energy in a productive way and turn them from costing our society to being added to our society? And as I said the moral imperative of that is that they now have this great sense of who they are and a sense of personal responsibility and that they can walk taller than ever before as a consequence. So first, it’s always to me a moral imperative. But I think that’s an opportunity for left and right to work together. I’m hopeful that education is an opportunity for the left and right wing. If both sides can look and see what’s right for the kids and can look past the adult issues and the arguments, look past the past — the teachers unions are oftentimes self-serving points of view — look past the old systems and look for opportunities to do new things in new ways. I think there could be real possibilities. How would you pay for road needs?

I’m a fan frankly of what the previous administration and Legislature did. They said: ‘Look, we’re going to have to ask the taxpayers to step up.’ While gas tax is an imperfect tool ... it may be as good as we can get until we can get a system where the user pays by the mile — a system that technologically is

probably in our future. And then you can get the right balance between passenger vehicles and the cost there as well as the trucks and the impact they have on the roads. Getting that balance right is going to be pretty important. But you don’t just do that by saying, well, ‘we just need you to give us more money.’ ... I’m not a fan of the current governor’s plan which seems to me to be a little disingenuous by saying, ‘Well, I’m going to raise gas tax with a budget that is going to get sent back to the general fund.’ I think that’s inappropriate. The gas tax should be devoted exclusively to transportation infrastructure. Where do you see the future of The Windquest Group?

We’ve got our hands full. We’ve got a number of projects that we’re working on now that need to get over the finish line. We kind of use this building as an incubator space for our (portfolio) companies. (With Boxed Water is Better), we’re trying to replace water bottles here in this country and eventually around the world. I think it’s a tragedy. I think a travesty. I’ve had the privilege of traveling and am a sailor. I love the water, as do many of us. And I’ve walked too many beaches and too many little bitty islands across the world where I’ve had the privilege of sailing and visiting and I’ve seen plastic bottles washed up on the shore. It breaks my heart. We do something about that. We’re raising the questions. Is there a better way to do this than this plastic water bottle? So it’s an audacious idea. It’s going very well. But we’ve got a lot of work ahead of us to get this company up and running and strong and profitable. And we’re already the category leader, but we still haven’t turned enough heads yet. We haven’t got enough people to stop reaching for plastic and start reaching for a better alternative. And that’s why we say Boxed Water is Better. (Neurocore, another Windquest portfolio company), tries to attack the issues of ADHD in our society. It can mitigate ADHD symptoms and problems. We have great success with sleep with anxiety and depression. These are all major issues in our culture today and all huge costs when you consider the drug-related alternatives. So it’s a human cost as it’s a financial cost. The drug companies are not happy with what we’re trying to do, and they’re out there. They’ve made our life… difficult. We’re doing our best again to fight for these kids that they should have a better alternative than simply being stuck on medication all their life with never any hope of a better future. Or those who are medicating for sleep or medicating for depression or those who are running around with excessive anxiety and again maybe requiring medication as well... We’re continuing to expand our custom closet company across the United States. It is growing very nicely and we’re… just in the process of closing down another significant acquisition here in the Western Michigan area. So we’ve got our hands full. We’ve got the craft spirits business, too, along with a few other brands that we that we have and distribute both in Michigan and other brands we distribute nationally. Author Adam Finkel is partner in Orfin Ventures LLC . A version of this interview also appears in his email newsletter, FamilyInsider.

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SPECIAL REPORT: CEO COMPENSATION

TOP-PAID CEOS SEE RAISE IN 2018

he 10 highest-paid CEOs in Southeast Michigan got a small raise in 2018, a year marked by a rough stock market that took a particular toll on automakers and their supply chain.

Total compensation for the top 10 CEOs rose an average of 3.6 percent from 2017. The year was marked by fears on Wall Street, especially late in the year, of trade wars and tariffs taking a toll on manufacturers. Eight of the 10 highest-paid CEOs are in manufacturing, seven of those in the auto industry. The average raise for these 10 chief executives lagged the median increase of $6.3 percent that The New York Times found in its analysis of 2018 CEO pay. 1. Mary Barra

General Motors Co. Total compensation: $21.9 million, down 0.3 percent One-year shareholder return: Down 15.1 percent Net income (net loss) 2017/2018: ($3.86 billion)/$8.01 billion Barra tops the list of highest-paid CEOs in Southeast Michigan for the fourth year in a row. Company notes: Last November, GM announced a restructuring plan that would reduce 14,000 jobs and halt production at several plants, including Detroit/Hamtramck and Warren, while pushing to remake itself for a future dominated by electric and autonomous vehicles. Pay package tidbits: Barra gets personal use of private aircraft, valued by the company at $140,599 for 2018, and security services totaling $89,884.

2. James Hackett Ford Motor Co.

Total compensation: $17.7 million, up 6.1 percent One-year shareholder return: -34.3 percent Net income (net loss) 2017/2018: $7.73 billion/$3.68 billion Like Barra, Hackett is leading an automaker that is preparing for a future dominated by electric and autonomous vehicles. Company notes: Another 2018 decision will reverberate for a long time: the choice to reduce its lineup of sedans drastically to save money and focus on areas where it is most competitive. The aggressive vision hasn’t resonated with Wall Street, which drove the company’s stock price down by more than a third last year, though it has bounced back somewhat since then. Pay package tidbits: The spike in Hackett’s compensation was primarily driven by an increase in the value of his stock awards from $10.3 million in 2017 to $12.7 million this year. GETTY IMAGES/ISTOCKPHOTO

3. Alessandro DiNello

4. James Verrier

Total compensation: $16.4 million, up 589 percent

Total compensation: $15 million, up 6.8 percent

One-year shareholder return: Down 29.4 percent

One-year shareholder return: Down 31 percent

Net income (net loss) 2017/2018: $63 million/$187 million

Net income (net loss) 2017/2018: $440 million/$931 million

Flagstar Bancorp Inc.

Flagstar saw its profitability rise in 2018, with net income nearly tripling in 2018 despite a tougher market for mortgages. Company notes: A big move for Flagstar was the acquisition of 52 Wells Fargo branches in Indiana, Michigan, Ohio and Wisconsin. Flagstar recently committed $5 million to Detroit’s Strategic Neighborhood Fund to support the Old Redford neighborhood. Pay package tidbits: DiNello’s compensation increase was primarily a result of restricted stock awards that went from zero in 2017 to more than $14 million last year. Some of those awards were given in exchange for a 10 percent salary cut executives took at midyear, according to the company’s proxy statement. Those stock awards vest over the next three years.

BorgWarner Inc.

Verrier announced his retirement from BorgWarner in June after serving as the auto supplier’s top executive since 2013. He led a decision by the company to stay on the sidelines of developing self-driving technology and focus on propulsion systems. Company notes: COO Frederic Lissalde became chairman and CEO of the company Aug. 1 . Pay package tidbits: Instead of individual perks, the company gives executives a cash perquisite allowance that totaled $50,000 for Verrier. The company also notes in its proxy that part of Verrier’s compensation was a $1,575 farewell gift. SEE NEXT PAGE

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SPECIAL REPORT: CEO COMPENSATION

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Total compensation: $14.1 million, up 2.3 percent

Total compensation: $13.9 million, down 42.8 percent

Total compensation: $12.6 million, down 4 percent

One-year shareholder return: Down 26.7 percent

One-year shareholder return: Down 52.4 percent

One-year shareholder return: Down 15 percent

Net income (net loss) 2017/2018: $1.36 billion/$1.07 billion

Net income (net loss) 2017/2018: $877 million/($1.69 billion)

Net income (net loss) 2017/2018: 3.49 billion euros/3.61 billion euros

Aptiv completed its first full year as an independent company after the spinoff of Delphi’s powertrain systems into Delphi Automotive Systems in December 2017.

Adient had a bumpy 2018, which resulted in McDonald’s abrupt departure from the company in June. The auto supplier, which spun off from Johnson Controls Inc. in 2016, abruptly canceled a $100 million plan to move its headquarters to downtown Detroit amid slow sales and high costs, dragged down by its money-losing seat structures and mechanisms division with its $3.3 billion in debt.

Marchionne’s death in July was a defining moment in the year for Fiat Chrysler and sent a sent a shock through the industry. He was replaced by former Jeep chief Michael Manley.

Aptiv plc

Company notes: In 2018, the company spent a total of $1.2 billion acquiring KUM and Winchester Interconnect. The acquisition of KUM, a South Korean maker of connectors, added business in the Asia-Pacific region. Another major initiative is a test program featuring self-driving taxis with ride-share company Lyft in Las Vegas. Pay package tidbits: Aptiv outlines no special perks for its executives other than a retirement plan contribution and payment on a life insurance policy.

Adient plc

Company notes: Adient lost $1.7 billion in 2018 and is now in the midst of a cost-cutting plan under new CEO Doug DelGrosso. Pay package tidbits: As part of his departure from the company, McDonald forfeited about $17 million in equity awards given in 2017. The company sold its aircraft in the second half of 2018.

FCA US LLC

Company notes: Big moves by Fiat Chrysler in 2018 included the $6.5 billion sale of its parts making unit Magneti Marelli to Japan’s Calsonic Kansei. The company’s revenue and profit both rose. Pay package tidbits: Fiat Chrysler offers tax equalization payments to executives so that their pay is equivalently taxed to their home country, regardless of taxes paid in other countries.

A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

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We Uphold a Fiduciary Standard 101 West Big Beaver Road 14th Floor Troy, MI 48084 (248) 687-1258 or (888) 777-0126

www.zhangfinancial.com Minimum Investment Requirement: $1,000,000 in Michigan $2,000,000 outside of Michigan. Assets under custody of LPL Financial, TD Ameritrade, and Charles Schwab *As reported in Barron’s March 8, 2019. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices, and other factors. **As reported in Forbes September 13, 2018. The rankings, developed by Shook Research, are based on in-person and telephone due diligence meetings and a ranking algorithm for advisors who have a minimum of seven years of experience. Other factors include client retention, industry experience, compliance records, firm nominations, assets under management, revenue generated for their firms, and other factors. For fee-only status see NAPFA.org

8. Keith Allman

9. Gerard Anderson

10. Raymond Scott

Total compensation: $11.6 million, up 1.1 percent

Total compensation: $11 million, down 30.6 percent

Total compensation: $9.9 million, up 81 percent

One-year shareholder return: Down 32.7 percent

One-year shareholder return: Up 4.2 percent

One-year shareholder return: Down 29.3 percent

Net income (net loss) 2017/2018: $533 million/$734 million

Net income (net loss) 2017/2018: $1.13 billion/$1.12 billion

Net income (net loss) 2017/2018: $1.31 billion/$1.15 billion

Allman’s total compensation rose slightly in 2018. The biggest increase in the components of his pay package came in the form of a more than $400,000 increase in the value of stock options awarded for the year. Most of the other components of his compensation rose or fell only slightly.

The value of Anderson’s compensation fell significantly, but that was due to a paper gain in the value of his retirement plan in 2017, which didn’t happen last year.

Scott’s promotion to president and CEO of Lear brought with it rewards, with his compensation package nearly doubling in 2018, his first year in charge of the company after being promoted to replace Matt Simoncini early in the year.

Masco Corp.

