Crain's Detroit Business, July 22, 2019 issue by Crain's Detroit Business

Is globalization unraveling? Page 3

JULY 22 - 28, 2019 | crainsdetroit.com

Pay rises for social services heads Page 10

CRAIN’S MICHIGAN BUSINESS

Signs of unrest Signs calling for a boycott of a Dollar General store now under construction in Curtis, Michigan are springing up all around the tiny town.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Dollar General’s astonishing rural Michigan expansion doesn’t always excite locals By Chad Livengood | clivengood@crain.com

n the outskirts of the unincorporated community of Curtis in Michigan’s Upper Peninsula, a group of residents banded together last year and bought a piece of land to block a Family Dollar store from setting up shop. The small-town defense of locally owned retail stores worked — for about six months. Dollar General, Family Dollar’s archrival in the no-frills discount retail business, snatched up a wooded parcel across the road from the site Fami-

ly Dollar pursued and began clearing the land to plant a store in a township with fewer than 1,000 year-round residents, according to local merchants. The new store under construction this summer in a location that’s nine miles from the nearest highway has divided tiny Curtis, with yard signs protesting and supporting Dollar General dotting the county roads leading to South Manistique and Manistique lakes, two popular recreational and fishing lakes 70 miles west of the Mackinac Bridge. SEE DOLLAR, PAGE 20

FINANCE

Sooch raises $5 million for new venture, ophthalmology pharma company Ocuphire By Tom Henderson

Mina Sooch, who raised tens of millions of dollars for two struggling early-stage biotechnology companies in southeast Michigan before helping to take them public, is back at the helm

of another biotech company and will announce Monday that she has raised more than $5 million to get it through Phase 2 U.S. Food and Drug Administration human trials. She told Crain’s that she will soon start raising another round, this one tar-

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geted at $30 million, to get the company, Farmington Hills-based Ocuphire Pharma Inc., through Phase 3 trials and to the marketplace — and to be able to buy or license Sooch other drugs to add to its product portfolio. Ocuphire opened its Farmington Hills headquarters in June. Its lead drug is Nyxol, a once-daily eye drop treatment the company hopes to show can be used to treat such eye disorders as night vision disturbances, glaucoma, dilated pupils and far-sightedness. SEE SOOCH, PAGE 18

HEALTH CARE

Union troubles hit Detroit area hospitals By Jay Greene jgreene@crain.com

Labor troubles are hitting some of metro Detroit’s largest hospitals as health care unions in Michigan feel emboldened with recent wins. At Detroit Medical Center, the Teamsters Local 283 in Detroit has been negotiating three contracts with Detroit Medical Center the past two years with DMC reportedly making final contract offers in the past month. The talks, union officials say, have been acrimonious and so far unproductive. At Ascension Crittenton Hospital in Rochester, the Office and Professional Employees International Union (AFL-CIO) Local 40 in Macomb Township has been negotiat-

ing contracts the past year for radiology and medical lab groups with a nurses’ contract expiring in September. Union officials say Ascension is dragging its feet on talks and meanwhile has created a staffing and patient care backlog problem by not filling positions. OPEIU, which also represents nurses at McLaren Macomb in Mount Clemens who last year settled into a new three-year contract, also has begun an organizing campaign for a mixed group of nonprofessional and technical employees. McLaren contends the groups don’t comport to rules under the National Labor Relations Board. SEE LABOR, PAGE 6

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

MICHIGAN BRIEFS

INSIDE

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

Study: Michigan prison workers facing mental health crisis Michigan prison workers are facing a mental health crisis that includes much higher rates of post-traumatic stress disorder, suicidal thoughts and alcohol abuse than in the general public, according to a report from the Associated Press that cites a study released last week. The report, conducted for the state Department of Corrections by Florence, Colo.-based Desert Waters Correctional Outreach, found that corrections employees also are more likely to have symptoms related to depression and anxiety. Nearly 140 workers, or 1.1 percent, are currently and actively planning to kill themselves, said the study, which was based on an anonymous survey of about 3,500, or 29 percent, of employees who chose to participate. “These findings are a cause for grave concern, as they point to a mental health crisis among MDOC employees and a workforce culture in dire need of assistance and support,” the authors wrote, noting similar findings in other states and jurisdictions. At least three male corrections officers have died by suicide this year.

Heidi Washington, director of the corrections department, said it is working to create a “culture of wellness that seeks to reduce stress.” An employee wellness unit that was recently established will provide confidential mental health support and referrals to staff, and a peer support and chaplaincy program also is being developed. The staff discipline process is under review, and hundreds of new employees are being hired in an effort to reduce the use of overtime. “The MDOC and its partners, including the Legislature, labor organizations and our communities, must make it a priority to protect these brave men and women, too, by offering them the support they need,” Washington said in a written statement. The report said the rates of major depressive disorder, generalized anxiety, PTSD, suicidal ideation and alcohol abuse among corrections workers exceeded those of first responders, military members and the general public by several times.

Michigan Supreme Court considers legality of work laws

Michigan Republicans’ maneuver to weaken voter-proposed laws to raise the minimum wage and require paid sick leave was “outright unconstitutional,” a top appellate lawyer

CALENDAR

MICHIGAN SUPREME COURT

The Michigan Supreme Court is considering legislators’ request for a rare advisory opinion on the constitutionality of the tactic, which could potentially avoid a lengthy legal fight.

said last week while urging the state Supreme Court to stand as a “last line of defense” against the unprecedented tactic, the Associated Press reported. An attorney for the GOP-led House and Senate countered that nothing in the state constitution prevents the Legislature from amending a citizen-initiated law at any time, including during the same legislative session. At issue is “adopt and amend,” a strategy that majority Republicans

used last year. To prevent minimum wage and sick time ballot drives from going to the electorate in November, after which they would have been much harder to change if voters had passed them, GOP legislators approved them in September so that they could be made more business-friendly after the election with simple majority votes and the signature of the outgoing Republican governor, Rick Snyder. Solicitor General Fadwa Hammoud, who is with Democratic Attor-

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ney General Dana Nessel’s office, said the maneuver killed voters’ right to petition lawmakers, thwarting their will. “This was outright unconstitutional. It was a slap in the face to the people that reserved their rights to themselves and it basically nullified that provision of our constitution in every way,” said Hammoud, who was one of five lawyers to speak during more than 100 minutes of arguments. “This court has been the last line of defense when it came to the Legislature intruding on the people’s voice.” The high court is considering legislators’ request for a rare advisory opinion on the constitutionality of the tactic, which could potentially avoid a lengthy legal fight. Under the Michigan Constitution, a group can collect hundreds of thousands of voter signatures to qualify an initiated bill for a November ballot. Legislators then have a 40day window in which they can enact it, reject it — putting it to a statewide vote — or propose an alternative to appear alongside the measure on the ballot.

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

ECONOMY

FINANCE

Industry giants Quicken Loans, State Farm team on mortgages By Annalise Frank afrank@crain.com

the global gross domestic product from 5 percent in 2007. Foreign direct investment dropped to 1.3 percent of global GDP last year from 3.5 percent in 2007. Those percentages appear paltry, but the drop in capital outflows represents nearly $3 trillion. At least some of those drops can be linked to ongoing geopolitical strife across the globe. President Donald Trump has attacked global trade since taking office in 2017. The White House has introduced tariffs on solar panels, washing machines, steel and aluminum, threatened tariffs on imported cars and imposed tariffs on $200 billion of imports from China.

State Farm insurance agents will use Detroit-based Quicken Loans Inc.’s online mortgage service, Rocket Mortgage, to originate mortgage loans under a new exclusive agreement that joins the top home and auto insurance provider with the largest retail mortgage originator. Rocket Mortgage is building technology for State Farm that will come out over the next few months, the companies said in a news release. “Through this alliance, we will be able to combine Rocket Mortgage’s powerful mortgage processing and underwriting technology with the advice and strong relationships built from the power of the State Farm agent network,” Quicken Loans CEO Jay Farner said in the release. Housing and mortgage publication HousingWire quantified the alliance between the two leaders in their fields as “massive.” Until the changeover, State Farm agents will continue originating customers’ mortgages and helping with home financing through the company’s banking unit, State Farm Bank, the company said on its website. Once the Rocket Mortgage deal takes effect, new mortgage loans will go through Quicken Loans. State Farm Bank’s pre-rollout mortgage customers won’t be affected by the change, according to the release. “State Farm is always looking at ways to innovate and serve more customers in more ways,” State Farm spokesman Roszell Gadson said. “Obviously Quicken Loans is a leader, Rocket Mortgage is a leader ... and we think it’s going to be beneficial for our customers and both companies.” Details of the agreement were not disclosed. Crain’s requested more information on the partnership from Quicken Loans and State Farm.

SEE GLOBAL, PAGE 19

SEE MORTGAGES, PAGE 17

GETTY IMAGES/ISTOCKPHOTO

Shrinking supply chains and trade wars: Is globalization unraveling? By Dustin Walsh dwalsh@crain.com

For two decades since 1990, globalization boomed, trade borders eroded and billions were lifted out of poverty. U.S. manufacturers chased cheap labor and profits overseas to great success. Hyperglobalized supply chains were created. Southeast Michigan automakers and suppliers could source parts and materials from anywhere in the world. But much of the last decade has been spent rethinking the ideals of far-flung suppliers, leaving manufacturers to transition to regional manufacturing — parts are made where cars are assembled and sold. Globalization was over-

Need to know

JJGlobalization, cross-border activity is

slowing

JJRegional manufacturing efforts continue JJTrade spars only playing minor role

sold and overextended. A tsunami in Japan stifled auto sales in 2011, for example, and the geopolitical landscape has worsened in the last three years, partly due to high-profile trade spats between the U.S. and nearly all of its allies. Supply chains stretched thin to make products and parts cheaper are now

risky. In return, supply chains are shrinking and further overhaul is on the horizon. This leads to the inevitable question: Have we hit peak globalization? It’s complicated. Economic experts are coining this the era of “slowbalization.” Global trade growth slowed to 2.1 percent this year, compared to 5.5 percent in 2017, according to the Organisation for Economic Cooperation and Development, an economic organization containing the 36 wealthiest nations. Last year, gross capital outflows — corporate spending on investment, operations, research & development, trade, etc. — fell to just 1.5 percent of

ADVERTISING

Agency behind Bell’s Official Hazy IPA finds growth in auto industry By Kurt Nagl knagl@crain.com

It started with pizza and blossomed with beer. Now, business at boutique advertising agency Driven Creative Supply Co. is being driven by new contracts in the automotive and packaged foods industries. What began as a pair of big ad agency refugees holed up in a windowless room in Southfield, scrapping to get business on their own, has grown into a $5 million-a-year firm in a burgeoning Pleasant Ridge factory district. The ad agency was founded in 2005 and is run by three partners with extensive advertising backgrounds. Kevin Woods is CEO, and John Cymbal and

Need to know

JJPleasant Ridge-based Driven Creative Supply Co. takes on new auto, packaged goods clients JJIts revenue grew 20 percent year-overyear to $5 million JJFounded in 2005 by former leaders of large ad agencies

Brian Cusac are both chief creative officers. Each spent many years at large agencies, including Detroit-based Campbell Ewald, Chicago-based Leo Burnett and New York City-based J. Walter Thompson. After a while, they realized they could do it on their own.

“We wanted to create a better mouse trap,” Woods said, referring to a snappy business plan to snag clients. “The big agency world seems slow to adapt. We wanted a smarter business model — not as expensive, quick to bring new and emerging technologies to businesses as opposed to being so traditional.” They run a team of 35 employees who provide a full range of services, from creative to ad buying to in-house videography and photography. A year and a half ago, the firm moved from a 5,900-square-foot space in Ferndale to a 9,200-square-foot space in the Iron Ridge Marketplace. SEE AGENCY, PAGE 19

DRIVEN CREATIVE SUPPLY CO.

Driven Creative Supply is run by three partners with extensive advertising backgrounds: from left, Brian Cusac, John Cymbal and Kevin Woods.

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First residents to move into The Corner; Taco Bell downtown?

The $37.5 million The Corner development has 111 units that will be welcoming the first residents next week on the former Tiger StadiKIRK um site. PINHO Forty-three of the units have been leased so far and the average rent is $2.24 per square foot. Eighteen of the 60 studio apartments have been leased, while 20 of the 42 one-bedrooms are spoken for along with five of the nine two-bedrooms, according to Southfield-based Village Green Cos., which is managing and leasing the property to residential tenants. Twenty percent of the units are for those making 80 percent or less than the area median income of $56,800 for a two-person household, so the units are for those making $45,440 or less. A studio of about 450 square feet would rent for roughly $1,000 and a one-bedroom of about 750 square feet would be $1,680. Eric Larson, the projectâ&#x20AC;&#x2122;s develop-

er, said 60 percent of the 27,000 square feet of ground-floor retail space is for small local businesses to rent at 50 percent of market rate, or $8 to $12 per square foot. Build Institute and Plum Health are announced tenants and Social Tykes will also take space in the development. â&#x20AC;&#x153;Market rates currently on this strip are currently $20 to $35 per foot,â&#x20AC;? Larson said Monday during a walk-through of the residential space. Troy-based Oâ&#x20AC;&#x2122;Brien Construction Co. is the general contractor and Champion Commercial Structures built the residential units offsite. Detroit-based Rossetti Associates Inc. is the project architect. In a separate development, Corner Ballpark opened in March 2018 on another section of the old Tiger Stadium site to host youth sports games, outdoor markets, concerts, car shows and other events. Itâ&#x20AC;&#x2122;s also the new home of Detroit PAL (Police Athletic League). The $11 million Towns at the Corner has 34 for-sale units in a joint venture between Larsonâ&#x20AC;&#x2122;s Larson Realty Group LLC and Robertson Homes.

Taco Bell cantina downtown? FWIW, Iâ&#x20AC;&#x2122;m hearing from a source familiar with the matter that the fast food restaurant is looking for a downtown location near Campus Martius for a cantina restaurant concept (similar to the one that was shot down in Royal Oak last year). They have been looking for quite some time, according to the source, so Iâ&#x20AC;&#x2122;m not holding my breath. JJ Schmidt, an Oakland Township-based broker with Marlin Properties who scouts for Taco Bell locations in Southeast Michigan, said Taco Bell has â&#x20AC;&#x153;looked at different things over the yearsâ&#x20AC;? in and around downtown, ranging from free-standing locations to the cantina concept. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve looked at a variety of things but right now there is nothing I can really comment on,â&#x20AC;? Schmidt said. There is currently one on Wayne State Universityâ&#x20AC;&#x2122;s campus in the Student Union, as well as at 14000 Livernois Ave. and 15624 W. McNichols Road. Stay tuned. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Detroit Regional Partnership targets issues that keep companies away

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The Detroit Regional Partnership has formed a problem-solving arm to target issues keeping companies from locating in Southeast Michigan. Itâ&#x20AC;&#x2122;s inviting groups from higher education, government, the nonprofit and business sectors to participate in solving the issues itâ&#x20AC;&#x2122;s hearing about from the companies that got away. Already, 20-30 groups have indicated interest in helping work on hurdle to economic development in the region through the new platform dubbed the Southeast Michigan Ecosystem, said DRP President and CEO Barry Matherly. The partnership is targeting roughly 50 local groups to participate on a project-by-project basis. Companies represented on the regional CEO group that formed the DRP are participating, along with others like: the New Economy Initiative, TechTown, American Center for Mobility at

Willow Run, Oakland University, Wayne State University, University of Michigan and Michigan State University. Even the most successful regions have issues, and Southeast MichiMatherly gan has its share, Matherly said. â&#x20AC;&#x153;The question is, are (we) going to do anything about it?â&#x20AC;? DRPâ&#x20AC;&#x2122;s job is marketing, growing the region and supporting the companies already operating here, he told retail brokers gathered for the ICSC Michigan Idea Exchange in Detroit late last week. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re not built to solve all issues ... (but) instead of ignoring them or pretending there was nothing to be done about them, we wanted a group of people willing to solve issues here to make this a better community.â&#x20AC;?

