Crain's Detroit Business, Nov. 4, 2019 issue by Crain's Detroit Business

Focus: Hope spins off neighborhood development efforts Page 3

Focus: Hope CEO Portia Roberson

ECONOMY

National biz leaders get more bullish on Detroit

JLA site likely to take years more to redevelop Page 4

NOVEMBER 4 - 10, 2019 | crainsdetroit.com UM’S NEW CENTER

TALENT BET FOR DETROIT: IF YOU BUILD IT, THEY WILL STAY

By Sherri Welch swelch@crain.com

National business leaders are increasingly bullish on Detroit’s investment potential. Over two-thirds of the 300 senior business leaders surveyed this year said they have a positive outlook on Detroit. And nearly half or 46 percent see Detroit as an “excellent” business opportunity, up from less than a third last year. That’s according to the fourth Goss annual Detroit Reinvestment Index, a survey launched by the Kresge Foundation to gauge, among other things, perceptions of Detroit’s comeback and views on the region as an investment opportunity. Detroit Future City took over management and marketing of the annual survey this year with a $260,000 grant from Kresge, commissioning New York-based FTI Consulting to conduct it once again. It’s important to see that Detroit is increasingly viewed favorably in comparison to other cities around the country, said DFC Executive Director Anika Goss. “That means more capital, more jobs and more redevelopment coming to Detroit.” On-the-ground operations in Detroit could be helping fuel the positive sentiment. An increasing number of respondents — 43 percent this year — said they have business operations in Detroit, up from 26 percent in 2016. One new question posed to national business leaders this year centered on whether they’d prefer to invest in a city that had high living costs along with a high level of amenities or in a city that had inexpensive living costs but fewer amenities.

The project is planned to include a residential tower, business incubation center and hotel. KOHN PEDERSEN FOX

How architects are thinking about UM’s innovation center

UM move is one answer to Amazon’s rejection

By Kirk Pinho

contribute undisclosed amounts), a company experienced with both Ross and the university is already associated with it: New York City-based Kohn Pedersen Fox Associate PC, an architecture and planning firm that worked on Ross’ eponymous Stephen M. Ross School of Business as well as his Hudson Yards development in Manhattan. Hana Kassem is principal of the firm who, as design principal on the project, is heading up the work along with Jill Lerner as managing principal on the former jail site transformation, which is also expected to include a business incubator, boutique hotel, residential space and other uses.

Across the Potomac River from the nation’s capital, Virginia Tech is developing a 1 million-square-foot innovation campus in Alexandria, Va., that’s two Metro commuter train stops away from the second North American headquarters Amazon is building. In New York City, Cornell University’s tech campus on Roosevelt Island CHAD has positioned the prestigious up- LIVENGOOD state New York school as an urban university across the East River from Long Island City, where Amazon planned to build another headquarters. Manhattan real estate developer Stephen Ross points to these two strategic locations for world-class universities as the reason why he believes his alma mater, the University of Michigan, needs to have a significant footprint in downtown Detroit.

SEE KASSEM, PAGE 25

SEE LIVENGOOD, PAGE 25

kpinho@crain.com

Last week, a pair of billionaires — Stephen Ross and Dan Gilbert — and the University of Michigan formally revealed plans for the former Wayne County jail site at Gratiot Avenue and I-375 downtown to become a planned $750 million-plus development that would be anchored by the $300 million research and graduate education building for UM students. While the project is still in its early stages (groundbreaking wouldn’t be until 2021) and fundraising is just getting started (Ross and Gilbert plan to

Hana Kassem

SEE SURVEY, PAGE 21

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TECHNOLOGY & MOBILITY

Will the American Center for e? Mobility live up to its promis

TECHNOLOGY & MOBILITY, Page 10 BROUGHT TO YOU BY:

LON HORWEDEL FOR CRAIN’S

An autonomous vehicle weaves between demonstration day Oct. 25.

a car that went left of center to avoid

a pothole and a cyclist that entered

the road from the car’s right during

a demonstration at the American Center

for Mobility’s live

in the works to branch out its offerings It’s been a bumpy start, but plans are By Dustin Walsh dwalsh@crain.com

Less than two years ago, the Ameras ican Center for Mobility — hailed the world’s preeminent proving ground for advanced safety and auto— mated vehicle technologies opened in Ypsilanti Township. The center was touted as an example of how public-private partnerships can solve tomorrow’s challengin es. It’s run by a nonprofit conjunction with the state’s Department of Transportation, the Michi-

mous vehicle deployment continues to be pushed back. Many executives be believed driverless vehicles would widely available by 2025, but most or experts believe now it will be 2030 later. The center also competes against Michigan’s public roadways, which are open and free to autonomous vehicle testing thanks to legislation signed into law by former Gov. 2016. in Rick Snyder Only six months after it opened, much of its top leadership was terminated, including founding CEO John Maddox, who was let go in August ac2018 with a $200,000 severance,

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MICHIGAN BRIEFS

INSIDE

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

MI businesses remain optimistic as recession talk rumbles, PNC report says Small and midsize businesses in Michigan remain optimistic about their prospects for the next six months even amid tariffs and talk of a potential recession. That’s the conclusion of a new economic outlook report from Pittsburgh-based PNC Financial Services Group Inc. that surveyed 150 business owners throughout Michigan. PNC has conducted surveys in the state since 2012. Nearly half of the respondents said they expected sales and profits to increase in the next six months, a record 46 percent said they are highly optimistic about the national economy and 41 percent said they are optimistic about the local economy. Nearly 75 percent said they think a recession in the next half-year is unlikely. That’s the bright side. Respondents indicate a heightened worry of a recession in 2021, with 38 percent saying it is likely and only 37 percent saying it is unlikely. While business owners’ confidence in their own businesses is strong, the percentage

CALENDAR

of respondents expecting increased sales slipped a dozen percentage points from a similar question a year ago. “Optimism has tempered a bit, but as the numbers show … Michigan’s economy is still healthy,” said Kurt Rankin, a PNC economist who analyzed the survey results. Michigan’s unemployment rate is 4.2 percent, near the record-low for the past two decades. More than a third of small- and midsize business owners said they have increased wages and salaries from last year.

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and to waive privilege so the truth can come out, is not shared by the MSU board chair, legacy board members and some newer trustees.” Nassar was sentenced in January to 40-175 years in prison, but fallout from the crisis continues. Former MSU President Lou Anna Simon, who resigned under pressure last year, on Oct. 28 was ordered to stand trial on charges she lied about her knowledge of allegations against Nassar.

Schlichting resigns from MSU board over stalled Nassar investigation

Nancy Schlichting has resigned from the Michigan State University board of trustees after less than a year, citing the board’s lack of progress on an investigation of the school’s culture stemming from the Larry Nassar scandal as the reason. University spokeswoman Emily Guerrant confirmed to Crain’s that Schlichting resigned effective Oct. 26. Schlichting submitted a letter of resignation to the office of Gov. Gretchen Whitmer, who will appoint her replacement. In her letter, Schlichting said she was stepping down because of the board’s lack of progress on an independent review of the university’s policies post-Nassar, the disgraced

AARON ECKELS FOR CRAIN’S

Nancy Schlichting has resigned from the Michigan State University board of trustees.

sports doctor who was employed by MSU and convicted of sexually abusing hundreds of girls and young women in his care over decades. “I joined the board to provide expertise from my long career leading complex health care organizations, and my extensive governance experience serving on more than 80 boards,” Schlichting, former CEO of Henry Ford Health System based in Detroit, said in her resignation letter,

a copy of which was obtained by Crain’s. “More importantly, I joined the board to help change the attitudes and beliefs of the legacy board members towards the extraordinary young women who have survived sexual assault by Larry Nassar, and to support the survivors in every way I could. During the last year, though, it has become very clear to me that my commitment to have an independent review of the Nassar situation,

Whitmer signs bill to let counselors continue to treat patients

Licensed professional counselors will continue to be able to diagnose and treat patients after Michigan Gov. Gretchen Whitmer signed legislation updating their scope of practice, The Associated Press reported. Whitmer said the law enacted last Tuesday will ensure that more than 150,000 people can still receive mental health care and protect 10,000 counselors from losing their ability to practice as they currently do.

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HEALTH CARE

Optalis expands nursing home footprint By Jay Greene jgreene@crain.com

Raj Patel, CEO of Optalis Healthcare, a Novi-based nursing home and senior living company, believes the time is right to expand the 15-facility company into Michigan, Ohio and Florida. With 10,000 baby boomers retiring every day and already 76 million people over the age of 65, Patel said the demand for nursing home and senior living care is on the verge of exploding. “We are very optimistic that we are in front of the bell curve with a large amount of seniors eight to 10 years away from when they really need services,” said Patel. “Age 65 is the new 55. Many seniors don’t need a lot of services until they get into their high

Need to know

Optalis Healthcare acquired five Beaumont Health-affiliated nursing facilities to expand business in Southeast Michigan 

 Nursing home chain also plans to build or acquire additional facilities in Michigan, Ohio and Florida  Reimbursement changes in Medicaid and Medicare are expected to hurt more nursing homes than help them

70s, early 80s. We are innovative and ready for the big wave.” Formed in 2016, Optalis on Sept. 1 acquired four skilled nursing and one senior living facility with 890 beds in Oakland and Macomb counties from Premier Healthcare Management, which managed the facili-

ties in a joint venture with Southfield-based Beaumont Health. The acquisition more than doubled Optalis holdings and employees. The company has 15 facilities, employs more than 3,000 workers, and generates annual revenue of more than $200 million with total assets exceeding $400 million, he said. Optalis was created through a merger of three separate companies owned by Patel and co-owners Charles Dunn, now COO, and Hemat Shah, CFO. “All three of us have been in the long-term care, post-acute industry a long time. Collectively, 70 years,” said Patel, 42, who is the youngest of the partners with 15 years of experience. SEE OPTALIS, PAGE 24

NURSINGHOMES.COM

ShorePointe Nursing and ShorePointe Village in St. Clair Shores are among the former Beaumont-affiliated facilities purchased by Optalis Healthcare of Novi.

NONPROFITS

Ballmer Group betting on CDCs to help lift Detroiters out of poverty By Sherri Welch swelch@crain.com

Sinai-Grace Guild Community Development Corp. is developing a program that will provide incentives to help people to move into homes in northwest Detroit and education subsidies to help others into good-paying jobs that enable them to buy homes in the area. It’s one of several efforts CDCs in the city are making with support from the Ballmer Group, the philanthropic effort by former Microsoft Corp. CEO Stephen Ballmer and his wife, Connie. Ballmer Group is putting bets on place-based strategies as one approach to spurring economic mobility for Detroiters living in poverty.

The spinoff does not signal Focus: Hope’s departure from the neighborhood and training residents for in-demand jobs, according to CEO Portia Roberson.

Need to know

 Three-year grant to Sinai-Grace Guild CDC marks sixth to Detroit CDC

LARRY PEPLIN FOR CRAIN’S

REFOCUSING ON CORE

Focus: Hope spins off redevelopment arm to concentrate on strengths By Kurt Nagl knagl@crain.com

Focus: Hope is spinning off its neighborhood redevelopment arm into an independent nonprofit as part of a financial turnaround effort and return to its core mission. The Detroit-based nonprofit’s Hope Village Initiative, launched in 2009, will be renamed Hope Village Revitalization, registered as a separate 501(c)3 and operate as a community development corporation governed largely by the Dexter-Fenkell/Oakman Boulevard neighborhoods it serves. Debbie Fisher, longtime director of the Hope Village Initiative, will serve as executive director of Hope Village Revitalization. Three paid staff members from Focus: Hope will also join the newly formed CDC, along with two unpaid volunteers. Approved by Focus: Hope board members in

September, Hope Village Revitalization’s first day of operation is Monday. It will be based in a rehabbed building at 14030 LaSalle Blvd., a block away from Focus: Hope’s Oakman Boulevard campus. “We had mission creep and capacity issues with being able to be in the redevelopment space,” Focus: Hope CEO Portia Roberson said. “We wanted to get to the cornerstones of what Focus: Hope is known for.” That means redoubling efforts on workforce development, early childhood education and its senior food program while moving away from real estate. Roberson said the spinoff does not signal Focus: Hope’s departure from the neighborhood and that training residents for in-demand jobs will fuel development in a different way. SEE SPINOFF, PAGE 24

KENNETTE BROCK /ANNISTIQUE PHOTOGRAPHY

Focus: Hope CEO Portia Roberson

 Will support housing incentives, education subsidies  Ballmer looking to CDCs to “get smarter faster” about needs in Detroit neighborhoods

Set to launch next year, the Northwest Anchor Strategy would be among the first neighborhood-based housing incentive programs offered in Detroit outside of similar efforts that helped attract people to the city’s downtown and Midtown neighborhoods roughly eight years ago. It will build on other anchor-based neighborhood stabilization efforts with an anchor at the center, like the University of Michigan’s and Detroit Public Schools Community District’s plan to jointly fundraise to put housing incentives in place to attract young teachers to live in the area around the cradle-to-college concept they are developing at the historic Marygrove College campus, just a mile and a half from DMC Sinai-Grace Hospital. SEE BALLMER, PAGE 22

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REAL ESTATE INSIDER

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Don’t expect a Joe Louis Arena site development to begin any time soon Even after the last beam of Joe Louis Arena comes down and the debris is cleared, it will take years to start work on the site overlooking the Detroit riverfront. A potpourri of complex easement and entitlement KIRK issues will require a proPINHO tracted pre-development period with Detroit-based Sterling Group, which is working on purchasing the former home of the Detroit Red Wings and the arena’s parking garage for $14.1 million, said Matt Walters, deputy group executive for Mayor Mike Duggan’s Jobs and Economy Team. “The People Mover, TCF Center, MDOT (Michigan Department of Transportation) infrastructure, etc., would all be a part of the conversation,” Walters said. The daunting nature of the infrastructure — freeways, skywalks, access ramps, etc. — will likely give First & Congress Management LLC, which is registered to Sterling Group’s general counsel, headaches for the foreseeable future, presuming the purchase closes. Sterling Group is required to break ground and apply for brownfield tax increment financing within five years of closing on the property or pay an additional $1 million to the city, according to a presentation to the City Council. News of the deal broke Oct. 20 when Crain’s reported that Sterling Group, which is run by TCF Bank Executive Chairman Gary Torgow’s son Elie Torgow, was nearing a purchase. Elie Torgow, who is CEO of Sterling Group, did not respond to an email seeking comment.

