THE CONVERSATION Rainy Hamilton Jr., of Hamilton Anderson Associates, on projects — and trains.
HEALTH CARE: Beaumont Health takes back pediatric hospice service. PAGE 3
PAGE 22 CRAINSDETROIT.COM I JANUARY 13, 2020
THE CASE FOR TOLLS? CHAD LIVENGOOD
ROADS
Why toll roads might not be as far-fetched as you think Since 2013, road construction companies working for the Michigan Department of Transportation have been slowly replacing a couple of I-94’s crumbling overpasses in Detroit each year. By 2039, they should be all done. You read that right. In nearly 20 years, Michigan may finally complete rebuilding one of the naChad LIVENGOOD tion’s first interstate highways this state helped invent in the 1940s and 1950s. The $2.9 billion remaining price tag for a project would effectively eat up the Michigan Department of Transportation’s capital budget for nearly three years if it were to focus only on replacing I-94 in Detroit. But there is a potential solution to waiting two decades to fix this economically vital thorSee TOLLS on Page 20 oughfare: Charge tolls.
FOCUS | CANNABIS RETAIL
MDOT to replace four highway bridges in Detroit this year BY CHAD LIVENGOOD
The Michigan Department of Transportation intends to close the crumbling Mt. Elliott Street bridge by the end of January as part of a plan to replace four aging bridges over I-94 and I-75 in Detroit this year. The 65-year-old Mt. Elliott Street bridge, part of which has had driving restrictions due to safety concerns, is slated to be demolished in late February, MDOT spokesman Rob Morosi said.
After that, MDOT’s contractors will tear down the Second Avenue bridge and East Grand Boulevard bridges over I-94, followed by the Milwaukee Street bridge over I-75 later in the spring, Morosi said. Those Mt. Elliott, Grand Boulevard and Milwaukee bridge projects are part of a $42.7 million contract MDOT plans to award to Milford-based Toebe Construction LLC in a packaged deal. See BRIDGES on Page 21
REAL ESTATE
How the recreational pot market is faring
Detroit projects scaling back
Business owners talk about the first month. PAGE 10
Rising construction costs put condos, other building at risk
NEWSPAPER
VOL. 36, NO. 2 l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
BY KIRK PINHO
Yet another condominium project in Detroit is on life support. The developer behind the planned $377 million The Mid project just north of Detroit’s Whole Foods Inc. store says that it’s “unlikely” the dozens of high-end condos that were planned as part of the two high-rises envisioned for the site will be developed after all. “We are evaluating luxury ex-
tended stay along with luxury multi-family for the residential units,” Turkia Mullin, a real estate executive working on the project, said in a statement to Crain’s. “The team has not made final decisions regarding changes to the program; however, it is unlikely we will develop condos.” Another project representative declined to say why they are now unlikely, although other luxury condo projects have been challenged in
the last year or so. It’s just the latest residential project in the city to take a difficult body blow. Developers of similarly upscale new luxury condo projects in and around downtown have said high construction costs have eaten away at their anticipated developer profit margins; lower-priced condos in Brush Park and Midtown, for example, have been completed. See CONSTRUCTION on Page 19
NEED TO KNOW
NO MORE THROWAWAYS?
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` REPORT: FEDS INVESTIGATE NEW UAW PRESIDENT THE NEWS: Federal agents are investigating a tip alleging UAW President Rory Gamble and former Vice President Jimmy Settles accepted bribes and kickbacks from a vendor, according to The Detroit News. Citing two sources, The News said agents are looking into whether Gamble and Settles accepted money at a Detroit strip club after awarding lucrative contracts to businessman Jason Gordon. No charges have been filed and both parties deny wrongdoing. "President Gamble can say he never took one red cent personally from Mr. Gordon or directly solicited anything from Mr. Gordon," UAW spokesman Brian Rothenberg said in a statement. "And President Gamble has never been to that establishment with Mr. Gordon. It simply is not true and never happened." WHY IT MATTERS: The Detroit-based union is trying to recover its reputation after numerous officials have pleaded guilty to corruption charges. Gamble was appointed to the president role in December after the resignation of former President Gary Jones amid corruption investigations.