The best way to solve them is to collaborate with the groups closest to each issue, Matherly said, leveraging the strengths of each to quickly and efficiently resolve issues. The DRP hired Boston Consulting Group this spring to develop the model and identify the core groups needed to solve issues, Matherly said. The efforts will have a defined timeline in the interests of arriving at a solution sooner rather than later. DRP will keep members of the new problem-solving arm informed of issues as they arrive, ask for volunteers to work on them and provide staff to serve as project managers when those efforts launch during the fourth quarter. Early on, the group could focus on issues such as increasing the amount of defense contracts coming to the region by pulling together a coalition of people to go to Washington, D.C., to meet with Michiganâ&#x20AC;&#x2122;s legislators on the issue, Matherly said.

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How some metro Detroit hospitals are ha By Jay Greene jgreene@crain.com

Several metro Detroit health systems, including Detroit Medical Center, Beaumont Health, Ascension Health and McLaren Healthcare Corp. are facing tough labor union negotiations, several of which are the subject of unfair labor practice charges.

Detroit Medical Center At DMC, Steve Hicks, president of the Teamsters Local 283, said three labor groups have been attempting to negotiate contracts with the for-profit hospital system since 2016. The Teamsters represents about 155 DMC employees, including 80 lab technicians, 50 couriers and 25 certified surgical technologists. Hicks said the Teamsters, who recently filed three unfair labor practice charges with the National Labor Relations Board, have been frustrated with the lack of progress in the contract talks. “I have never experienced anything like this,” he said. “Tenet (Healthcare Corp., the for-profit owner of DMC) is extremely difficult to bargain with.” DMC has offered a five-year contract for the couriers and patient medical care assistant groups with a 1 per-

LABOR FROM PAGE 1

At three Beaumont Health hospitals, the Service Employees International Union Healthcare of Michigan has been negotiating since their contract expired June 30, 2018, for more than 1,000 health care support employees. Union officials say Beaumont appears to be trying to destroy the SEIU union at the hospitals by holding down wages, increasing health benefits and sending unpaid health care bills of union members to collection agencies. Last week, SEIU held a rally at Beaumont Wayne where more than 100 workers gathered to protest low wages, lack of staffing and the 82 percent raise Beaumont CEO John Fox was granted in 2017 along with other raises from senior vice presidents. In late April, the Michigan Nurses Association started a union drive at Beaumont Hospital in Royal Oak that has turned contentious with pro- and anti-union nurses facing off. Pro-union nurses have filed unfair labor practice charges against Beaumont managers for alleged intimidation tactics by using consultants to “educate” nurses about unions. An anti-union nurse group also filed unfair labor practice charges against the MNA, but later withdrew the complaint. Hospital officials from Beaumont, Ascension and DMC responded to Crain’s with short statements about the union talks, suggesting they are going well and hoping for settlements in the near future (See accompanying story on this page). With the exception of McLaren and Beaumont on the nurses union drive, who provided Crain’s with executives to interview, DMC and Ascension declined interview requests. Shela Khan-Monroe, vice president of labor relations with McLaren, said McLaren Macomb nurses recently completed contract talks that she believes were resolved amicably

cent raise for 2019, 2020 and 2021 and no retroactive raise for 2017 and 2018, Hicks said. Lab tech employees are still bargaining for wages and benefits. The Teamsters are asking for 3 percent in 2019, 2020 and 2021 with pay retroactive back at 3 percent for 2017 and 2018. After weeks of back-and-forth talks to set up a negotiating session, Hicks said DMC has agreed to meet July 31 for the lab contract. He said he prefers to talk about all three contracts at the same time because they contain the same language, but said DMC officials have so far refused. “While we don’t discuss ongoing labor negotiations, we are hopeful we will reach a satisfactory agreement with Teamsters Local 283,” said Brian Taylor, DMC’s director of communications and media relations, in a statement to Crain’s. James Fox, a DMC lab courier for 17 years, said one of the problems he has seen the past several years is the lack of respect for employees, especially the way female employees are treated. There are about 50 couriers in the union. Fox, who is a union steward and vice president, said because there is a serious shortage of couriers, it is difficult to take a vacation of more than four consecutive days.

“One manager told me if one person misses a Monday or Tuesday it throws the whole schedule off. You put in for an earned vacation the month before for a week. Then you look on the calendar and they give you Monday to Thursday or Tuesday to Friday off. Who wants to cut a vacation short to do that?” Fox said. On the 1 percent wage increases offered, Fox said past contracts negotiated were always 2 percent raises, plus a 1 percent incentive for attendance bonuses. He said to be eligible for attendance bonuses, a perfect attendance record was required, including no tardy time card entries. “We were told that was our best last chance offer. We never had a chance to make our proposals for money and benefits. We were told to take it to our members and vote on it. This isn’t negotiating,” said Fox. Melissa Burger, a DMC lab assistant, chief union steward and recording secretary, said the chief problem for the 40 lab assistants in the union is lack of backup staff. “We need at least 50 lab assistants for coverage. We are so short-staffed. I work for doctor offices in the patient service centers. We are supposed to have five to eight (techs), but some days we work with two or three,” Burger said.

Burger, who has worked at DMC for 20 years, said patients wait one to two hours to get their blood drawn, much longer than they should. She said the department has never been slow in getting results for patients. But the wait patients endure, she said, isn’t because the volume of patients is high. “People are quitting because of the way they are treating us and they aren’t replacing them,” Burger said. “We work in an unsafe unit. Errors can be made. People are getting written up because there isn’t enough staff to keep up.” Like the couriers, Burger said the short staffing causes problems with vacations. “I had a vacation approved for Monday, but if I am on the schedule and don’t come in I get written up. I am out of state. What do I do?” she said. “It happens all the time to other co-workers.”” Teamsters are also advocating for better health care benefits. “I bring home the same amount today that I did in 2011. It is because my insurance costs went up. My deductible is so high, $13,000. I met it by September and now I am out of pocket.”” Burger said the Teamsters advocated to move from Tenet’s health care plan to Blue Cross Blue Shield of Michigan, under the Teamsters’ benefit. “It will be cheaper for the compa-

ny, but (DMC) is fighting it,” she said. Because DMC’s health benefits program is too expensive for union workers based on their pay, Hicks said the union proposed to go on the Teamsters insurance program earlier this year. But DMC demanded data on all employers participating in the Blue Cross Blue Shield of Michigan program, Hicks said. “They did ask us for all the companies participating in the Michigan conference. There are 18 companies participating. It isn’t relevant for bar-

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and fairly. Contract talks with nurses at McLaren Lapeer also were settled last fall. But the OPEIU has filed a petition for a mixed union group of nonprofessional and technical service employees at McLaren Macomb that was the subject of a recent hearing before the National Labor Relations Board in Detroit. A decision is expected in the next two weeks. “The hospital believes the union petition is illegal because it didn’t capture the right categories of employees,” Khan-Monroe said. The NLRB recognizes eight categories of labor groups based on a hospital’s workforce. They are registered nurses, physicians, professionals, technical employees, skilled maintenance, business office clerks, guards and all nonprofessional employees, a general category that the union believes covers a mixed group of employees. Last year, McLaren Macomb nurses settled a new contract with some wage increases and McLaren Lansing nurses are negotiating moving to the system’s new benefit package that includes slightly higher cost sharing. McLaren’s other hospitals, including Lapeer, have completed contract talks, Khan-Monroe said.

the future is uncertain. His law firm represents OPEIU Local 40 in the Ascension and McLaren talks. “Crittenton Hospital was formerly an independent hospital, now part of Ascension. They want to put their Ascension imprint on the bargaining units. ... Hospitals also like to play on the indefiniteness of the ACA (that it may change for the worse and impact hospitals negatively financially). “First it was Medicaid (and Medicare) they claimed would not help them because of low rates. Next they argued the other position, that other parts of the ACA cannot be relied upon and not serve their bottom line” going forward, he said.

“Since 2008 (everyone has been) climbing out of recession and the last two or three years we have seen economic growth, but wages are stagnant,” although still rising statistically slightly faster than inflation. Khan-Monroe said the federal government’s Bureau of Labor Statistics predicts health care will be one of the two fastest areas of growth through 2027. While national union membership overall has been dropping for years down to 10.5 percent, or 14.7 million workers, of the total workforce, from 20.1 percent in 1993, health care union membership has been increasing, according to new figures from the U.S. Department of Labor. National health care union data for non-physician and support employees shows a slight increase in membership, going up to 618,000 members in 2018 from 577,000 the year before. Full-time wages for union employees were $1,051 per week compared with non-union workers at $860. It is not clear if health care union membership is increasing in Michigan because no national data is available from the BLS. However, some experts believe Michigan health care unions are growing in members as more hospitals gain union representation. Recently, DMC Huron Valley Medical Center in Commerce Township and Munson Medical Center in Traverse City gained nurses’ unions and other groups are possible there. “There has been a push by unions to drive for higher wages, to make up for lost ground they perceive,” Khan-Monroe said. “At the same time, (hospitals and doctors) are moving toward value-based reimbursement. There is less revenue coming in on the inpatient side.” But as Michigan has moved away somewhat from manufacturing as the employer of choice and union membership has dropped, health care has grown, giving hope for renewed membership by the Teamsters, SEIU, OPEIU and other unions,

experts said. As a result, “There is more organizing in the health care sector,” Khan-Monroe said. “With the use of social media used more (in organizing) it creates the perfect storm.” Brooks said the question for wages is really a question of fairness. When hospital executives receive dou-

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Why union talks are contentious Union drives and contract negotiations are usually difficult and time consuming for all parties. Experts say an increase in health care union activities in Michigan the past several years appears to have intensified emotions on both sides. Scott Brooks, a labor lawyer specializing in representing unions with Detroit-based Gregory, Moore, Brooks & Clark P.C., said the union contract talks have become more difficult in recent years. He cited two main reasons: the consolidation into multi-hospital systems; and because the Affordable Care Act of 2010 has given hospitals pliable excuses to say

“There is more organizing in the health care sector. With the use of social media used more (in organizing) it creates the perfect storm.” — Shela Khan-Monroe, vice president of labor relations with McLaren

Brooks said he hasn’t met a hospital executive who has felt the financial future was rosy. This is despite recent data from the American Hospital Association has shown hospitals have been hitting near record high operating profit margins at 6 percent in 2016, the last year national data is available, since the low of 2 percent in 2000. Total margins, which include investment income, have been in the 8 percent range the past five years, the AHA said. Khan-Monroe agreed that labor talks have become more difficult the past several years between unions and hospitals. “There have been multiple things that have changed between employees and management, many outside of the walls of hospitals” she said.

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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 LY 2 2 , 2 0 1 9

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MICHIGAN NURSES ASSOCIATION

Beaumont nurse Mary Beth Boeson speaks on behalf of pro-union nurses at an Oakland County board meeting.

gaining. They also asked for all the wages of people in the other companies. We brought someone in from the Michigan Conference to answer all his questions and they canceled the June 6 bargaining.” In a June 10 letter to Hicks, Richard Martwick, DMC’s senior director of employee and labor relations, said the benefits offered to Teamsters

SEIU

Service Employees International Union Healthcare of Michigan held a rally last week at Beaumont Hospital Wayne to protest lack of progress with talks.

ble-digit pay increases, wages for rank and file employees have been relatively stagnant. “It is difficult to play catch up when wage increase of-

members are the same provided to other DMC employees. He said DMC has made “our last, best, and final offers” on the courier and PMCA groups and that the lack of counteroffers “clearly indicates the parties are at impasse.” But Hicks said the Teamsters agreed to keep DMC’s health insurance plan, provided that “they must keep the same benefits throughout the term of the contract and the cost to the membership is 10 percent of the premium.” He said he has not heard a response yet. Hicks said the Teamsters were starting to make progress in contract talks about two years ago using outside law firms to negotiate some of the contracts, but two years ago DMC brought its negotiating team in-house. Since then Martwick has led the talks, which Hicks said have slowed and become more drawn out. Over the past three years, Teamsters has filed nine complaints with the NLRB, most of which have been settled, he said. “It has been difficult. DMC settles then seems to forget the agreement and we have to start all over,” Hicks said. “I get accused of bargaining (in) bad faith, but we ask for documentation as part of normal negotiations and get stalled.”

Hicks said he believes DMC has taken an even harder position on contract talks because in February the Teamsters objected to the sale of DMC’s outpatient lab and diagnostic testing services to Laboratory Corp. of America, a Burlington, N.C.-based life sciences company. DMC terminated the sale in April of the outpatient lab. In May, Hicks wrote a letter to Tenet CEO Rick Rittenmeyer, complaining about how DMC officials have conducted the union talks. He said Rittenmeyer did not respond to his letter. DMC declined further comment.

fers don’t match inflation,” he said. Another reason union efforts by nurses and others appear to have intensified in recent years was because several major health systems in Southeast Michigan over the past decade settled lawsuits that charged efforts to improperly hold down nursing salaries. From 2009 to 2015, eight health systems in metro Detroit paid about $90 million to settle a class action lawsuit over nurse wages that spanned 2002 to 2006 and involved more than 20,000 nurses. Systems that settled included Detroit Medical Center, Beaumont Health, Henry Ford Health System, Trinity Health and St. John Providence Health System. On the other hand, a growing number of hospitals have taken steps to improve relations with nurses. Some have been certified as “magnet” hospitals by the American Nurses Association and the Institute of Healthcare Improvement. So far, more than 300 hospitals nationwide, including Beaumont Health, the University of Michigan and 12 other hospitals in Michigan, have been credentialed as magnet hospitals. Still, labor strikes, the worst case scenario, one that hospital managers and labor consultants harp on as a potential negative for unions, have been somewhat rare the past 40 years. Crain’s research found six strikes since 1979 at hospitals in Michigan. There was a 1994 strike at Marquette General, and two at the University of Michigan Hospital in the 1980s. A labor dispute went on for nearly three years starting in November 2002 at the former Northern Michigan Hospital in Petoskey, now McLaren Northern Michigan. In 1979, nurses at St. Francis Hospital in Escanaba struck for 120 days before it was settled with help from a federal mediator. Nurses nearly struck four times since 2000 at Genesys Regional Medical Center in Grand Blanc Township before settling on contracts.

Last October, more than 5,700 nurses at the University of Michigan with the University of Michigan Professional Nurses Council reached agreement on a three-year, 273-page contract that will boost pay by about 10 percent over the term and address other issues, including agreeing to safe staffing levels based on patient acuity and other factors. Andrea Acevedo, president of the SEIU Healthcare Michigan, said health care union membership in Michigan is increasing at a fast pace and so are wages and benefits, despite increased anti-union activities at some hospitals. “We have had a lot of success, and it is just the beginning,” Acevedo said. She said thousands of new health care employees have joined unions at hospitals and nursing homes the past two years. She said West Michigan hospitals, including Trinity Health and Mercy hospitals, have agreed to more favorable contracts with health care unions than other parts of Michigan. “It depends on what side of the state you are on. We have significant differences in health care (pay increases), personal time off and health benefits,” she said. Acevedo also said despite Michigan’s right to work law, the vast majority of members are paying dues and many are volunteering for advocacy work. Right to work laws allow union members to refuse to pay dues. Earlier this month, Gov. Gretchen Whitmer and Detroit Mayor Mike Duggan announced the “Going Pro” campaign, which will expand educational and career opportunities in the skilled trades, including health care. “This will allow certified nurse assistants to become licensed professional nurses without missing a paycheck and still be at work in an apprenticeship program” in skilled nursing facilities, Acevedo said.