City Council documents released last week say the Sterling Group affiliate “proposes to design and construct a high density mixed-use development” on the site, although specifics are not yet known. For years, it has been the subject of chatter about a new hotel to complement TCF Center (formerly Cobo Center). Under a 2014 bankruptcy court agreement, creditor Financial Guaranty Insurance Corp. was to hire a developer to build a hotel with at least 300 rooms, plus office, retail and residential uses. The agreement gave the city 90 days to review a development agreement once submitted. Later, however, FGIC sued to get more time to submit a development agreement, and the city and creditor ultimately reached a mediated agreement for an extension. That lawsuit said the city’s planning department has, “consistent with (FGIC’s) view, questioned whether the Development Proposal should still include the contractually specified hotel or whether the Property would be better utilized in another form.” Maurice Cox, the city’s planning director at the time, mused publicly to me during an interview two years ago: “It has an absolutely wicked entanglement of infrastructure that makes the development site challenging to access ... Whether a hotel could ever survive on what is effectively the service side of a convention center is a question that will be answered first and foremost by an understanding of what degree of access you can give the site.” Brandon Leversee, a senior project manager based out of Royal Oak for Westbury, N.Y.based hospitality research company HVS, said Tuesday morning that a convention-style hotel

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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 // N O V E M B E R 4 , 2 0 1 9

Demolition of Joe Louis Arena is scheduled to be finished by March 31. LARRY PEPLIN/CRAIN’S DETROIT BUSINESS

with 1,000 rooms would be ideal for the site, in spite of its perhaps less-than-perfect location slightly behind TCF Center. “It’s a golden opportunity to put a convention-style hotel there,” he said. Demolition of the arena began May 28 and is expected to be completed March 31.

HUD contradicts United Artists demo requirement The U.S. Department of Housing and Urban Development is contradicting developer Emmett Moten Jr.’s assertion last week that the department is requiring the demolition of the United Artists Theatre, attached to the United Artists Building, for the $56 million redevelopment of the 18-story tower overlooking Grand Circus Park. “We looked at ways we could use it, and you can’t use it for anything,” Moten told the Detroit City Council’s Planning and Economic Development standing committee on Thursday. “They are not going to close on this project unless the building comes down.” The Detroit News first reported HUD’s response. Marta Jauniza, public affairs specialist in Chicago for HUD, sent me the same statement she sent The News: “HUD did not impose a condition requiring the demolition of the theater. The borrower’s proposal was to demolish the theater.” A loan for the project would be insured through HUD’s 221(d)(4) program, which provides a 40-year multifamily construction loan that requires department evaluation of the market, demand and other issues. It may be a case of speaking in generalities, however. John Graves, one of the investors with Moten’s Bagley Development Group LLC, said that Gershman Mortgage, which is expected to provide about $34.5 million in senior-position debt for the project tentatively slated for 2021, believes not demolishing the theater would jeopardize it financially. He provided a letter from Adam Hendin, vice president in the Clayton, Mo., office of Gersh-

man, outlining the mortgage company’s position. Hendin confirmed Tuesday morning he wrote the Oct. 2 letter to Moten. The letter says the theater takes away possible parking spots for residents, making “the project less attractive and less marketable to prospective tenants,” and that the “theater building is dilapidated and not an attractive building to live next to.” In addition, the letter says: “If the theater building gets renovated and becomes operational again, Gershman has concerns that this adjoining commercial, public use would disrupt the residential tenants and therefore make the project less attractive and less marketable as a going concern.” The letter says that “the development was presented to Gershman and HUD such that the adjoining theater would be demolished.” “As part of Gershman and HUD’s approval of the demolition, we will require appropriate approvals from the SHPO (State Historic Preservation Office),” the letter reads. “It has recently come to Gershman’s attention that there is consideration not to demolish the theater. Not demolishing the theater is a material change from the financing application that has been presented and approved of to date, and making this change will put the 221(d)(4) financing at risk.” The Detroit City Council Planning and Economic Development standing committee recommended approval last week to establish an Obsolete Property Rehabilitation District and Neighborhood Enterprise Zone property tax abatements with a full value is $2.43 million — about $175,000 for the OPRA and $2.25 million for the NEZ, according to Tracey Lynn Pearson, deputy director of media relations for Mayor Mike Duggan.

Count on it.

Gratiot closed for Hudson’s site work A small stretch of Gratiot Avenue downtown is closed until Nov. 15 for work on the J.L. Hudson’s site redevelopment by Dan Gilbert’s Bedrock LLC. The closure between Farmer Street and Woodward Avenue is so that water, gas and telecommunications infrastructure can be installed, said Gabrielle Poshadlo, Bedrock’s director of communications. The height of the tower planned for the site, at one point envisioned to be up to 912 feet tall, has not yet been determined, she said. Bedrock executives this summer backed away from previous assertions that the skyscraper component would be the tallest building in the state. While it could ultimately end up claiming that title, it isn’t a certainty. Whether it ends up taller than the 727-foot Detroit Marriott at the Renaissance Center, currently the state’s tallest building, is largely contingent upon what an undetermined hotel operator that could use the building wants, Joe Guziewicz, vice president of construction for Bedrock, which is Gilbert’s real estate development, management, leasing and ownership company, said in August.

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Marina in St. Clair Shores sold In a little bit of boat-related real estate news, the Harbor Nine Marina in St. Clair Shores sold for $1.15 million, according to Joseph Sowerby, partner for Mount Clemens-based commercial real estate firm Anton, Sowerby & Associates. His company represented the seller, Harbor Nine Storage LLC, which is registered to James Rini in Clinton Township. Maudi Moody of Grosse Pointe Woods-based Lucido Real Estate represented the buyers, Todd Hyatt and his wife Virginia Carstarphen out of Chicago, who plan upgrades including a new office, bathrooms, showers and docks. Moody also said the plan is to lease out a 7,100-square-foot restaurant that was included in the sale. The property is at 24030 Jefferson Ave. north of Nine Mile Road. A marketing brochure said the seller is retiring and had owned it for 50 years. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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LARRY PEPLIN FOR CRAIN’S DETROIT BUSIENSS

Former Aetna Inc. Chairman and CEO and Detroit native Mark Bertolini (right) talks with Crain’s Senior Editor Chad Livengood at Crain’s 2019 Health Care Leadership Summit.

Ex-Aetna CEO: Fixing health care starts outside doctor’s office

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Improving our health care system starts with improving our education system, former Aetna Inc. Chairman and CEO Mark Bertolini told the audience at Crain’s Health Care Leadership Summit. The Detroit native and executive who oversaw Aetna’s acquisition by CVS Health and now sits on the health care giant’s board said that the key to having a health care system that produces better outcomes and costs less must happen outside the doctor’s office or hospital. It starts with improving socioeconomic status, and that starts in school. The theme of this year’s Health Care Leadership Summit was “Filling the Gaps in Health Care” — the kind of gaps that come from lack of patient or provider knowledge, or gaps in communication, or the gaps created by social factors that can make it hard for a patient to find reliable transportation to the doctor. Those social factors are the key part of the equation, Bertolini said. Bertolini noted that 10 percent of life expectancy is determined by medical care, 30 percent is related to genetics — but 60 percent is determined by where you live. “Your ZIP code matters more than your genetic code,” he said. Such social factors can only be improved by improving education, he said. “What’s happening is this sort of vicious flywheel, ...underinvesting in social resources and social determinants, creating sicker people that cause our health care costs to go up, which then drives the social determinants lower and lower and lower,” Bertolini said. “Look at the discourse and incivility in our political dynamic, look at the opioid epidemic across the United States ... It’s a loss of hope,” Bertolini said. Life expectancy is falling. “As people that run businesses, we have often been taught that we

LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

Crain’s Associate Publisher Lisa Rudy talks with Rana Awdish, M.D., about her experience as doctor and patient.

should steward scarce resources and put at risk plentiful resources.” People were plentiful and financial resources were scarce decades ago. That changed, Bertolini said. Wages have been flat on an inflation-adjusted basis since 1972. Life expectancy has declined three years in a row in the U.S., Bertolini said. Creating “place” is crucial, to help people where they live. That was a key to the CVS-Aetna deal — the vast network of stores that are already neighbors — 10,000 stores within five miles of 85 percent of the U.S. public. Bertolini also talked about his recently published memoir, “Mission Driven Leadership,” which details his personal and professional experiences with the health care industry following a near-fatal skiing accident and his son’s unlikely survival of a rare form of cancer. The Leadership Summit was kicked off by Rana Awdish, M.D., a

critical care physician at Henry Ford Health System who recounted for the audience her experience of her own health care crisis — one in which she almost died. As her liver was failing, she heard the anesthesiologist say, “We’re losing her, she’s circling the drain.” Awdish survived, and that experience led her to write a book called “In Shock: My Journey from Death to Recovery and the Redemptive Power of Hope,” and she has used what she learned in her own patient experience to inform training for other doctors. Her book is used in more than 50 medical schools around the country. “Healing means to return to wholeness and this is the true purpose of health care,” Awdish said. The summit also featured breakout panel sessions on health care literacy, health care policy, health care innovation and health care, and presented awards to Crain’s annual Health Care Heroes honorees.

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OPINION COMMENTARY

Maybe UM should kick tires on DMC next

he University of Michigan’s planned Detroit Center for Innovation is a big bet on the city where the university was founded. But it’s hardly the only big bet that UM President Mark Schlissel is laying on the table. Five years into his presidency, Schlissel is clearly going to leave a big stamp on the university before he is done. The university has joined with the Kresge Foundation and others to attempt to create an innovative preschool-to-college campus at the former Marygrove University that aims to be a lab for experimentation with urban schools. And, biggest of all, the university just a month ago announced it is planning a brand-new hospital, at a price tag of almost a billion dollars, that it says will be the most advanced in Michigan, intended to supplement the existing UM hospital and take on the toughest cases that require the most sophisticated care. It’s enough to make you wonder what else might be coming. One thing that UM is known for that it doesn’t do much of in Detroit is health care. Now, the university isn’t going to build a hospital in Detroit. The Ann Arbor project is enough to keep Michigan Medicine busy — on both planning and fundraising — for the foreseeable future. And Detroit doesn’t need any more hospital beds. But there are still potential ways

MICHAEL LEE malee@crain.com

into the city for Michigan Medicine. One of those might be to consider buying the Detroit Medical Center. Earlier this year, the Legacy DMC board outlined a variety of concerns about DMC since its conversion to for-profit status and subsequent acquisition by Tenet Healthcare Inc. Among those concerns are a number of investigations over quality, as well as veering from the hospital system’s commitment to research (for its part, DMC says those concerns are unfounded). Those sounds like things an institution with the mission and financial muscle of UM could help with. Of course, that would mean acquiring some or all of the system from Tenet, which has said it is not for sale. Tenet also hasn’t been allowed to sell off or close pieces of the DMC. That will change after 2020, when a 10-year clock barring such moves, agreed to when the system converted to for-profit status, runs out. There’s reason to think that Tenet might soften its stance on unloading

DMC. The company over the past two years has sold off many of its hospitals as it tries to improve its financial performance. It has made major hospital sales in several urban markets, including Philadelphia, Houston and Chicago, as it tries to pay down its heavy debt load. DMC’s existing relationship with Wayne State University’s medical school might pose a roadblock, but not an insurmountable one. (Wayne State itself kicked around whether to

make a play to buy DMC last year.) The fact is that DMC is a safety-net hospital in Detroit, one of the poorest big cities in America. Running and improving that safety net would seem to be directly on mission for UM, and squarely within Schlissel’s own goals. It’s likely other hospital systems would be interested in DMC, or at least parts of it like Children’s Hospital of Michigan, if it came up for sale. With UM’s new interest in De-

troit, might UM be one of them?

whom President M. Roy Wilson hired without a search process, paying him $500,000 for a one-half-time appointment. Our union regularly files Freedom of Information Act requests for the compensation of Wayne State administrators. His true salary was concealed from us in the FOIA response. He was paid an additional annual $350,000 from an obscure source controlled by the administration. His pay, for a halftime position, was the highest of any public official in Michigan who did not coach an athletic team. The lack of transparency of the Wilson administration is shameful. Mr. Hefner was charged with negotiating a clinical partnership with WSU School of Medicine and the Henry Ford Health System that would replace its troubled relationship with Detroit Medical Center. Another less-visible task was to manage the Medicaid funds that came from the federal government, that were then sent through the state to the university for distribution to 23 agencies providing services to Medicaid recipients. The non-transparent way Mr. Hefner pursued negotiations with Henry Ford proved to be his undoing. Neither the board of governors, nor the faculty of the School of Medicine, were kept appropriately informed as the negotia-

tions proceeded. He proposed a relationship with Henry Ford that was grandiose, administratively intricate and difficult to understand. It became clear to the WSU BOG that under the proposed agreement they would be handing over public assets, for which they were constitutionally responsible, to a private institution. As this became fully realized by the WSU board, a majority (6 to 2), voted to have the president fire Hefner. When the University Physicians Group declared bankruptcy, it was revealed that under Mr. Hefner’s guidance, a substantial portion of the over $100 million in annual Medicaid funds that were intended to pass through to the service providers were being diverted to other purposes by the university as “institutional adjustments.” Lawsuits ensued and relations between the university’s Department of Pediatrics practice plan, one of the recipients of the Medicaid funds, and the university deteriorated and its departure to the medical school at Central Michigan University accelerated. The problems of the Wayne State board are politically complicated, but not impossible. They are not driven by the bad behavior of any single board member. They need to be solved by the board members themselves, not by the

governor. The irresponsible kibitzing of Ms. Kramer is not helpful to this effort. Charles J. Parrish Professor, Political Science Wayne State University President, WSU AAUP-AFT Local 6075 Detroit

in the status quo, but he worked far harder than many full-time employees, including early mornings, late nights, weekends and holidays. Say what you like about him and his direct approach, but his work ethic is unassailable. Mr. Hefner has been criticized by his detractors for an alleged lack of transparency, but I attended many, many meetings with all levels of leadership and faculty — including Professor Parrish — that dealt with complex and detailed issues, including the expansion of the partnership between WSU and Henry Ford Health System, and the maintenance of the relationship with the Detroit Medical Center, two critical paths forward for our medical school. Professor Parrish is wrong about Mr. Hefner, who worked tirelessly on behalf of the medical school. I hope he is correct in his assessment that the problems of the WSU Board of Governors, while complicated, are “not impossible.” So far, they have proven extremely distracting and potentially harmful. If the governor could help resolve them, I, for one, would be grateful. The Board of Governors’ impasse is endangering the secure future of the School of Medicine. Jack D. Sobel, M.D. Dean Wayne State University School of Medicine

Michael Lee is managing editor of Crain’s Detroit Business.