Company notes: Livonia-based Masco saw sales and profit grow in 2018, partly due to its $550 million acquisition of Kichler Lighting, which helped sales of architectural products rise for the maker of Delta faucets and Merillat cabinetry. Pay package tidbits: Allman received personal use of company aircraft valued at $127,654 and $10,000 in financial planning expenses.

DTE Energy Co.

Company notes: The Detroit-based electric and gas utility spent effort in 2018 on its integrated resource plan, a far-reaching plan required under Michigan’s 2016 energy law that forecasts how the company will meet customer power needs and provide reliable and low-cost electricity. Pay package tidbits: In lieu of specific perks, DTE gives executives a cash “executive benefit allowance” that was $35,000 for Anderson last year. Though the company allows limited personal use of company aircraft, no executive used any in 2018, DTE said in its proxy.

Lear Corp.

Company notes: The Southfield-based seat maker has made a series of acquisitions of software suppliers aimed at positioning it to own automotive interiors as the industry moves to self-driving technology. Pay package tidbits: Lear disclosed that Scott received $1,000 for a patent tied to his work. The company allows limited CEO use of company aircraft for personal use — with the chairman’s permission — but the company reported no use by Scott for 2018.

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CRAIN'S LIST: TOP-COMPENSATED CEOS

Ranked by fiscal 2018 compensation Name Rank Company

Total compensation 2018/2017

Salary 2018/2017

Bonus 2018/ 2017

Stock awards Nonequity incentive/ 2018/2017 retirement 2018/2017

Other compensation 2018/2017

Option awards 2018/2017

CEO pay ratio 2019

Median employee's total compensation

Company net income

Mary Barra General Motors Co.

$21,870,450 $21,958,048

$2,100,000 $2,100,000

$0 $0

$11,081,760 $10,737,570

$4,452,000 $5,008,792

$811,684 $861,683

$3,425,006 $3,250,003

281 to 1

$77,849

$8,014,000,000 ($3,864,000,000)

James Hackett Ford Motor Co.

17,752,835 16,731,724

1,800,000 1,344,333

0 1,000,000

12,743,125 10,366,420

2,592,000 3,600,000

617,710 420,971

NA NA

276 to 1

64,316

3,677,000,000 7,731,000,000

Alessandro DiNello Flagstar Bancorp Inc.

16,425,199 2,387,543

950,000 1,000,000

0 0

14,206,394 0

1,212,000 1,305,500

56,805 82,043

NA NA

297.10 to 1

55,286

187,000,000 63,000,000

James Verrier B BorgWarner Inc.

15,047,237 14,085,523

1,108,945 1,260,000

0 0

12,062,828 8,561,811

1,036,147 3,801,391

839,317 462,321

NA NA

110 to 1

45,547

930,700,000 439,900,000

Kevin Clark Aptiv PLC

14,123,103 13,800,347

1,375,000 1,275,000

0 0

10,643,793 10,095,699

1,827,000 2,184,000

277,310 245,648

NA NA

2,609 to 1

5,414

1,067,000,000 1,355,000,000

R. Bruce McDonald C Adient plc

13,868,393 24,263,753

1,530,000 1,500,000

0 0

10,620,765 17,046,774

NA 4,774,800

1,717,628 942,179

NA 0

782 to 1

18,861

(1,685,000,000) 877,000,000

Sergio Marchionne D FCA US LLC

12,553,803 13,070,260

2,261,770 4,242,050

325,873 5,548,600

NA NA

4,964,610 NA

5,001,550 3,279,610

NA NA

Keith Allman Masco Corp.

11,636,439 11,504,440

1,201,200 1,177,212

0 NA

3,783,562 3,876,629

4,243,600 4,370,127

320,383 405,144

2,087,694 1,675,328

300 to 1

38,769

734,000,000 533,000,000

Gerard Anderson DTE Energy Co.

10,986,809 15,835,907

1,344,231 1,319,231

0 NA

6,992,734 8,813,700

2,500,000 5,568,249

149,844 134,727

NA NA

91 to 1

120,861

1,120,000,000 1,134,000,000

Raymond Scott

9,936,305 0

1,109,183 NA

0 NA

6,968,803 NA

1,429,734 NA

428,585 NA

NA NA

987 to 1

10,063

1,149,800,000 1,313,400,000

Timothy Mayleben

9,724,839 0

600,000 NA

115,000 NA

NA NA

360,000 NA

81,615 NA

8,568,224 NA

16 to 1

601,814

NA NA

Jeffrey Brown

9,591,566 8,833,351

1,000,000 1,000,000

3,000,000 2,700,000

5,550,040 5,100,019

NA NA

41,526 33,332

NA NA

88 to 1

109,452

1,263,000,000 929,000,000

David Dauch

9,469,299 13,245,617

1,150,000 1,150,000

0 0

5,700,848 7,319,937

2,519,073 4,688,698

99,378 86,982

NA NA

170 to 1

55,835

(57,500,000) 337,100,000

Gary Shiffman

9,193,778 13,630,313

691,837 691,837

0 NA

7,404,000 11,895,000

1,089,643 1,037,756

8,298 5,720

NA NA

355 to 1

25,878

107,229,000 72,183,000

Richard Allison E

9,102,416 0

744,711 NA

0 NA

5,428,782 NA

1,470,143 NA

161,180 NA

1,297,600 NA

477 to 1

19,077

361,972,000 277,905,000

Patricia Poppe

8,091,185 6,862,295

1,200,000 1,100,000

NA 0

4,609,710 4,263,888

1,876,800 1,144,000

404,675 354,407

NA NA

76.2 to 1

106,125

657,000,000 460,000,000

Brian Harper F RPT Realty (formerly RamcoGershenson Properties Trust)

8,047,751 0

377,885 NA

1,011,000 NA

6,517,047 NA

NA NA

141,819 NA

NA NA

108 to 1

81,934

NA 62,359,000

Sachin Lawande

7,858,920 8,044,443

1,030,000 1,030,000

0 0

4,504,035 3,785,854

298,700 1,416,250

526,207 562,355

1,499,978 1,249,984

483 to 1

16,278

164,000,000 176,000,000

Jeffrey Craig

7,842,647 6,062,250

900,000 900,000

0 0

4,099,993 3,599,991

2,624,455 1,377,900

218,199 184,359

NA NA

204 to 1

38,480

117,000,000 324,000,000

Paul Stuart G Rockwell Medical Inc.

7,483,803 0

184,615 NA

300,000 NA

4,782,994 NA

NA NA

2,216,194 NA

(32,125,860) (25,921,280)

Roger Penske

6,824,351 6,807,491

1,400,000 1,375,000

0 NA

5,000,000 5,000,000

NA NA

424,351 432,491

NA NA

168 to 1

40,720

471,000,000 613,300,000

Dennis Gershenson H RPT Realty (formerly RamcoGershenson Properties Trust)

6,362,249 3,335,248

393,777 727,204

0 0

1,479,000 1,602,342

276,900 995,972

4,212,572 9,730

NA NA

108 to 1

81,934

NA 62,359,000

Donald Stebbins I Superior Industries International Inc.

5,497,408 0

900,024 NA

0 NA

2,806,127 NA

NA NA

1,791,257 NA

NA NA

413 to 1

13,299

25,961,000 (6,203,000)

24 BorgWarner Inc.

Frederic Lissalde J

5,008,443 0

946,235 NA

0 NA

2,490,633 NA

944,146 NA

627,429 NA

NA NA

110 to 1

45,547

930,700,000 439,900,000

Joel Agree

4,882,765 3,944,174

609,712 525,168

0 61,390

3,362,974 2,636,987

877,000 688,610

33,079 32,019

NA NA

40 to 1

122,543

58,172,000 58,112,000

10 Lear Corp.

11 Esperion Therapeutics Inc. 12 Ally Financial Inc. Axle & Manufacturing 13 American Holdings Inc.

14 Sun Communities Inc. 15 Domino's Pizza Inc. 16 CMS Energy Corp. 17

18 Visteon Corp. 19 Meritor Inc. 20

21 Penske Automotive Group Inc.

25 Agree Realty Corp.

Want the full Excel version of this list — and every Crain's list? Become a Data Member: CrainsDetroit.com/data SOURCES: S&P Global Market Intelligence, (Marketintelligence.spglobal.com) and SEC filings. Top compensation for CEOs at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available.

B Left CEO position Aug. 1, 2018. C Left CEO position June 11, 2018. D Was replaced as CEO by Mike Manley, head of Fiat Chrysler Automobiles' Jeep division on July 21 after complications from surgery. Marchionne, who later died on July 25 was CEO of both FCA US LLC and Fiat Chrysler Automobiles N.V., London.

E Became CEO July 1, 2018. F Replaced Dennis Gershenson as CEO in June. G Became CEO Sept. 4, 2018. H Brian Harper replaced Gershenson as CEO in June. I Left CEO position Dec. 12, 2018. J Succeeded James Verrier as CEO on Aug. 1, 2018.

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

CRAIN'S LIST: TOP-COMPENSATED NON-CEO EXECUTIVES

Ranked by fiscal 2018 compensation Rank

Name Company

Total compensation 2018/2017

Salary 2018/2017

Bonus 2018/2017

Stock awards 2018/2017

Nonequity incentive/ retirement 2018/2017

Other compensation 2018/2017

Option awards 2018/2017

$13,839,726 $15,626,099

$1,700,000 $1,650,000

$0 $0

$10,096,459 $10,266,426

$720,000 $2,192,132

$1,323,267 $1,517,541

NA NA

William Clay Ford Jr. executive chairman Ford Motor Co.

Mark Glickman chief commercial officer Esperion Therapeutics Inc.

9,014,658 0

322,500 NA

0 NA

1,345,800 NA

190,000 NA

9,250 NA

7,147,108 NA

Daniel Ammann CEO of GM Cruise Holdings LLC General Motors Co.

8,971,881 9,258,318

1,450,000 1,450,000

0 0

3,993,891 4,078,222

1,921,300 2,138,800

372,307 356,918

1,234,383 1,234,378

Lee Smith executive VP and COO of Flagstar Bank Flagstar Bancorp Inc.

8,620,609 2,089,504

712,500 750,000

0 0

7,115,675 525,000

757,500 776,700

34,934 37,804

NA 0

Robert Shanks Executive VP and CFO Ford Motor Co.

8,420,165 6,744,218

971,250 879,750

0 309,750

6,617,074 3,677,962

720,000 1,778,185

111,841 98,571

NA NA

Mark Reuss president General Motors Co.

7,356,090 7,726,508

1,200,000 1,200,000

0 0

3,276,007 3,345,168

1,590,000 1,824,390

277,579 344,446

1,012,504 1,012,504

Charles Stevens B former adviser General Motors Co.

6,939,180 7,101,039

1,100,000 1,100,000

0 0

3,255,775 3,076,744

1,320,000 1,676,614

257,153 316,430

1,006,252 931,251

Russell Weiner COO & president of the Americas Domino's Pizza Inc.

6,358,117 2,227,938

679,557 610,000

0 0

3,888,429 428,582

1,026,085 743,529

38,576 70,384

725,470 375,443

James Farley president of New Businesses, Technology & Strategy Ford Motor Co.

5,860,588 13,473,558

1,075,000 973,417

0 200,000

3,744,511 8,807,539

792,000 1,000,000

249,077 2,492,602

NA NA

Joseph Hinrichs president of Automotive Ford Motor Co.