Beaumont nurse union drive, SEIU contract conflict Nurses at Beaumont Hospital Royal Oak are mounting a union drive with the help of the Michigan Nurses Association. Pro-union nurses say they have 1,900 people supporting the union effort on the Facebook page they have created while only about 200 nurses have shown support for the anti-union nurses, who have called for nurses to reject a union and focus on improving Beaumont’s nursing council. SEE TALKS, PAGE 18

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

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

OPINION COMMENTARY

Want better mass transit in metro Strategies for reuse of Detroit? Get your employees on a bus vacant industrial sites

or 17 years, Brenda Black took three or four DDOT and SMART buses every day to get to her job as a convenience store cashier at Detroit Metro Airport. Her daily commute to work from the west side of Detroit to the airport terminals in Romulus took up to two and a half hours — one way. Then, she’d navigate the bus system home, spending nearly five hours in transit for a roundtrip commute that takes 50 minutes by car. Last year, the 63-year-old Detroiter’s commute changed dramatically when SMART launched its limited-stop FAST service along Michigan Avenue from downtown Detroit to the airport, reducing her route to work to two buses and a 40-minute trek. “That’s the best thing they’ve ever done,” Black said last Tuesday as she stepped off the FAST bus at the McNamara Terminal. “Whoever came up with this idea, thank you, thank you, thank you.” While the region’s political and business leaders remain at odds over how to fund and build a public transit system that better resembles growing regions of the country, SMART’s FAST service and improvements to the Detroit Department of Transportation’s service are quietly showing what happens when buses arrive frequently on time and you eliminate barriers. People ride. In June, SMART’s weekday ridership on the Gratiot, Michigan and Woodward corridors was up 49 percent from June 2017 before the FAST buses were introduced, an additional 4,500 weekday trips, according to the suburban transit agency. In year-over-year growth, ridership on Woodward Avenue grew 22 percent on weekdays and 31 percent on Saturdays in June compared to last June, said Robert Cramer, deputy general manager of the Suburban Mobility Authority for Regional Transportation. “It’s really outperformed our highest expectations,” Cramer said. The deployment of the FAST service, which costs $11 million to operate annually, is as much a response to market demands. As more people are working downtown, the traditional one-person, one-car method of getting there has congested streets and parking spaces. Younger millennials are less interested in driving to work, even if they have a vehicle. Improvements in regional bus service, such as the recent introduction of the Dart universal farecard for SMART and DDOT, has made moving from provider to provider easier. “It used to be difficult taking the bus,” said John Castle, who rides the Gratiot FAST bus daily from Roseville to downtown for his information technology job at Quicken Loans Inc. Castle has been riding SMART buses to jobs in downtown Detroit for 14 years. “It’s a heck of a lot cheaper than

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Riders board Suburban Mobility Authority for Regional Transportation’s Gratiot Avenue FAST bus at Griswold and Larned in downtown Detroit.

CHAD LIVENGOOD clivengood@crain.com

parking downtown.” Because of parking constrictions downtown, Quicken Loans Inc. has recently started paying its employees $8 a day to commute to work by bus, bike, ride share, scooter, carpooling, walking — or some multimodal combination. “We don’t want people to drive alone,” said Kevin Bopp, vice president of parking and mobility at Bedrock LLC, the real estate arm of Quicken Loans founder Dan Gilbert’s family of companies. Bedrock has developed an app platform called My Commute for employees to navigate different modes of transportation to work. The app is integrated into their employee calendars to record when they shared a ride with a co-worker, earning both the $8 daily incentive to not drive alone. Castle is among a cadre of Quicken Loans employees who are becoming internal company ambassadors for riding the bus, helping car-oriented co-workers navigate the bus systems, even offering to ride with them the first time. “There’s a ton of latent interest, but it’s that first ride,” Bopp said. The organic “team member to team member” mobility mentoring, Bopp said, is “way more effective than the incentives have been.” It’s part of a culture at Quicken Loans that’s focused on changing habits to solve real parking and congestion bottlenecks, while building up demand for transit, Bopp said. “It’s dangling a carrot — let’s get people to try something that they

might otherwise not,” Bopp said. “And once they try it, they may like it.” Quicken Loans also is working with SMART and DDOT to try to make access to the bus systems even more seamless by paying directly for employee fares. All of these measures are born out of necessity for Bedrock as it manages a growing downtown real estate portfolio, the parking needs of office and commercial tenants and increasingly scarce parking near its buildings. Other businesses and their executives in Detroit and the suburbs should take notice. Changing the deep city-suburban divisions over paying for transit won’t be easy (just look at Lansing’s decade-long inability to close persistent shortfalls in road funding). But changing mobility habits to build a consensus for a better transit system can start in the workplace. That will require companies to begin viewing reliable public transit and alternative mobility options as a necessary component to their business model in moving workers across this sprawling and barrier-prone region. If business leaders want better mass transit for metro Detroit, they can start by getting their own employees on the existing bus infrastructure and growing those services organically. SMART has plans on the shelf to add FAST service along Grand River, Van Dyke and Telegraph. But those plans will be collecting dust until old habits change. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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

ecent announcements about Fiat Chrysler and Waymo Corp. opening new production facilities in Detroit were a welcome reminder that manufacturing will still be an important part of the city’s future, not just its past. Nevertheless, nearly 900 vacant industrial properties sprinkled across Detroit remain a significant challenge that must be addressed as the city charts a new path toward economic growth. These sites will require a variety of innovative strategies — including both industrial and nonindustrial reuse — to turn these present-day liabilities into future economic assets. There are three strategies in particular that hold promise for encouraging the reuse of vacant industrial property in ways that will provide jobs and other benefits to city residents. They are: 1. Support the expansion of homegrown businesses in the small-scale manufacturing sector.

The nature of manufacturing has changed in recent years. A new breed of small-scale manufacturers has grown up in cities across the country, producing everything from food products to apparel, furniture, household goods, metal works, craft beer and specialty items. These businesses tend to emphasize quality and design rather than mass production. However, many craft-based manufacturers have developed national, and even international, markets for their products, which gives them potential for growth and profitability. This phenomenon has been documented and promoted by the Urban Manufacturing Alliance, a national nonprofit that recently published “The State of Urban Manufacturing,” drawing on research conducted in five cities, including Detroit. Working with Design Core Detroit, UMA surveyed almost 100 small, Detroit-based businesses and found that many expect to expand production in the near- to mid-term. 2. Strengthen or establish placebased district management organizations within industrial and mixed-use districts.

Place-based management organizations are common in downtowns, commercial corridors and residential neighborhoods in Detroit and cities around the country. The value added to redevelopment efforts by organizations like Midtown Detroit Inc. or Southwest Detroit Business Association is widely recognized. District management organizations in industrial districts are less common, but successful examples can be found everywhere from New York to Chicago to Indianapolis. For example, Milwaukee, a city roughly the same size as Detroit, has a network of seven industrial district organizations funded by business improvement districts that generate

OTHER VOICES Tom Goddeeris

funds to support their activities each year. Such organizations can foster collaboration between businesses, market the district to new businesses and customers, facilitate area planning and development activities, and support clean and safe initiatives. 3. Connect Detroiters to workforce training and manufacturing job opportunities.

Increasingly, district management organizations are also prioritizing workforce development. For example, the Industrial Council of Northeast Chicago not only manages a thriving industrial district and business incubator but also has full-time workforce development staff to help its members connect to workforce training and fill job openings. Creating meaningful, stable and gainful employment for Detroit residents is essential to realizing the goals of equitable and inclusive growth. Mayor Mike Duggan’s administration has made workforce development a top priority and is working to connect Detroiters to new job opportunities in the manufacturing sector. These efforts could be enhanced with the assistance of placebased district management organizations. Detroit Future City has just released three new reports that take a closer look at strategies for adapting Detroit’s legacy of industrial properties for productive use. One report identifies inspiring case study examples of industrial building reuse from around the country and Europe. The second looks at best practices applied at the site, district and systemwide scales. The third is a framework study for the Milwaukee Junction district in Detroit that suggests how these ideas could be put into action in one Detroit community. Milwaukee Junction, once the center of auto manufacturing in Detroit, is rapidly evolving into a mixed-use district, but some manufacturing uses can, and should, remain. With a strategy built around local placebased leadership, incubation and growth of small manufacturing businesses and a sharp focus on creating quality jobs for Detroit residents, Milwaukee Junction could be a model for the equitable and inclusive redevelopment of aging industrial districts that Detroit needs. Tom Goddeeris is deputy director of Detroit Future City.

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

Road building industry ready to fix roads once funding is there A

s CEO of Ajax Paving Industries Inc. in Troy, I’ve experienced firsthand how Michigan’s lack of a comprehensive road funding plan has sidelined an industry more than ready, willing and able to fix our crumbling roads and bridges. As a direct result, Michigan has among the worst roads in the nation that threaten the safety of motorists more every day. Two years ago, Ajax invested $10 million to upgrade our Brighton Hot Mix Asphalt facility with the most modern, up-to-date technology available and added staff in anticipation of a real road funding solution from Lansing. It never

OTHER VOICES Jamie Jacob

came. The road building industry stood ready then — and remains ready now — to meet the challenge of fixing Michigan’s deteriorating infrastructure and roads.

With the support of the industry, the Operating Engineers has doubled its training facility in Howell, and many communities, including Detroit, have invested in technical schooling. All with the focus to Fix the Damn Roads! Yet for four decades the Legislature has only provided short-term solutions that rob Peter to pay Paul and create uncertainty in my industry. Many Michigan contractors have sought work in other states with real road funding solutions in place to compensate for the lack of demand at home. That’s bad for Michigan’s businesses, bad for our state’s economic comeback and

bad for all Michiganders. Thankfully, Gov. Gretchen Whitmer has provided a comprehensive plan to pump $2.5 billion into fixing our failing roads. If we don’t make this long overdue investment now, we will risk bridge and overpass collapses that have caused serious injuries — and in some cases, death — in other states. It is up to lawmakers on both sides of the aisle to support Gov. Whitmer’s plan before tragedy strikes here at home. In addition to fixing our roads, the governor’s plan would make the greatest investment in our schools in a generation, create new opportunities for skills and career train-

ing that lead to good-paying jobs and ensure we all have access to clean drinking water. As Michiganders, we have a choice to make: Do we want to stay on the same path of disinvestment in our infrastructure, schools and communities, or embrace this unique opportunity to invest in our state for the long run? Gov. Whitmer’s plan paves the way to fixing our roads, growing our economy and making our great state the best place to live, work and raise a family in the country. Jamie Jacob is CEO of Ajax Paving Industries Inc. in Troy.

TALK ON THE WEB

Re: $16.8 million apartment complex planned for Banglatown Frankly, it scares the heck out of me when government, when the city, starts trying to “help” the organic growth of one of the “towns.” Banglatown developed and grew in spite of the city, not because of it. Thomas E. Page

REGISTRATION OPEN FOR

CRAIN’S

Re: Construction on Detroit’s ‘Avenue of Fashion’ cripples business 1. Un-green though it is, without the trees, I was able to see the storefronts and signs when I drove up Livernois a couple of days ago. When the work is done, I hope there will be hanging signs in a consistent style to give the area some of the class it used to have. 2. The shuttle during Jazz Fest is a worthy experiment, but where will the parking be? I have often thought a shuttle loop from Puritan (empty lot) to Eight Mile (rent a lot from the church) would be a good thing. 3. And if Kuzzo’s renovation cuts some of the noise volume that makes conversation impossible, that will be all good. Mle Detroit Looking forward to seeing the much needed improvement. In the meantime, I have not encountered any major issues frequenting the businesses and restaurants on this stretch of Livernois during or before the construction except for Kuzzo’s. The service at this establishment has been consistently subpar to absolutely appalling ever since it opened. We’ve tried numerous times to dine there in the last month or so, including this past Sunday. Went to Northern Lights on Baltimore street in Midtown instead and had a very lovely brunch on the outside porch. Kuzzo’s is always crowded and people are consistently given a wait time of two or more hours often due to not enough kitchen staff. Perhaps that is the reason for the kitchen renovation — too small. To blame the temporary closing on the renovation and construction is beyond disingenuous given all of the people waiting to be seated. That said, a marketing campaign might be helpful for those who are not familiar with this area. Gottobeme

MONDAY

OCT 28 8:30AM - 1:30 PM The Henry, Dearborn

Crain’s welcomes professionals working in healthfocused industries to join us at our annual Health Care Leadership Summit. With the theme Bridging the Gap Between Providers, Patients & Payers Mental and Physical Health, panels will focus on health care literacy, innovation, and policy.

TITLE SPONSOR: MAHP

FEATURED SPEAKERS:

Dr. Rana Awdish, INDIVIDUAL TICKET: $185 RESERVED TABLE OF 10: $2,000

MD FCCP FACP Director, Pulmonary Hypertension Program, Henry Ford Hospital

YOUNG PROFESSIONAL TICKET: $129.50 Available to attendees ages 21-35

Mark T. Bertolini

Former Chairman and CEO, Aetna Inc.

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

FOCUS

N p

NONPROFIT COMPENSATION

swelc

In this package  Pay rises for social services nonprofits. This page  Nonprofits step up incentive pay to stay competitive. Page 11  Crain’s list of top-paid nonprofit executives. Page 12

JDAWNINK VIA ISTOCKPHOTO

Pay rises for social services leaders By Sherri Welch

swelch@crain.com

The CEOs of social services nonprofits have historically been among the lowest-paid executives in the nonprofit sector. But the pay scale for the CEOs overseeing social services organizations in Southeast Michigan is on the rise. Experts say local compensation increases are part of a national trend fueled by a mix of factors, including continued turnover among executives in social services and other nonprofit segments and related competitiveness concerns, a long period of economic growth and the increasing budget sizes and complexity of social services agencies. The rising pay levels are tracking what is happening in the corporate sector, namely low unemployment and competition for great leadership, said Blaire Miller, co-managing partner of the Hunter Group, a national executive search firm based in Bloomfield Hills. Nonprofit boards are realizing “that with all this dynamic change in nonprofits and other sectors, they really need a strong leader to guide them through some of the turbulent, rapid change we’re experiencing,” Miller said. The rising compensation levels for social services nonprofit leaders are the new normal, she said. “It’s going to continue to track with the corporate sector. They want the same quality of leader they’d get in

Nonprofit compensation by the numbers For calendar year 2017, compensation data reported on nonprofit 990 filings with the Internal Revenue Service for the 59 Southeastern Michigan executives on Crain’s top-paid nonprofit CEOs list:

3 percent Median base pay increase

3.5 percent

Median total compensation increase

$340,730 Median base pay

$427,963

Median total compensation

36 CEOs received incentive pay in 2017, up from 31 in 2016

the corporate sector.” Fourteen years ago, when Crain’s launched its inaugural Nonprofit Executive Compensation Report, the median base pay for the highest paid social services CEOs in the region in 2003 was $200,000. Fast forward to 2017 — the most recent year available for compensation data reported on the 990 forms 501(c)(3)nonprofits are required to

file with the Internal Revenue Service — and the median compensation for the 10 top-paid CEOs of social services nonprofits has risen to $298,597. “Over the last 10-year period it’s almost been like a stutter-step as (nonprofits) try to adjust salaries,” said William Weatherston, vice president at Harvey Hohauser & Associates, an executive search firm in Troy. For many years, smaller nonprofits in the $1 million to $20 million range were not raising salaries for a number of reasons, he said. Social service agencies saw demand for their services spike as donations fell. In recent years, government funding for human services has been declining. “So there’s been pressure on boards to minimize those increases over the last few years ... what’s happening now is them realizing we’ve got to get them up,” Weatherston said. “The salary levels seem to be reflective of the real marketplace, now, so you’re getting a substantial jump in the executive levels of the human service areas.” The median base pay for the 28 Southeastern Michigan social services CEOs included in Crain’s online database of nonprofit executives was $210,514 in 2017, compared to $205,417 the year before.