` SENATE PANEL TAKES UP CERTIFICATE OF NEED CHANGES THE NEWS: A Senate panel heard concerns about cost and quality of care
relating to legislation proposing major changes to the health care "certificate of need" process, The Associated Press reported. The Senate Health Policy and Human Services Committee held the hearing on legislation that would eliminate or loosen requirements for health care investments and services. WHY IT MATTERS: Two bills would repeal the certificate of need requirement for psychiatric beds and require as a condition of licensure that a psychiatric hospital or unit accept public patients and also keep half of its beds available to public patients. Defenders of CON laws say weakening them could lead to facilities saturating the market in areas of the state that already have enough beds at the expense of underserved areas.
Meijer Woodward store steers clear of single-use plastic ` Meijer’s small-format grocery store is scheduled to open in Royal Oak at the end of the month without typical plastic and paper bags. The $1 reusable black bags to be sold at Woodward Corners in Royal Oak will be 100 percent recycled from other plastic bags. Woodward Corner Market is aiming to eliminate single-use bags by encouraging customers to bring their own bags and selling reusable and recyclable bags at the register, according to a news release. When the 41,000-square-foot store opens Jan. 29 it will be the Walker-based grocery chain’s first small concept in metro Detroit and its first store to eliminate single-use bags. Meijer is considering implementing the policy at other stores, spokesman Frank Guglielmi told Crain’s in an email.
A rendering of the planned store. | CONTRIBUTED PHOTO
` AUTO CLUB GROUP ADDS AAA CAROLINAS, NOW NO. 2 THE NEWS: The Auto Club Group, Michigan's AAA insurance and travel club, is merging with AAA Carolinas to form the second-largest auto club in North America spanning 13 states, two U.S. territories and the Canadian province
of Quebec. The Auto Club Group has a headquarters building in Dearborn.
` GEORGE PERLES, LONGTIME MSU COACH, DIES AT 85
WHY IT MATTERS: The addition of North Carolina and South Carolina adds scale, giving The Auto Club Group more than 13.5 million members across the continent. It is just shy of the largest AAA affiliate, The Automobile Club of Southern California with 13.6 million members in 20 states.
THE NEWS: George Perles, who coached Michigan State University to a Rose Bowl victory in 1988, was a longtime member of the university's board of trustees and founder of the Motor City Bowl college football game, died Tuesday, The Associated Press reported. He was 85.
WHY IT MATTERS: "George touched so many lives. He helped so many people. He was fiercely loyal and never forgot where he came from," said Brian Mosallam, a former MSU football player now on the board of trustees. The Motor City Bowl ran 17 years,.
` RECORD YEAR FOR MORTGAGE GIANTS THE NEWS: United Shore Financial Services LLC reports it did a record $107.7 billion in mortgage loan volume last year. The fast-growing Pontiac-based company said its United Wholesale Mortgage business, the top wholesale mortgage lender in the U.S., also broke the wholesale industry record of $103.3 billion set 15 years ago by Countrywide Financial, which later collapsed in the mortgage crisis. WHY IT MATTERS: Metro Detroit's mortgage giants had record-setting years, with Quicken Loans also setting a company record and leading the industry in retail mortgage volume. (Reminder: It only takes a few extra letters to change “Motor City” to “Mortgage City.”)
` CORRECTION ` An item in the Need to Know column on Page 2 of the Jan. 6 issue misstated the year of the Detroit Lions’ last NFL championship. It was in 1957.
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THE BIG SHIFT NONPROFITS
The Children’s Center raises close to $1 million from the charity preview of the North American International Auto Show and its AutoGlow event held after the preview each year. | THE CHILDREN’S CENTER
Nonprofits focus on stable revenue, cautiously hopeful on changes in auto show preview “WE HAVE A SPECIAL COMMITTEE THE BOARD HAS SET UP THAT’S EXAMINING HOW WE MIGHT RESTRUCTURE OR ELIMINATE SOME OF OUR EXPENSES IF WE DON’T MAKE THE DOLLARS WE HOPE TO GET.” — Debora Matthews, president and CEO, The Children’s Center
BY SHERRI WELCH
New grants, gifts and earned revenue are helping insulate nonprofits as the North American International Auto Show, and its money-raising Charity Preview, is pushed out six months this year. Many of the benefiting nonprofits say they’re well-positioned to offset any cash flow delays, but some are budgeting conservatively until they get a sense of attendance with the new two-tier ticket levels and indoor-outdoor format launching this summer. One nonprofit, however, Detroit-based The Children’s Center, is scrambling to raise $400,000-$500,000 by spring to make up for shifting one
its major fundraisers past the close of its fiscal year as a result of the auto show’s new June date. Delaying its annual breakfast typically held each May until October was necessary to avoid asking sponsors to support key fundraisers two months in a row, President and CEO Debora Matthews said. The Children’s Center is pushing to secure major gifts by March/April, halfway through its fiscal year, to offset the decreased revenue in the early part of the year, she said. “If we haven’t secured it by then, we'll have to consider other actions. Our board would have to approve operating in the red, or we’d have to change operations in some substan-