5,815,455 12,124,550

1,107,250 1,081,000

97,920 0

3,617,080 8,677,955

870,565 2,257,817

122,640 107,778

NA NA

Dhivya Suryadevara C executive VP and CFO General Motors Co.

5,506,090 0

668,100 NA

0 NA

2,446,635 NA

1,192,500 NA

402,592 NA

796,263 NA

Gerardo Norcia president and COO DTE Energy Co.

5,476,877 4,871,914

826,923 730,385

0 0

2,979,048 2,252,390

1,549,185 1,798,629

121,721 90,510

NA 0

Alan Batey advisor General Motors Co.

5,340,520 5,975,628

1,025,000 1,025,500

0 0

2,178,894 2,224,928

1,230,000 1,764,401

233,197 287,373

673,429 673,426

Eric Mitchell former executive VP Adient plc

4,821,454 5,736,096

750,000 700,000

0 0

2,348,813 2,999,997

NA 1,831,552

1,722,641 204,547

NA 0

Joseph Massaro senior VP and CFO Aptiv PLC

4,707,111 3,451,873

790,500 619,125

0 0

3,055,017 2,019,136

797,260 766,740

64,334 46,872

NA 0

Jeffrey Vanneste senior VP and CFO Lear Corp.

4,361,550 4,896,840

827,750 827,750

0 0

2,534,641 2,378,790

648,128 1,391,477

351,031 298,823

NA 0

Michael Simonte president American Axle & Manufacturing Holdings Inc.

4,216,862 5,036,913

750,000 727,300

0 0

2,230,775 2,144,593

1,169,663 2,108,241

66,424 56,779

NA 0

Terrence Larkin executive VP of business development, general counsel and corporate secretary Lear Corp.

4,196,862 4,929,600

855,098 855,098

0 0

2,436,866 2,566,739

595,148 1,197,137

309,750 310,626

NA 0

Ronald Hundzinski D former executive VP and CFO BorgWarner Inc.

4,182,249 4,626,647

752,250 708,750

0 0

2,387,568 2,169,724

705,775 1,440,000

336,656 308,173

NA 0

Frank Orsini executive VP and president of Seating Lear Corp.

4,155,642 4,346,773

764,396 736,375

0 0

2,474,496 2,151,892

658,713 1,220,965

258,037 237,541

NA 0

Majdi Abulaban former senior VP and president of signal and power solutions and engineered components group Aptiv PLC

4,000,502 4,347,831

670,000 667,500

0 0

2,022,370 2,019,136

541,125 642,380

767,007 1,018,815

NA 0

Jeffrey Stafeil executive VP and CFO Adient plc

3,754,575 5,602,912

780,000 750,000

0 0

2,552,994 3,199,977

NA 1,427,250

421,581 225,685

NA 0

Byron Foster former executive VP Adient plc

3,678,176 6,780,072

800,000 750,000

0 0

2,450,946 3,700,002

NA 2,102,250

427,230 227,820

NA 0

Pär Malmhagen president Tower International Inc.

3,675,095 3,129,393

675,000 663,940

0 772,393

2,064,990 498,149

835,710 899,258

99,395 295,653

NA 0

John Sznewajs VP and CFO Masco Corp.

3,582,934 4,144,148

698,185 672,867

0 0

981,886 1,107,228

1,242,500 1,690,962

86,851 141,241

573,512 531,850

Want the full Excel version of this list — and every Crain's list? Become a Data Member: CrainsDetroit.com/data SOURCES: S&P Global Market Intelligence, (Marketintelligence.spglobal.com) and SEC filings. Top compensation for non-CEO executives at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available.

B Left CFO position Sept. 1, 2018. C Became CFO Sept. 1, 2018. D Left CFO position Dec. 31, 2018.

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Employment & Labor

And so many more... visit us at kitch.com Children’s Hospital of Michigan Foundation adopts new name

CRAIN’S DETROIT BUSINESS

Children’s Hospital of Michigan in Detroit.

By Sherri Welch swelch@crain.com

Children’s Hospital of Michigan Foundation, the nonprofit that took the bulk of charitable assets when the Detroit Medical Center converted to a for-profit in late 2010, has adopted a new dba, The Children’s Foundation, to signal its broader support for children’s health beyond its namesake hospital in Detroit. At the same time, in line with its bid to become a community foundation for children, the organization has taken on administration of the annual Paul W. Smith Golf Classic and launched a $2.5 million campaign on behalf of the Jamie Daniels Foundation to help fund a new longterm residential center for people recovering from opioid and heroin addiction. “This is the next chapter ... in following the evolution of this foundation,” said Matt Friedman, chairman of the foundation and founding partner of Farmington Hills public relations firm Tanner Friedman. There’s been increased confusion about what the foundation supports since DMC was acquired by Vanguard Health Systems in 2010 and subsequently by Tenet Healthcare in 2013, he said. “The hospital and DMC’s for-profit status has become better known, and it’s become even more confusing on how a nonprofit can support a for-profit, publicly held company,” Friedman said. The new name reflects the broader work of the foundation at this point, namely to support pediatric health initiatives connected to DMC Children’s Hospital of Michigan and beyond, he said. “Our legal advice is to use the dba for now ... so we don’t need to get a new tax ID number and can operate as we have been, just (under) a new umbrella name,” President and CEO Larry Burns said. When the foundation is raising money for Children’s Hospital, it will

use the Children’s Hospital of Michigan name, he said, or when it’s raising money for the Jamie Daniels Foundation, it will use that name, with The Children’s Foundation serving as its umbrella name.

Children’s Hospital support The foundation will continue to support Children’s Hospital at the same level as it has since becoming an independent foundation, Burns said. About two-thirds of its nearly $6 million in annual grants this year has gone to fund charitable efforts and research at Children’s Hospital by the hospital and its affiliates, including Wayne State University, he said. As it grows, it’s expanding its grants outside of Detroit. Its latest round of funding includes the first grants it’s made on the state’s west side, to Helen DeVos Children’s Hospital Foundation, Western Michigan University Homer Stryker M.D. School of Medicine and the Brain Injury Association of Michigan’s programs in that region. Also on the list are new funding to Michigan State University and grants to Children’s Hospital and other Southeast Michigan nonprofits including Forgotten Harvest, Detroit Public Television and YMCA of Metropolitan Detroit. As of April, The Children’s Foundation had assets totaling $125 million. In line with its bid to become a community foundation, managing other community assets to benefit children’s health, as well as its own, The Children’s Foundation has taken on administration of another outside entity, the Paul W. Smith Golf Classic. The Children’s Foundation will now be one of the charitable beneficiaries of the event, Burns said.

Jamie Daniels Foundation The Children’s Foundation is re-

ceiving a 1.5 percent operating fee on the value of the Jamie Daniels Foundation’s assets to manage them, Burns said. The organization took over management of the Jamie Daniels Foundation last year. The Children’s Foundation has also launched a $2.5 million campaign for the nonprofit established by Detroit Red Wings announcer Ken Daniels in memory of his son who died of an opioid overdose while living at a long-term residential center in Florida. “If there had been a facility like this close to home, Jamie Daniels would not have had to necessarily stay in Florida after his recovery,” Burns said. Daniels was a victim of the socalled “Florida Shuffle,” a scheme aimed at milking a person’s insurance coverage rather than putting them on a path to permanent recovery, and “patient brokering” in which a rehabilitation center pays a third party for bringing people in recovery to their centers. The new campaign will help fund a $10 million long-term treatment and rehabilitation center in Southeast Michigan for people recovering from opioid and heroin addictions, Burns said. “We are working with some former drug court judges to put things in place (and) modeling this after Andy’s Place, a facility that just broke ground in Jackson in April,” Burns said. The new center will provide wraparound support, “be it counseling (or) meetings, whatever they need to live their lives,” Burns said. A charity roast of Ken Daniels’ co-announcer for Red Wings games, Mickey Redmond, is set for September to help kick off the campaign, Burns said. The goal is to break ground on the Jamie Daniels Recovery Center within two years, he said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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Paula Herbart:

School fix starts with Whitmer’s budget. Page 21

cliven

THE GROWTH

CONUNDRUM ROADS

CHAD LIVENGOOD clivengood@crain.com

As outer-ring suburbs grow, they bring with them demands for road growth — how can we afford it?

which get no state direct aid for roads, approve residential housing sprawl — and then dump the cost of infrastructure onto cash-strapped counties. “I don’t have the money for today’s roads much less the new roads we’re building,” Macomb County Executive Mark Hackel said in an interview. This is the public policy of Southeast Michigan transportation planning for past half-century: A one-mile stretch of 23 Mile Road gets widened with local, state and federal funding to ease morning and evening congestion for commuters in affluent subdivisions with half-million-dollar homes. But 10 Mile, 11 Mile, 12 Mile and (insert the name of just about every county road south of Metropolitan Parkway/16 Mile here) get worse and worse and worse. Interstate 75 in Oakland County gets widened. But Nine Mile Road in Hazel Park is hardly passable in some places. Something seems off here. Hackel admits he’s basically a political prisoner to townships that want to expand their tax base by

P f By

JUNE 2019

n northern Macomb County, $9.7 million is being spent this summer to widen 1.3 miles of 23 Mile Road from two lanes to five to accommodate traffic along a subdivision-congested stretch of road that a generation ago was mostly sod farms and plant nurseries. Elsewhere in Macomb County, there are 800 lane-miles of roads rated in poor condition that the county and its municipalities cannot afford to fix. Eight. Hundred. Miles. This contrast of priorities exposes an issue that’s largely gone undebated in the yearslong debate over road-funding in Michigan: We’ve built a state we can no longer afford to maintain with the current levels of taxpayer support. And in Macomb County’s townships north of the Hall Road commercial corridor, we’re still building a state we can’t afford to maintain with stagnant population growth and thousands of baby boomers leaving the workforce each day for retirement. Outer-ring suburban townships,

turning farm fields into cul-de-sacs and residential builders that want to go about their business of turning farm fields into cul-de-sacs. A generation ago, township leaders in Shelby and Clinton townships and the former county road commission basically left Hackel and today’s leaders with the crumbling road network the state’s third-largest county has today — and limited taxation options and below average per-vehicle state funding to pay for it. “It’s not unique to Macomb County,” Hackel said. But it’s more pronounced in Macomb County, with all of the county’s needs in older suburbs (full disclosure: I live in St. Clair Shores, where Harper Avenue is jagged and jarring). And with each housing subdivision, there’s virtually no accounting for the cost of additional damage to two-lane roads like 23 Mile and north-south connectors such as Romeo Plank Road, which is two lanes of blacktop with rim-bending, rutted gravel shoulders between 22 Mile and 23 Mile. Under Michigan's road-funding formula, known as Act 51, townships are

Rooftops spring up in Macomb Township as the state debates how to maintain its roads. LARRY PEPLIN FOR CRAIN’S

excluded from a piece of the pie, even though townships are where most of the new construction is taking place in Livingston, Macomb, Ottawa and other counties experiencing sprawl. But there's nothing to stop townships from approving new residential developments, causing already scarce resources to be shifted from repaving pockmarked older roads in cities to widening country roads in the exurbs. As state lawmakers wrestle with how to generate at least $2 billion more annually for all roads in Michigan (Macomb County alone puts its tab at $2.3 billion in needs for its broken roads and bridges), the issue of how to better plan for future growth and pay for Michigan’s existing road network is percolating at the Capitol. Senate Majority Leader Mike Shirkey, a Republican from Jackson County who could play a pivotal role in hashing out a road funding solution this year, said the wide-open public policy of allowing new development without accounting for the additional infrastructure costs “needs to be reconsidered.” SEE SPRAWL, PAGE 19