What’s causing pay levels to rise Executive search and compensation experts said a mix of factors

have lifted the pay level for what traditionally has been one of the lowest-paid segments of nonprofit CEOs. “There’s more competition, but there’s also more satisfaction and comfort with the economy, which is where we see a lot of support,” said Paul Creasy, a partner at Ohio-based Organizational Consulting Group. The long-term economic growth in the country and region have helped many social services agencies increase their budgets and the size of their operations, experts said. The Nonprofit Quarterly in 2017 reported that the base rate of pay for most nonprofit executives increases in direct proportion to every $1,000 of operating expenses. Changeover from long-term executive directors has also been accelerating as predicted, Weatherston said, and that is spurring increased compensation. “It’s not that the former CEO was underpaid … (the nonprofit) was their baby ... they were pretty happy with the level they were at and wanted to use the extra money in other parts of the organization,” Weatherston said. CEOs were making a choice to be OK with the salaries they had instead of taking raises to keep pace with the market, Weatherston said. “On a couple of the searches, I’ve had to go to boards and tell them they have to bump it up ... it’s going to cost (them) substantially more than what they were paying their

CEO,” Weatherston said. “They say … ‘Are you sure?’ But they get it,” Weatherston said. On the other hand, with the aging workforce in the region, some agencies don’t think they have the bench strength to promote someone to the top spot, said Tim Dupuis, a Detroit-based vice president for Chicago-based executive compensation firm Pearl Meyer & Partners LLC. “So we are seeing increasing compensation packages for aging executives where the board wants them to stick around for another year or two,” he said. Four of the 10 highest-paid social services CEOs in the region in 2017 have since left the nonprofits they led at the time. Three retired and one, the former president and CEO of United Way for Southeastern Michigan, Herman Gray, left late in 2017 to return to a health care role as chairman of pediatrics at Wayne State University School of Medicine. Outgoing CEOs sometimes make legacy pay for the amount of time they’ve been with a nonprofit, and that will boost their compensation, said Dupuis. “But the job descriptions for CEOs of social services have changed a lot.”

Needs change as complexity grows Detroit-based Southwest Solutions is the poster child for a complex social service agency. SEE PAY, PAGE 11

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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 LY 2 2 , 2 0 1 9

SPECIAL REPORT: NONPROFIT COMPENSATION

Nonprofits step up incentive pay to stay competitive By Sherri Welch

Compensation mix

Nonprofits are stepping up incentive pay opportunities to attract and retain top executives, experts say. Those already offering it as a part of compensation packages are increasing the amount CEOs can earn, said Tim Dupuis, a Detroit-based vice president for Chicago-based executive compensation firm Pearl Meyer & Partners LLC. And smaller nonprofits that hadn’t yet begun to offer it are adding it to compensation packages. Base salaries paid by nonprofits have generally been competitive with for-profit companies of similar size, Dupuis said. But for-profits offer larger incentive opportunities. Nonprofits have tried to close the gap by offering slightly more generous health and wellness and retirement benefits, Dupuis said. “But in order for us to be competitive in the market and attract and retain the talent we need to achieve mission, we need to have some kind of performance pay. The base salary and health and wellness benefits aren’t cutting it anymore,” he said. Nonprofits “are finding that to attract and retain their executive talent, they have to pay more similarly to for-profit organizations.” If they are going to pay executives more, boards prefer to put more pay at risk to ensure they get what they pay for, Dupuis said. Because nonprofit boards are often comprised of for-profit executives, there’s a willingness to look at incentive pay to compensate leaders, said Blaire Miller, co-managing partner of Bloomfield Hills-based Hunter Group, which does local and national searches for a number of sectors, including nonprofits. “You have goals, and you get paid for goals.” Boards recognize the nonprofit world is still, in general, underpaid compared to the corporate world, she said. “That pay-for-performance element is really building at the board

Incentive pay made up an average of 13.2 percent of the total compensation of the highest-paid executives in the region in 2017. That’s just below the national average of 14 percent reported by The Chronicle of Philanthropy in June. Locally and nationally, the figures are skewed by a handful of executives who earn more at-risk pay. When it comes to base pay, local executives were still earning a greater proportion of their total compensation through base pay than the national average in 2017. Nationally, base pay accounted for an average of 62.7 percent of total compensation for nonprofit executives, according to The Chronicle of Philanthropy, with remaining compensation coming through a mix of incentive pay, deferred compensation and nonmonetary compensation. Here in Southeast Michigan, base pay accounted for just under 74 percent, on average, of the top-paid nonprofit CEOs’ total compensation in the latest reported numbers. But there were six nonprofit executives whose base pay made up only about a third or less of their total compensation. Those executives led health care and other nonprofits that compete directly with for-profits and include: McLaren Health Care Corp.; Beaumont Health; Altarum Institute; food and water testing nonprofit NSF; and the three local Blues nonprofits: Blue Cross Blue Shield of Michigan/Blue Care Network; Blue Cross Blue Shield of Michigan Foundation; and Blue Care Network of Michigan. For BCBS President and CEO Dan Loepp, the highest-paid nonprofit executive in the region, just 11.5 percent of his $13.4 million in total compensation was base pay. The bulk, or 77.34 percent, of his total compensation was incentive pay.

swelch@crain.com

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FROM PAGE 10

What started out as a mental health agency expanded over the decades to include a housing development subsidiary, services for the homeless, foreclosure prevention assistance, training for immigrant- and minority-owned entrepreneurs in Detroit and other services. In the past, agencies like Southwest were led by social workers, psychologists or people with degrees in public policy. But that likely isn’t sufficient now, given the increasing complexity of the agencies over the past 15 or 20 years, said Southwest Solutions board Chairman Seth Lloyd. “As we’ve grown and the organization has become more complex and our gross revenues have increased, the focus on operations has become more and more critical,” Lloyd said. “You need a (CEO) who is very talented in analyzing balance sheets and income statements, in all sorts of the

Dupuis

Miller

Need to know

JJBase pay typically competitive with for-profits but incentive pay lagging JJNonprofits already offering merit pay are increasing what execs can earn for hitting targets JJSmaller nonprofits adding incentive pay to compensation packages

level to recognize great performance.” Health care executives were the earliest among nonprofits to see incentive pay as part of their compensation package. Other nonprofits started to adopt merit pay in the early 2000s, as Crain’s reported in 2005. As of 2012, just over a third of the highest-paid executives were awarded incentive pay. In 2017, 61 percent, or 36, of the 59 highest-paid CEOs on Crain’s list received bonuses.

“That pay-forperformance element is really building at the board level to recognize great performance.” Blaire Miller

Nonprofits that have included the “at-risk” or merit pay as part of compensation for years are giving executives the opportunity to be awarded a higher percentage of their base pay — say 20 percent instead of 10 percent — for hitting defined performance targets, Dupuis said.

“You need a (CEO) who is very talented in analyzing balance sheets and income statements, in all sorts of the nuts and bolts operations that a smaller … less complex nonprofit might not have to be so focused on.” Seth Lloyd

nuts and bolts operations that a smaller … less complex nonprofit might not have to be so focused on.” A background in health care, which brings a familiarity with capitation arrangements — where the payor pays an agency a set dollar amount per member each month to manage all of their care — as well as fee-for-service knowledge has become something

Sherri Welch: 313 (446-1694) Twitter: @SherriWelch that’s very important for Southwest’s top executive, he said. “Managing that is extremely complex.” Those skills, along with things like proven ability to secure donations, grants and government funding and a visionary and mission-oriented mindset are all things that are top of mind, Lloyd said, as Southwest faces a CEO search over the next six to 10 months to find a permanent successor to former CEO John VanCamp who retired last year after 45 years at Southwest. “It’s become a very complex task to find someone to take over a nonprofit of any complexity, and Southwest Solutions certainly is that,” Lloyd said. The nonprofit paused its CEO search in favor of bringing in local turnaround consultant Fred Leeb in April 2018 to help diagnose financial issues and then, last fall, interim CEO Joseph Tasse, a veteran health care executive who has overseen hospital turnarounds, to make the operational changes needed before a new, permanent CEO is hired. SEE PAY, PAGE 13

THE BIRMINGHAM PARKING GARAGE

FAQ

Question: Will the parking garage have the same amount of parking spaces? Answer: The new parking garage will add approximately 400 additional parking spaces for downtown Birmingham. Question: Were the developers given a “hand-out” by our city? Answer: By law, the city is required to sell or lease land at a fair market rate. Question: Will the parking garage really be “free” for residents? Answer: The parking structure will be paid for by the parking system reserve fund and user fees – residents’ taxes will not increase.

VOTE YES ON TUESDAY AUGUST 6TH! For More Information Please Visit: www.BhamGov.org BIRMINGHAMYES.COM Paid for with regulated funds ds byy Birmin mingha gham Yes. 12221 Bow Bowers ers St St., PO Box 375, Bi Birmingha i h m, MI 480 48012 12

Community

Respected

Women Leaders Celebrating 50 years of giving back to the community as a respected and award winning leader. Here’s to 50 more!

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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 LY 2 2 , 2 0 1 9

Top-paid nonprofit executives Crain’s compiles a database of compensation of the top executives at prominent Southeast Michigan nonprofits. This year’s review focused on compensation data for calendar year 2017, which is the most recent available, given that nonprofits can get extensions of up to 11 months after the close of their fiscal year to file their 990 tax forms. It includes large nonprofits and smaller organizations that in our judgment merited inclusion, such as civic and business organizations and smaller nonprofits whose CEOs earned compensation comparable with their peers at larger nonprofits. The total compensation for some executives, where noted, is net of deferred compensation reported on a prior-year 990 to give a more accurate picture of that executive’s actual compensation and a truer ranking. Crain’s list does not include some organizations that compensate their top executives at comparable levels because their 990 filings with 2017 compensation data were not yet completed and they did not provide that data separately to Crain’s. In the interests of transparency, some nonprofits still completing 990s provided compensation data for their top executives upon request, as noted. Published here are some of the top-paid nonprofit executives in Southeast Michigan, broken out by the type of nonprofit. An expanded version of this list is available with a Crain’s enhanced membership at crainsdetroit.com/data. Arts and culture 2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Dominic Dimarco

Cranbrook Educational Community

408,423

50,000

549,112

509,387

Patricia Mooradian

The Henry Ford (The Edison Institute Inc.)

370,841

98,383

515,637

448,330

Ron Kagan

Detroit Zoological Society

397,417

34,797

457,086

433,053

Anne Parsons

Detroit Symphony Orchestra

405,881

16,300

452,998

398,730

Salvador Salort-Pons

Detroit Institute of Arts

396,141

427,963

402,357

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Business organization 2017 top executive

Doug Rothwell

Business Leaders for Michigan

558,142

100,000

832,423

795,133

Sandy Baruah

Detroit Regional Chamber

376,976

210,205

627,946

510,928

Jeffrey Krause

SME (formerly Society of Manufacturing Engineers)

339,815

94,874

485,473

470,087

Eric Larson

Downtown Detroit Partnership

290,764

30,000

348,302

273,031

Terry Barclay

Inforum

305,641

326,229

318,601

2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Susan Burns

Wayne State University Foundation

298,115.74

35,000

371,363.50

296,525

2 Scott Smith

St. John Providence Health System Foundation (dba Ascension St. John and Providence Foundations)

215,123

43,898

312,801

222,094

Jill Hunsberger

Eastern Michigan University Foundation

144,661

197,975

210,836

Paul Miller

Presbyterian Villages of Michigan Foundation

133,457

22,953

156,410

162,240

2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Audrey Harvey

Blue Cross Blue Shield of Michigan Foundation

281,198

400,759

918,952

716,128

Richard (Rip) Rapson

The Kresge Foundation

742,107

855,093

812,958

Mariam Noland

Community Foundation for Southeast Michigan

567,631

650,095

627,964

Tonya Allen

The Skillman Foundation

424,433

483,212

467,088

David Egner

Ralph C. Wilson Jr. Foundation

401,510

64,200

465,710

422,748

2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

Dan Loepp

Blue Cross Blue Shield of Michigan/Blue Care Network

1,537,661

10,380,749

Philip Incarnati

McLaren Health Care Corp.

1,827,318

1,413,530

1 13,421,863 1 6,929,688

2016 total compensation

John Fox

Beaumont Health

1,767,133

2,101,487

5,674,842

3,119,371

Wright Lassiter

Henry Ford Health System

1,465,486

1,098,370

3,328,358

4,746,145

Richard Gilfillan

Trinity Health

1,429,454

849,759

2,725,228

2,504,883

2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Robert Cahill

Hospice of Michigan Inc.

Fundraising foundations

Grant-maklng foundations

Health care

Social services

13,420,000 6,658,326 3

John Thorhauer11 5 Herman Gray

470,794

131,065

685,086

669,141

United Methodist Retirement Communities

368,987

68,452

500,685

456,778

United Way for Southeastern Michigan

374,115

72,100

481,392

455,170

Roger Myers

Presbyterian Villages of Michigan

377,434

58,042

450,992

384,614

Scott Kaufman

Jewish Federation of Metropolitan Detroit/United Jewish Foundation

340,730

347,000

346,183

2017 top executive

Organization

2017 base compensation

2017 bonus and incentive

2017 total compensation

2016 total compensation

Kevan Lawlor

NSF International

625,718

1,579,120

2,186,082

Lincoln Smith

Altarum Institute

375,942

606,703

1,493,205

4,8 2,146,384 4,9 1,158,048

Larry Alexander

Metropolitan Detroit Convention and Visitors Bureau

402,746

422,919

417,562

Kristen Holt

GreenPath Financial Wellness

309,773

51,667

397,508

262,450

Louis Glazer

Michigan Future Inc.

200,000

215,500

209,667

Other

1 Compensation provided by nonprofit. 2 President is no longer in this position. 3 2016 compensation paid to former CEO Nancy Schlicting. 4 2016 total compensation as listed is net of deferred compensation reported on prior year 990.

5 President and CEO is no longer in this position. 6 2017 total compensation as listed is net of deferred compensation reported on prior year 990. 2016 total compensation as listed is net of deferred compensation reported on prior year 990. 7 2017 total compensation as listed is net of deferred compensation reported on prior

6,7

4, 10

year 990 was $704,868. 8 2016 compensation reported as deferred on prior Form 990 was $238,500. 9 2016 compensation reported as deferred on prior Form 990 was $543,171. 10 2016 compensation reported as deferred on prior Form 990 was $41,775. 11 Set to retire in October.

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

PAY

‘Avenue of Fashion’ construction cripples business, prompting response from city

FROM PAGE 11

“My hunch is we’re going to have pay more than the amount we paid John his final year,” Lloyd said. “Southwest Solutions was John’s baby … he wasn’t in it for the money, wasn’t clamoring for ever-greater compensation.” “To attract someone here to replace him is not going to be cheap,” Lloyd said.

Continued turnover Significant competition for candidates with continued executive turnover is leading nonprofits to recruit candidates from other places, not just in social services but across the nonprofit sector. United Way for Southeast Michigan, Southwest Solutions, the Charles H. Wright Museum of African American History and Michigan Science Center are among nonprofits that hired CEOs from other states in their searches over the past couple of years. “As we’re recruiting candidates into Michigan, even with the cost of living being lower here, they’re only going to come down so much,” Miller said. National searches are pushing local social services compensation up, she said. “But boards are seeking that best practices knowledge … they’re willing to pay for that different expertise.” Public reporting of the compensation nonprofit CEOs and other key nonprofit employees earn is also driving social services CEOs up, said Cyd Kinney, partner at DHR International in Birmingham. “Everyone knows through the 990 what the last person made, (and) they don’t want to make less.”

“The final candidate pool for a CEO search is usually made of, say, four to six finalists and of those, at least two to three come from corporate, thereby increasing compensation.” Gary Dembs

Experience still figures into compensation levels, Kinney said, but the market isn’t flooded with candidates. Candidates moving into new executive positions typically sought to increase their pay by about 15 percent in the old days, Kinney said. Today, they’re looking for more. The economy is in good shape. There’s more competition, and therefore, social services agencies have to pay higher salaries to get the talent, said Gary Dembs, CEO of the Southfield-based Non-Profit Personnel Network. “It’s definitely a candidate’s market.” The salaries of social services CEOs are also increasing as corporate board members seek to bring best practices and in some cases, executives, from the business world into nonprofits, Dembs said. “The final candidate pool for a CEO search is usually made of, say, four to six finalists and of those, at least two to three come from corpo-

By Kurt Nagl knagl@crain.com

Dembs

Lloyd

rate, thereby increasing compensation.”