tial way, whether that’s cutting back on staff where we can,” or something else, Matthews said. The Children’s Center employs about 285 at its Detroit location. It provides behavioral health, foster care and adoption services for about 7,500 children each year, funded largely through government contracts. It raises $3 million of its $25 million budget each year. It does that through a handful of annual fundraising events. The Charity Preview and a Ford Motor Co.-sponsored, ticketed afterglow bring in almost $1 million in revenue. Its annual breakfast is its second-biggest fundraiser, Matthews said. See CHARITY on Page 17
HEALTH CARE
Beaumont Health takes back pediatric hospice service from Ohio company Announcement ends weeks of anxiety, confusion for families BY JAY GREENE
After less than a year, Beaumont Health has taken back a children’s hospice service it sold to Ohio-based Alternate Health Solutions Network after that company told more than 30 families with terminally ill children that it would close the service. The announcement by Beaumont on Dec. 30 to families in Southeast Michigan ended several weeks of anxiety and confusion. It’s another move for an unprofitable program that helps dozens of families with terminally ill children that has been passed around among four different companies over the past several years. The parents now worry that Beau-
mont might not continue what is called the Patch hospice program, although the health system’s officials say they are working with other providers to possibly expand it statewide because of the need. Jessica Hall, who lives in Chesterfield Township, is the mother of Andrew, a 19-year-old who is severely developmentally disabled and has been helped by Patch for many years, the past four with Beaumont. Andrew is terminally ill, blind and has multiple conditions including CHARGE syndrome, a genetic disorder that affects many parts of the body, she said. “We are extremely worried” about the Patch program ending, Hall said. “We are satisfied with the Beaumont
program (the past four years). They have been very supportive. If they close it, it will mean more hospitalizations, more trips to doctor offices, more ambulance trips to Children’s (Hospital of Michigan). Nobody else can do it. The Patch team extends life.” Stacey Lotterman, a former Beaumont nurse who lives in Washington Township, has a 4 1/2-year-old son who has been in the Beaumont-led program two years. Holden, who also is terminally ill, has several diagnoses, but the main one is mitochondrial disease, a disorder that affects energy production and creates organ dysfunction in the body. See BEAUMONT on Page 18
Holden Lotterman has been in the Beaumont-led program two years. | STACEY LOTTERMAN JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 3
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4 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
The WJBK TV Studios building at 7441 Second Ave. in Detroit is being marketed for lease by the Royal Oak office of JLL following a $2.6 million sale to Adam Lutz and Matthew Sosin last month. | CHRIS GERRARD/COURTESY OF ADAM LUTZ
New landlords come to New Center area, Eastern Market, Midtown The former WJBK TV Studios building in Detroit’s New Center area has a new ownership group that paid $2.6 million for it last month. Kirk New owners PINHO Adam Lutz and Matthew Sosin are becoming familiar names in the area, with construction continuing on the nearby Albert Kahn Building they also own as they turn it into about 206 apartments, the majority of which are one-bedroom units, in a $69.2 million redevelopment. For the WJBK building at 7441 Second Ave. at Bethune Street, immediately to the north of the Albert Kahn, the duo said they plan to list it and its 30,000 square feet for lease through AJ Weiner, managing director in the Royal Oak office of Chicago-based brokerage JLL. “We love the idea of adding another asset to the neighborhood because we are so excited about what’s going on there. This building is extremely flexible,” said Lutz, who is the principal of Birmingham-based Lutz Real Estate Investments. Sosin is principal of Farmington Hills-based Northern Equities Group. Sosin said the building, which has about 80 parking spots, would make good space for “a really interesting R&D user” or office space, or possibly hotel or apartments (which is what the previous owner, Calgary-based developer Halcor Group, had planned with a 145-unit apartment project that it abandoned). “Just like in the suburbs where we are seeing this trend of heavy office but with a lab component, it fits that profile,” Weiner said. “It has two floors of above-grade office, but what was once a TV studio is a logical R&D space. You can do all kinds of things there.” Lutz and Sosin said construction on the Albert Kahn should be complete by the middle of this year and will include about 75,000 square feet of retail space, though no leases are signed yet. Amenities will include a game area and an exterior dog park. The WJBK building is “the only intact example of a 1950s television studio left in the city,” according to an application for addition to the National Register of Historic Places, which
was approved 2016, the Detroit Free Press reported. The popular TV shows “Sagebrush Shorty” and “Sir Graves Ghastly” were produced there. The building was designed by John Volk, who was the architect for properties for the Vanderbilt, DuPont, Ford, Dodge and Pulitzer families, the application says.
for the building. Vincent Mazzola brokered this deal, too, but declined comment.