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.

LETTERS

Plea to governor on Wayne State board is pernicious advice Editor’s Note: The letter below ran last week on CrainsDetroit.com, and Crain’s received the following letter in response. We are publishing both. To the Editor: Readers of Crain’s Detroit Business have become accustomed to Mary Kramer’s comments on issues in which she has limited knowledge but strong opinions. Her plea to Gov. Gretchen Whitmer to intervene in the policy disputes between members of the Wayne State University Board of Governors is pernicious advice. Ms. Kramer outrageously compares the board situation to the removal by Gov. Jennifer Granholm of Mayor Kwame Kilpatrick, who was under criminal indictment. Her reference to the resignation of John Kelly from the board some years ago in a conflict of interest situation is also completely irrelevant. If the governor would follow her suggestion that she start removing officials for casual reasons of supposed “misfeasance,” the result would be constitutional and political chaos. The issues that split the WSU board were the actions of Mr. David Hefner,

Hefner comparison was insulting, Wayne medical dean says To the Editor: I was deeply troubled by a letter from Wayne State University professor Charles Parrish titled “Plea to governor on Wayne State board is pernicious.” I am troubled by both the writer’s false characterization of Mr. Hefner, and the enormous distraction from the many positive developments at Wayne State University and our venerable School of Medicine under the leadership of our president, M. Roy Wilson. I was — and remain — dean of the medical school during Mr. Hefner’s tenure as vice president for health affairs. It is grossly inaccurate to describe his appointment as “one-half time.” Mr. Hefner may have appeared controversial, as those who insist on change often are to those who are content to wallow

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

Restore education corps funding to ensure student success

he Michigan Education Corps provides critical support to Michigan children struggling with math and literacy, through one on one intervention and tutoring in some of our most challenged schools. At a cost of only $3 million, using AmeriCorps members as interventionists and leveraging substantial philanthropy, it’s a proven success for Michigan children and schools, yet became an unfortunate victim of the budget impasse. An unintended victim of the current budget battle, loss of funding for MEC means Michigan’s children will suffer. Michigan businesses lose, too, as we know that the inevitable outcome is fewer literate graduates ready to meet employer needs. I know that Gov. Gretchen Whitmer and the Michigan Legislature are committed to supporting high-performing public schools throughout the state of Michigan. Legislative leaders have introduced a series of supplemental spending bills that would restore funding to some of the line-item vetoes, but MEC is not included. Without it, thousands of children will be at risk of falling behind in literacy and math at a critical point in their education. A study earlier this year by Michigan State University indicated that Michigan suffered the largest decline in funding for its public schools among all states over a 20year period ending in 2015. Meanwhile the Lansing State Journal earlier this year indicated that enrollment at the majority of Michigan’s public colleges is down, often by a double-digit percentage. Meanwhile about 55,000 students statewide are failing to reach basic levels of literacy and more than 40,000 students don’t have a fundamental grasp on basic math based on recent M-STEP data. For the last seven years, Michigan Education Corps has been working to actively change that. And what MEC provides is working. The program is in 84 schools, 26 districts and 17 counties across the state, including Detroit Public Schools Community District and the Flint Community Schools. Statewide, MEC serves 3,000 children from preschool age through eighth grade. Of those, 80 percent of students are meeting or exceeding their literacy goals, and 74 percent are meeting their math benchmarks because of our intervention. We know that each high school dropout costs state taxpayers $292,000 over the cost of his or her life. In 2018, nearly 16,000 students who started ninth grade dropped out within six years. By doing the math, the potential cost to state taxpayers could exceed billions of dollars. The cost to businesses could be even greater. During the recent economic run-up, access to high-end talent has been a challenge for statewide businesses from manufacturing to retail. Many of those 3,000 students being assisted by the MEC each year are likely to stay in Michigan as adults. We can intervene early and help them get on track or we can pay the price later — a growing number of students that fall behind their classmates, possibly being held back. Many won’t graduate, creating greater

OTHER VOICES Phil Weaver

costs for our communities and businesses that need a well-trained workforce. Michigan Education Corps is a proven, national program that has flourished in other states including

Adient

Minnesota, Florida and Massachusetts. In fact, four separate studies across three states showed that students who participated in Reading Corps accelerated their literacy skills and performed better than comparable students who did not. Moreover, students of color, students eligible for free and reduced-price lunch and English language learners all made noteworthy gains toward closing their learning gap. The current cut puts even that at risk. It’s my hope, and that of my colleagues at Hope Network and in the local community, that Gov. Whitmer and the state Legislature put students, families and businesses

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Phil Weaver is president and CEO of Hope Network, a nonprofit organization providing health care and life services to more than 20,000 people in 240 communities across the state. Learn more at hopenetwork.org.

American Axle and Manufacturing

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Wayne State University’s College of Engineering would like to thank these industry partners for opening your doors and welcoming our students as interns. Your continued partnership in Detroit and around the globe ensures that together we’re preparing Wayne State students to be ready for the real world even before they earn a degree. Thanks to you, eight out of 10 of our students complete at least one internship before they graduate, providing them with career opportunities as soon as they leave college. Students who are as prepared for the real world as they are for the classroom. That’s Warrior Strong.

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EarthLink

Federal Mogul Motorparts

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Clark Construction

DTE

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An unintended victim of the current budget battle, loss of funding for MEC means Michigan’s children will suffer. Michigan businesses lose, too, as we know that the inevitable outcome is fewer literate graduates ready to meet employer needs.

first. We all want a better tomorrow for Michigan, and this is one program that is making that a reality. I believe I echo the wishes of thousands of families, entrepreneurs and business owners directly impacted around the state that Michigan Education Corps funding should be returned as quickly as possible.

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FOCUS

TECHNOLOGY & MOBILITY

Will the American Center for Mobility live up to its promise?

LON HORWEDEL FOR CRAIN’S

An autonomous vehicle weaves between a car that went left of center to avoid a pothole and a cyclist that entered the road from the car’s right during a demonstration at the American Center for Mobility’s live demonstration day Oct. 25.

It’s been a bumpy start, but plans are in the works to branch out its offerings By Dustin Walsh dwalsh@crain.com

Less than two years ago, the American Center for Mobility — hailed as the world’s preeminent proving ground for advanced safety and automated vehicle technologies — opened in Ypsilanti Township. The center was touted as an example of how public-private partnerships can solve tomorrow’s challenges. It’s run by a nonprofit in conjunction with the state’s Department of Transportation, the Michigan Economic Development Corp., the University of Michigan, Ann Arbor’s Spark business accelerator and Ypsilanti Township. The goal was to ensure that the 70 percent of all U.S. automotive research and development work stays in Michigan as the industry moves toward driverless cars. The state approved $35 million for the nonprofit that controls the joint partnership for the completed first phase of construction, with the total cost of the center to cost at least $135 million. So far, the road has been bumpy. The timeline for widespread autono-

A future development site on the campus of the American Center for Mobility.

LON HORWEDEL FOR CRAIN’S

mous vehicle deployment continues to be pushed back. Many executives believed driverless vehicles would be widely available by 2025, but most experts believe now it will be 2030 or later. The center also competes against Michigan’s public roadways, which are open and free to autonomous vehicle testing thanks to legislation signed into law by former Gov. Rick Snyder in 2016. Only six months after it opened, much of its top leadership was terminated, including founding CEO John Maddox, who was let go in August 2018 with a $200,000 severance, according to court records. The center’s board wanted to “go another direction,” Maddox told the Washtenaw County court during his divorce proceedings last year. In February, the board hired Michael Noblett, global segment lead of automotive industry sales for Santa Clara, California-based semiconductor manufacturer Intel Corp., to replace Maddox. Several sources, including those interviewed here, declined to discuss why Maddox and the other officials were terminated. SEE MOBILITY, PAGE 12

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

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SPECIAL REPORT: TECHNOLOGY & MOBILITY

MOBILITY FROM PAGE 10

Since then, the center has sought to increase users and build out its offerings, including an operations center to house companies looking for a more permanent presence on the grounds. The construction of the operations center is currently under planning. “It’s not taken off as quickly as we had hoped,” Mark Chaput, COO of ACM, told Crain’s at an event on the grounds on Oct. 25. “We were not significantly surprised as we’re competing with free. Places like MCity and other proving grounds can be significantly cheaper depending on what users are looking for, so we have to work for it.” Paul Krutko, president and CEO of Ann Arbor Spark and ACM board member, said ACM is out of startup mode now and is ready to welcome a broader base of users. “The thinking behind (ACM) was it was something Southeast Michigan needed to do to be competitive with the rest of the world,” Krutko said. “The U.K., the Koreans, Chinese and the EU are all spending big national government dollars to build this type of facility. ACM is an anchor to position Southeast Michigan into the future. Collectively, this organization is going to be very important to the economic opportunity of our region. We’re now well positioned and I expect this facility to grow and get more and more usage.” The stakes for its success are high. Seven companies, including Toyota and Visteon Corp., paid $5 million apiece to be considered founding members of the facility. “Supporting” member Subaru and five other companies paid $2 million for ongoing use of the track. It’s not just for traditional automakers and suppliers. AT&T and Microsoft have been using the facility to advance next-generation automotive connectivity. ACM is a 500-acre testbed with a 2.5mile highway loop, a multi-lane tunnel, testing garages, urban environments and other features. Roughly 200 acres remain undeveloped, Chaput confirmed. Upton Bowden, director of advanced technology for Visteon, said the convenience of ACM, located roughly seven miles from Visteon’s headquarters in Van Buren Township, has made its investment worth it. “We get quite a bit of value out of the facility,” Bowden said. “Its proximity to our offices and its offerings provide us with what we were really looking for in a proving ground.” Visteon previously tested its advanced driver-assistance systems and autonomous technology at UM’s MCi-

TECH

FROM PAGE 11

Eighteen projects are competing in the challenge, in one of two tracks — a virtual track, where teams develop solutions to challenges in a Robotics Operating System, and a systems track in which teams create physical prototypes to compete in a real-world environment. Seven teams are competing in the virtual track and 11 teams are competing in the systems track. Kitchen’s project, the Bayesian Adaptive Robot Control System, is competing in the virtual leg of the challenge. It’s a visual mapping and

“We’re going to try to find a way of developing good general solutions, then attaching teams to the general solution, and then optimizing everything.” Sarah Kitchen

communication system for drones operating in underground environments. Her goal is to identify a core solution to the problem of navigat-

ing these conditions that can be adapted to a variety of situations and draw on an array of potential robotic assets from multiple federal or local agencies that may be involved in a particular real-world scenario. “We’re going to try to find a way of developing good general solutions, then attaching teams to the general solution, and then optimizing everything,” she said. Cash prizes will be awarded to self-funded teams in each of the three circuits: $250,000 for first place, $150,000 for second place and $100,000 for third place. Kitchen’s team is funded by DARPA under a contract that pays about $250,000 per year, and is not eligible for cash

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LON HORWEDEL FOR CRAIN’S

Above, Miles Webber of Keysight Technologies flexes as he shows how his company’s hand-held thermal camera works during the American Center for Mobility’s live demonstration day in Ypsilanti. At left, Gordon Wallace, test manager for Elekrobit (center), talks to FCA U.S. Engineer Konstantin Kim.

LON HORWEDEL FOR CRAIN’S

The interior of S-E-A’s autonomous vehicle on display after running a demonstration during the American Center for Mobility’s live demonstration day on Oct. 25 in Ypsilanti.

prizes in the circuit competitions, though it will be eligible to win prize money in the final comprehensive challenge in 2021. A total of $5.6 million in prizes will be awarded over the three years of the program.