More complexities, more skills needed Most social services agencies formed to provide services in one area, experts said. But over time, they’ve grown increasingly complex, most today providing multiple programs and services supported with a number of different funding streams. “Social service organizations are growing and becoming more complex, and therefore, they’re having to pay their top talent more in order to effectively run the organization,” Dupuis said. The fact that social services leaders often come from a clinical and operational care background that requires professionalized, graduate degrees and leadership experience working in the community with health care and hospital providers continues to drive compensation increases, Miller said. “They see the convergence of all these different health care areas coming together to treat people in a holistic fashion ... they’re looking for leaders that have these diverse experiences.” Boards are also seeking leaders who bring knowledge of artificial intelligence and digital reach, “great storytellers ... who embody the mission from their legacy,” and who are capable of guiding a charity through the dramatic changes social services are experiencing because of changes in government programs and reimbursement policies, Miller said. “Boards are stretching to get the right kind of leaders. They realize it’s not just cost; the right leader can help them through the turbulent waters of change, help them find new programming ... (and) funding sources.” Executives vying for positions need a level of sophistication with a variety of revenue sources including traditional philanthropy, earned revenue and other funding streams tied to the health care arena, Dembs said. Expertise in organizational stability is something nonprofits in other segments have also sought in new leaders. For example, the Detroit Historical Society’s executive director and CEO, Elana Sullivan, who was hired last year, in part because of her ability to turn the Multiple Sclerosis Society around during her tenure there and her vision for making the museum more sustainable, said Dembs, whose firm conducted the search for the society. Especially in the social services sector, “these jobs are more challenging, given health care reform, government cuts and (other) sustainability issues,” Dembs said. “Therefore, the talent level has to go up, the salaries have to go up and the recruitment has to be broader than just Detroit.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Construction on a new streetscape planned for Detroit’s Avenue of Fashion is choking traffic to businesses and causing major headaches for shop owners. Work on the project started in May, and business owners are beginning to feel the impact of lost sales, with the staple restaurant Kuzzo’s Chicken and Waffles choosing to close during construction and others facing the possibility of permanent closure. The impact on businesses is prompting the city to put together marketing programs to boost local shops — a move business owners say they wish had happened sooner. Kuzzo’s closed July 14 until November, or whenever construction is done, said owner Ron Bartell. He had planned to renovate the kitchen at the end of summer but decided to push the project up while business is down. “We hadn’t planned on closing now, but with the construction and the impact it has had on businesses in the area, we just thought it would be in our best interest to do the renovations now.” Bartell said he is investing $150,000 to $200,000 to overhaul the kitchen with new equipment to make it more efficient. He said he’ll use the closure as an opportunity to improve overall operations of the restaurant as he looks to scale the business and open more locations in the city. The city says construction will wrap up at the end of November, with some landscaping finishing in the spring. One of Bartell’s tenants, Narrow Way Café & Shop, is also facing potential closure, but with the possibility of

CITY OF DETROIT

Construction on a new streetscape for the Livernois Avenue of Fashion started in May and is causing disruptions for business owners on the strip.

not reopening. Sales at the coffee shop, which opened in 2017, are down 40-45 percent from the same time last year, said co-owner Jonathan Merritt. He said after a private investment of “a couple hundred grand” to open, they were left with no liquid capital to survive a business downturn they hadn’t predicted. The Livernois project is part of the city’s $125 million neighborhood improvement plan. Construction on Livernois, between Eight Mile Road and Margareta Street, began in May and will include removal of the median and widened sidewalks. The project is the main pilot of Mayor Mike Duggan’s effort to revitalize the infrastructure of commercial corridors to spur business in the neighborhoods. Livernois business owners are excited about the potential boost the streetscape could bring, but some are worried about surviving to see it. Other stores, such as D&D Cuisine and

Loose Massage Therapy Plus, are delaying opening until the project is over. Arthur Jemison, chief of services and infrastructure for the city, said his department is organizing a marketing campaign that involves putting up banners, sandwich signs and feather signs throughout the area, as well as advertising for the businesses on social media and the city’s website. Jemison said a free shuttle will be launched during Jazz on the Ave on Aug. 3 and continue operating on weekends through August and September. In addition, the city plans to help organize the first “Livernois Soup” — a spinoff of Detroit Soup, which aims to raise small funds for local businesses and increase patronage. “We want to keep a real focus on the end result here, which is gonna be a brand new streetscape,” Jemison said.

NOMINATION PROGRAMS

OPEN!

Notable Women in Law argue high-stakes legal cases, protect intellectual property and are leaders outside of the courtroom.

NOMINATIONS CLOSE: AUG. 6

BEST-MANAGED

NONPROFIT

This year’s program will focus on what Southeastern Michigan nonprofits are doing to develop the next generation of leaders in their organizations in the face of high turnover and increased competition for talent at all levels.

NOMINATIONS CLOSE: AUG. 13

For more information or to nominate, visit crainsdetroit.com/nominate

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

Gilbert buys Courtyard by Marriott on Jefferson By Kirk Pinho kpinho@crain.com

Dan Gilbert is the new owner of the Courtyard by Marriott property on Jefferson Avenue in downtown Detroit. His Bedrock LLC real estate company said Wednesday afternoon that the deal for the 265-room hotel previously owned by a General Motors Co. affiliate closed Tuesday, adding yet another key downtown property to his ever-growing real estate portfolio. A purchase price was not disclosed.

Need to know

JJ265-room hotel was owned by a General Motors affiliate JJPurchase part of Bedrock’s broader hospitality strategy JJPurchase price not disclosed

Andrew Leber, vice president of hospitality for the Detroit-based development, ownership, management and leasing company, said improving food and beverage spaces within the hotel will be discussed but for the time being no immediate changes are in store. A change in the hotel flag would be considered in the future but for now it is not anticipated, Leber said. “The Courtyard brand is extremely strong,” he said. “It’s a couple blocks from our headquarters and is well located. ... Broadly speaking, it diversifies our portfolio and is part of our broader hospitality strategy and expands us into different hotel offerings.”

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The Courtyard by Marriott hotel at the Millender Center in downtown Detroit has 265 rooms and was part of a $37.8 million sale in 2010 to General Motors Co.

In addition to the Courtyard by Marriott, Bedrock has opened the boutique Shinola Hotel on Woodward Avenue across from the old J.L. Hudson’s department store site and is considering hotel space in a large mixed-use development on the property, as well as in the former Detroit Police Department headquar-

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In Your Corner.

ters building at 1300 Beaubien St. Bedrock is also including an estimated 100- to 150-room hotel in its $311 million redevelopment of the Book Tower and Book Building that is underway on Washington Boulevard. “Bedrock has played a tremendous role in the transformation of downtown Detroit, and we’re confident they will do great things with the property,” GM said in a statement. It’s the latest prominent hotel sale around the greater downtown area, following the $23.3 million ($96,680 per room) sale of the Holiday Inn Express & Suites Downtown Detroit in April 2018 to New York City-based Glenmont Capital Management LLC, along with two other out-of-state in-

vestors, Project Destined co-founders Cedric Bobo and Fred Greene; and the February 2018 sale of the Hotel St. Regis in the New Center area for $8 million ($64,000 per room) to Detroit-based Invictus Equity Group, which is headed up by Tony Saunders and Christos Moisides. Downtown Detroit’s average daily hotel room rate has increased from $127.18 in 2008 to $174.35 last year. RevPAR, which is industry lingo for revenue per available room, has nearly doubled from $66.14 in 2008 to $124.20 last year, according to data from Westbury, N.Y.-based hospitality research company HVS, which does not include the Marriott at the Renaissance Center or the casino hotels.

Leber declined to reveal performance metrics for the Courtyard by Marriott but did say it “performs better” on an annual revenue basis than other similar hotels. It was built in 1985 as part of the Millender Center and has a combination Applebee’s/IHOP restaurant that opened last year on the first floor run by Livonia-based Team Schostak Family Restaurants. Crain’s reported in November that the hotel was for sale. GM had CBRE Inc. marketing the property. A source at the time said the Detroit-based automaker was seeking $45 million for it. The deal did not include the 1,850-space parking deck, 30,000 square feet of retail and nearly 10,000 square feet of office space in the complex that GM owns. Riverfront Holdings Inc., a GM subsidiary, bought the hotel, parking deck, retail and office space that are part of the Millender Center from Cleveland-based Forest City Enterprises Inc. for $37.8 million in December 2010, Crain’s reported. Forest City owned what was at the time known as the Millender Center Apartments, which has 339 units, until 2013, when the property was purchased by Southfield-based Village Green Cos. and renamed Renaissance City Apartments at Millender Center. They are now the Renaissance City Club Apartments and are owned by Farmington Hills-based City Club Apartments, which was formed after former Village Green CEO Jonathan Holtzman split with Village Green in 2016. GM began leasing the Millender Center complex in 1998, two years after it purchased the Renaissance Center, which is also owned by Riverfront Holdings. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Alden Towers sells to Belfor affiliate By Kirk Pinho kpinho@crain.com

Contact Rick Manczak at rpmanczak@varnumlaw.com n

Comprehensive corporate transactional practice including business planning and startup Corporate governance and finance, venture capital, M&A Tier 1 Metropolitan Ranking in Corporate Law and Commercial Litigation

2019

The nearly century-old Alden Towers apartment complex in Detroit has sold to a subsidiary of Birmingham-based property restoration giant Belfor Holdings Inc. for an undisclosed price. The previous owner of the 389-unit complex was River Park Towers LLC, an affiliate of Greenwood Village, Colo.-based Triton Investment Co., which paid just $2 million for the property in August 2012, according to city land records. The deal between River Park Towers and Alden Towers Holding Company LLC, which lists Chris Jones at Belfor’s Birmingham headquarters as a member, closed Wednesday afternoon. An email sent to a Belfor spokeswoman on Wednesday morning seeking comment was not returned. Kevin Dillon, senior managing director in the Southfield office of Berkadia Real Estate Advisors LLC, was marketing Alden Towers for sale along with Senior Director Rick Brace and Managing Director Jason Krug. “Triton did very well with the transaction and was very pleased with the outcome,” Dillon said, adding that Alden Towers, which is at

COURTESY OF BERKADIA REAL ESTATE ADVISORS LLC

The Alden Towers apartment property on the Detroit River was built in 1922 and sold Wednesday to a subsidiary of Birmingham-based Belfor Holdings Inc.

8100 E. Jefferson Ave., is about 95 percent occupied. He said the new ownership group plans to “continue with the previous value-add and property improvement plan, including interior unit upgrades, upgrades to some common area facilities and maintaining the asset at a high level.” Southfield-based Village Green Cos. had been property manager but the new owners are hiring Ferndale-based Magar & Co. Marketing materials say the property was built in 1922 and the units

rent for an average of $1.34 per square foot per month. An average 715-square-foot unit is $958. The building has studios and one- to three-bedroom apartments renting from $625 to $1,840, according to the Village Green website. This spring, Belfor sold for an undisclosed amount to New York Citybased private equity firm American Securities LLC, which has been active in metro Detroit in recent years. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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

Local historic district proposal for Eastern Market could hamper building demolition By Kirk Pinho kpinho@crain.com

An effort is underway that could thwart the demolition of a property in Eastern Market by making the entire area a local historic district. If it ultimately becomes one, it wouldn’t just affect Sanford Nelson and his investors, whose Detroit-based Firm Real Estate company owns the property at 2701 Russell St. that is anticipated to be demolished. Virtually any physical change outside of ordinary maintenance to any building in Eastern Market — ranging from things like masonry work to demolition — would have to be approved by the Historic District Commission if the local historic designation is assigned. That would add another layer of approval needed for improvements by any landlord in a proposed district bounded by Gratiot Avenue, Mack Avenue, the Chrysler Service Drive and St. Aubin Street, and could prevent Firm Real Estate from tearing down the Russell Street property if it doesn’t get the HDC’s blessing. At the request of City Council member James Tate, Janese Chapman, deputy director of the city’s Historic Designation Advisory Board, has taken the initial step to getting the city’s food hub an interim local historic district designation, which would grant the advisory board plus two ad hoc members a year to study the issue and potentially recommend that City Council grant permanent local historic district status. The request to make Eastern Market a local historic has been pending before the board for more than a decade at the request of a city resident. A proposed resolution has been submitted to City Council for its consideration. It’s expected to be referred to the Neighborhood and Community Services Committee by the City Council on Tuesday. Crain’s reported that Firm Real Estate plans to tear down the 15,000-square-foot property — which Nelson says is four separate buildings with four separate foundations in varying states of deterioration — that houses Mike Coney Island on Eastern Market’s main drag. No timetable for the demolition has been established, nor any plan

KIRK PINHO/CRAIN’S DETROIT BUSINESS

This building on Russell Street in Eastern Market is set for demolition. Detroit City Council is being asked to consider an interim local historic district designation for Eastern Market that would add a hurdle to the demolition.

for what would take its place. Nelson also said in an interview last week that this is the only building in the company’s Eastern Market portfolio of 20 buildings totaling about 250,000 square feet that is anticipated to be torn down. Nelson, the son of serial entrepreneur Linden Nelson, said those interested can email hello@firmdet.com with the subject line “2701 Russell Street” and offer suggestions on what should take its place. “Of course, Eastern Market is an historic district. It’s a national treasure,” the company said in an emailed statement. “That’s why we are committed to preserving and renewing Eastern Market as the Midwest’s premier food-and-arts hub. We embrace this historic district process and value (Eastern Market Partnership President) Dan Carmody’s leadership. None of this changes the fact that the building at 2701 Russell is structurally unsound, unsafe, and will eventually need to be replaced with a project that respects the history and architectural integrity of Eastern Market. That won’t happen anytime soon and will involve immense community input.” Carmody is listed as an ad hoc member of the advisory board to

help study the matter, if council approves it; a city resident would be chosen to serve as the other ad hoc member. Carmody on Monday morning said the Eastern Market Partnership is “generally in favor of regulatory measures that help us maintain the character of the market.” However, he said, questions to be answered in the study process would include what a local historic district allows versus what a federal designation (as it currently has) allows; how a local historic district works with a zoning overlay district, as is currently under consideration; and how a local historic district would impact improvement to buildings. “We don’t want to become so regulatory that we impact the potential to continue the revitalization of the market district,” Carmody said. Eric Kehoe, president of the board of directors of Preservation Detroit, a historic preservation advocacy group, said he was “glad to see a sense of urgency on behalf of City Council to preserve the character of Eastern Market.” However, he said, it’s one piece of a larger series of considerations that need to be taken about things like “affordability and preserving the culture and diversity of the market.”

He also wondered whether it would have an effect on the popular Murals in the Market event, scheduled this year from Sept. 14-21, or mural painting in general. “Not sure, that’s why it needs further study,” Carmody said.

Changing district As a new and different group of landlords, including Nelson and Firm Real Estate, has started purchasing properties in Eastern Market, longtime tenants like small businesses and artists and others have raised concerns about rent increases in the historically inexpensive area to the east of downtown, where real estate is at a premium. Several businesses have closed or have announced plans to close, among them Russell Street Deli (which is closing in September following a highly public landlord/tenant battle with Nelson), Mootown Ice Cream & Dessert Shoppe LLC. Farmers Restaurant, Adam’s Meat LLC and Cultivation Station Inc. However, Jose’s Tacos announced plans to open in the market and Well Done Goods by Cyberoptix is moving from a Gratiot Avenue space Nelson owns into a larger, soon-to-be-renovated space in the area.

Other new landlords include Detroit developers and economic development professionals Roger Basmajian and George Jackson and New York City-based developer ASH NYC, replacing the street-level business operators in Eastern Market that traditionally owned their own properties (and sometimes others). Nelson said last week that eight of his buildings are under renovation, and that work on the Supino Pizzeria/Russell Street Deli/Mootown/ Zeff’s building should be done in about a month. Nelson has said that rents in his properties will be “market rate” and he plans on carving out affordable space for artists and food users as his overall vision for his portfolio progresses. In May, Eastern Market Corp. adopted 29 core values for the market. The priorities include things like limiting the size of a property owner’s portfolio, having affordable rents for both businesses and residents and limiting the amount of chain or franchise businesses. Eastern Market Corp. has no ability to enforce what it is describing as its protocols but it could impact the entity’s support for development projects. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

$16.8M apartment complex planned for Banglatown By Kurt Nagl knagl@crain.com

The city of Detroit is seeking developers to fix up more buildings in Banglatown as it tries to push forward ambitious revitalization plans in the fast-growing neighborhood north of Hamtramck. The city’s Housing and Revitalization Department and Planning and Development Department issued a request for qualifications for the redevelopment of a city-owned building at 12449 Conant St. due Aug. 30. The two-story building is 2,760 square feet with 250 square feet of parking space along a busy thoroughfare, according to a city document. At the same time, another new development, the Carpenter Apartments, is being planned for the empty lot at the northeast corner of Charest Street and

CITY OF DETROIT

The city of Detroit envisions a redevelopment of a vacant two-story building and parking lot in the Banglatown neighborhood.