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CRAIN’S FORUM | JUNE 2019 EMPLOYMENT

Poll: 4-in-5 voters want ban on firing for sexual orientation, gender identity By Chad Livengood clivengood@crain.com

our out of every five likely 2020 general election Michigan voters think it should be illegal for an employer to fire a worker because of their sexual orientation or gender identity based on their religious beliefs, according to a new statewide poll released exclusively to Crain’s. The statewide survey conducted May 30-June 2 by Lansing-based Glengariff Group Inc. found 83 percent of likely voters said there should not be a religious exemption for employers invoke when firing a worker who is lesbian, gay, bisexual or transgender. The poll also found 79 percent of the 600 likely voters surveyed said a landlord should not be able to deny housing because of a person’s gender identity or sexual orientation. Eighty-one percent of voters incorrectly think it’s already illegal “to fire someone or deny them housing because they are gay, lesbian, bisexual or transgender,” according to the poll results. Pollster Richard Czuba said the support for extending the state’s civil rights act to the LGBT community is as strong as public support for banning oil drilling in the Great Lakes. “When you’re polling in the 80 percent or higher range, voters are unanimous in that they don’t agree with the loophole,” Czuba. Support for making it illegal for an employer to fire or landlord to deny housing based on sexual orientation or gender identity ran across all demographics in the poll, including 65 percent of self-identified Baptists and 62 percent of Catholics. “There just aren’t that many pockets of objection to this anymore,” Czuba said. When voters were asked directly whether an employer should be able to fire someone for being gay or transgender based on their “own religious beliefs,” 83 percent of Catholics surveyed said no. Twenty-two percent of the poll’s 600 respondents were Catholic.

From the survey

Currently in Michigan, an individual can be fired from their job or refused housing because they are gay, lesbian, bisexual or transgender. Would you support or oppose a law making it illegal to fire or deny housing in Michigan to any person because he or she is gay, lesbian, bisexual or transgender? Support 77.5%

Michigan’s Elliott-Larsen Civil Rights Act currently prohibits discrimination in housing or employment based on a person’s religion, race, color, national origin, age, sex, height, family status or marital status. Do you support or oppose legislation that would expand Elliott-Larsen protections in Michigan to make it illegal to fire someone or deny them housing because they are gay, lesbian, bisexual or transgender? Support 73.5%

Oppose 16.5%

Oppose 19.8%

Don’t know/Refused to answer 6% Should an employer be allowed to fire an employee they find out is gay, lesbian or transgender if it conflicts with their own religious beliefs? Yes, should be able to fire 8.8%

Don’t Know/Refused to answer 6.7% Should a landlord be allowed to refuse to rent an apartment to someone they find out is gay, lesbian or transgender if it conflicts with their own religious beliefs? Yes, should be able to deny housing 13.2%

No, should not be able to fire 83%

No, should not be able to deny housing 79.2%

Depends 4%

Depends 3.3%

Don’t Know/Refused to answer 4.2%

Don’t Know/Refused to answer 4.3%

Source: Glengariff Group Inc.’s statewide poll of 600 likely 2020 general election Michigan voters conducted May 30-June 2 via a telephone operator. The poll’s sample of likely voters included 35 percent with cell phones and 65 percent with landlines.

“The voters in the pews flat out don’t agree with the lobbyists of the Catholic Conference,” Czuba said. Tom Hickson Jr., vice president for public policy for the Michigan Catholic Conference, said the poll “misses the mark” by not informing voters that faith-based exemptions for employers are common law across the U.S. “Religious liberty protections for faith-based employers are inherent to civil rights laws across the country,” Hickson said. “Michigan would be the first state to exclude such protections if the Elliott-Larsen Civil Rights Act were to be amended in the manner as proposed.” Czuba’s Glengariff Group polling firm tested the issue just before Gov. Gretchen Whitmer and fellow Democrats in the Legislature this week renewed a years-long battle to amend Michigan’s Elliott-Larsen Civil Rights Act to add protections for gay, lesbian and transgender residents. The law bars discrimination in employment, housing and public accomodations based on race, sex, religion, national origin, age, weight and other protected

factors. Some of Michigan’s biggest businesses have backed a previous effort five years ago to amend the law, which fizzled out in the Republican-controlled Legislature over objections by conservative lawmakers who want to give employers a religious exemption to hire, fire and deny housing based on their beliefs. In 2014, the Michigan Competitive Workforce Coalition, which included the Detroit Regional Chamber and Grand Rapids Area Chamber of Commerce, made an unsuccessful push to get the Legislature to amend the civil rights law. The coalition of business interests included Detroit Medical Center, Dow Chemical Co., Kellogg Co. Quicken Loans Inc., Strategic Staffing Solutions and Steelcase Inc. Equality Michigan, an organization that advocates for the state’s lesbian, gay, bisexual, transgender and questioning (LGBTQ) community, is working on restarting the coalition, said Erin Knott, interim executive director. Knott said the poll results show “the vast majority” of Michigan residents

support “modernizing Michigan’s policies to make it a clear that discrimination against LGBT people will not be tolerated any longer.” The polling support for extending the civil rights law to gays, lesbians and transgender people comes nearly four years after the U.S. Supreme Court's landmark ruling allowing for the legalization of same-sex marriage. “I think, over time, people are starting to see that members of the LGBTQ community were everywhere,” Knott said. “We are in your neighborhood, we’re at your place of employment, we share meals with you down on Main Street at the local diner. We’re teaching your kids, we serve as local elected officials.” The Glengariff Group survey was conducted using a telephone operator and had a cell phone sample of 35 percent and a margin of error of plusor-minus 4 percentage points. The poll had a partisan breakdown of 43 percent Democrat, 36 percent Republican and 19 percent independent voters. Senate Majority Leader Mike Shirkey, R-Clarklake, and House

SPRAWL

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood maintaining a road for residential subdivision expansion the same way he manages his Orbitform tool-and-die business in Jackson when making capital investments in equipment for making manufacturing machines — and backing it up with a revenue stream. “In my business, if I don’t spend at least as much as I depreciate every year, the age of my equipment declines rapidly, and it frankly puts me out of business,” Shirkey said. “We need to have that same mentality when we’re doing new developments and expansion.” On 23 Mile Road in Macomb Township, third-generation vegetable farmer Ken DeCock has watched the housing boom spread around his family’s 70-acre Boyka’s Farm Market for years with little planning for improving the infrastructure that causes one-mile traffic backups each afternoon to Romeo Plank Road. “In Macomb County there’s a saying: The county and state work on improving the roads after the people get there, not before they get there,” DeCock said.

FROM PAGE 18

“When those kinds of expansions and those kinds of developments were started decades ago, there should have been consideration given then about the sustaining cash flow for maintenance,” Shirkey said in an interview last month at the Mackinac Policy Conference. Shirkey doesn’t oppose new roads for economic development. He opposes new development without a long-term plan to pay for and maintain the necessary infrastructure. “It’s one thing to go out and build something new. But if you haven’t spent enough time thinking about how you have cash flow behind that to take care of the depreciation, amortization and so forth, then you’re setting yourself up for a problem,” Shirkey said. “And I think we’ve had evidence of that across the state where we’ve been very excited about new expansions and nobody’s saying, ‘Wait a minute. How are we going to fund this cash flow-wise?’” Shirkey thinks about the cost of

Speaker Lee Chatfield, R-Levering, have made no commitment to take up legislation amending the Elliott-Larsen Civil Rights Act, staking out the position of past GOP legislative leaders that there should be a religious exemption. Democrats have refused to vote for any change in the law that doesn’t include transgender residents or creates a religious exemption loophole. If the legislative stalemate continues, LGBTQ advocates have talked about gathering the nearly 350,000 voter signatures needed to put an initiated law before the Legislature or placing it on the 2020 ballot. Glengariff Group’s poll found nearly 77 percent of likely 2020 presidential election voters would support a ballot initiative to outlaw discrmination in employment and housing based on sexual orientation or gender identity. “Strong Republicans are on board with this,” Czuba said, noting nearly 66 percent support among likely voters who identify as “strong Republicans.”

LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

A residential development goes up near 22 Mile Road and North Avenue in Macomb Township.

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

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CRAIN’S FORUM | JUNE 2019 ROADS | FUNDING SOLUTIONS

P3s could help solve Michigan’s road-funding crisis

veryone knows that Michigan’s roads and bridges are in bad shape. What we don’t know is how we are going to pay to fix them. According to a recent Detroit Free Press analysis of Michigan Department of Transportation data, more than 1 in 10 of our state’s bridges are in poor or worse condition, and Michigan has the 10th-highest percentage of bridges in such shape.

The average age of our state’s bridges is 46 years old, and more than 700 of them haven’t seen rehabilitation work in 75 years. Even scarier, fixing them at our current pace — without a deal in Lansing or a sudden influx of capital — will take roughly 92 years, the chief economist for the American Road & Transportation Builders Association told the paper. On top of that, the longer we wait to repair a piece of infrastructure, the more expensive it will be — and that’s if the road or bridge can still be saved. Having to build new bridges because the old ones have been allowed to deteriorate too long would add dramatically to the cost. MDOT says that it will cost $3.4 billion to replace Michigan’s 1,200-some bridges

NEAL BELITSKY

MDOT says that it will cost $3.4 billion to replace Michigan’s 1,200-some bridges that are in poor or worse condition.

that are in poor or worse condition, and that’s not taking into account the other costs of poor infrastructure, such as damage to vehicles and loss of economic development opportunities. Despite this crisis, in 2015, Michigan ranked 42nd among states for road spending for every 10,000 vehicle miles traveled, according to the Citizens Research Council of Michigan. “Our roads and bridges are plainly unsafe, and it’s bad for our economy, but most importantly I think it’s a dangerous situation that should keep us all up at night,” Gov. Gretchen Whitmer told reporters on May 16. “It’s a catastrophe in the making.” Fixing the roads was Whitmer’s signature campaign rallying cry, and

Michiganders have consistently made it clear that our infrastructure is a top priority. However, Lansing has not been able to reach an agreement. Therefore, we might need to look for other solutions. Perhaps one answer is a public-private partnership (P3) structure, one that enables the government to hire a private partner to front the cost for the repair or replacement while providing cost-effective, innovative solutions. The private-sector partner takes on the obligations and risks of delivering a project, including financing, construction and operations and is reimbursed through a set payment, known as an “availability payment,” or through toll collection. Under the availability payment model, the governmental entity reimburses and compensates its private partner through performance-based payments. Usually, the amount of that payment is determined by companies submitting bids in an open and transparent yet competitive process. Some states use a P3 structure that compensates the private partner through rights to tolling rather than availability payments. Though such a model has not been popular in Michigan to date, it may be an effective tool worth reconsidering given how access of funds has been an

issue in addressing our state’s infrastructure deficit. Companies such as American Roads own, operate, manage and rehabilitate road and bridge infrastructure. As a potential private partner, American Roads can take a bundling approach, providing rehabilitation, maintenance and operations of a group of facilities. By managing and maintaining multiple projects, they also benefit from efficiencies through economies of scale. Assessing projects over a long-term horizon allows the private partner to view projects holistically. For example, a company may agree to undertake an approach that might be more costly initially, but will benefit from reduced maintenance costs in order to deliver the lowest total cost in the long run. In this way, the government, private sector and drivers all win. Through working with a private partner, the government can get the work done now. No more waiting. No more flat tires and no more chunks of falling concrete endangering people’s lives. Greater use of public-private partnerships might just be a major contributor toward ending Michigan’s road-funding crisis. Neal Belitsky is CEO of American Roads, which operates the Detroit-Windsor Tunnel.