Automotive applications Michigan’s connection to the automotive industry and its emerging autonomous vehicle sector make the state a key beneficiary of the technology being developed in the DARPA challenge, Kitchen said. “There’s a lot of interest in sensor research associated with autonomy for autonomous vehicles that MTR

is working on,” said Kitchen. “There’s also some crossover in terms of the sensors and the general types of solutions that we’d be applying to these [subterranean] problems.” Chung noted that several previous DARPA challenges have been pivotal to advances in the autonomous vehicle industry. “The DARPA Grand Challenge in 2004 and the Urban Challenge in 2007 set in motion the driverless autonomous vehicle industry we see today,” he said. “Many of the engineers and technologists who took part in those early events are now helming autonomous vehicle development for companies.” Chung announced winners in the

Chaput

ty, a 32-acre mock city and proving ground on the university’s North Campus in Ann Arbor. Also proving to be useful to Visteon is the availability of the resources at ACM. Bowden said the supplier can get access to ACM any day it wants, which is about five to 10 times per month. It costs roughly the same as MCity because Visteon can rent the space on a shared basis, meaning other users can be on site at the same time as Visteon — though other users are only on site about half the time, Bowden said. This, of course, speaks to how infrequently the site is used, but Bowden doesn’t anticipate that to last much longer. “From our standpoint, we don’t struggle reserving days,” Bowden said. “But we look at the facility as basically new. One thing we know is that the volumes for ADAS and automotive driving system is going to see rapid growth. As that happens, the need for a facility like ACM is going to grow too.” Chaput said interest in ACM is steadily growing as it settles into regular operations after construction. “We’ve had more visits (from potential users) in the last four months than we saw in the first year,” Chaput said. To supplement industry demand, ACM has branched out into government contracts. In 2018, the center secured a government contract to study truck platooning — a group of trucks accelerating, braking, etc. simultaneously through automated systems — with the U.S. Army and Tank Research, Development and Engineering Center, University of Michigan-Dearborn, MDOT, U.S. Department of Energy’s National Renewable Energy Laboratory and Alabama’s Auburn University. It’s also partnered with MCity, MDOT and the city of Detroit to study automated driving simulations with plans to recreate Detroit city roads on the site. “The use is daily at this point. We have 10 different environments available,” Chaput said. “Yes, we’ve been a site in transition, but we’re starting to really establish operations and are really opening up this facility to the entire industry.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh Tunnel Circuit competition last week — Kitchen’s BARCS team won second place. They’re now hard at work on the Urban Circuit, which will take place in February 2020. That will involve expanding their repertoire from small unmanned ground vehicles to unmanned aerial vehicles that rely on stereo cameras for vision. “I am consistently impressed by the diverse solutions — ranging from novel platforms to interesting concepts of operation — which reflect the diversity of competitors,” said Chung. “We have a variety of participants, from technology companies and university researchers to hobbyists.”

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Dealership group co-founder Maureen LaFontaine dies at 73 By Kurt Nagl knagl@crain.com

Maureen LaFontaine, co-founder of LaFontaine Automotive Group, died Monday at the age of 73. She was hospitalized Oct. 25 and died unexpectedly, the auto dealership group said in a news release. No cause of death was given. Maureen started selling cars part time with her husband, Michael, while raising their children. In 1980, they founded their namesake auto group, based in Highland Township, and expanded it into 36 retail franchises and seven collision centers, including 17 locations in Michigan. The company employs more than 1,300. Maureen had been involved in the company up until her death, but in 2008, she and Michael handed over day-to-day responsibilities to their children Ryan, who is chief operating officer, and Kelley, who is vice president. “Known affectionately as Madre to all that knew and loved her, my mom was a true firecracker and lived life to the fullest,” Ryan LaFontaine said in the release. “Her motto was ‘Faith, Family and Friends,’ and we were all inspired by her dedication to giving back and always putting the customer and community first.” LaFontaine Automotive is the third-largest metro Detroit-based dealership group, according to Crain’s research. It ranked 57th on this year’s Automotive News list of the

LAFONTAINE AUTOMOTIVE GROUP

Maureen LaFontaine founded LaFontaine Automotive Group in 1980. She died Monday.

largest auto dealership groups in the nation. LaFontaine’s Dearborn and Highland dealerships were closed Saturday for LaFontaine’s funeral. The services were to be held at the flagship LaFontaine Cadillac, Buick, GMC dealership in Highland. The family is directing donations to the U CAN-CER VIVE Foundation. It was established by the LaFontaine family to find a cure for cancer — a mission inspired by Ryan’s successful battle with Hodgkin’s lymphoma. He was diagnosed with the disease in

2008 at age 29 and was successfully treated. The nonprofit has raised $2.5 million since launching in 2016. Maureen LaFontaine took a hands-on approach to running the business, making customers feel valued and happy to receive the “LaFontaine Family Deal.” That attitude helped the auto group retain workers as the industry struggles with high turnover rates. “We don’t turn over people. We have people that grow, that make a very good living and get compensated for the job that they’re doing. It’s an investment in them,” Ryan LaFontaine told Automotive News earlier this month. Kelley LaFontaine said in the release that the culture created by her mother will continue steering the company. “We lost our mother, best friend, mentor and guiding light,” she said. “There is no question my mom’s vision, leadership and heart, are at the core of everything we do at LaFontaine Automotive Group.” Maureen received the 2019 Women in Retail Network Premier Dealer Award, the Women’s Automotive Association International Spirit of Leadership Award in 2014 and was recognized by Automotive News in its list of 100 Leading Women of 2010. She is survived by husband, Michael; children Ryan, Mike Jr., Kelley and Christie; and 15 grandchildren. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

Anthony Viviano, owner of Sterling Heights Dodge, dies at 87 By Kurt Nagl knagl@crain.com

Longtime metro Detroit auto dealership owner Anthony Viviano died last Tuesday at age 87. His health had been declining for the past year-and-a-half, said his grandson Tony, who learned the business under the tutelage of his grandfather. Viviano owned Sterling Heights Dodge Chrysler Jeep Ram, which he started in 1965. He previously owned Meadowbrook Dodge, which closed in 2008 amid the economic downturn, and Dollar Rental Car at Detroit Metropolitan Airport. “He was the definition of the dealership owner,” said Tony, who works as business development manager at Sterling Dodge. “He was the prototypical guy that would evolve through the times.” When Viviano opened his business on Van Dyke Avenue in a then-rural part of Macomb County more than 50 years ago, the dealership was surrounded by farmland. To draw people down the road to buy cars, he would hold fairs in his parking lot with farm animals and stunt cars, Tony said. The strategy raised eyebrows, and attention for the dealership. Viviano graduated from De La Salle High School and attended University of Detroit. He was an accomplished pianist and accordion player. He was also an avid traveler who

AUTOMOTIVE NEWS

Anthony Viviano owned Sterling Heights Dodge Chrysler Jeep Ram, which he started in 1965.

loved animals and maintained a large Japanese koi pond. Most of all, he loved selling cars. Although a strong motivator, dollar signs didn’t stimulate him as much as being in the shop and just talking to people. “This was his golf course,” said Mike Manzo, assistant sales manager at Sterling Dodge who worked with Viviano for 30 years. Viviano was involved in the company even in his later years. He told Automotive News in 2015 that he still showed up to work every day out of

pride for a business he started with just “17 cents in my pocket.” “He never officially retired,” Tony said. “He walked out of here and went to the hospital.” He suffered a series of ailments that largely kept him out of the dealership in his last year-and-a-half, Tony said. Despite his attachment to Sterling Dodge, he built a legacy that went well beyond the dealership’s doors. Viviano used his business acumen to raise money for causes close to his heart, such as the Southeast Michigan Chapter of the March of Dimes and Sterling Heights Lions Club. He served as chairman of the Henry Ford Macomb Hospital Healthcare Foundation and a board member at the hospital. He had also been commander of the sheriff reserve units for the Macomb County Sheriff Marine Division. Viviano’s sons Sal and Nino inherit the dealership, which employs 120 people. Tony said his grandfather’s accomplishments were made possible by his wife of 58 years, Catherine. “Couldn’t do it without grandma — she was his rock,” Tony said. Viviano is survived by wife Catherine; sons Sal and Nino; daughters Mary and Liz Viviano; brother Peter; eight grandchildren and six great-grandchildren. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

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JPMorgan Chase investing $675,000 to help 20 nonprofits By Sherri Welch swelch@crain.com

JPMorgan Chase is teaming up with IFF and Fiscal Management Associates to bring a 14-month program aimed at strengthening the financial capacity and position of nonprofits led by people of color and/or serving low-income communities of color to Detroit. As part of its $200 million investment in Detroit, JPMorgan Chase has contributed $675,000 to nonprofit community development financial institution IFF to implement the Stronger Nonprofits Initiative with 20 Detroit-based nonprofits. New Yorkbased Fiscal Management Associates will provide the training on fiscal management to the leaders of those nonprofits. Leaders from 10 Detroit nonprofits are participating in the first of two cohorts for the program which launched Oct. 29. They include: J Detroit Police Athletic League J Develop Detroit J Michigan Community Resources J Developing Kingdoms in Different Stages J FoodLab Detroit J Goodwill Industries J Mack Avenue Community Church Development Corp. J Neighborhood Service Organization J Southwest Detroit Environmental Vision Project J The Yunion Participants will work alongside other nonprofit leaders to improve financial management capacity and gain skills they need to build the net assets of their organizations. Leaders of those nonprofits will receive training through a series of fullday workshops and one-on-one sessions on financial management, capital access, facility management, and the role real estate analysis plays in the financial health of their organizations. The Detroit initiative will build on learnings from the program’s launch in Chicago between summer 2017 and this past summer, the organizations said in a release. Following the completion of the program, 20 nonprofits primarily serving Chicago’s south and west sides have implemented lessons learned from the program to improve their budgeting process, access capital, tell a better financial narrative and forge new connections to maximize their impact. Thirteen of the Chicago nonprofits are either planning or embarking on real estate projects that the program helped them initiate. Among them was the North Lawndale Employment Network, which was able to purchase a building with support from IFF and other funders, said Amalia Kontesi, a spokeswoman for JPMorgan Chase, in an email. That site now houses a program to help develop job skills for people living in Chicago’s underserved communities, with a focus on people with criminal backgrounds. Another Chicago nonprofit, New Horizons, was able to save $10,000 per month through refinancing, she said. Through the program, JPMorgan Chase is not only helping to build the capacity of nonprofits that are key to

maximizing the impact of its $200 million commitment in Detroit’s economic recovery, “but also investing in the talent of nonprofit leaders of color who have traditionally not had the same access to opportunities to grow their organization(s),” said September Hargrove, philanthropy program officer, in the release. CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

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

The Detroit Police Athletic League is among the organizations that will benefit from the training in financial operations through the JPMorgan Chase program.

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Consumers tests storage batteries, could improve grid By Jay Greene jgreene@crain.com

Consumers Energy Co. is testing battery storage capabilities in three pilot projects that could help customers cut costs, limit time without electricity during outages, reduce grid problems and possibly stave off future brownouts. During the summer, the Jackson-based energy company began installing batteries in 50 homes in Caledonia, a suburb of Grand Rapids, in its first residential storage pilot program. The area was picked based on an analysis of best locations and because it was an area contained in a single circuit, said Brian Wheeler, a company spokesman. “We are conducting this pilot to test and measure how aggregated battery storage may have the potential to offer benefits to Michigan’s electric grid and our customers,” Ryan Kiley, Consumers’ executive director of product development, said in a statement. Homeowners who qualified for Consumers’ pilot were limited to those customers who did not have solar panels or backup generators wired to their home electrical systems and live in a single-family home. They also had a partially or fully shaded space near the side of the home that can accommodate a battery storage system that is about 3-feet wide, 6-feet tall and 2-feet deep. “We are testing to understand the

CONSUMERS ENERGY CO.

A battery storage system on the campus of Western Michigan University in Kalamazoo that can store 1 megawatt of electricity, enough to power 1,000 homes.

different values that batteries could provide to the overall grid, such as potential investment deferral, resiliency and reliability, while also providing backup of critical loads for pilot participants,” Kiley said. To help it measure energy storage and monitor data, Consumers has contracted with San Francisco-based Sunverge, a distributed energy resource control provider that also offers rooftop solar and home energy management systems. Sunverge is providing its software and energy storage systems to each home, said Martin Milani, its CEO.