Carpenter Avenue. Bingham Farmsbased MHT Housing Inc. plans to build a $16.8 million apartment complex with 50 affordable units, according to the document. More information on that development was requested from MHT and the city Wednesday. Additionally, the city plans to issue a request for qualifications to rehab the vacant Washington Trade School at Dequindre and Lawley streets. It would require the reactivation of a 100,000-square-foot site by this fall or winter 2020, the city said. The development requests and plans come as the city targets Banglatown for streetscape improvements, fixed-up storefronts and stabilized single-family housing. A $5 million grant from American Axle & Manufacturing is being funneled to the neighborhood, and several

projects — including rehabs of a half-dozen parks — are in the works. A $6.4 million transformation of the old Transfiguration School building into 19 affordable apartment units is also still planned, but work hasn’t started since the project was announced in 2017. The city aims to leverage the neighborhood’s green space and dozens of restaurants, retail stores and art galleries in the area to spur development. The full request for the 12449 Conant St. property is on the city’s website. Preference will be given to applicants who “offer greater diversity in retail options and bridge the various communities in the study area,” the document said. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

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

DEALS & DETAILS

CALENDAR

SPOTLIGHT

MERGERS & ACQUISITIONS

WEDNESDAY, JULY 24

New leader for Michigan Public Service Commission

Secure-24 Intermediate Holdings Inc., Southfield, a subsidiary of NTT Communications Corp., a communications business within the telecommunications company NTT Group, Tokyo, Japan, has an agreement to acquire Symmetry Holdings Inc., Brookfield, Wis., a systems, applications and products service provider. Websites: secure-24.com, symmetrycorp.com, ntt.com J Dynamic Map Platform Co. Ltd., Tokyo, Japan, provider of research, development and commercialization of 3-D map data, has acquired Ushr Inc., Livonia, provider of high-definition map technology for the auto industry. Websites: ushrauto.com, dynamic-maps.co.jp J An affiliate of Stratford-Cambridge Group, Plymouth, a private equity firm, has jointly acquired AIC Equipment & Controls Inc., Brighton, a plastic injection molding service, and the Plasti-Co Equipment Company, Brighton, with an additional facility in Wixom, supplier of barrels, feedscrews, screw tips or valves and end caps for injection molding machines. Website: scgequity.com, plasti-co.com, aicequipment.com J

CONTRACTS J Espresso Public Relations LLC, Detroit, a public relations agency, has four new clients: Techstars Detroit, an incubator for startups in mobility and manufacturing; Altimetrik Collider, Detroit, Altimetrik Corp.’s downtown innovation and collaboration hub supporting software startups; Shades Optical, Birmingham, an optometric services and eyewear business; and Marketing Supply Co.,

Detroit, a marketing agency. Websites: espressopublicrelations.com, techstars.com, colliderdetroit.com, shadesoptical.com, marketingsupply.co J Airfoil Group, Royal Oak, a marketing communications firm serving technology companies, has nine new clients: AthenasOwl, Boston and Mumbai, India, an artificial intelligence solutions provider; GTA, Guam, a telecommunications company; The Mars Agency, Southfield, a marketing agency; Memorial Healthcare, Owosso, a hospital; Peloton Technology, Mountain View, Calif., a truck safety and fuel efficiency company; Quantiphi, Boston and Mumbai, India, an AI and data software services company; Transient Plasma Systems, Torrance, Calif., designer and manufacturer of power systems; University Liggett School, Grosse Pointe Woods, a school, and Zero Mass Water, Scottsdale, Ariz., a renewable water company. Websites: airfoilgroup.com, athenasowl.tv, gta.net, themarsagency. com, memorialhealthcare.org, peloton-tech.com, quantiphi.com, transientplasmasystems.com, uls.org, zeromasswater.com J BAE Systems plc, Sterling Heights, an aerospace company, was awarded a $45 million contract by the U.S. Army for the Extended Range Cannon Artillery Increment 1 prototype with the purpose of increasing the range and rate of fire on current and future self-propelled howitzers. Website: baesystems.com

EXPANSIONS J LCPtracker Inc., Orange, Calif., provider of software for prevailing wage and construction site compliance, opened an office in Holly. Website: lcptracker.com

Exporting Demystified: Tips for Growing Your Business Globally. 8-11 a.m. July 24. Automation Alley. A panel of international business experts share insights about the opportunities and challenges of doing business worldwide. Automation Alley. $20. Contact: Eriola Fishman, email: fishmane@automationalley. com; phone: (248) 687-7249.

UPCOMING EVENTS Professional Edge Workshop. 8-9:30 a.m. Aug. 1. Birmingham Bloomfield Chamber. Chamber member and ambassador Ken Sewll leads a workshop titled “Investing in Relationships: The Art of Investing in Long-term Mutually Beneficial (Business) Relationships.” Birmingham Public Schools, Beverly Hills. Free. Email: thechamber@bbcc.com Employee Turnover Trends in Oakland County. 1:30-3 p.m. Aug. 6. Oakland County Michigan Works! and Workforce Intelligence Network. Oakland County employers were surveyed on employee turnover in southeast Michigan. Survey findings include: Employee turnover rates and related costs; effective management and communication strategies; removal of barriers to work success; employee training, including onboarding programs; promotion pathways and employee feedback mechanisms. L. Brooks Patterson Building 41W Conference Center. Free. Contact: Liz Rivard-Weston, phone: (248) 858-0922; email: rivardwestone@oakgov.com. Website: eventbrite.com/e/ocmw-employee-turnover-survey-highlights-briefing-tickets-64001533309

Environmental sustainability advocate Tremaine Phillips has been named to the Public Service Commission by Gov. Gretchen Whitmer in an appointment that shifts the balance on the three-member panel that has been closely Phillips watched by environmental groups and industry leaders, Gongwer News Service reported. Phillips replaces Norm Saari, who was appointed by former Gov. Rick Snyder and whose term expired July 2. This appointment is subject to Senate approval. Phillips’ appointment, which was first reported Friday by Gongwer News Service, gives Whitmer’s nominees to the powerful commission a new 2-1 Democratic majority. However, the statement from Whitmer’s press office did not mention any change in the PSC chair post, which leaves independent Commissioner Sally Talberg in the position, at least for now. The chair serves as the pleasure of the governor. Democrat Daniel Scripps was appointed by Whitmer in February to replace Rachel Eubanks, an independent who resigned in December. She was appointed state treasurer by Whitmer. The commission, which has more than 200 employees providing expert analysis and support, is

composed of three members appointed by the governor with the advice and consent of the Senate.

Leadership Oakland hires executive director

Leadership Oakland has named Thomas Sommer as its new executive director. Sommer, 46, replaces Nancy Maurer, who is leaving to establish a leadership coaching and consulting business called Sonder Haven, according to a Sommer news release. Sommer assumed his new role at the Auburn Hills-based organization Thursday. Founded in 1990, the nonprofit is centered around business and community leadership development, the release said. It offers the Cornerstone Program, a nine-month leadership skills program that takes developing leaders in businesses, organizations and governmental agencies and dives into regional issues such as education, health and human services, race and more. Sommer has more than 20 years of nonprofit experience, most recently as the senior director for corporate and foundation relations at Kettering University in Flint. “Tom has a clear vision to lead our organization into the future and ensure its success. We are confident he will strengthen Leadership Oakland’s reputation and ability to attract and help develop the region’s top and upcoming leaders,” board President Patricia Blount said in the release.

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tional Fannie Mae or Freddie Mac, FHA, VA, USDA, and Jumbo mortgages, the release said. Dan Gilbert’s Quicken Loans, ranked as the largest retail mortgage originator in the country in 2018, introduced Rocket Mortgage in late 2015 as the first completely online mortgage lender service. It allows prospective home buyers to be approved for a mortgage quickly via smartphone. Now Rocket Mortgage is used in 98 percent of Quicken Loans-originated home loans. Quicken Loans has an expertise in technology that puts it ahead of competitors and in a place to mop up more market share as technology constrains smaller mortgage companies, Greg McBride, chief financial analyst for New York financial services company Bankrate LLC, told Crain’s earlier this year. It’s now using that digital prowess to claim more business through State Farm, which says its group of companies is the biggest auto and home insurance provider in the U.S. Parent company State Farm Mutual Automobile Insurance Co. operates the State Farm group with around 19,000 agents and 58,000 employees working on 83 million accounts and policies in auto, fire, life, health and banking.

Hiring bonanza The new avenue to reach customers through State Farm comes as Quicken Loans makes a hiring push. As of this week, 1,300 positions were open, ranging from mortgage banker and underwriter to software engineer and data scientist. Approximately 85 percent-90 percent of the jobs are based in Detroit, Quicken Loans Chief People Officer Mike Malloy said. The company is also hiring in Cleveland, Phoenix and Charlotte, N.C. Quicken Loans employs 13,000 in Detroit. The entire Quicken Loans family of companies — which includes real estate firm Bedrock LLC and other Gilbert entities — employs more than 17,000 across Detroit properties including One Campus Martius, the First National Building, the old Detroit News building on West Lafayette Boulevard and Chrysler House. The mortgage giant hires around 4,000-5,000 a year, Malloy said. He declined to disclose salaries.

more and more team members in Detroit ... We have our recruiting team (that) looks at all different avenues AVAILABLE that wePOSITIONS can hire from. Partnerships with many of the local colleges and universities, community groups, veterans’ groups and others.” Crain’s reported on Quicken Loans’ rise — a mix of strategy and timing — in March. The company saw its highest quarterly closed loan volume in 2019’s second quarter: $32 billion, it announced in a Tuesday news release. That’s up from $21.1 billion in 2018’s second quarter. It originated nearly $11 billion in June, its highest monthly figure yet, the release said. A representative declined to release data for the same month last year. It recorded $83.4 billion in loan generations in 2018. Quicken Loans isn’t the only metro Detroit mortgage giant seeking new talent and recording billions in loan volume. United Shore Financial Services LLC, which moved to Pontiac from Troy last summer to accommodate accelerating growth, is looking to hire 900 yet this year, according to CEO Mat Ishbia. He declined to disclose salaries. The 4,100-employee company — up from 2,300 a year ago— is filling in its 600,000-square-foot, $45 million Pontiac building. It brought on nearly 1,400 people in the first six months of the year, after announcing in January that it aimed to hire 800 in 2019. Ishbia said a late June recruiting fair at the Pontiac headquarters drew 1,000 people and he expected to hire around 250-300 of them. United Shore’s United Wholesale Mortgage produced a company record $41.5 billion in loan volume last year, according to data published this week in industry publication Inside Mortgage Finance. United Shore’s biggest business is wholesale mortgage lending, so it doesn’t generally compete in the same sphere as Quicken Loans, the vast majority of whose business is in retail mortgage origination directly to consumers. But they do compete with each other when it comes to talent, and Ishbia has called United Shore a better place to work. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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TALKS FROM PAGE 6

Liz Martinez and Mary Beth Boeson, two nurses supporting the MNA union drive, have filed an unfair labor practice against Beaumont for intimidation of pro-union nurses. “I feel those numbers (supporting the union) speak for themselves,” Martinez said. “At this point, we will not be exploring the idea of expanding the already heavily management governed professional nurse council, as it is not a sustainable plan.” Lorie Hall, a nurse practitioner and one of the anti-union leaders, tells Crain’s she has 350 nurses who have signed a petition to keep the MNA nurses union out of Beaumont. “I am one of many nurses at Beaumont who do not want representation by the MNA,” Hall said in an email to Crain’s. “Despite the public smear campaign beginning against the Beaumont name, they have not been voted in and neither the MNA nor this group of disgruntled nurses speak for the majority of the 3,200 nurses employed at Beaumont.” Meanwhile, Beaumont’s contract with the SEIU’s 1,000 union workers for hospitals in Taylor, Trenton and Wayne expired June 30, 2018. There have been off-and-on talks, but they haven’t been productive, said an SEIU official and two union workers in interviews with Crain’s. SEIU officials have declined to reveal details of the wage proposal submitted to Beaumont, but one official said it will be at least 2 percent to 3 percent the first and second years of the contract and include a percentage bonus for retroactive pay to contract expiration date, a flat dollar increase at ratification, increases in shift differentials, weekend differentials, and protections against outsourcing jobs to non-union subcontractors. In a statement from Beaumont, communication director Mark Geary said: “Beaumont Health has been meeting with SEIU for more than a year, bargaining in good faith, with the goal of reaching a mutually agreeable labor contract. We have met with multiple SEIU negotiators in more than 24 sessions. We remain committed to continuing to bargain in good faith with the union and are looking forward to coming to an agreement for our valued employees.” Another major area of contention the SEIU has is health benefit premium costs. “They are just not affordable for lower-wage healthcare workers,” SEIU said. “On top of this they have very high deductibles and co-pays for doctor’s visits and prescriptions.” Staffing levels are another concern, the SEIU said. “The certified nurse assistants have severe understaffing and are seeing 12 to 18 patients at a time. They can’t provide good quality care,” said a SEIU official, who talked on background and declined to be identified because he wasn’t authorized. SEIU held a rally last week at Beaumont Hospital Wayne to protest lack of progress with contract talks and the 82 percent raise given to Beaumont Health CEO John Fox, who earned $5.7 million in 2007. IRS tax documents show several other senior executives making

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 2 2 , 2 0 1 9 more than $1 million each in compensation. Overall Beaumont generated revenue of $4.4 billion in 2018, earning $142 million in profits, according to its audited financial statement, Crain’s reported. “I’m very disappointed that Beaumont executives are making millions while the actual caregivers are struggling to just make ends meet,” said Mike Graham, a certified nursing assistant at Beaumont Hospital in Taylor. Geary said Beaumont’s executive compensation is unrelated to SEIU negotiations. “Beaumont is recognized as one of Michigan’s and the nation’s best for excellent and compassionate patient care,” he said. “We also are committed to being a workplace of choice, in part by providing employees with comprehensive, market-competitive compensation and benefits.”

Ascension Rochester Hospital Labor issues at the former Crittenton Hospital in Rochester, now Ascension Rochester Hospital, have reached a critical point in the talks, says Jeffrey Morawski, nurse union president of OPEIU Local 40 in Macomb Township. There are two groups — medical laboratory and radiology technologists — that have been in contract talks for more than a year, with the nurses contract coming up in September. “The hospital is a mess. It has canceled tests for patients, closed down offices because of understaffing and staff is at risk,” said Morawski, who is a cardiac catheterization nurse at McLaren Macomb. Ascension is offering pay increases of 1.5 percent the first year, 2 percent the second year and 1.5 percent the third year for the 30 lab and 60 radiology techs, Morawski said. OPEIU is seeking a 12 percent wage increase over three years starting in 2019, he said. In a statement from Ascension, spokesman Christine Gleason told Crain’s: “Ascension Providence Rochester Hospital remains committed to working diligently and in good faith toward reaching a new collective bargaining agreement for our OPEIU Local 40 associates. Out of respect for this process, we will not comment publicly about discussions that are part of active negotiations.” Scott Brooks, a labor lawyer specializing in representing unions and the OPEIU with Detroit-based Gregory, Moore, Brooks & Clark P.C., said low staffing has had a negative impact on Ascension Rochester hospital employees. Lack of a wage increase for radiology technologists also has been a sore point. At McLaren Macomb, Brooks said he attended an eight day NLRB hearing that began June 21 and ended July 2 where McLaren called 23 witnesses to talk about how the OPEIU had misclassified the mixed union group, representing about 300 employees, they had proposed. “They are trying to delay union vote, because if they can delay they think they can win it,” Brooks said. Shela Khan-Monroe, vice president of labor relations with McLaren, said the Grand Blanc-based system has presented its case that the OPEIU mix ground is illegal and is awaiting the results. Brooks said he hopes the NLRB will issue its decision within two weeks.