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ECONOMY | THE TALENT GAP

Michigan needs to lead in workforce development O

ne of the most important building blocks for a strong, growing economy and vibrant communities is the development of a diverse and multi-faceted workforce. Without qualified talent, Michigan businesses and communities can’t stay competitive or drive growth for the benefit of our workers and residents. Although there are job training success stories in Michigan, we can and must do better.

Even though I work for a bank, I spend as much time speaking with business owners and civic and community leaders about people as I do about capital — underscoring the fact that their No. 1 business concern is attracting qualified individuals from an underdeveloped talent pool. These business leaders agree that the current state of career preparation is not sufficient to meet present and future workforce demands, threatening Michigan’s continued economic growth. In 2018, there were an average of 36,261 monthly job postings for skilled occupations in Southeast Michigan. Although there are numerous state and federal job-training programs, there is a growing gap between those who are generally look-

MATT ELLIOTT

We cannot attract and develop talent for tomorrow with yesterday’s skills and tools.

ing for work and those who are qualified for specific trade-related jobs. How does Michigan address this challenge? First, we need an approach that better prepares new and returning employees for jobs of the future. Next, we need to develop strategies that better connect the needs of employers with training providers. In recent years, it has become increasingly important for post-secondary educational institutions to work to close the talent gap. While higher education works to develop people for a broad base of careers, trade and other community schools can prepare people for jobs today. Continuing to form partnerships with the private sector is one of the most effective ways schools can do

that work. Partnerships and alliances between educational institutions, governmental entities, nonprofits and employers can help ensure that our workforce is sufficiently prepared to meet challenges and opportunities. Businesses should view such partnerships as investments in not only talent, but their businesses. For example, by 2020, 65 percent of all U.S. jobs will need a postsecondary credential such as a four-year university degree, two-year associate degree or some other high-value certificate. Yet since 2010, the vast majority of new U.S. jobs have required some postsecondary education — and just 41 percent of Michigan adults have at least an associate degree. By improving postsecondary opportunity with both tuition assistance and employer-based training, business must become a key player in postsecondary training. How can more businesses make a difference in talent and prepare a workforce? Bank of America is paving the way with several opportunities. Fifteen years ago, Bank of America created Neighborhood Builders, one of the country’s largest philanthropic investments in nonprofit leadership. Nonprofits serve as major economic engines and the foundation of strong communities. It is an example of how our company deploys capital in local communities and builds cross-sector partnerships, which serves to advance economic and social progress as

part of its approach to responsible growth. Bank of America awards two Neighborhood Builders each year to metro Detroit nonprofits. This investment begins with a grant of $200,000 to each organization and finishes with two years of leadership development training. Some of our alumni organizations invest heavily in job training, such as the Robotics and Engineering Center at the Detroit Hispanic Development Corporation while others concentrate on neighborhood infrastructure and small business development like Jefferson East Business Association. We also place young adults (14-19) in summer and year round jobs through our partnership with Urban Alliance and Grow Detroit’s Young Talent. As a state, we cannot attract and develop talent for tomorrow with yesterday’s skills and tools. Increasingly rapid technological advances and other global changes will put pressure on individuals to adapt to new expectations in both the jobs of today and the new ones of tomorrow. These changes will require Michigan residents to have versatile skills. As a member of Business Leaders For Michigan, I support its recommendation for greater coordination of job training programs at the local and state levels, tailoring training to meet specific business needs. Matt Elliott is the Michigan market president for Bank of America.

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CRAIN’S FORUM | JUNE 2019 EDUCATION | KEEPING MICHIGAN COMPETITIVE

A road map to restoring Michigan’s school system

e’ve been fortunate enough to be leaders in business, fathers, and now grandfathers. And in all three roles, we learned the value of a strong basic education. Having that foundation makes it possible to find good, productive, satisfying employment, raise a family and provide the kind of critical thinking necessary in our democracy.

 Our young people have A recent report by The Education Trust-Midwest, been losing ground to other a group that we both supstates, at a time when educaport by serving on its leadtion and talent are by far the ership council, raises seribest predictors of what ous questions about the states will succeed in providdirection our state is going ing the opportunity for a in providing pre-K-tomiddle-class lifestyle. high-school education, the The report offers a road MICHAEL J. basic building block of op- KEN map to a better future, if JANDERNOA portunity and success, to WHIPPLE policymakers will put aside the children of our state. their preconceived notions Bottom line: Our young The blunt statistics: and work together on an people have been losing  Michigan is one of only agenda that, frankly, is supported by the vast ma13 states declining in fourth ground to other states. jority of parents (voters). grade reading scores from Fortunately, the report also points to the way 2003-2017. Today, we rank 35th in the nation. If current trends continue, we will be 45th in 2030. forward. It looked at states such as Massachu We are 33rd in the nation in eighth grade setts, which are among the best — not only in the math scores. If current trends continue, we will nation, but in the world — in providing their people with an opportunity for a quality educabe 37th in 2030.  Michigan’s low-income schools are doing tion. It looked at states that have been at the botpoorly, whether in rural, suburban or urban tom but have made policy shifts and moved forenvironments. But even in our more prosper- ward quickly, such as Florida and Tennessee. It found successful states have key elements ous communities, our students as a whole are underperforming similarly advantaged stu- in common — policies our state could emulate if we find the political will to do so. dents in other states.

First and foremost: We need to provide more funding to disadvantaged students. Right now, the poorest school district — which by definition has the students whose parents have the lowest incomes — has teachers who are paid on average $9,739 less than the wealthiest school district. Today, we rank 43rd out of 47 states (that report) in funding equity. Equity is not equal funding. Equity recognizes that we all benefit when a student who has fewer opportunities through no fault of his or her own gets a hand up. And those dollars must be invested in a way to ensure that the students in classrooms directly and effectively benefit from this investment. We need to step up and invest more in at-risk students if we are to have true equality of opportunity for all in our state. In all school districts, as the report says, we should “provide schools with sufficient funds to meet the additional learning needs of students from low-income families, students with disabilities and students from other vulnerable student groups.” Another top priority: Accessible, comparable data that can lead to helpful improvement systems, from public reporting to better teacher feedback to thoughtful accountability. Businesses have long said “you can’t measure what you can’t see.” We need to stay with a few standardized (yes, that word) tools that will let us measure progress in schools across a district, in districts across our state and in our state over time and across the nation. State education leaders need to quit changing assessment tools from year to year, and insist upon a data system that allows comparison to other states. We now have an A-F grading system

for schools, but no accepted way to assign grades. This is a great opportunity to fix this problem, by ending efforts to modify or drop the M-STEP assessments and return to using the version of the test that had been fully aligned with other states and independently reviewed. A third priority: Let’s support our teachers. They have a difficult job, one that is far more difficult than a generation or two ago. Let’s identify top educators and offer them master teacher roles with increased compensation. We can put in place evidence-based, capacity-building investments for districts to ensure effective annual evaluations for all educators, to help more teachers do the job we know they want to accomplish. These are just a few of the policies laid out in the new report. A new poll that The Education Trust-Midwest has commissioned finds Michigan parents support this agenda. They agree that improving the quality of education is the top issue facing the state, even more important than fixing our roads. And 80 percent of parents said that they would favor a change in education funding distribution that increases funding for poorer districts. Parents are voters. Policymakers should be listening to voters and the recommendations available in this report. We cannot afford to continue to allow our state’s education policies to hold our people back from success. Ken Whipple is a former CEO of Consumers Energy and chairs The Education TrustMidwest Leadership Council. Michael J. Jandernoa is a former chairman and CEO of Perrigo and a member of the council.

EDUCATION | THE QUESTION OF MONEY

Turning around schools starts with Whitmer’s budget

f Gov. Gretchen Whitmer and educators across the state have their way, the spectacular disinvestment in public schools over the last two decades will soon come to an end. The K-12 education budget the governor presented to the Legislature earlier this year truly is a game changer.

“Michigan has tried to improve The governor’s budget proposes an schools on the cheap, focusing more increase of half a billion dollars for on accountability and school choice,” public schools next year, the largest Arsen said. “To make those policies increase in nearly two decades. And effective, they have to be matched it is badly needed. with adequate funding. We have In January 2018, the School Finance been kidding ourselves to think we Research Collaborative, a group of can move forward while cutting business leaders and education exfunding for schools.” perts from metro Detroit to the Upper The severe underfunding of our Peninsula, released Michigan’s PAULA public schools comes with a price: first-ever school finance adequacy HERBART The study notes that Michigan ranks study. This study determined the true Twenty at the bottom nationally in math and cost of educating all students. reading proficiency. It provided conclusive evidence years ago, Twenty years ago, Michigan led all that policymakers were dramatically Michigan led Great Lakes states in both student underfunding Michigan students by all Great at least $2,000 each annually — and Lakes states achievement and education funding. Today, we are at the bottom of both that figure does not include addition- in both measurements. Policymakers have al funding needed for higher-cost student programs like special education, at- achievement made a deliberate choice not to adequately fund education, and student risk, or career/technical education. and educaachievement is reflecting that choice. Michigan State University education funding. In addition to failing our students, tion policy Professor David Arsen fol- Today, we we have also failed our educators. lowed up the SFRC study with a new are at the Teacher pay has declined across the report on education funding in Mich- bottom of country, but Michigan has been among igan titled “Michigan School Finance both meathe “leaders” in this trend. Adjusted for at the Crossroads.” surements. inflation, average teacher salaries in The report details how Michigan schools have faced the worst decline nationally Michigan have fallen by 12 percent over the past in education funding over the past 25 years. decade. Only three states (Indiana, West Virginia Since 2002, revenue for Michigan schools has and Wisconsin) have seen worse declines in declined by 30 percent adjusted for inflation. teacher pay. Starting teacher salaries in Michigan rank The study notes that since 1994, only two states have seen such decreases — West Virginia and 32nd in the nation. That statistic helps explain Michigan. The other 48 increased per-pupil al- why one in five new teachers leave the classroom within the first five years of entering the profeslocations by an average of $1,400.

ILLUSTRATION BY JOZEFMICIC/ISTOCK

sion — an all-time high. Many young teachers are simply unable to pay off student loans and support themselves on such low salaries. Districts across the state are reporting difficulties filling positions. The loss of so many bright, young teachers is yet another symptom of the lack of funding our schools are suffering under. In addition to a substantial increase ($120$180 per student) in the foundation grant, the governor’s budget includes increases in several other areas which have been severely underfunded in recent years. Special education funding would increase by 4 percent, funding for at-risk students would

increase by $102 million and career/technical education funding would increase to $55 million. Gov. Whitmer also proposes to triple the number of literacy coaches to help meet the goals in the new third-grade reading law. Amazon sent a similar message when they decided not to invest in Michigan, taking its HQ2 project elsewhere, citing a lack of depth and quality of human talent needed for their business. If we want to change that deficiency, we must adequately fund our public schools. Paula Herbart is president of the Michigan Education Association.