The lithium-ion polymer storage batteries were manufactured by Kokam, a South Korean company. “We worked with Consumers Energy to evaluate the energy provider’s distribution circuits and identify grid locations suitable to test the potential benefits and value from behind the meter battery storage,” Milani said. “Consumers Energy used this analysis to select a circuit in Michigan’s Grand Rapids area to conduct the pilot.” Milani said Consumers hired Sunverge, which provides battery storage systems and support to thousands of

homes in multiple states, to help them better understand how they can use battery storage to support the electric grid. He said many utilities are testing battery storage as one solution to reduce carbon gas emissions, cut operating costs and use renewable energy more effectively. DTE Energy Co. in Detroit this summer received approval from the Michigan Public Service Commission to launch a “large customer demand storage pilot” that includes a solar and battery storage system at the Ford Motor Co. Research and Engineering Center in Dearborn, said DTE spokesman Peter Ternes. Other pilots on battery storage are planned, he said. Consumers has a goal of “generating 40 percent of their energy from renewable sources by 2040,” said Milani, citing Consumers’ recently approved integrated resource plan. “They can use battery storage as one method to accomplish this.” Over the past year, Consumers CEO Patti Poppe and other executives have been describing the company’s energy plan. Its IRP, approved in June, calls for Consumers Energy to own up to half of future additional capacity and to buy the rest from third parties. “There are a variety of providers for solar energy. Given what a large role we see it playing in the future, we wanted to make sure that any of the new renewable energy we’re adding to the system is the best

price,” Poppe said. Consumers also will boost energy-efficiency efforts, including by incentivizing customers to reduce their electricity use during peak periods. It also plans to attack the demand side of the equation by ramping up efficiency programs and using data-driven technology to guide incentives. By 2040, renewable energy could account for 43 percent of Consumers’ total power. Another 10 percent would be from natural gas, 6 percent from hydroelectric pump storage and battery sources and the remaining 41 percent of Consumers’ portfolio would come from regional market purchases, Consumers IRP says. Battery storage, said Milani, could potentially be used to account for a greater percentage of power mix for utilities such as Consumers and DTE. He said there are many other benefits from battery storage for energy companies and their customers. “The homes are connected in a feeder to their network grid. The battery storage provides multiple benefits,” Milani said. “One, the use of energy storage can lower Consumers’ wholesale market costs. You can purchase and store electricity at the cheapest (price) available and discharge energy during peak hours when electricity is the most expensive.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Business, nonprofits grant $1.4M for Cody programs By Sherri Welch swelch@crain.com

A group of private funders is making a combined $1.4 million grant to City Year Detroit to bring AmeriCorps volunteers to Cody High School on Detroit’s west side. Funders include DTE Energy Co., General Motors Co., Quicken Loans Inc., the Skillman Foundation and Trinity Health. AmeriCorps volunteers will provide one-on-one and small-group tutoring to students, mentoring, schoolwide events and after-school programs at Cody High School, in an effort to build “near-peer” relationships with students. Those relationships have been shown to increase the number of students who achieve proficiency in math and reading and graduation rates, according to a joint news release issued by the funders. They noted that a 2015 study by Policy Studies Associates found that schools that partnered with City Year were two to three times more likely to see improvements on English and math standardized tests. The funding will support AmeriCorps volunteer work at Cody this year and next. It expands an existing partnership between Detroit Public Schools Community District and City Year Detroit, which operates in 11 district schools, including Gompers Elementary-Middle School, which feeds into Cody High School, the groups said.

CITY YEAR DETROIT

City Year Detroit AmeriCorps members worki with students at Mary Mcleod Bethune Elementary-Middle School in Detroit.

City Year AmeriCorps members serve as tutors, mentors and role models in schools, providing students with academic and social-emotional supports to encour-

age them to attend class, work hard, dream big and graduate from high school on time and on track for future success. “It’s exciting to see City Year’s ex-

pansion grow throughout our district. City Year’s work is directly aligned to our vision to provide consistent and day-to-day academic, behavior and attendance support to

our students,” Nikolai Vitti, superintendent of Detroit Public Schools Community District, said in the release. The expansion is also consistent with the district’s plan to provide more student services in its neighborhood feeder patterns and is an example of how “philanthropic partners are aligning their investments with our vision to rebuild the district,” he said. The new support to City Year is being made through the Cody Rouge Initiative, a public-private collaboration to support a resident-led vision to ensure the Cody Rouge neighborhood is a great place to raise children. Additional partners in the initiative include the Cody Rouge Community Action Alliance, Detroit schools and the Detroit Planning Department. Cody Rouge is among the neighborhoods the city is supporting through its Strategic Neighborhood Fund. For its part, the Quicken Loans Community Fund believes quality and equitable education are “the only way to prepare the next generation of Detroiters for the jobs that will both drive our city forward and end intergenerational poverty,” Laura Grannemann, vice president of strategic investments, said in the release. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

WE’RE UNVEILING A NEW LOOK AND NEW FEATURES STARTING NOV. 11 WHATS NEW: A refreshed print design featuring sleek new fonts and an updated layout A revamped weekly briefing column, called Need to Know, that gives readers a quick, digestible analysis of the most important news The Conversation Q-and-A column that features an array of people and helps readers get to know them and their organizations

RETURNING FEATURES: Real Estate Insider offering weekly inside detail, tips and other notes on what’s going on in real estate

Crain’s Forum a monthly look at public policy issues affecting Detroit and Michigan’s economic future …and more!

Interested in aligning your brand with these features? Email Lisa Rudy at lrudy@crain.com

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

CALENDAR WEDNESDAY, NOV. 6 Integr8 — The Industry 4.0 conference. 7:30 a.m.-6 p.m. Automation Alley. Integr8 is a conference focused on the eight core smart technologies of the Fourth Industrial Revolution: Internet of Things, Big Data, Robotics, Artificial Intelligence, The Cloud, Cybersecurity, Additive Manufacturing and Advanced Materials and Modeling, Simulation, Visualization and Immersion. Event will include Industry 4.0 roundtables in addition to breakout sessions; national and international keynote speakers and panelists offering insights on how to capitalize on the rapid transformation of global manufacturing while ensuring the workforce is prepared for the changing job landscape. The Smart Technology Expo will highlight the technology options available to facilitate the digital transformation. TCF Center, Detroit. $449 members; $599 nonmembers. Contact: Cathy Steiner, email: info@automationalley.com; phone: (248) 4573200.

THURSDAY, NOV. 7 Professional Edge Workshop. 8-9:30 a.m. Birmingham Bloomfield Chamber. The Professional Edge Workshop will focus on “Communicating Your Business in a 2020 World.” Session will provide an overview on traditional and new commu-

DEALS & DETAILS nications tools and guidance on how to share an organization’s story effectively to help advance business objectives. Birmingham Public Schools, 31301 Evergreen Road, Beverly Hills. Free. Contact: Kelly Bennett, email: kellyb@bbcc.com; phone: (248) 4307688. The Importance of Diversity in the Growth of Your Business. 11:30 a.m.-1:30 p.m. Washtenaw Economic Club. Marlin Williams, assistant vice president, Economic Development at Wayne State University, will talk about how diversity programs are creating environments that foster competitive advantage, innovation and economic advancement. Morris Lawrence Building, Ann Arbor. $77.50. Website: wec.wccnet.edu

Champions — Angela & Herman Moore. 7:30-9 a.m. Nov. 12. Leadership Oakland. Leading Together: Work-Life Integration from a Successful Dual-Career Couple — Angela and Herman Moore discuss how they balance two successful careers while raising a family. Angela Moore is a business owner, coach, speaker and advocate for personal responsibility. Herman Moore, who played for 12 years in the NFL, is CEO of Team Business Solutions, a print management and promotion solutions company. MSU Management Education Center, Troy. $45 members; $65 nonmembers. Contact: Susan Hollady, email: shollady@leadershipoakland.com; phone: (248) 495-4781.

UPCOMING EVENTS

Your Company’s Crisis: What You Need to Know Now. 8-11:30 a.m. Nov. 12. Detroit Regional Chamber. Program will include advice from human resources, legal and public relations experts to prepare for a crisis. Three examples of crises will be covered at this event: de-escalating disasters, protecting an organization’s image and solutions for cybersecurity crises. Complimentary breakfast will be provided. The Henry Hotel, Dearborn. $75 members; $95 nonmembers. Contact: Andrea Rayburn, email: arayburn@detroitchamber. com; phone: (313) 596-0340.

Leadership Oakland Breakfast of

Navigating

ASE Annual Summit. 5-8 p.m. ASE. The 2019 Michigan HR Executives of the Year will be honored at ASE’s 16th Annual Summit. The event will feature a keynote presentation by Ted Abernathy, managing partner at Economic Leadership LLC, who will speak about 10 trends that will impact every employer in the future. Detroit Athletic Club. $99. Contact: Heather Nezich, email: hnezich@ aseonline.org; phone: (248) 2238040.

Change:

How

the

Shifting Health Care Landscape is Accelerating Innovation. 11:30 a.m.-1:30 p.m. Nov. 13. Detroit Economic Club. Tim Wentworth, president of Express Scripts and Cigna Health Wentworth Services, will discuss the ways uncertainty in the health care industry is helping to drive innovation and how technology is shaping the future of health care. The Masonic. $45 members, $55 guests of members. Website: econclub.org EMU Digital Marketing Workshop: The Speed of Change. 7:30 a.m.-2 p.m. Nov. 15. Workshop will focus on how the transition to digital has made rapid, data-driven decision making a critical component in marketing, business and government. The Digital Marketing workshop, based on the theme, “The Speed of Change,” will feature Garlin Gilchrist, lieutenant governor of Michigan, as keynote speaker. He will discuss using public data and technology to address the pressing concerns of Michigan. Eastern Michigan University Student Center, Ypsilanti. $70; $50 before Nov. 1. Contact: Bud Gibson, email: fgibson@emich.edu; phone: (734) 487-3094.

MERGERS & ACQUISITIONS J PowerVac of Michigan Inc. and ServicePro, Novi, provider of hydro excavation, pipe inspection, jet/vac, plumbing, electrical, mechanical, and other repair and maintenance services, was acquired by private investment firm Pillsman Partners, Greenwich, Conn., private equity firm Peninsula Capital Partners LLC, Detroit, and management. The transaction closed Aug. 30, and details were not disclosed. Websites: yourworkorder.com, peninsulafunds. com, pillsmanpartners.com

NEW PRODUCTS Gale, a Cengage company, Farmington Hills, an educational publishing company, launched Gale In Context: For Educators, to provide educators standards-aligned lesson plans and instructional materials for curriculum development and classroom instruction. Website: gale.com/ foreducators J ProQuest LLC, Ann Arbor, an information and technology company, is offering ProQuest One Literature, a literature collection of works by authors who have been marginalized with additional multi-media and multi-format resources. Website: proquest.com J

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Advertising Section

PEOPLE ON THE MOVE

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

BUSINESS DEVELOPMENT

FINANCIAL SERVICES

LAW

NONPROFIT

Mectron Inspection Systems

Bank of Ann Arbor

Young & Associates

Mectron is proud to announce Andrew Hanna has been promoted to Director of Business Development. Part of his new responsibilities include overseeing special projects partly funded by three new grants from the United States government. The three grants assist Mectron with cyber security, aid to help with foreign competition, global marketing, and technological advancements. The companywide improvements will help Mectron with current and future Department Of Defense projects as well as others.

Michelle Swartzendruber joins Bank of Ann Arbor, serving as Vice President and Commercial Loan Officer. With nearly 20 years of experience in the banking industry, she has previously focused on Commercial Real Estate, as well as the Healthcare, Education and Non-Profit segments. Michelle earned her bachelor’s degree in finance from Michigan State University. She is an active member of Inforum and Association for Corporate Growth (ACG).

Young & Associates attorney Jaye Quadrozzi has been appointed as Oakland County’s representative to the Great Lakes Water Quadrozzi Authority’s Board of Directors. She has a long and successful history with Oakland County dating back to her representation during a long federal lawsuit under the Clean Water Act involving the Detroit Water and Sewer Department. She also represented the county in the Detroit bankruptcy case which resulted in the formation of the GLWA. “Jaye will be a tremendous asset to the GLWA and Michigan’s residents,” Young said firm founder Rodger Young. “Her experience with the Huron-Clinton Metropolitan Authority Board and deep understanding of, and passion for, the issues, challenges and opportunities will serve the mission well.”

Junior Achievement of Southeastern Michigan

Rockford Construction

FINANCIAL SERVICES

Rockford Construction, a nationally recognized construction, development, and property management provider, is pleased to announce the addition of Kent Jackson to its Detroit leadership team as Vice President. As a lifelong Detroit resident with 25 years of construction management experience, Kent will focus on business development, preconstruction and project management. Kent is a certified LEED Accredited Professional and a State of Michigan Licensed Builder.

First Business Bank

EDUCATION

HEALTHCARE / PROVIDER

Regina High School

PsyGenics Inc.

Regina High School’s Board of Directors is pleased to announce that Mary Treder Lang will become the second president of the private, Catholic college preparatory high school for young women, effective November 4, 2019. Treder Lang, a certified public accountant and chartered global management accountant, has extensive experience related to marketing, business development, nonprofit growth, and institutional advancement. She currently serves on Eastern Michigan University’s Board of Regents.

We are excited to announce that Tamara Hagar has been named Chief Clinical Officer. She will be responsible for guiding and engaging our providers and clinical staff, promoting clinical effectiveness and advancing our culture of excellence. Tamara has over 15 years of mental health experience with expertise in strategic planning, program oversight, compliance, fiscal responsibility, workforce development and accreditation. Tamara will work out of the Detroit, Dearborn and Trenton locations.

Mark Davis has nearly 20 years of experience in SBA lending. He helps business owners purchase new businesses or acquire commercial real estate with SBA loans, executing all phases of loan origination from initiation to closing. Mark has served business owners in a range of industries throughout the country, including food, manufacturing and distribution, veterinary, assisted living centers, recycling centers, and self-storage properties.

MEDIA & ENTERTAINMENT

Fox Sports Detroit The Detroit Sports Commission (DSC) announced Greg Hammaren, Senior Vice President/General Manager of the Fox Sports Detroit (FSD) regional sports network, has been named Chairman of the 2020 NCAA® Men’s Frozen Four® Local Organizing Committee. The Frozen Four, hosted by the DSC and Michigan State University, will take place on April 9 & 11 at Little Caesars Arena. The event returns to Detroit for the seventh time and the first time since 2010. For more information, visit ncaa.com/frozenfour.

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CONSTRUCTION

Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

Junior Achievement of Southeast Michigan (JASEM) has named Crystal T. Smith, Vice President of Philanthropy. JASEM provides Financial Literacy, Work Readiness and Entrepreneurship programming to 60,000 plus students annually. Crystal brings over 25 years of fundraising skills from a diverse background of major Metropolitan Detroit Nonprofits. She will be leading the helm in Philanthropic contributions and various strategic partnerships for JASEM’s 10-county program service area.