SOOCH FROM PAGE 1

Nyxol has more than a decade of safety and efficacy data from Phase 1 and 2 trials. Sooch’s investors include angel groups from around the state, some of whom invested in and made nice returns on her two previous companies, Plymouth Township-based ProNAi Therapeutics Inc., a spinoff from Wayne State University that had an IPO of $158 million in July 2015, and Livonia-based Gemphire Therapeutics Inc., which had an IPO of $30 million in August 2016. The angel groups investing in Ocuphire were the Detroit-based Belle Michigan Impact Fund, made up of women investors; the Grand Angels of Grand Rapids, the Kazoo Angels of Kalamazoo, the Woodward Angels of Detroit, the Saginaw-based BlueWater Angels and the Ann Arbor-based Michigan Angel Fund. The Belle fund was the first to invest in Ocuphire when Sooch began meeting with potential investors early last year. The fund and individual Belle investors invested $500,000. “Mina is one of Michigan’s most accomplished, experienced and smartest women entrepreneurs. Several Belle women had been investors in her earlier companies, myself included, and find her a transparent and extremely competent leader, so there was widespread support to help her make sure this company is a tremendous success,” said Carolyn Cassin, the fund’s general partner and co-founder. “Mina and Ocuphire fit Belle Michigan’s Impact Fund’s mission perfectly: We invest in early stage women owned, women led businesses, primarily here in Michigan, and we’re looking for women leaders to invest in who can scale and provide excellent returns to our fund. Mina is all of that and more.” Sooch was a member of Crain’s 2007 40 under 40; in September 2015 she was named by Crain’s as one of the state’s top women in tech, and in January 2017, she was named by Crain’s as one of its Newsmakers of the Year for 2016. She was honored as the entrepreneur of the year by the Ann Arbor-based Michigan Venture Capital Association at its annual awards banquet in 2015. Sooch has an engineering degree from Wayne State University and an MBA from Harvard University.

Two previous IPOs Sooch’s entrepreneurial star rose in 2014. In January of that year, she raised $12.5 million for ProNAi, a company that produced a drug for patients with non-Hodgkin’s lymphoma that she co-founded in 2004 and took over as president and CEO in 2012. Later in 2014, she raised a round of $59.5 million, then the largest VC round in state history. In September of that year, she left the company as part of the plan to have it go public in 2015. The company brought in another CEO, Nick Glover, who had experience running public companies. She then became president and CEO of Gemphire, a company formed in November 2014 to bring to market gemcabene, a drug licensed from Pfizer Inc. to lower levels of LDL, the so-called bad cholesterol. On May 31, 2017, the local tech world was shocked by the news that Sooch had left the company for per-

“I started scouring the Midwest for unappreciated assets. Within a month I had 10 deals on my desk. It’s all about networking.” — Mina Sooch

sonal reasons. She and the company refused further comment, and speculation by some in the local entrepreneurial community was that perhaps some of the institutional investors from the IPO may have wanted to bring in new management. Sooch now tells Crain’s that the reason she left was the death of her father, Jagdish Patel,who had come to the U.S. from India in 1968 to attend Wayne State. He brought his family with him, and she was one and a half when she arrived. “We lived the American dream,” she said. “I stepped back for family reasons. I had that death in my family, and I wanted to take some time off, which I did. I left the company in a good place,” she said. On the day her departure was announced, Gemphire’s stock was trading at $9.61. Over the next two months, it had a nice run up, hitting a high of $21.50 on Aug. 1. It was trading at $19.74 on Aug. 4 when the company announced disappointing trials results and shares dropped to $9.93 by the end of the next day. In the last year, the stock has traded in a range from 57 cents to $8.25. Long after her departure from ProNAi and after its IPO, it, too, reported disappointing trials results, and in January 2017 it was rebranded as a Vancouver company, Sierra Oncology Inc. It trades on the Nasdaq exchange under the symbol SRRA. It has been trading in the 55-cents range.

Back in action Sooch said that by late 2017, she was ready to get back into the entrepreneurial saddle.

She said she put the word out to her network of venture capitalists, angel investors and university technology transfer offices. “I started scouring the Midwest for unappreciated assets. Within a month I had 10 deals on my desk,” she said. “It’s all about networking.” One of them was recommended to her by one of her Gemphire investors, Mequon, Wis.-based Capital Midwest Fund, which told her about a drug at a dormant Chicago company called Ocularis Pharma LLC. The eye drug had gotten some modest funding and had shown promising results in human trials, but hadn’t been able to raise more money to finish the trials. Sooch said she spent the next two months doing due diligence on the offers she had, and eventually agreed with Capital Midwest that Ocularis’ technology was a good bet. “I like the ophthalmolgy space. Trials are shorters and cheaper, and there’s a growing market as the population ages. Nyxol is a hidden gem. It’s a very versatile drug.” In April 2018, Ocularis’ IP and the drug were merged into Ocuphire, and Sooch began reaching out to investors. The drugs’ co-founders, Alan Meyer and Bill Pitlick, joined Ocuphire in an equity deal. Meyre is chief operating officer and Pitlick is chief development officer. Their patents are good through 2034. Ocuphire has three full-time employees, now, with Sooch saying there are seven or eight 1099 contractors. Sooch said she hopes by the end of the year to hire a chief medical officer, director of clinical operations and a chief financial officer. The company has launched two

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GLOBAL FROM PAGE 3

LARRY PEPLIN FOR CRAIN’S

Phase 2 trials. About half of the 40 patients needed for a glaucoma trial have been enrolled. Enrollment has also started for a trial on what is called reversal of mydriasis, which is the dilation in the pupils caused during eye exams, which can affect vision for hours. The company is preparing a Phase 3 trial for treating night vision disorder, which affects more than four million in the U.S., causing people to experience glare, halos, starbursts and poor vision in dim light. It has no approved drug therapy. Sooch said she hopes to be in Phase 3 trials on those indications next year and in the market in 2022. Other investors quickly responded to Crain’s for comment about why they liked Ocuphire. “Our experience with Mina and her teams (has) proven that she can quickly create value and move clinical stage companies toward commercialization,” said Timothy Parker, the president of the Michigan Capital Network, a new holding company for the Kazoo Angels, Grand Angels and the recently formed Woodward Angels. “We invested in two of her previous companies, both successfully moving to IPOs. Ocuphire is an exciting company because it shows potential to provide safe and effective treatments for various eye and vision conditions.” “Ocuphire checks all the boxes an investor wants to see in an early stage company. Big market need, the product works and a team with a track record of bringing this kind of product/ solution to the market. It has been largely de-risked, so it was a fairly easy decision to make,” said Skip Simms, managing partner of the

Michigan Angel Fund, referring to the earlier clinical trials showing safety and efficacy. ID Ventures, the venture-capital arm of Invest Detroit, also invested. “Mina is one of the rare CEOs that can take companies from initial funding rounds to IPO, time after time. We are excited about Ocuphire’s opportunity to improve vision for millions of people, and to support a phenomenal entrepreneur that is an amazing asset to Michigan,” said Patti Glaza, one of ID Ventures’ managing directors. Said her partner, Martin Dober: “Ocuphire is targeting multiple multibillion-dollar markets in the eye space where there are still unmet needs. We’re impressed with the significant clinical studies that have already been conducted and the patient data that has been generated, providing for a much faster regulatory pathway than what we usually see at this stage.” Sooch joined the Ann Arbor-based VC firm of North Coast Technology Investors LP as an entrepreneur-in-residence in 2001. “She is super smart, high energy and has a great track record,” said Hugo Braun, one of North Coast’s co-founders. “She’s got a record of working with companies with significant challenges and being able to move them forward relentlessly. There were times they looked like they were never going to make it, but by the force of her will, they turned it around. She understands science and knows how to get to market. I wouldn’t be at all surprised if she’s successful, again.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

Japan and South Korea, two key U.S. trading allies, are engaged in their own trade war. South Korea has sought reparations for its people forced to work for Japanese occupiers during World War II. The spat led to Japan, citing national security concerns, placing restrictions on exports to South Korea of three chemical materials used to manufacture semiconductors and screens used in smartphones and televisions. “All of this trade craziness has led to companies basically sitting on their hands,” said Kristin Dzizcek, vice president of industry, labor and economics at Ann Arbor-based Center for Automotive Research. “There’s nowhere left to hide right now, so companies aren’t investing anywhere until something shakes out.” The White House, however, believes the tariffs and political unrest globally is moving and will continue to move manufacturers back to the U.S. On Twitter in November 2018, Trump said, “Billions of dollars are pouring into the coffers of the U.S.A. because of the tariffs being charged to China, and there is a long way to go. If companies don’t want to pay tariffs, build in the U.S.A. Otherwise, lets just make our country richer than ever before!” While not a mass rush to the border, companies have indeed been shifting to the U.S. in recent years. Roughly 145,000 jobs were “reshored” from overseas or created through foreign direct investment in the U.S. by 1,389 companies in 2017, according to the 2018 Reshoring Report by the Reshoring Initiative. But that’s been part of a broader initiative to reduce supply chain costs more than a move tied to tariff avoidance, according to Carrie Uhl, vice

president of purchasing and supply chain for the Americas for the third-largest global auto supplier Magna International Inc. “This trend is not new,” Uhl said. “The desire to have a supply chain largely in an area where you’re not manufacturing or selling is going away.” Reshoring became a widely used term in 2012 — former President Barack Obama touted the practice in that year’s State of the Union address — as companies began realizing the full costs of shipping products back and forth over oceans. “Companies realized they were miscalculating the total cost of the supply chain,” said Uhl. “There’s just so much extra stock, longer lead times, etc. They were underestimating the environmental impacts, the packaging and energy it requires to ship things far distances. They underestimated the challenges in communication, working with suppliers in different time zones. The desire to have a supply chain in an area you’re not manufacturing or selling is just not smart anymore.” In 2012, Crain’s Detroit Business reported on an effort by Bloomfield Hills manufacturing conglomerate TriMas Corp. to increase capacity at plants in Indiana, Texas, Oklahoma and elsewhere instead of overseas. “I’d rather compete on speed than costs, and manufacturing locally allows us to move product quicker with fewer problems,” then-TriMas President and CEO Dave Wathen told Crain’s in 2012. “We’ve reduced inventory, turnaround and sped up the supply chain. That creates a pretty strong case for strategically bringing (manufacturing) back.” By 2016, China’s manufacturing cost advantage over the U.S. plummeted to only 2 percent to 4 percent better than the U.S. from as much as 15 percent in 2004, according to re-

search by Boston Consulting Group. That’s before transportation and logistics costs are factored in. It’s since widened again to 7 percent thanks to a weakening yuan and falling energy costs, the report said. But current TriMas CEO Thomas Amato said U.S.-imposed and retaliatory tariffs are expediting their process of reshoring manufacturing. “The tariffs have been the biggest driver to what is causing U.S. manufacturers to move back to the U.S.,” Amato said. “The trade initiatives have customers asking the deeper questions, trying to eliminate variables. To me, it’s more exciting and interesting to put capital in the U.S. and a lot of that is because of the uncertainty created by tariffs.” But when Amato talks about onshoring, he’s talking about returning manufacturing to North America, not necessarily the U.S. He said while the company is looking to expand plants stateside, much of that has been plant consolidation and construction of a new plant in Mexico. It recent years, it shifted production at a company in its aerospace division from Paris, Ark., to another in Ottawa, Kan., as well as consolidate work from two locations in Tulsa, Okla., to a third in the same city, in its engineered components division. Its packaging division shifted production from Mexico City into the new plant in San Miguel de Allende, Mexico. General Motors Co. became the top automaker in Mexico this year as it plans to shutter four plants in the U.S. “I don’t think globalization has peaked,” said John Taylor, associate professor of supply chain management and chair of the marketing and supply chain management department at Wayne State University. “There’s a lot of rhetoric and noise and posturing around the tariffs, but at the end of the day, there’s still plenty of room for growth in sourcing from further away.”

AGENCY FROM PAGE 3

The marketplace is an old industrial building between the thriving downtowns of Ferndale and Royal Oak that is being pegged for new life with tenants such as Driven Creative and a potential new brewery. The ad agency is behind a complete rebrand of Grand Rapids-based Spartan Nash’s Family Fare grocery stores, which started last year and includes a new logo, interior design and “Keeping it Real” advertising campaign. It’s also behind the marketing and package design of the Official Hazy IPA by Kalamazoo-based Bell’s Brewery. In the early days when the ad execs had just quit their jobs, they had been hurting for clients, although they had big ambitions. Their firstyear goal was to make $10 million in capitalized billings. They made $792. “We though, oh boy, we need to get this thing going,” Woods said. Their first big account was Sterling Heights-based Jet’s Pizza. The partners hatched a strategy called “boxology,” which involved making best use of the pizza box for brand messaging. The client that put them on the map, though, was Grand Rapids-based Founders Brewing Co., Cymbal said. Driven Creative led the brewery through branding and marketing of its All Day IPA and came up with the idea of the first 15-pack for a craft brewery, Cymbal said. “Those guys paid us in beer back

DRIVEN CREATIVE SUPPLY CO.

Driven Creative Supply Co.’s office in Pleasant Ridge is adorned with products the agency has worked on, such as Bell’s Official IPA..

in the day,” he said. “The All Day IPA — it changed the game and brought us into the food and beverage world.” Since then, Founders has exploded in popularity and rapidly expanded distribution of its beers. Drive Creative still does some work with the company, but it is no longer a major client, Cymbal said. The ad agency has around 25 clients, nine of which are on retainer. Some of the clients are Nascar, Westborn Market, Gale Cengage, ABC Warehouse, Bose, McClure's Pickles, Quicken Loans and Wayne State University. It also recently won a contract to create and launch a new paint line for Dutch company AkzoNobel. Partners say they see continued growth in the OEM and packaged

food space. Last year’s revenue of $5 million was up around 20 percent from the year prior. They are hoping to hit $6 million to $7 million this year. Traditional advertising takes up the bulk of business, but unsurprisingly, digital is on the rise. Its revenue from the digital side — including social media and online advertising — has doubled in the pat year and is now 30 percent of overall revenue. No matter the medium, the agency’s strategy of “turning things upside down and inside out” remains, Woods said. “It’s hard to read the label when you’re stuck inside the bottle,” he said. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

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

DOLLAR FROM PAGE 1

The arrival of Dollar General “is a big controversy in this little town,” said Kim Bushey, president of the Curtis Michigan Area Chamber of Commerce, which is officially neutral in the small-town conflict. “We don’t stand anywhere. Our job is to promote business in this town.” More small Michigan towns like Curtis could be soon seeing Dollar General’s yellow-and-black letter signs. Dollar General Corp. (NYSE: DG) is in the midst of a rapid expansion across the country, capitalizing on the fall of big-box retailers like Kmart and Sears that were once anchored in midsized towns in Michigan and building a business model that thrives on being small, nimble and nearby. “That’s been key to their success so far is they’re willing to go as a retailer where most retailers won’t,” said Simon Johnstone, director of retail insights at the research firm Kantar. “It just wouldn’t make sense for a Walmart to go to these towns. Dollar General has taken that formula and just rapidly expanded.”