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WSU

FROM PAGE 1

A Wayne State representative declined to provide additional comment on the restructuring plan. The November bankruptcy filing was driven by discovery earlier in that year that financial losses of the 20-year-old faculty practice plan were double the $5.5 million expected and a new, more drastic turnaround plan was required, Crain’s reported at the time. Over the past decade, UPG’s number of physicians declined by 50 percent, which hurt clinical revenue and made its leased network of suburban offices untenable, the filing said. The court-approved reorganization strategy created with consulting firm AlixPartners will help determine the future of UPG. It is expected to carry UPG from its 2018 loss of $8.1 million to $3 million in profit by 2022, according to the release and reorganization documents. To carry out the reorganization, the practice plan’s leadership formed six interdisciplinary teams to “transform and modernize” financial operations, its footprint, patient access, doctor compensation, business relationships and organization culture, among other things, last week’s news release said.

Closing clinics As part of restructuring, UPG is shrinking the amount of clinical space it operates from 260,000 square feet to 115,000 by the end of the year, Charles Shanley, M.D., University Physician Group’s president and CEO, told Crain’s on Tuesday. The

practice plan downsized sites in Southfield, Dearborn and Livonia and closed its clinical practice locations in Lake Orion and Port Huron, as well as a surgical center in Troy. “We desperately needed to consolidate and modernize the clinical footprint,” he said. UPG is shrinking to seven sites, Shanley added. The large majority are in Midtown Detroit, with UPG opting to focus its presence less on the suburbs and more in Detroit and at WSU’s School of Medicine. “We are on a path to be a leading urban academic practice, in a thriving city, recognized for innovative delivery of high-value care to the most complex and vulnerable members of the community,” Shanley said in the release. “Our future lies in streamlining access for the Detroit community ... to high-quality and cost-effective care in collaboration with Detroit’s primary care physicians, federally qualified health centers, the Detroit Medical Center, Barbara Ann Karmanos Cancer Institute and Henry Ford Health System.” The practice plan employs 244 physicians, with 23 more who have been hired and are in the credentialing process. A net total of five physicians have left since the bankruptcy filing. UPG has been looking since last summer at sites around Midtown where it could create a multidisciplinary ambulatory site, allowing patients to walk a short distance to another specialist doctor instead of needing to travel to another facility. It’s also looking at locations in Midtown where it could shift its administrative offices from Troy. That move-out is expected to finish by the end of October, marking the end of the site consolidation process.

Henry Ford, DMC ties The November filing came several weeks after UPG and the Detroit Medical Center reached a five-year contract in September for clinical and medical administrative services. The deal renewed a longtime affiliation between the for-profit hospital chain owned by Tenet Healthcare Corp. of Dallas and the Wayne State group, appearing to calm what had been a disintegrating relationship. UPG’s financial crisis — alongside mismanagement, lack of teamwork and other issues — have shown it will likely never become the large, profitable group envisioned by former Wayne State Medical School Dean John Crissman in 1999, Crain’s previously reported. Wayne State University’s medical school also needs to look at revenue options to replace what it would have taken in through an affiliation deal with Henry Ford Health System, according to previous Crain’s reporting. Henry Ford Health System CEO Wright Lassiter III pulled the plug in March after months of negotiations. The bankruptcy is unrelated to WSU’s negotiations with Henry Ford Health System, Shanley told Crain’s on Tuesday. “I think there’s general enthusiasm among the leadership of the school of medicine and the university to maintain and enhance our relationship with Henry Ford and resume conversations toward a synergistic partnership,” he said. “We’re all enthusiastic and supportive of that. It’s critical to the mission of the school of medicine and it’s good for the city of Detroit ... I think it’s just a matter of reinitiating those discussions.”

DISTRICT FROM PAGE 3

It doesn’t look like the renderings of a bustling area that the Ilitches showed the public in 2014 — as the city was under state-led emergency financial control and in municipal bankruptcy — and promised to build concurrently for when the city-owned arena opened in 2017. There’s been less criticism of the political and government class that ultimately approved the deals and the money: former Gov. Rick Snyder and his hand-picked emergency manager for Detroit, Kevyn Orr; the City Council; leadership of the Detroit Economic Growth Corp. such as George Jackson; and state legislators. Detroit City Councilwoman Raquel Castañeda-López — who was not made available for an interview — has led a recent political effort to achieve some accountability. She requested reports from the city’s Legislative Policy Division, Law Department and Downtown Development Authority to see what the city could do to ensure the Ilitches were living up to the deals. Turns out, there’s not much Detroit can do. Instead, the accountability tools available to the city are limited to ensuring the empty Hotel Eddystone is redeveloped, and that the arena itself employs an agreed-upon number of city residents. There’s nothing in any of the deals that is either a carrot or stick to spur completion of the district. The Eddystone serves as an example of the wider issue with the district and the Ilitches’ checkered history of development projects. The hotel has been a lightning rod for Ilitch criticism because the family agreed to redevelop it

into 96 apartments and commercial space as part of a deal not to demolish it alongside the adjacent Hotel Park Avenue that was razed in 2015. Instead, the Eddystone has languished undeveloped, windowless. Last month, Olympia and DDA agreed to series of benchmarks in the planned $40.9 million redevelopment. If Olympia defaults on the pact, a $33 million performance bond will ensure that someone else can step in and complete the project, which is anticipated to ask for public financing. The deal to finish the hotel’s renovation is a step but won’t silence critics. “I’m glad that there is an Eddystone agreement with teeth in it,” said Francis Grunow, chair of the Neighborhood Advisory Council for the District Detroit area. “However, Detroiters also deserve an overall district agreement with teeth. What (Olympia) sold the public to get now nearly $400 million in public money is far, far from reality.”

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June 10, 2019 June 10, 2019

LARRY PEPLIN FOR CRAIN’S

Little Caesars Arena opened in 2017.

As for the arena jobs promise, it appears the DDA, which owns the arena, has not been asking for data from Olympia Development that would show whether it’s meeting certain requirements to which it agreed for hiring city residents and using city-based businesses or businesses owned by city residents. An April report to the Detroit City Council says the DDA did not have data on: the number of Detroit residents working at the arena; the training and advancement opportunities provided to them; and Detroit businesses and businesses of Detroit residents bidding on arena contracts. “In response to the DDA’s request, a meeting is being scheduled to review various employment/business participation and outreach efforts, as well as other matters set forth in the (agreement). Olympia Development looks forward to this meeting, which we expect to occur soon,” the company said in a statement. Olympia handily exceeded its commitment of 1,100 jobs at the new arena, which opened in 2017; the report says that in 2018 there were 143 full-time employees and 3,028 part-time employees, according to the DDA. However, the report also says “much more information is needed to determine whether the commitment to providing Detroit residents jobs, training opportunities and contract opportunities for Detroit-based and Detroit resident owned businesses has been achieved.” The DDA declined to answer specific questions, instead sending a statement: “The Downtown Development Authority has been working with Olympia Development to track job performance results as well as other requirements of the (agreement). The DDA continues to schedule meetings with Olympia to review its employment plans, and to connect ODM with organizations that can grow the pipeline of trained and talented Detroiters.” In addition, Olympia faces a looming deadline to submit a development plan to the DDA for a chunk of land at the northwest corner of Woodward Avenue and I-75 that has been proposed to become a hotel. To date, no development plan has been submitted. It remains fenced off, covered in a District Detroit scrim. “We are currently working through timing and a development plan,” Olympia said in a statement. Construction of the arena, a few parking decks, a new business school for Wayne State University named after the family patriarch, the late Mike Ilitch, and some retail space has fulfilled an ancillary development deal Olympia and the city inked together. Under that deal, the Ilitches would

build, or cause to be built, at least $200 million in non-arena development. Its contractual obligation for ancillary development was exceeded because it built a couple of large parking garages, an office building attached to the arena for Google, and a new Little Caesars pizza chain headquarters that remains behind schedule. The rest of the district is mostly surface parking lots that generate revenue for Olympia, which has become a focal point of criticism. Christopher Ilitch, president and CEO of Ilitch Holdings Inc., said last month that the parking lots are future development opportunities and that many were required. The DDA agrees that Olympia has met the $200 million threshold, which triggers a $74 million reimbursement for Olympia from the DDA to be paid in coming decades. One local expert observer isn’t surprised the district doesn’t look like what was proposed. “It’s not uncommon for a developer to overpromise,” said John Mogk, a Wayne State University law professor who specializes in urban land use. “When the city deals with a developer, in Detroit or any other city, and the developer is asking for incentives, the city has to be on its guard.” There’s growing sentiment that the city should have driven a harder bargain. “(A development deal) has to be prepared in a way which legally you can hold the developer accountable for what they’re promising,” Mogk said. DeMause, the stadium subsidy critic, says the situation stems from a lack of knowledge. Arena developers often pay for studies that tout economic benefit of mixed-use projects tied to sports arenas, but there are decades of independent studies that show otherwise. Olympia paid for a report by University of Michigan Professor Mark Rosentraub that estimated the arena project would create 8,300 construction jobs and 1,100 permanent jobs, along with $1.8 billion in economic impact for the city, region and state. For cities, “It comes down to not being very good negotiators and having no incentive to become better negotiators because there’s no accountability. Is anyone going to be thrown out of office?” deMause said. The emergency manager in charge of Detroit during the arena and district negotiations, Orr, or other officials along the way, could have demanded options of the land within the district, giving the city the right to take it back if Olympia didn’t development it within a certain time frame, deMause said. “It’s not in the DNA of local officials to make demands, which is a huge problem,” he said. Mayor Mike Duggan took office in January 2014 and said he wasn’t part of the arena deal. “The city and DDA are pursuing everything that is legally enforceable relative to the arena project. The emergency manager had approved the basic arena project in 2013 before the mayor’s election and, in 2014, excluded the mayor from any participation in negotiations on the arena contracts,” said Alexis Wiley, Duggan’s chief of staff, via email. Mogk chalked up the Olympia deals now under fire to a political keenness for good news. “The city was most anxious to see this progress begun, whatever the outcome might be,” Mogk said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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PET COKE

“Look at all of the dust coming from the Levy asphalt plant,” Marathon refinery general manager Dave Roland says pointing west from atop of the tower. After years of being the brunt of criticism about its environmental track record, Findlay, Ohio-based Marathon Petroleum is pushing back in unusual ways — pointing fingers at its odor-emitting and dust-creating neighbors in a bid to win approval from the City of Detroit to continue operating its pet coke storage and disposal without a covered roof over the massive pit. “No one ever complains about the (smell of the) waste water treatment plant — especially the city,” Roland said during a recent tour with Crain’s of the refinery’s coker, where the pet coke is produced during the refining process. The city’s Buildings, Safety, Engineering and Environmental Department (BSEED) recently denied Marathon’s variance request to continue outdoor storage under a 2017 ordinance that City Council passed in response to Detroit Bulk Storage’s previous storage of 40-foot piles of pet coke along the Detroit River that created black dust storms that could be seen — and breathed — in Windsor. “The goal is protect public health so that stuff is not blowing into people’s homes,” said City Councilwoman Raquel Castañeda-López, who represents southwest Detroit.