PROFESSIONAL SERVICES

BDO USA Matt Manosky assists both private and public companies with various tax planning and compliance matters. His primary area of focus is multi-national companies who face challenges navigating the ever-changing global tax environment. He also serves clients in many industries, including private equity, manufacturing and distribution, professional services, technology and retail.

SOFTWARE

Clinc Tom Cashman has joined Clinc as Executive Vice President, Global Sales and Alliances. Cashman will oversee the sales team and will be responsible for furthering Clinc’s leadership in conversational AI into industries like health, automotive, gaming and retail. Cashman brings over 25 years of industry experience working in various global enterprise software sales roles in highly competitive markets. Prior to joining Clinc, Cashman was EVP sales and global alliances at Tintri, Inc.

SPOTLIGHT GM names Parks head of purchasing, product development

Doug Parks, a longtime General Motors Co. engineer who oversees its autonomous and electric vehicle programs, will become the Detroit-based a u t o m a k e r ’s global product development and purParks chasing chief, the company said Wednesday. Parks will take over product development duties from President Mark Reuss and assume responsibility for purchasing and supply chain from Steve Kiefer. The moves come as GM prepares to make a major push into electrification of its lineup. CEO Mary Barra this week said the company expects to spend more money developing EVs than internal-combustion vehicles over the next five years. Kiefer, GM’s purchasing boss for the past five years, will be president of GM South America and International Operations. Parks, 58, and Kiefer, 56, will report to Reuss, who is expanding his role as president to oversee GM’s regional businesses. GM’s top officials in North America and China, who previously reported to Barra, also will report to Reuss now.

Zeal Credit Union names new CEO

Zeal Credit Union has promoted its chief strategy officer to the role of president and CEO. Julie Kreinbring, 47, started the job at the Livonia-based credit union We d n e s d ay , replacing AnKreinbring thony Carnarvon, who stepped down in August, according to a news release. He had been with the organization since 1987 — as CEO since 2003. Kreinbring, who has 20 years of leadership experience at credit unions, was hired by Zeal as executive vice president and chief strategy officer in 2018. She had served 10 years as executive vice president at Southfield-based Alliance Catholic Credit Union prior to that and six years at Brighton-based Lake Trust Credit Union before that. In her new role, Kreinbring will oversee the credit union’s 13 full-service branches in metro Detroit. The organization has $600 million in assets and more than 65,000 shareholding members. Kreinbring has a bachelor’s degree of business administration from Davenport University and master’s degree of management information systems from Central Michigan University.

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SURVEY FROM PAGE 1

Respondents were split almost evenly on that question, Goss said, with 47 percent of the national business leaders surveyed saying they could see their companies investing in cities that offered lower costs but fewer amenities. “That was really surprising to us, because I think the assumption was they’d be willing to pay more for cities with higher amenities like cities on the coast or Chicago. “But the fact that (about half) were willing to (consider) lower-cost, lower-amenity cities like Detroit is very promising,” Goss said. It gives the region an opportunity to market from an asset perspective, highlighting the low cost of living in Southeast Michigan, vs. the deficit position of having fewer amenities, she said. Another surprise that turned up in the survey results: Many national business leaders thought Detroit was still in some level of bankruptcy. Just over a fifth of respondents thought the city was in bankruptcy, according to the survey, and 34 percent thought it was still emerging from bankruptcy. Locally, the bankruptcy isn’t part of our collective consciousness anymore; it’s part of our history, Goss said. But there could be value in advancing the narrative of Detroit post-bankruptcy, given that it could impact investment decisions, she said. In a new focus this year, the survey also sought feedback from 300 Detroit residents and 200 people living in the surrounding suburbs. “What we really wanted to see was how Detroiters and suburbanites are making decisions themselves about where they live and how they feel about their neighborhoods,” Goss said. Those perceptions are important in both retaining the region’s population and attracting new residents, she said. Similar to national business leaders, Detroiters and those living in the suburbs reported they felt positively about the changes happening in the city. Among national business leaders, 82 percent said they are confident Detroit can once again be a great American city. That number was slightly higher among people living here in the re-

gion, with 84 percent of Detroiters expressing the same level of confidence and 89 percent of suburbanites. “If your neighborhood still looks the same or worse … you were less likely to say you felt favorably about the changes happening in Detroit,” Goss said. Among other results, the survey found:  46 percent of Detroiters have more favorable impressions of the city now than in the past.  About 64 percent of suburbanites share the same sentiment.  About 82 percent of Detroiters who’ve noted change in Detroit and 93 percent of suburbanites who have view the changes in the city as positive.  72 percent of Detroiters and 86 percent of suburbanites see the change in their own neighborhood as a good thing. When asked what they found most desirable in an ideal neighborhood, residents of both Detroit and its suburbs reported the same top three characteristics: safe and secure neighborhoods, housing affordability and living in a good place to raise a family. An important trend that arose from the survey responses was a feeling of anxiety among renters inside and outside of Detroit about being displaced because of redevelopment, Goss said. Twenty-six percent of Detroiters surveyed said they fear increased rents will force them out of their neighborhoods; 16 percent said it already has. Similar, albeit smaller percentages of suburbanites share those fears, according to the survey. “If someone takes over their building or the rents go up too high ... they are feeling vulnerable,” Goss said. “For Detroit in particular, I think we’ve not paid enough attention to the renter population, and they make up the majority of Detroit’s population,” she said. “As Detroit changes ... being intentional about what happens to renters has to be a part of the redevelopment strategy.” Going forward, DFC will continue to seek residents’ perspectives as part of the Detroit Reinvestment Index, Goss said. “We also want to take a harder look at inclusive growth and equity … inside and outside of Detroit.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

Switch, West Michigan schools reach tentative tax breaks deal Gongwer News Service and Crain’s Detroit Business Las Vegas-based data center giant Switch Inc. has reached a tentative deal with two West Michigan school districts over controversial tax breaks sought by the company for its Grand Rapids-area server farm. On Thursday morning, during a meeting of the Michigan House Commerce and Tourism committee, representatives of Switch (NYSE: SWCH) and the Kent County Intermediate and Caledonia school districts said they had reached an agreement in which Switch would continue to pay the districts taxes related to real property but not personal property. The agreement also stipulates that the schools would not have to reimburse Switch for past taxes. Switch had asked for a retroactive property tax break.

Switch’s bid for enshrining additional tax relief in state law touched a nerve with leaders of local schools, which stand to lose $373,000 annually and would have to refund the company nearly $625,000 in taxes paid for previous years. Switch was seeking an exemption to paying about 8 mills of personal property taxes on the value of the equipment inside the data center to Caledonia Community Schools for capital debt service and other schools in Kent County for operations. The deal comes as Switch seeks additional tax exemptions, which it says are a clarification of the 2015 deal it made with the state to become a renaissance zone after legislation passed exempted co-located data centers from paying sales or use taxes.

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Former Microsoft Corp. CEO Stephen Ballmer and his wife, Connie, attended a Detroit Homecoming event in 2016. Ballmer Group is putting bets on place-based strategies as one approach to spurring economic mobility for Detroiters living in poverty.

BALLMER FROM PAGE 3

The Sinai-Grace Guild program will focus housing incentives on current and potential employees of the hospital. But in a new twist, it will incorporate education and training delivered by Wayne County Community College District to help employees move into good jobs at the hospital and position them to buy homes nearby. Incentives including down payment and closing costs assistance and education subsidies will be funded with support from the Ballmer Group and one of its national grantees, Enterprise Community Partners, building on the operational support the hospital, Ford Foundation and other foundations provide to the CDC, said Lisa Jones, executive director of the Sinai-Grace Guild CDC. Originally the idea of the hospital’s former CEO Conrad Mallet Jr., now DMC’s chief administrative officer, the developing program is set to roll out next year with an estimated 20 participants, Jones said. CDCs are working closely with residents in the neighborhoods and gauging needs on an ongoing basis, said Kylee Mitchell Wells, executive director of Ballmer’s Detroit operations. The grassroots groups are enabling Ballmer to “get smarter faster” about the needs of those living in poverty in Detroit, as they relate to jobs, education, health and human services, Wells said. “As we think about making investments, we don’t want to be doing that from an ivory tower. We want to be side by side with community leaders … who understand the need.” What Ballmer is hearing from CDCs is that residents want jobs, she said. And health care offers a lot of career pathways. That’s why the Sinai-Grace partnership with health care and an education institution is one to watch, Wells said. “We want to learn how the program can be replicated in other communities.”

Turning to CDCs Sinai-Grace Guild CDC is the sixth CDC in the city to receive a grant from the Ballmer Group to support operations and innovation already happening, while also helping the CDCs to think beyond affordable housing and infrastructure efforts to other areas that are important and needed by the community like health and human services, education and entrepreneurship support, Wells said. Ballmer started looking at CDCs last year when its Detroit office first launched, putting a total of $2.1 million in grants behind five Detroit CDCs as part of $16 million in grants

“As we think about making investments, we don’t want to be doing that from an ivory tower. We want to be side by side with community leaders … who understand the need.” Kylee Mitchell Wells

made during its first round of funding in Southeast Michigan. “We wanted to augment some of that public money being put into the community,” Wells said. “When we were looking at how can we best invest in neighborhoods, we’re really looking for how we can fill the gaps.” Five of the Detroit CDCs it’s now supporting are working in areas adjacent to the 10 neighborhoods included in the city’s Strategic Neighborhood Fund, Wells said. Just one, Live6 Alliance in northwest Detroit, is included in the city’s focus neighborhoods. Other Detroit CDCs funded as part of $16 million in first-round funding from Ballmer last fall included:  Grandmont Rosedale Development Corp., with a $450,000 grant over three years to help plan a comprehensive approach to community revitalization through strengthening

housing, the workforce and the commercial corridor in its northwest Detroit neighborhood.  Mack Avenue Community Church Community Development Corp. with $450,000 granted over three years to support community-focused programs in education, workforce, commercial corridor improvements and housing.  New Hope Community Development Non-Profit Housing Corp. has had $450,000 granted over three years to assist with workforce and housing resources for greater northwest Detroit.  Vanguard Community Development Corp., $450,000 granted over three years to expand workforce development and housing programs for Detroit’s North End neighborhood.  Live6 Alliance, $300,000 granted over two years for its use to sponsor University of Detroit Mercy to create access to economic opportunity for local residents through small-business and workforce development and entrepreneurship programs. Like Sinai-Grace Guild, the CDCs in other neighborhoods are responding to community need, as well. Grandmont Rosedale is teaming up with human service agencies in the neighborhood to make essential services such as grief and trauma counseling more accessible to residents, hosting property-tax exemption workshops to keep people at risk of foreclosure in their homes and looking at developing senior housing to enable residents to age in place, Wells said. And Mack Avenue Community Church CDC has added a literacy program to The Commons, a mixeduse space it opened last year in a 1920s building on Detroit’s east side to offer the community a place to get a coffee, do their laundry and gather. “We are really looking at placebased strategies and understanding how they can work ... (and) we continue to look for new opportunities,” she said. “CDCs have helped us to learn, and we’ll continue to learn. We really believe CDCs are the pulse of the neighborhoods.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

Wayne Pediatrics to contract with Henry Ford network By Jay Greene jgreene@crain.com

Wayne Pediatrics, Wayne State University medical school’s new clinical pediatric group, has approved plans to seek a contract for business services with Henry Ford Physician Network, Crain’s has learned. While officials at Henry Ford Health System declined comment, Wayne State officials confirmed they are exploring their options. They said they are not ready to make an announcement. The arrangement under consideration between Wayne Pediatrics and HFPN, which is a clinically integrated network that is part of Henry Ford Health System in Detroit, is for a “management service organization” contract. HFPN recently signed a direct health care contract with General Motors Co. for 24,000 salaried employees and Gray their dependents. Typically, an MSO is an agreement where one physician organization seeks business or back-office services with another physician organization. Services may include billing and collections, managed care support, human resources, payroll, legal, accounting, recruiting and personnel. Two sources familiar with the negotiations who requested anonymity told Crain’s the MSO would not include any kind of merger or clinical affiliation. It would simply be set up to help support Wayne Pediatrics. HFPN, which includes more than 3,400 providers in 40 specialties, regularly sells services to independent physician practices. Crain’s also learned that University Physician Group, the quasi-independent multi-specialty faculty practice plan affiliated with Wayne State, also filed with the state of Michigan on Dec. 27 for the name of Wayne Pediatrics, three months before Wayne State announced the formation of Wayne Pediatrics. UPG and WSU officials confirmed the name filing with the state. On May 17, Wayne State received confirmation from UPG that it would release the Wayne Pediatrics name to the university. UPG signed paperwork at the time to release the name, but it is not clear if UPG terminated its hold on the name with the state Department of Licensing and Regulatory Affairs. Officials for University Pediatricians, which formerly was WSU’s clinical service group, have been using the DBA filing of Wayne Pediatrics by UPG as evidence that Wayne State all along had a plan to hurt UP by recruiting its pediatricians into UPG, sources tell Crain’s. Mark Harrison, UP’s administrator, said in an Oct. 1 email to UP members that UPG “controls” Wayne Pediatrics, according to the LARA filing. Wayne State also said there never has been a secret plan to make Wayne Pediatrics part of UPG. “Any contrary statement is simply false, and smacks of the desperation of the leadership of University Pediatricians, who have led WSU faculty pediatricians down a ruinous path