No saturation in sight Last November, Dollar General opened its 500th Michigan store, in the farming community of Ida in rural Monroe County. In Jackson County alone, Dollar General has opened eight new stores in the past two years and now has 21 locations in the county. Today, the Goodlettsville, Tenn.based retailer says it operates more than 530 stores in Michigan — more than double the number of stores the company had in January 2010 (247) and 55 percent more locations than it reported operating at the start of 2015 (341). Dollar General won’t say how many new stores it’s opening up in Michigan this year among the 975 new stores the chain is planning to open across the country. But they’re seemingly popping up everywhere in rural areas of the state, particularly summer vacation spots where the population swells between Memorial Day and Labor Day. In March, the retailer opened a store in the Iosco County farming community of Whittemore (population 373), less than 16 miles from an existing store in Prescott and 20 miles from another Dollar General in the Lake Huron town of Au Gres. Now, Dollar General is constructing another new store in tiny Omer (population 293) on U.S. 23 that’s slated to open this fall, seven miles from the chain’s Au Gres store. “We know convenience is a major factor in our customers’ shopping decisions as we generally serve customers within a three to five mile radius, or 10 minute drive,” Dollar General spokeswoman Angela Petkovic said. “We also take demographic trends, competitive factors, traffic patterns and community concerns into consideration.” Nationally, Dollar General has nearly 15,600 stores, making it the largest retailer by store count in the U.S. The stores are typically 7,400 square feet — two-thirds the size of an average CVS or Walgreens pharmacy store — and Dollar General executives have disclosed they cost about $250,000 to construct. Grand Haven-based Westwind

A typical Dollar General store, like this one in Stockbridge, Michigan, costs the company about $250,000 to build, and serves customers within a three to five mile radius.

Construction has been the general contractor on multiple Dollar General stores built in Michigan over the past few years. Midwest V LLC, an affilate of Westwind, has been the real estate development company that buys the land. Dollar General — a retailer that markets bargain-priced name-brand food, pop and household items typically priced at the nearest dollar — posted $25.6 billion in revenue last year, surpassing Macy’s department stores in total sales. Dollar General CEO Todd Vasos has told analysts the company believes there’s a market for 12,000 more Dollar General stores nationally. “For them, they’re still in a expansion mode,” Johnstone said. “Saturation is a long time off, and not many retailers can say that.” Dollar Tree Stores Inc., which acquired the Family Dollar chain in 2015 after beating out Dollar General in a bidding war, is in the midst of

Signs of support prove that not everyone in Curtis, Michigan, objects to the Dollar General store that’s being built in the small rural town.

“store optimization” as it focuses on making struggling Family Dollar stores profitable or closing them, Johnstone said. Family Dollar has 387 stores in Michigan, down from 403 five years ago, according to its parent company. Nationally, Dollar Tree Stores is in the midst of renovating 1,000 Family Dollar stores, re-bannering 200 Family Dollar stores to the Dollar Tree brand and closing as many as 390 Family Dollar stores, company spokeswoman Kayleigh Painter said. Painter declined to say how many Family Dollar stores in Michigan would be renovated, closed or re-bannered to Dollar Tree, where all items are priced at just one buck. “This information is proprietary,” she said. Dollar General has strategically targeted small towns regardless of competition. The chain recently broke ground for a store next door to an existing Family Dollar store in the

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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 LY 2 2 , 2 0 1 9

crainsdetroit.com

A new Dollar General store is being built in Curtis, Michigan.

PHOTOGRAPHS BY CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

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Dollar General by the numbers

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A numbers-focused look at the Goodlettsville, Tenn.-based retailer

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The number of stores Dollar General is operating in Michigan in 2019

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Stores Dollar General operated in Michigan in January, 2010

341

Stores Dollar General operated in Michigan in January, 2015

Nearly 15,600

The number of stores Dollar General operates nationally, making it the country’s largest retailer by store count

400-resident village of Mesick along M-115 in Wexford County, the Cadillac News reported in April. “By going as small as 1,000 people, you’re bringing the store to them — and it’s working,” said Johnstone, the retail industry analyst. “That’s very much part of their view on opening 12,000 new stores.”

Empire strikes back Though Dollar General prevailed in building in Curtis, that has not always been the case. In Leelanau County, residents in the unincorporated town of Maple City packed township meetings this spring to voice their opposition to Dollar General’s effort to build a store there. Dollar General’s real estate development contractor withdrew its land purchase offer in May. “Everyone had the same reaction and same questions: Why did they think that would work here? Would there be enough business for it?”

said Scott Mills, a web developer from Maple City who led the protests against Dollar General building a store next door to his home. “There was a lot of bafflement around that, not to mention people being unanimously opposed to it and what it would do to our local businesses.”” A similar revolt ensued in 2015 when Dollar General tried to build a store in Empire along the scenic M-22 byway near the Sleeping Bear Dunes National Lakeshore. The local planning commission in Empire denied Dollar General’s request to rezone residential land to commercial use, the Glen Arbor Sun newspaper reported. This month, Dollar General made another attempt at buying a six-acre parcel on M-22, across the road from the Sleeping Bear Plaza, a five-unit commercial building with cedar shake siding that is considered Empire’s only strip mall. The land purchase offer from Midwest V LLC caused the Empire Village Council to hold a special meeting last Wednesday to consider a six-month moratorium on any permits, applications, site plan reviews, rezoning or special land use requests for commercial development. The meeting drew more than 115 residents, including a Maple City woman who wanted to sell her inherited land. Most of the residents who spoke during the public comment period were in favor of a moratorium or outright zoning ban on dollar stores. But a few longtime residents said the town, which has been without a full-scale grocery store for more than a year, would benefit from Dollar General’s non-perishable packaged food and limited cooler selection of milk, eggs and lunchmeat. “Empire has to do something in terms of moving forward,” said Chet Salisbury, a retired teacher. “To have a dollar store, I don’t think it’s going to create a big problem, even for other businesses.” Joe Greisinger, a seasonal resident from Toledo, said he bought a summer home in Empire to escape the urban commercialism back home. “We don’t need to Disneyfy Empire,” Greisinger said. “If you put a dollar store here ... what’s next? McDonald’s? Burger King?” “This should all stay mom-andpop,” he later added. Empire’s Village Council unanimously approved the moratorium on new commercial real estate, blocking Dollar General again — for now.

Bracing for impact The new Dollar General that’s expected to open by summer’s end in Curtis nine miles from the nearby US-2 highway has divided the summertime vacation town that straddles the two Manistique lakes. “This is not a place for Dollar General,” said Sandra Hasenjager, co-owner of The Trading Post, a store on Main Street in Curtis that sells fishing licenses, sporting goods, souvenirs and convenience items that are the hallmark of dollar stores. “I don’t see how they’re going to support it in the winter time.” The only independent grocery store in Curtis is bracing for a blow to its business after watching a locally owned grocery store in nearby Naubinway close after a Family Dollar store opened. Ron, the owner of Vos Village Market in Curtis who declined to give his last name, said he’s already been informed by his Aunt Millie’s Bakeries bread distributor and Dean Foods milk distributor that Dollar General has negotiated regional prices that he won’t be able to compete with. “From applesauce to zucchini, everything that they buy is at a regional price,” he said. The local grocer takes some comfort that an independently owned Pepsi Cola Co. distributor in the eastern Upper Peninsula has refused to deliver Pepsi products to Dollar General stores in that part of the state. But he’ll still be competing with the Dollar General store for sale of Coca-Cola Co. soft drinks. “Everything that I sell, they sell — and they can sell cheaper,” he said. Hasenjager is less worried about new competition for the snowmobiling and watersports apparel, tin signs, pocket knives and “quality” coffee mugs she sells — items that don’t usually adorn Dollar General’s jam-packed shelves. What worries her is competing with Dollar General for sales of candy, barbecue sauce, water toys, cap guns, sunscreen, bug spray and greeting cards — the small stuff that brings customers in the door to get them to peruse her higher-cost items. “I’m not reordering any of my greeting cards before I know what’s going on down there,” she said. “I have sunglasses, phone chargers, and I also sell balloons, too.” Hasenjager added: “I’m the first person in town to have balloons — and now Dollar General’s coming.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior editor, Chad Livengood, (313) 446-1654 or clivengood@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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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 LY 2 2 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Detroit planning chief Maurice Cox to leave

Whitmer slashes contract for former Snyder aide

JULY 12-18 | For more, visit crainsdetroit.com

aurice Cox is leaving his position as Detroit's top planning official in September, the city confirmed Friday. He is leaving this fall to lead Chicago's planning efforts as its planning commissioner, a city source told Crain's Thursday evening. Eleanor Gorski is Chicago's acting Planning and Development commissioner, having served in that position since May, according to the city's website. Cox declined comment Thursday evening other than to say he "looks forward to sharing more information in the coming weeks." In a Friday afternoon news release, he said the city has "come a long way in building the trust of residents through community engagement and smart planning based on that engagement." "The infrastructure is in place and the work will go forward to ensure the quality of life for the residents of Detroit continues to approve." Arthur Jemison, the city's chief of services and infrastructure, said in the release that he "will be taking an active role in the department's operation and will lead the transition" as the city seeks a new permanent planning director. An acting director will be named before Cox's departure and Katy Trudeau has been promoted to deputy director of planning from her role as executive director of implementation for Mayor Mike Duggan's Services and Infrastructure team. Trudeau replaces Janet Attarian, who left early this year.

BUSINESS NEWS Chemical Financial Corp.’s $3.6 billion all-stock deal to acquire TCF Financial Corp. received its final approval last Tuesday, paving the way for the deal to close officially Aug. 1. The Federal Reserve System gave the OK for the two banks to combine, according to a news release. This follows regulatory approvals from the U.S. Department of Treasury’s Comptroller of the Currency and shareholders of each company. J Detroit City Council member Scott Benson is proposing rules that could require restaurants to display health and safety compliance on signs outside their doors. J Lear Corp. is tempering expectations for its second quarter earnings by revising its 2019 financial outlook lower due to a global economic decline. The Southfield-based seating and electronics supplier lowered its full-year outlook by more than $1 billion to revenue between $19.8 billion and $20.3 billion from a previous projection of $20.9 billion to $21.7 billion. J RecoveryPark on Detroit’s east side was hit by three robberies over six days, causing $25,000 in losses and interruption in business for the nonprofit. The first incident occurred July 10, when individuals went through a fence and drilled through the locks on a shipping container that contained lawn equipment that RecoveryPark uses to maintain 105 acres on the city’s behalf. J

RECOVERYPARK

RecoveryPark on Detroit’s east side was hit by three robberies over six days, causing $25,000 in losses and interruption in business for the nonprofit.

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

$15 million

Cost of a new childhood education center at Marygrove campus in Detroit

$46 billion

Amount of assets TCF Financial Corp. will have after TCF-Chemical Bank deal

$174.35

Downtown Detroit’s average daily hotel room rate, up from $127.18 in 2008

J Ann Arbor-based Domino’s Pizza said aggressive discounting by third-party delivery services like DoorDash is hurting its U.S. sales — and shows no sign of letting up. U.S. sales at stores open at least a year rose 3 percent in the second quarter. That was below analysts’ forecast of 4.5 percent. J Nine health insurance companies filed to have individual plans included next year on the Affordable Care Act exchange in Michigan, requesting rate changes ranging from an increase of 8.3 percent to a decrease of 8.8 percent, according to the Michigan Department of Insurance and Financial Services. Open enrollment for Michigan’s Health Insurance Marketplace, operated by the federal government, starts Nov. 1 and closes Dec. 15. Coverage starts Jan. 1, 2020. J Dan Gaydou, who oversees Grand Rapids-based MLive Media Group, is stepping down at the end of the year and taking a senior adviser role, MLive.com reported. Gaydou helped launch MLive Media Group in 2012. Owned by New York-based Advance Publications, it is composed of eight local newspapers and MLive.com, where most of the news group’s local content appears. It also includes Advance Ohio, which operates the Cleveland Plain Dealer and Cleveland.com. J Indianapolis law firm Barnes & Thornburg LLP is expanding its presence in Michigan by adding an office in Southfield. The firm plans to open the office, located at 3000 Town Cen-

ter in Southfield, in the coming weeks.

REAL ESTATE NEWS J The new “cradle-to-career” school planned for Marygrove College’s campus in northwest Detroit will include a $15 million Early Childhood Education Center expected to open in fall 2021. Once complete, the 28,000-square-foot building on the 53-acre campus will provide integrated health and human services to about 144 children under 5 years old and their families. J A $26 million affordable housing development in Detroit’s Oakman Boulevard neighborhood has reached completion. The two-phase development, led by Harper Woodsbased American Community Developers Inc., is a blend of new construction and rehabilitated units.

ov. Gretchen Whitmer’s administration is slashing in half a $499,999, 15-month contract that former Gov. Rick Snyder’s office awarded one of his longtime aides to continue being the state’s point-person on construction of the Gordie Howe International Bridge. The Democratic governor’s administration is reducing the contract for attorney Andy Doctoroff to $205,000 for a new 12-month term, Whitmer spokeswoman Tiffany Brown said. Doctoroff's previous contract equaled $399,999 over 12 months. “We determined that the compensation was too much,” Brown told Crain’s. Crain’s first reported in December that the Snyder administration had lined up a contract for Doctoroff’s Andrew S. Doctoroff Consulting LLC that was $1 short of requiring approval by the State Administrative Board. Last week, Whitmer's administration lowered the board's threshold for contract approval back to $250,000. Snyder’s office wanted to keep Doctoroff in place after the new governor took office to ensure continuity in the $2.9 billion project, which the Canadian government and private transportation companies are financing. Doctoroff had previously spent five

years as a senior special projects adviser in Snyder’s office, working on coordinating efforts between the Michigan Department of Transportation and Canadian officials for Doctoroff land assembly, condemnation proceedings, policy and other issues surrounding construction of the long-planned second bridge over the Detroit River. "I'm very happy to continue working on this vital project," Doctoroff said Friday in a text message. Under the previous terms of the contract, Doctoroff was required to work a minimum of 1,200 hours per year for the state. On an annual basis, the contract would have paid him $333 per hour. Whitmer’s administration reduced the hourly salary to about $171 per hour, but “the scope of work will not be narrowed,” Brown said. Brown said the new contract is still being finalized but will remain between Doctoroff’s LLC and the Michigan Land Bank Fast Track Authority.

HEALTH CARE NEWS J Less than two months after the state's largest measles outbreak was declared over, a Detroit resident who recently returned from overseas travel has been diagnosed with the highly contagious disease. The individual visited the emergency department at the Children's Hospital of Michigan in Detroit on Tuesday from 12:309:30 p.m., according to a news release from the Detroit Health Department. Patients, family members and visitors who were present during that time frame may have been exposed to the disease. J More than 20 million Americans with chronic diseases are now eligible, if their health plan or employer begins to offer it, to receive first-dollar coverage under their deductible for 14 preventive drugs and services that can keep them healthy and potentially alive, according to new guidance issued this week by the U.S. Treasury Department and Internal Revenue Service. The decision covers insulin, statins, beta-blockers, diabetes, depression and opioid addiction. It allows health insurers and employer-based plans to pay for chronic care treatment before patients meet their deductibles. J The Oakland County Board of Commissioners on Thursday voted 13-8 to approve a resolution asking Beaumont Hospital in Royal Oak to stop efforts to interfere with a drive by nurses to form a union at the 1,109-bed hospital, Beaumont Health's flagship facility.

Shinola/Detroit LLC confirmed Friday morning it laid off around 30 employees in Detroit.

Shinola lays off about 30 employees in Detroit H

igh-end design brand Shinola/ Detroit LLC laid off about 30 employees Thursday in Detroit — less than 5 percent of its total workforce. The Detroit-based watch and luxury goods maker made the “decision to restructure” as part of a business growth strategy, it confirmed to Crain’s on Friday in an emailed statement. Shinola employed 610 people before the Thursday layoffs. As of March 2018, the company employed more than 650 people, according to a fact sheet emailed to Crain’s at the time, meaning Thursday’s round of cuts likely wasn’t the first. “As Shinola remains committed to delivering the highest quality products to its customers, the company is taking the necessary steps to refocus its business strategy for future operations,” the statement to Crain’s said. “In order to advance this new phase of growth, the company is reducing its workforce by

less than 5 percent. Shinola is a small family. Our employees are this company’s foundation and the decision to restructure was not made without careful consideration. While difficult, this step is critical to enable and scale profitable growth. We are grateful to have been able to identify specific local employment opportunities outside of Shinola for each employee affected and will continue to support them in any way we can.” Shinola’s former president, Jacques Panis, left the company in early 2018, saying it was the right time for him in his career to “move on.” Panis this year signed on to lead a Troy-based labgrown diamond startup. Shinola has grown from a boutique watchmaker in Detroit to a largescale producer of upscale bicycles, bags, turntables, jewelry and office accessories. It is a subsidiary of Texas-based Bedrock Manufacturing Co.

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