In denying Marathon a variance, city officials said the oil refinery failed to demonstrate in its application that it has a daily street sweeping schedule to clean up any pet coke dust that may escape the storage pit while it’s being loaded and trucked out of the facility. City officials also said Marathon failed to prove that the operation is not allowing “fugitive dust” to escape.

“Marathon’s argument is based on their assertion that since the coker unit has been operating since 2012 there have been no visible emissions and they have not caused a public nuisance,” Bell wrote. “They have offered no analytical data or air monitoring data of any sort that would conclusively show that there is a no fugitive dust emissions from the coke pit.” Because of the way coker and pit were constructed as part of a $2.2 billion expansion of the refinery seven years ago, modifying the structure and adding a roof over the pit storing the petroleum coke “becomes rather problematic” because the coke emits heat and steam, Roland said. Other oil refineries in rural areas around the country often keep pet coke piled up without any type of walls to prevent wind picking up dust particles, according to Marathon officials. “It was designed for being in a neighborhood,” said David Blatnik, manager of state government affairs for Marathon. “Everything in here is enclosed, except for the pit. And the pit was designed with the water and moisture content to keep all of the dust out anyways.” Sprayers mounted over top of the pit spray water on the petroleum coke to maintain a 10 percent moisture level, according to Marathon officials. City officials have stressed Marathon can resubmit its variance request with more data to prove the pet coke piles aren’t adding toxic dust to the air. “I’d like to see what they’re going to resubmit and how that will convince the city that there’s no issue,” Scott said. “It could go either way.” Marathon officials are in a holding pattern. “We’re still evaluating what the course of action will be,” Blatnik said.

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ing, and a small overage of about $40,000. But Creative Many hasn’t been able to secure sustainable operating support on an ongoing basis, he said. Though different arts associations advocate on behalf of their specific members, Creative Many’s closure will leave a gap in broad, statewide advocacy, Weinfeld said. “I’m sure that over the course of time ... there will be ... actions taken to close the gap. There are far too many passionate people in this space to let that gap (stand) for any length of time,” he said. Arts and the creative industries is a primary economic driver in the state, both in terms of job creation and wealth creation, Weinfeld said.

“It’s important that state policy makers and even local policy makers understand that impact.” Creative Many helped establish and nurture the Michigan Legislature Creative Caucus, which continues to work as a great supporter of arts throughout the state, said Omari Rush, chairman of Michigan Council for Arts and Cultural Affairs (MCACA) and executive director of CultureSource, which represents 140 arts and culture organizations in Southeast Michigan. CultureSource had relied on Creative Many to provide some focused arts advocacy services, he said. “In their absence, we will enhance our efforts in this area.”

T and iden edu cym role the succ peri com C brin opp brid the son A stat dire ture

FROM PAGE 1

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FRO

“No one ever complains about the (smell of the) waste water treatment plant — especially the city,” said Marathon refinery general manager Dave Roland .

Industrial dustup Marathon officials are questioning why Detroit’s bulk materials storage ordinance applies to pet coke but not the petroleum-based asphalt millings piled up at the Cadillac Asphalt plant across the street from the refinery or the Detroit Salt Co.’s dusty salt piles that sit next to the refinery along I-75. Berl Falbaum, a spokesman for Edward C. Levy Co., said the Cadillac Asphalt plant has had no violations for dust. “We abide by every dust ordinance of every municipality,” Falbaum said. “I don’t know what Marathon’s issue is. We’ll let Marathon meet its own obligation.” Falbaum added: “We do anything we possibly can to minimize our operations. But overall, we’re a good corporate citizen.” Asphalt millings were specifically excluded from the definition of “carbonaceous materials” under Detroit’s ordinance, said Paul Max, general manager of environmental affairs for the city. “They have received a full inspection in October of last year and a partial inspection last month and neither time was there an indication of a fugitive

LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

Pet coke travels inside the conveyor belt tube to an enclosed building, where it’s dropped into semi-trucks that haul the coke to plants in Monroe and Toledo.

dust issue or any other noncompliance with the ordinance,” Max said of Cadillac Asphalt. The Marathon refinery’s general manager also questioned the inconsistency of Detroit having an ordinance restricting its pet coke pile storage while DTE Energy Co.’s metallurgical coke sits piled up along the Detroit River two miles away in River Rouge, right along the city limits. Eric Younan, a spokesman for DTE, said a foam is sprayed on the piles of metallurgical coke to bind the petroleum byproduct together and prevent it from getting dusty and dry. Bulldozers are then used to compact the piles, which never exceed 50 feet in height, Younan said. “These are bigger particles — it’s not dust — they’re like pebbles,” he said. Met coke, which is used for fueling steel-making blast furnaces, is shipped wet by rail, truck or shipping vessel from Zug Island to DTE’s customers that include AK Steel and U.S. Steel’s plants in Dearborn, Younan said.

CREATIVE FROM PAGE 3

“We have been fantastic at acquiring programmatic dollars ... but at the end of the day, it takes people to run them,” he said. “We had not been able to develop a sustainable business model to support those people and ... other important aspects, such as advocacy,” said Weinfeld, a member of Creative Many’s dissolution committee. Creative Many has operated, typically, on an annual budget of $1.2 million, Wilson said. It reported losses on that budget in both fiscal 2017 and 2016.

Watson

Weinfeld

Last year, it brought $2.3 million in revenue in due to multiple-year grant payments, he said, much of it restricted for specific programs. It ended last year in the black, with an unrestricted fund balance of $94,000, Wilson said, after making cuts and securing new unrestricted support through fundrais-

Although Zug Island is visible from Detroit’s sparsely populated Delray neighborhood, the city’s regulations are limited to its boundaries, said Raymond Scott, deputy director of BSEED. “Because this is a local ordinance, there’s no way for us to go after them,” Scott said of DTE’s operations on Zug Island. (Zug Island is in River Rouge.) But the city environmental regulator conceded: “Air has no boundaries.” “We’re trying to figure out a way to make sure we manage all of that,” Scott added.

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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 // J U N E 1 0 , 2 0 1 9

TIGERS FROM PAGE 3

If there are 3,862 fewer fans per game, that’s $282,199 less revenue created per game. Over the season, that’s $22.8 million. Why does the unrealized revenue matter? That’s not an easy question to answer. Since team President and CEO Christopher Ilitch authorized the rebuilding process via a series of high-profile trades in summer 2017, Detroit had shed almost $100 million in player salaries. The current 40-man roster has about $100 million in salary, which is $35 million less than the league average for payroll. It’s unknown how much money the Tigers take in, but the known figures for local and national broadcast rights deals cover about $100 million. That doesn’t include shared revenue from national merchandise and licensing deals, and game-day money. It’s unknown what other expenses, such as ballpark debt, non-player salaries, and game-day costs total — but it’s in the millions. That’s a long way of saying that the Tigers are likely a break-even business, and uninterested in taking on more salaries until, in theory, the team is ready to contend again in 2021. The Tigers appear to be sticking to the budget. The fan decline has been under way for awhile, but it quickened this season. Since their all-time best attendance of 39,538 per game in 2008 — a large-market type of attendance hard to sustain — the Tigers are down 58 percent or 22,837 per games. Detroit sold out 41 games in 2008. Lately, the only sellouts are Opening Day, and the season ticket base has fallen to about 10,000 from 15,500 two years ago. Why attendance has plunged isn’t a mystery: The Tigers have been in a rebuilding mode since July 2017 and are a bad baseball team. Often, very bad. Through Friday, the Tigers had lost 21 of their last 30 games and were 23-36 overall. The lone star on the roster is Miguel Cabrera and injuries and age have robbed him of much of his thrilling power. He’s hit just three home runs in 2019. The rest of the roster is largely fill-ins and journeymen. Cabrera’s struggles personify the Tigers’ problems that have turned off fans. Detroit’s 211 runs scored is the lowest total in the majors, its 52 home runs are the second-fewest, and its combined .228 batting average is fourth-worst. A few bright spots exist, but not enough to draw fans. Not all is gloomy. There is a lot of attention on the prospects developing in the minor leagues, talent gathered in trades and in the draft, but those promising The Michigan Council for Arts and Cultural Affairs is working to identify new partners to assist in educating and informing state policymakers and supporters of the role of the creative expression in the health of Michigan businesses, success of students and the prosperity of Michigan residents and communities, Rush said. Creative Many’s pending closure brings the arts and culture sector opportunities for “building some bridges that haven’t been there in the past,” said MCACA Director Alison Watson. At the end of this month, the state agency plans to convene the directors of statewide arts and culture associations and regional

LARRY PEPLIN FOR CRAIN’S

Fans watch the Detroit Tigers play Tampa Bay at Comerica Park Tuesday.

young players are years away from being fixtures in Detroit’s everyday lineup. Ownership and management have signaled that the rebuilding process should culminate in 2021 or so, and money will be spent to add veteran free-agents needed to contend again. Until then, plenty of space will remain in the Comerica Park stands for the diehard fans, and those just out for a nice summer day, to stretch out. Tigers General Manager Al Avila spoke with reporters Thursday morning about the rebuilding process. “I’ve said it before, the rebuilding process, sometimes it’s excruciating pain that you have to go through. But at the end of the day, when things start to come together — and not every part of it is going to come together perfectly — but it’s putting every piece together and then going out (and getting) what you need to get afterwards. And believe me: We will need to go out and get some players afterwards, and we will,” he was quoted as saying. The front office is keenly aware of the

shriveled attendance, and in a bid to stanch the decline it staged a 72-hour ticket discount sale over the weekend of May 31-June 2. The team said 35,000 tickets were sold via the online promotion for June home games. The promotion started with $9 no-fee tickets. It’s unclear if Detroit will have another such sale. The team did say that its internal projections, based on pre-sold tickets and historic trends, show increased attendance over the summer. That’s historically true for the Tigers and many teams, who see an uptick when school ends and the weather improves. One of the top executives for the Ilitch family expressed satisfaction, via an emailed statement, with the recent ticket sale and the planned discounts and perks. “We were thrilled to see the response from Tigers fans on the Super Summer Sale. It was a clear indication to us that fans are engaged and excited to come out and enjoy a game at Comerica Park and support the ballclub. We were happy to offer this special deal, further em-

groups to discuss the upcoming absence of a statewide advocacy group, Watson said. “We’ve relied on one organization to do all the work on our behalf … this gives (associations) that time to say ... what can we do together?” she said. The agency, which began in 1998 as ArtServe Michigan, has been operating for the past couple of years from TechTown in Detroit. It’s consulting with the Michigan Attorney General’s Charitable Trust Section as it winds down operations to ensure commitments to funders and grantees have been fulfilled, payroll taxes have been paid and all legal obligations are met, Weinfeld said, noting that he

does not expect there to be charitable assets remaining after all obligations are met and staff are provided with exit packages. Creative Many has in excess of $400,000 cash on hand, Wilson said, but some of that is committed to programs, some to staffing and some to other commitments. “We’re in the process of working through those commitments and then … at the top of our list is our employees so we can provide as soft a landing as possible for our employees … whatever we can do as they make a transition to another job,” he said. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