Wayne State confirmed in its statement that it “repeatedly said that Wayne Peds will have no connection to UPG. We intend to follow through with that commitment.” for the last three years,” WSU said. LARA’s website also shows Wayne Pediatrics as a DBA of UPG and an-

other line where Wayne Pediatrics Inc. is a separate entity of Wayne State. But WSU said UPG signed paperwork to terminate its Wayne Peds DBA and LARA recorded it on Oct. 14. Crain’s requested interviews with UPG, Wayne State and Henry Ford, but only received statements. In its statement, UPG said last December it also filed multiple other names, including Wayne Medicine, Wayne Health Partners and Wayne Network. It is not clear if UPG plans to change its name to those filings. It currently is studying rebranding University Physician Group, including its name. Why did UPG file those additional names? “We reserved the DBA only

in case we should ever need it in the future, along with several other names. WSU was not aware of the filings at that time,” said UPG. Wayne State confirmed in its statement that it “repeatedly said that Wayne Peds will have no connection to UPG. We intend to follow through with that commitment.” In its statement, WSU said “(UPG) reserved the (Wayne Pediatrics) name only in case it should ever need it in the future. There is nothing nefarious in this action, as evidenced by the fact that UPG also filed five other names in December 2018, and two others in 2019. WSU was not aware of the filings at that

YOU KNOW WHAT IT TAKES TO RUN A BUSINESS.

time they were made.” Talk among some doctors and administrators has been that UPG would like Wayne Pediatrics to join UPG, but Wayne State has resisted those efforts. UPG said in a statement that it doesn’t have designs on Wayne Pediatrics. “UPG fully supports an independent Wayne Pediatrics and that UPG stands ready to partner with Dr. Gray and WP to improve access to ambulatory clinical services (adult and pediatric) at 400 Mack,” said Charles Shanley, M.D., CEO of UPG. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPINOFF

OPTALIS

“Get them trained for living wage jobs, which allows them to own the revitalization of their neighborhood,” she said. “We are still a stakeholder in the community. We’re not going anywhere.” Focus: Hope’s redevelopment arm has focused on rehabbing commercial buildings and developing housing for senior citizens and low-income families within the neighborhoods bound by Dexter Avenue to Hamilton Avenue and the John C. Lodge Freeway to the Davison Freeway. The spun-off nonprofit will focus on the same area and the same initiatives but will emphasize equity and sustainability to allow neighborhood residents “to buy into some of the development that’s going on,” Fisher said. “I think it’s really the logical next step for the work that Focus: Hope has been doing for a while,” she said. “As Focus: Hope was going through its strategic planning process, it came to recognize that it has moved the neighborhood revitalization work to a point that it should have community control.” Hope Village Revitalization will have a 12-member board, with one member from Focus: Hope and the other seats comprised of neighborhood residents, businesses and stakeholders. Its expected first-year operating budget is $300,000. Roberson said the nonprofit will take $120,000 to $130,000 of funding that Focus: Hope was granted for neighborhood revitalization. With approval from the Kresge Foundation and other grantors, those funds will be transferred to Hope Village Revitalization for the same purpose. Fisher said Hope Village Revitalization is also applying for additional grants and expects to be awarded $56,000 from a foundation she declined to name because it has yet to be finalized. She said operations will be independent of Focus: Hope, but the CDC plans to purchase back-office services from the nonprofit for the first year as it finds its footing. Hope Village Revitalization’s 2,500-square-foot headquarters was purchased out of foreclosure in

“We are all local people who live in Oakland and Wayne County. We worked in different parts of town and decided to come together to put everything under one roof. Each operator has certain strengths we wanted to pool,” he said. Optalis operates nine nursing homes, four assisted living centers in Michigan, two assisted living centers in a joint venture in Akron, Ohio, and has one senior living-type project underway in Florida, Patel said. It also plans to break ground in November on a 56-bed, $10 million assisted-living facility and memory-care unit in West Bloomfield Township called Cranberry Park of West Bloomfield. The new home is expected to open in late fall 2020. The four former Beaumont-affiliated nursing homes are Evergreen, Southfield; Shelby, Shelby Township; ShorePointe Nursing, St. Clair Shores; Woodward Hills, Bloomfield Hills, and an assisted living facility called ShorePointe Village, St. Clair Shores. It also operates skilled nursing facilities: The Lakeland Center, Southfield; Greenfield Rehab, Royal Oak; Fountain Bleu, Livonia; Belle Fountain, Riverview; Four Seasons, Westland. Senior living facilities with memory care units are ShorePointe Village, St Clair Shores; Cranberry Park of Milford; and Cranberry Park of Clio. Optalis joint venture projects in Ohio are Echelon Senior Living and Echelon Senior Living, both in Medina. The third planned center in Florida is Echelon Senior Living in Estero. Patel said Optalis plans to continue to add facilities, but he declined to specify a number or when announcements might be made. He said building plans and acquisition plans are still under review.

FROM PAGE 3

Seasoned

FROM PAGE 3

“As Focus: Hope was going through its strategic planning process, it came to recognize that it has moved the neighborhood revitalization work to a point that it should have community control.” Debbie Fisher

2012 by the Hope Village redevelopment arm. The CDC retains the property as part of the spinoff. The $250,000 rehab of the house was paid for with grant funds and individual donations. While Hope Village Revitalization gears up for future redevelopment projects, Roberson said Focus: Hope is looking into selling some of its properties. It has eight buildings on Oakman and a food center on the city’s east side and one in Inkster. “We have a huge real estate footprint,” she said. “We’ve talked to different buyers because we’d be able to consolidate our programs.” Fisher said her reach goal is to eventually have 10-15 staff members at Hope Village Revitalization. “There’s enough work to be done in the neighborhood,” she said. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

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Company growth So far during 2019, Optalis has hired more than 150 employees and Patel said more clinicians, nurses’ aides, managers and technical staff are needed. “We have a tight labor market, and we are continuously looking for staff to serve our senior population,” Patel said. “We have people coming in from different industries and have training programs for them.” Specialty areas primed for growth include the advanced respiratory and cardiac program, dialysis and behavioral and dementia care units. “We have special units depending on the facility,” he said. Optalis also is budgeting annual capital spending of $6 million to $8 million annually, or about $400 to $500 per bed. In addition to normal renovations and upgrades, Patel said information-technology improvements will be needed. “We have reduced paper by 60 percent” over the past several years, Patel said. “Electronic medical record systems are eliminating errors and helping us with billing and referrals.”

Federal, state reimbursement changes Reimbursement and regulatory changes have always affected the nursing home industry over the years. As health care has been moving to pay for quality instead of vol-

ume, the so-called “value-based” reimbursement model, the nursing home industry is also being challenged. “Rarely you will ever hear an operator praising Medicare, but there are smart, favorable changes (begun) October 1 with Medicare’s reimbursement system,” Patel said. “It rewards facilities like ours for doing quality work and taking more complicated cases.” Melissa Samuel, CEO of the Health Care Association of Michigan, said nursing home members haven’t expressed too much concern at this point about Medicare’s new reimbursement scheme, but she said it is the most extensive change since 1996. “Before it was heavily focused on therapy. Now (Medicare) is looking at the person in totality in illness,” not just physical, occupational or speech therapy, said Samuel, adding that the reimbursement trend will become clearer after the first quarter of 2020. Cathy Sunlin, the association’s vice president of regulatory services, said Medicare has added all the complexities of nursing home care back into the reimbursement model. “It is a big shift,” she said. Samuel said the therapy reimbursement focus was because most seniors with Medicare were sent to nursing homes after hospital stays, where they needed more rehabilitation. “The whole system missed medical complexities with complex respiratory issues. They weren’t paid,” she said. Patel said he believes Optalis will benefit from the new Medicare reimbursement model because there will

“In the past, complicated cases were never rewarded. You were only penalized when things went wrong. For providers like us that embrace higher-acuity patients, we will get paid for that. The system got a lot fairer.” Raj Patel

be more reimbursement from Medicare for sicker patients, those needing chronic care and dementia treatments. “In the past, complicated cases were never rewarded. You were only penalized when things went wrong,” said Patel. “For providers like us that embrace higher-acuity patients, we will get paid for that. The system got a lot fairer.” Called the Patient Driven Payment Model, skilled nursing homes are now paid based on acuity and other data-driven characteristics that are similar to bundled payments. In a statement, Medicare said the model is “budget-neutral,” but it is expected to produce a new set of “winners” and “losers,” affecting those nursing homes that have boosted investment in therapy and those that treat fewer medically complex patients, experts said. For example, therapy hours will likely fall under Medicare PDPM, which includes a provision that group and concurrent therapy minutes can account for no more than 25 percent of the total services provided to the patient. “Our philosophy is to operate

these facilities at the highest level of care, seamlessly for the best possible outcomes for patients we serve,” Patel said. “We want to customize as much possible to tailor to patient needs.” Services range from long-term care nursing services to assisted living facilities. “If a patient is in a nursing facility for rehabilitation, we want to get them rehabilitated and back to their lives,” Patel said. “We strive for our assisted living centers to bring a comfortable, relaxed environment for seniors unable to take care of themselves, shaving, showering, feeding themselves.” Dunn said nursing homes have been preparing for two years to convert to the new Medicare reimbursement scheme. “There will be cuts to the therapy department,” he said. “It could improve care overall.” Shah said higher-care facilities should get some benefit from the change, but it depends how many Medicare patients nursing homes treat. On average, 20 percent of patients at nursing homes are on Medicare. But Patel said Optalis has double the number of Medicare patients, 40 percent to 50 percent, depending on the home location. Medicaid is 25-30 percent and commercial 15-20 percent, he said. But in Wayne County, Patel said Medicaid accounts for about 50 percent and Medicare about 30 percent. While Medicare payment changes may benefit Optalis and other chains with similar approaches, a proposed new Medicaid reimbursement change has been projected to cut payments by 6 percent in fiscal 20192020 and affect 40 percent of the state’s 440 nursing homes, HCAM said. Samuel said the announcement of the change in reimbursement took everyone by surprise. “The governor on Sept. 30 issued line item vetoes (on a number of spending bills) and issued several Medicaid policy bulletins. One impacted nursing facilities,” Samuel said. On Sept. 30, the Michigan Department of Health and Human Services issued a policy bulletin, Variable Cost Limit Rate Change, that proposes to change the highest amount of costs nursing homes can claim for reimbursement. While the bulletin said public comments are open until Nov. 4, “these changes are effective for cost reporting periods ending on or after Nov. 1.” In a statement, MDHHS said the department will make a final determination on the policy after the Nov. 4 public comment period has ended. But spokesman Bob Wheaton acknowledged the Medicaid cuts would affect nursing homes and generate cost savings to the state, estimated to save at least $15.3 million gross and $5.5 million to the general fund. Patel said the Medicaid cuts, if they become final, will devastate many nursing homes. “This is money that goes to direct, hands-on care. The Medicaid patient is the least desirable payer source. Everybody knows this ... It is the worst area for the state to cut. It is just punishing the aged patients with limited resources.” Dunn said the proposed cuts will make it much more difficult to take care of patients. “There will be more citations by the state and government, more turnover of staff,” he said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

KASSEM

place holds together and it offers something to the city in Phase No. 1, Phase No. 2 and Phase No. 3, and that it organically grows into place.

FROM PAGE 1

Kassem — who has been with Kohn Pedersen Fox since 2001 and has worked on projects for City University of New York and Florida International University, as well as projects in Shanghai, Rio de Janeiro, and Mumbai — spoke with Crain’s Detroit Business reporter Kirk Pinho last week about the new project.

Are there any comparable buildings you’d point to?

Crain’s Detroit Business: How did Kohn Pederson Fox become involved in this project? Hana Kassem: (Jill Lerner and I) have

a relationship working with Steve Ross on the Ross School of Business for the University of Michigan and that was a pretty long, multi-year project. When Steve came up with this great idea of transforming this pivotal site in Detroit, it made sense, and we were the natural go-to since we have a history working with the University of Michigan and Steve as well.

When did he approach you?

The idea started about a year ago, just the beginning of the thought of doing something on that site in Detroit. Is Kohn Pedersen only designing the Detroit Center for Innovation , or is it also doing some of the other components?

The project is comprised of starting off first with the master plan for the whole site because a building alone cannot create the place. You have to have a vision for the whole site and several buildings together with different programs, open space, enclosed space, public space. We worked first with several ideas on the master plan, and we really focused on trying to create a place that felt open and connected to the city and invited engagement. What was the architectural inspiration of this?

These are quite basic and sort of a first pass, but the bones of the building itself have to do with this idea of a portal,

LIVENGOOD FROM PAGE 1

“Corporations go to urban areas because of the talent they generate,” Ross said in an exclusive interview with Crain’s. “When Amazon was going to come to New York, it was because of Cornell Tech and the students that it was generating for senior management. ... So there’s a lot of lessons to be drawn.” The $300 million Detroit Center for Innovation that Ross and fellow billionaire Dan Gilbert want to build for UM is effectively their answer for Amazon quickly passing over Detroit in its nationwide sweepstakes for a second headquarters outside of Seattle. That Ross and Gilbert want to plant a satellite UM campus on a 15-acre tract of downtown land that a decade ago was destined to be a jail incarcerating Detroiters underscores the dramatic change in Detroit’s trajectory from the depths of the bankruptcies of General Motors, Fiat Chrysler and later the city itself. UM’s Detroit Center for Innovation will offer master’s-level courses automotive mobility, artificial intelligence, sustainability, cybersecurity, financial technology — fields of study the likes of Amazon, Google, Apple, GM, Ford Motor Co. and Gilbert’s Quicken Loans Inc. are looking for in their next generation of innovators. Instead of a razor wire-ringed for-

KOHN PEDERSEN FOX

The project will include an adjacent midrise residential tower, a business incubation center and conference center and hotel developed at the former Detroit police headquarters building at 1300 Beaubien St.

a portal for engagement. It’s really meant to be a portal that connects entrepreneurship and the University of Michigan. When you see these elements that pull apart and create this gateway that leads into a public park, these are very initial moves, but I think they contain in them these ideas of accessibility, of engagement as a gateway to a bright future for everybody. The leaning and tilting (of the building), it’s a language that we felt talked about progress, that talked about something that we are dynamically changing, and innovative. It is meant to be a catalyst for the whole site, and that’s where that language begins, that it is something that is forward-looking. It tilts down because at the top of the building the idea is that there is a space that looks back at the city, the skyline, and looking forward what is currently the highway, I-375.

at this point. At this point they haven’t really been developed. We are waiting for our engagement with the community and the city to see what it’s going to be in the end. For sure, if the highway wasn’t there it would allow for more connectivity with the residential community to the east, and that’s a positive thing. What are some of the challenges of a project like this?

We are aware of it. We don’t know what will actually happen. Of course, it would be very beneficial in many ways. The ideas for the master plan and for the building are quite generic

I don’t know if I would call them challenges. We certainly see a lot of opportunity at this point for everybody involved. From what we’ve heard from the University of Michigan, they see this as a place where they can engage significantly with the community and be impactful and help with incubation of local entrepreneurship. The challenges are going to be how do we find the right form and the right people to have these conversations with, so we don’t miss out on an opportunity for good engagement with the public. There are parts of this site that are not available immediately, so maybe the challenge of the project as a whole is going to be to make sure that at any phase, at any point, the

tress on Gratiot Avenue, Ross and Gilbert want to construct an “iconic” and futuristic structure that will attract top minds from around the world who will want to live, work, study and invent new technologies at the business incubation building planned for this campus. “The block M does have that global brand that people want to be part of,” said Khalil Rahal, Wayne County’s assistant county executive in charge of economic development. “And right now, not everybody has the ability to get that education.” Backers of the project want to stop Michigan’s brain drain that was exposed in Detroit’s failed 2017 bid for Amazon HQ2 by the fact the state’s flagship university in Ann Arbor exports more computer science and engineering and MBA graduates to Amazon’s Seattle headquarters than any other university in America. “One of our motivations for being part of this collaboration is to have a situation where more of our students look first to employers in Detroit, Southeast Michigan and this part of the country,” UM President Mark Schlissel said in an interview before Wednesday’s announcement. “Right now, many of our master students end up getting recruited out to the big companies in Seattle and Silicon Valley, to the Bay Area as a whole, to Boston, to New York. As more and more opportunities exist in Detroit, I really want to give those businesses a

competitive advantage in attracting Michigan-trained, highly educated students — all to the good of the regional economy.” The project isn’t fully baked. There are several benchmarks that need to be met, not the least of which is raising an unspecified sum of the $300 million cost from foundations, philanthropists and corporations — getting them to buy into the concept and need for UM to have a bigger presence than the research initiatives and admissions office outpost the Ann Arbor university has maintained for years in the city of its founding. Gilbert and Ross are pledging to fill in the fundraising gap; their real estate development companies plan to co-develop the rest of the “fail jail” site with residential midrise towers, business incubation space and a hotel and conference center. The innovation center plans to offer high-level certificates to retrain workers whose jobs and needed skills will change with the advent of artificial intelligence. “Being in the city (within) walking distance of these major businesses and employers gives the University of Michigan very good access to a new and growing community of current and future learners,” Schlissel said. During the failed Amazon bid, Gilbert’s team always scoffed at the notion that there’s a dearth of available talent given how close UM, Gilbert’s alma mater of Michigan State University and any

How does the idea of raising I-375 into a boulevard impact the project?

I would say in terms of the programming and elements of the program, we did look at Cornell Tech on Roosevelt Island (in New York City). But in terms of its footprint and configuration and location, it has nothing to do with what Detroit would offer. Cornell Tech as a program has the elements that we have looked at as a parallel: It has an incubator building, a residential component, the academic building and places that we will have that are educational and facilitate place-making. But on the other hand, it is on an island in New York City. Here we are in Detroit and connected to the fabric of the city. This development will be a catalyst, really a game-changing moment we are hoping for a lot of people, local entrepreneurs and the ability for students to have that access directly in the city and make a big impact in terms of research. People are going to be looking at mobility, artificial intelligence, sustainability, cybersecurity. These are a lot of the themes that are going to be studied there. The impact of this development in Detroit is going to be major, whereas Cornell Tech in New York City is a little more isolated and of itself. What else do you think is important to talk about?

I think we have probably touched on most of it. I think we talked about the co-location of business incubators, co-working spaces, startups, a lot of these things that I think will really make a positive impact regionally and in Detroit specifically. The critical location of this is between four neighborhoods, Greektown, Lafayette Park, Eastern Market, the central business district. It’s at a pivotal point. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB number of world-class universities are within a five-hour drive from Detroit. “We always push back on the lack of talent,” said Matt Cullen, a top Gilbert lieutenant and CEO of Bedrock LLC. “But to have this kind of factory in the middle of the city generating 1,000 graduates a year, it certainly pushes back on that.” Cullen uses the word “factory” on purpose to emphasize the volume of brain power that could be attracted to advance their education in Detroit. Ultimately, the goal with the UM innovation center is a strategic play for developing the talents of Detroit’s next Dan Gilbert to innovate and disrupt an industry as Gilbert’s internet-based Quicken Loans has done with mortgages. “We are in hand to hand combat with Silicon Valley for automotive-related tech companies as cars become more computers on wheels,” Mayor Mike Duggan said. “This is a huge advantage to us.” The hope is, if you build it, they will stay. “This will attract jobs and bring corporations here. It will really act as the economic development tool … for Detroit to continue its renaissance,” Ross said. “It’s not just educating elite students. It’s really opening itself up to really help grow the city and participate in the rebirth of the city of Detroit.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 4 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

WSU free tuition announcement slammed for ‘lack of transparency’

Detroit hosts global design conference

OCTOBER 25-31 | For more, visit crainsdetroit.com

hree Wayne State University board members say last week’s announcement of the free tuition program for Detroit students is another example of why university President M. Roy Wilson is unfit for his position, according to a statement reported by the Detroit Free Press. The statement is the latest shot in a dispute between factions of the WSU board of governors. It comes after the university said last week that it would provide free tuition to any Detroit high school graduate for costs not covered by other forms of financial aid. Wayne State University Provost Keith Whitfield called it a “life changer” at an event attended by Mayor Mike Duggan and Gov. Gretchen Whitmer, as well as Wilson. “The Heart of Detroit Tuition Pledge is the latest example of Wilson’s lack of transparency and accountability to his employer, the Board of Governors,” board members Michael Busuito, Sandra Hughes O’Brien and Dana Thompson wrote in a statement sent to some media, including the Free Press. The three board members said Wilson did not let the full board know about the free-tuition plan until right before the announcement, according to the statement. Crain’s requested a copy of the statement from the members led by Busuito. “This tuition pledge has major financial, political and reputational implications, yet the president did not inform nor discuss with all members of the board the details of the pledge prior to the morning the tuition pledge was announced,” the statement said, according to the Free Press. The gap scholarship would apply to any graduate of a public, charter or private high school or homeschooled Detroit resident enrolling at Wayne State starting for the fall 2020 semester, including those who attended high school outside of the city but have a Detroit mailing address. The university confirmed it did not inform the board “in a timely manner,” Wayne State spokesman Matt Lockwood told Crain’s said in a statement. “That was clearly an unintentional oversight on the part of the administration, and the oversight was acknowledged to the entire board.” Board Chair Kim Trent was informed, however, and was involved in the announcement event’s planning, according to the statement. “This event was originally going to be more modest, but during the planning we felt it deserved more public attention, and the governor and mayor were invited to speak. In retrospect, we should have alerted the entire board at this time,” Lockwood’s statement said.

BUSINESS NEWS J The boards of Fiat Chrysler and PSA Group announced plans to merge the two companies creating the world’s fourth-largest automaker

global conference on inclusive design will come to Detroit for the first time next week. The conference, Include 2019, is being hosted by the College for Creative Studies and Design Core Detroit and is produced by the Helen Hamlyn Centre for Design at London’s Royal College of Art. The conference is put on every two years. This year’s will focus on De-

troit’s strategy as a UNESCO City of Design to drive inclusive growth in the city, organizers say. The conference runs Thursday and Friday at the College for Creative Studies’ A. Alfred Taubman Center for Design Education in Detroit. General admission is $310 for both days or $155 for one day. Registration is available at eiseverywhere.com/website/4756.

WAYNE STATE UNIVERSITY

Wayne State University announced a free tuition program for Detroit residents without first informing the entire WSU Board of Governors.

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

460,000

The number of lead water service lines in Michigan. Altarum Institute and Mona Hanna-Attisha, M.D., are studying costs and benefits of replacing them all.

70%

Share of Michigan’s communities that have opted out of allowing recreational marijuana businesses.

600

Number of hourly employees at Ford Motor Co.’s Romeo Engine Plant, which would close under the automaker’s tentative deal with the United Auto Workers. Workers would be offered jobs at the Van Dyke Transmission plant in Sterling Heights.

with enough scale to confront “the new era in mobility.” The merger would bring together Italian-American Fiat Chrysler, with its strong footprint in North America where it makes at least two-thirds of its profits, and France’s PSA Group, the No. 2 automaker in Europe. J Vici Properties Inc. agreed to buy the real estate assets of Jack Cleveland Casino and the nearby Jack Thistledown Racino for about $843 million in cash. New York City-based real estate investment trust Vici, which spun off from Caesars Entertainment in 2017, agreed to lease back the properties to Detroit mortgage mogul Dan Gilbert’s Jack Entertainment LLC at an initial annual rent of about $66 million, according to a statement. J Dan Gilbert-backed investment firm Rockbridge Growth Equity has acquired ProSites Inc., a provider of online marketing solutions, from Cleveland-based private equity firm Riverside Co. Financial terms of the deal were not disclosed. J A month after he announced a third venture capital fund at Detroit Homecoming 2019, AOL co-founder

Steve Case announced another fund of $150 million focusing on startups not located on the coasts. Case announced the Rise of the Rest Fund II at the Forbes Under 30 Summit in Detroit. J BJ’s Wholesale Club Holdings Inc. planned to open the East Coastbased chain’s first Michigan location on Saturday at the site of a former Super Kmart in Madison Heights and plans to open another in Taylor on Nov. 19. J The multi-concept restaurant set to take over the top of the Renaissance Center next month has hired a head chef ahead of an expected November opening. Scott Garthwaite will be executive chef, according to a news release. He is a longtime colleague of James Beard Award-winning Chef Shawn McClain, an owner of the hospitality group that’ll operate the 71st- and 72nd-floor restaurants.

GOVERNMENT NEWS J David Coulter announced Thursday morning that he will seek the full term as Oakland County executive next November. Coulter, a Democrat, was voted into office Aug. 16 by the Board of Commissioners to serve a partial term as county executive following a messy political fight after the death of L. Brooks Patterson, who died Aug. 3 at age 80 from complications of pancreatic cancer after serving as county executive since 1993. J Michigan began accepting applications Friday for recreational marijuana businesses. Nearly 70 percent of communities in the state have opted out of allowing such businesses. J Detroit City Council is seeking new rules to preserve government emails in the wake of the Office of Inspector General’s report on deletion of emails pertaining to the city’s involvement in Wayne State University prenatal care program Make Your Date. City Council President Brenda Jones requested a draft ordinance. J Sports betting and online gambling would become legal at Michigan casinos under legislation approved Wednesday by the House, though Gov. Gretchen Whitmer continues to have concerns that the expansion could siphon revenue from the state’s lottery.

ANISA JIBRELL/CRAIN’S DETROIT BUSINESS

Detroit bakery Sister Pie is at 8066 Kercheval Ave.

Sister Pie no longer pursuing lease for second location on Mack

ister Pie will no longer seek a lease for the Mack Avenue site where it was planning a second outpost near its small West Village bakery in Detroit. Founder and owner Lisa Ludwinski announced the decision in an email to West Village neighbors earlier this month and a social media post Tuesday morning. “This decision has weighed heavily on our hearts for the past few months,” Ludwinski wrote in the email provided to Crain’s. “Initial concerns regarding lease negotiations gave us a chance to step back and really reflect, once again, on what’s best for Sister Pie and our surrounding community. Through even more exploration of our personal/ business goals, it’s clear to us that the space on Mack is not an ideal fit for our vision.” Ludwinski and her team are “pausing for a moment to reassess” where the company is at and where it wants to be in the long-term, she wrote in the email. Sister Pie still wants to grow in its ZIP code, 48214 — around the Villages area on Detroit’s east side — but how that will happen isn’t

clear yet. “Maybe we’ll build something from scratch or maybe we’ll find another space to expand into ... that’s all TBD,” she wrote. The vision Ludwinski discussed in April involved building out an old boarded-up grocery store at 8110 Mack Ave., less than a mile from Sister Pie’s headquarters since 2015 at 8066 Kercheval Ave. The new spot was planned with a breakfast-andlunch cafe, community and classroom space, and a small section with limited groceries. The nationally recognized bakery has long since run out of room for expansion at its 950-square-foot shop at Kercheval and Parker. But the 8,000-square-foot Mack location is no longer in the cards, according to Ludwinski’s announcement. “I personally struggled with this because we had shared the news so publicly (and with so much enthusiasm from YOU),” Ludwinski — a Crain’s 40 Under 40 honoree this year — said in the post on social media. “But we are pro-transparency and this is part of that journey.”

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