phasizing the great value entertainment option of going to a Tigers game,” said Chris Granger, the group president of sports and entertainment for Ilitch Holdings Inc., which is the umbrella company that oversees the Tigers, Red Wings, Little Caesars pizza chain, and other Ilitch family businesses. There are several factors that drive attendance, and the first and foremost is winning versus losing. A winning team attracts more fans. Also driving the gate totals are weather, star players, time of year, holidays, weekday versus weekend, day versus night, perks and promotions, and whether there are historic records a player or team may be chasing. One of the chief attendance tools any team can use to goose attendance is giveaways, especially bobblehead figurines. The Tigers have seen the little dolls help fuel attendance spikes of more than 5,000 additional fans a game in the past. Typical bobblehead game increases range from 1,500 to 3,500, team officials have said. Ten thousand Sparky Anderson bobbleheads will be given away for the June 29 game against the Washington Nationals as part of the 35th anniversary celebration of the 1984 World Series team. If the stands fill out a bit more over the summer, as the team says they will, the Tigers won’t register the dubious honor of having fewer fans than during their worst-ever season. Detroit averaged 17,103 per game in 2003, which was the franchise’s worst-ever season at 43-119. The Tigers’ worst per-game average in recent decades was 14,427 in 1996 when they still played at old Tiger Stadium. Detroit’s turnstile woes are part of a wider trend across baseball. MLB at-

tendance overall through May 30 was down 1.4 percent over the same point last season, the Associated Press reported, and 19 of 30 teams had experienced year-over-year declines. The average MLB-wide was 26,854 through Wednesday is 1.4 percent below the 27,242 through the similar point last season, the Associated Press reported. The news service said MLB Commissioner Rob Manfred attributed this season’s decline to fewer season tickets. He said day-of-game ticket sales were up 6 percent. “Given the explosion of entertainment alternatives and the growth of the secondary market, it is not surprising that season ticket sales can be challenging,” Manfred was quoted by the AP as saying. MLB’s average peaked at 32,785 in 2007 — the last year before the Great Recession and the next-to-last season before the New York Yankees and Mets moved to smaller stadiums, AP reported. The average was at 30,517 in 2015 before sliding for three straight years, and last season’s final figure of 28,830 marked a 4 percent drop, the overall number hurt by unusually cold and wet weather early in the season, AP said. The major league per-game attendance average was 28,660 last season for the entire year. Currently, the L.A. Dodgers lead baseball with 47,402 per game, while the Miami Marlins have the worst average with 9,478 per game. Detroit’s top minor league team, the Triple-A Toledo Mud Hens just an hour to the south, is averaging 5,694 per game. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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

THE WEEK ON THE WEB

RUMBLINGS

Gilbert’s recovery after stroke ‘will take time’

Survey asks residents about area’s economy

MAY 31-JUNE 6 | For more, visit crainsdetroit.com

an Gilbert’s team says that although his recovery from a May 26 stroke “will take time,” he is joking with hospital staff as that takes place. In a statement last Wednesday evening from Jay Farner, CEO of Gilbert’s Detroit-based Quicken Loans Inc. online mortgage company, he says Gilbert’s in a recovery process “that will take time” but that “he maintains his strong sense of humor and focus on constant improvement.” “In fact, a few days ago, Dan requested his favorite beverage,” Farner said in the statement. “When the hospital staff informed him they were not able to provide it, in the humorous tone Dan is known for, he insisted that a review of the hospital’s beverage best-practices be completed. “To be clear, Dan’s recovery is a process that will take time — but we are all confident that he will meet this challenge head on as he always does.” Gilbert, who is founder and chairman of Quicken Loans and Rock Ventures LLC, has been a key catalyst in a resurgent downtown core the last several years as his companies have brought 17,000 employees to the central business district and he has amassed a greater downtown real estate portfolio of more than 100 properties like buildings, parking decks and others. He was taken to the hospital by a family friend on May 26 after falling ill earlier in the day, and he suffered a stroke there, Farner said late last month. Gilbert underwent a catheter-based procedure and was moved to the ICU. The Detroit News has reported that he is at Beaumont Hospital in Royal Oak, although Gilbert’s team has not revealed where he is being treated. Forbes estimates Gilbert’s fortune at $7.3 billion. He also owns the Cleveland Cavaliers and is embarking on several ambitious developments in Detroit’s central business district, including the projects on the J.L. Hudson’s department store site, the Monroe Blocks site, the former Wayne County Consolidated Jail site and others.

BUSINESS NEWS J Belfor Holdings Inc., the Birmingham-based property restoration giant, sold for an undisclosed amount to a New York City-based private equity firm that has been active in metro Detroit in recent years. The deal was approved by the European Commission — Belfor has offices in more than 20 countries — in March and is acknowledged on the American Securities LLC website, which says the investment took place in April. J Wayne State University School of Medicine’s faculty practice, University Physician Group, has emerged from bankruptcy. U.S. Bankruptcy Court in Detroit last Monday approved University Physician Group’s reorganization plan and its exit from bankruptcy protection. J Fiat Chrysler pulled out of an offer to merge with French automaker Renault last Wednesday, saying in a statement that France’s political cli-

new regional survey aims to gauge how residents feel about Southeast Michigan’s economy. The Southeast Michigan Council of Governments has teamed up with the Metropolitan Affairs Coalition to conduct the “Pulse of the Region” survey in an effort to gather insights to help guide the development of a comprehensive economic development strategy, the organizations said in a Wednesday news release. The survey will help identify economic assets and issues most critical to the region, the release said. The survey asks Southeast Michigan residents about their opinions on the best approaches to economic prosperity, and the level of economic diversity in the region in re-

lation to jobs and businesses, among other topics. It’s powered by Charlotte-based Cobalt Community Research, a nonprofit coalition that offers research and educational tools such as annual metrics, surveys and more, to schools, local governments, and nonprofits. SEMCOG assists local governments in improving and maintaining the region’s transportation systems, environmental quality and other assets. The organization serves Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw and Wayne counties. The survey can be found at cobaltcommunityresearch.org/semcog.

LARRY PEPLIN FOR CRAIN’S

Detroit billionaire Dan Gilbert suffered a stroke late last month.

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

$19M

Investment planned for the Pope Francis Center for the homeless in downtown Detroit

$34.8M

Price a Toledo-based bank is paying to acquire Clarkston State Bank

Number of years Lord + Taylor, set to close in September, has been in business at Lakeside Mall

mate would prevent the tie-up from being a success. J Penske Logistics’ mammoth food distribution center in Romulus is operational with 460 employees following a $98.5 million investment to serve The Kroger Co. of Michigan. The center is spread across 47 acres south of Detroit Metropolitan Airport. J As groundskeepers work to get the course at Detroit Golf Club in tip-top shape for the Rocket Mortgage Classic later this month, management is also planning a $4.5 million renovation of its historic clubhouse. Work on the Albert Kahn-designed clubhouse, which was built in 1918, will include a new pro shop, redesigned dining room, patio overhaul and façade improvements. J A former meat-packing facility in Eastern Market with a bright eggand chicken-themed mural is expected to be largely demolished. Beatrice and Eli Wolnerman originally planned to renovate the approximately 4,000-square-foot building at 1533 Winder St., but found the walls weren’t structurally sound. J An upcoming walking tour of Pon-

tiac will include open houses at a half dozen businesses downtown as organizers of the new event hope to reshape the city’s image. Troy-based manufacturing nonprofit Automation Alley is hosting the “Morning Mingle” event June 13. The walking tour is free and open to the public. J The city of Detroit plans to spend $2.76 million to reopen the 40-yearold Joe Louis Arena parking garage. The City Council last Tuesday approved a contract for the capital improvements that will be managed through the Detroit Building Authority. J Cadillac and JPMorgan Chase are among those who have signed on to sponsor the Rocket Mortgage Classic in Detroit later this month. The Warren-based luxury automaker and New York City-based national bank are “premier sponsors” of the PGA tour event J Clarkston State Bank is being acquired by a Toledo-based bank for $34.8 million as it moves to grow its presence in Southeast Michigan.

RETAIL NEWS J Detroit-based furniture maker Floyd LLC is embedding its full product line in select West Elm stores in the U.S. thanks to an expanded partnership with the Brooklyn-based furniture retailer. Floyd’s product line, which includes sofas, bed frames and tables, went live last week on West Elm’s website and in key stores based in New York City’s Chelsea neighborhood; Austin, Texas; and Santa Monica, Calif. J Luxury women’s shoes and accessories brand Jimmy Choo opened its first Michigan store in Somerset Collection in Troy. It’s on the first level of Somerset Collection South, near anchor store Saks Fifth Avenue. J Department store chain Lord + Taylor is closing its Sterling Heights location in the latest hit to the struggling Lakeside Mall. A total of 97 employees are expected to be laid off by the time the store closes Sept. 15.

WAYNE COUNTY AIRPORT AUTHORITY

Air Margaritaville, Atwater Brewery and Contoro Italian Market Trattoria are open in the North Terminal of the Detroit Metropolitan Airport.

Air Margaritaville, Atwater among new airport eateries T

he first of 15 new food and beverage businesses are open at Detroit Metropolitan Airport amid a $21 million refresh at the North Terminal. Jimmy Buffett-inspired Air Margaritaville opened Wednesday alongside Detroit Street Café featuring Zingerman’s Coffee, according to a Thursday news release from the Wayne County Airport Authority. Atwater Brewery opened Saturday and Cantoro Italian Market Trattoria opened April 18. “When people fly into DTW, our airport is their first glimpse of who we are as a state, region and cities,” Tanya Allen, partner of food and beverage manager Paradies Lagardere Dining Division, said in the release. Air Margaritaville is 3,178 square feet with 162 seats and an attached 10-seat Detroit Street Café. Air Margaritaville is a branch of famed singer Jimmy Buffett’s restaurant chain based in Florida. His eateries are characterized by casual American fare and an island-inspired experience. Detroit’s location is the second Air Margaritaville in the U.S. The general contractor for the Detroit airport location is Commerce Township-based Commercial Interior Resources Group, and the architect is Farmington Hills-based JPRA Architects. Atwater stretches 2,451 square feet

with 131 seats. Virginia-based The Peterson Cos. is general contractor, and JPRA is the architect. Cantoro will be 1,397 square feet with cafe-style seating. Detroit-based MIG Construction is the contractor, and Ohio-based Chute Gerdeman is the designer. MOD Pizza, National Coney Island and Starbucks are expected to open this summer for phase two of the four-phase project, expected to be complete by spring 2020. Other businesses will be Anita’s Kitchen Lebanese Café, Pei Wei Asian Diner, Outback Steakhouse, Chick-fil-A, Jolly Pumpkin Taphouse, Common Grace Coffee Co. and Brioche Doree bakery. The new businesses are moving in under 10-year contracts, according to the authority. The overhaul is the first major food and beverage change at the North Terminal since it opened in 2008. Construction began in the fall. The bars and restaurants being replaced are Champps, Coffee Beanery and the accompanying deli, Earl of Sandwich, Hockeytown Cafe, Le Petite Bistro, Legends, Mediterranean Grill, Ruby Tuesday, TGI Friday’s and Villa Pizza. McDonald’s and National Coney Island are the only two returning to the terminal, but they will be moved and remodeled.