Singapore SWF enters metro Detroit
An entity called Halcor Studio Live LLC bought the property in April 2017, according to Wayne County land records, from Brooklyn-based Yesre Realty LLC, which bought it from the Mosaic Youth Theatre of Detroit in February 2015. Halcor paid $2.7 million for it, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. The sale last month was brokered by Vincent Mazzola, senior associate for Detroit-based O’Connor Real Estate.
The sovereign wealth fund of Singapore is now landlord for a metro Detroit Plum Market. GIC has finalized a deal with New York City-based RPT Realty, most recently known as Ramco Gershenson Properties Trust (NYSE:RPT), to purchase a 48.5 percent stake in five of its properties for $118.3 million, the REIT formerly based in Farmington Hills. Among them: The Shops at Old Orchard at 6526-6695 Orchard Lake Road in West Bloomfield Township, where Plum Market is the key tenant with 40,000 square feet in the 97,000-square-foot shopping center. RPT is the owner of the other 51.5 percent stake. Other properties as part of the deal are Coral Creek Shops in Coconut Creek, Fla.; Mission Bay Plaza in Boca Raton, Fla.; The Crossroads in Royal Palm Beach, Fla. and Town & Country Crossing in Town & Country, Mo., according to RPT. RPT also says GIC has committed up to another $200 million to be part of future deals in which it would take a 48.5 percent ownership stake, meaning that the joint venture, called RPTGIC Venture, will have $412.5 million over three years to invest.
Another NYC developer buys Eastern Market spot
SheWolf has a new landlord
A New York City property owner has purchased the vacant building at 1561 Adelaide St. in the Eastern Market area. This one flew under the radar for much of 2019 until it popped up in a CoStar Group Inc. search last week. The deal actually closed in March for $2.15 million, according to city property records. An entity called 1561 Adelaide LLC is the owner, with a registered address in Brooklyn that is listed for David Mosseri, who is the founder and CEO of an Elizabeth, N.J.-based company called U.S. Mobile Phones Inc. Dan Cousino, founder and partner of Royal Oak-based Cousino Law, is listed as the attorney on the 1561 Adelaide LLC incorporation documents. He said his client would have no comment on the purchase or future plans
The building that houses the popular SheWolf Pastificio & Bar has a new owner. Vincent Mazzola said the buyer was 440 Selden Street LLC but declined to identify who is behind the entity other than to say it’s a New York resident. The sale price was $1.21 million, he said, a 9 percent reduction from the $1.33 million asking price. SheWolf will remain the tenant. According to an offering memorandum, the building has an annual gross income of $113,906, with SheWolf paying $33.75 per square foot for its 3,375 square feet. After $19,710 in taxes and $1,214 in insurance cost, the net operating income is $92,982, the OM says.
“WE LOVE THE IDEA OF ADDING ANOTHER ASSET TO THE NEIGHBORHOOD BECAUSE WE ARE SO EXCITED ABOUT WHAT’S GOING ON THERE. THIS BUILDING IS EXTREMELY FLEXIBLE.” — Adam Lutz, principal, Lutz Real Estate Investments
Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
MERGERS & ACQUISITIONS Waterford Bancorp announced in June that it agreed to purchase Clarkston Financial Corp., the parent company of Clarkston State Bank, which operates one branch in Clarkston and one in Waterford. | CLARKSTON STATE BANKS
Toledo-based bank finalizes $34.8M acquisition of Clarkston State Bank Bank has branches in Clarkston and Waterford Township BY KURT NAGL
Toledo-based Waterford Bancorp Inc. has finalized its $34.8 million acquisition of Clarkston State Bank. Waterford Bancorp announced in June that it agreed to purchase Clarkston Financial Corp., the parent company of Clarkston State Bank, which operates one branch in Clarkston and one in Waterford. The deal closed Jan. 1, according to Waterford Bancorp’s website.
The combined, privately held financial institution will operate as Waterford Bank, with $967 million in assets and four branches in Michigan and Ohio. The combined bank is overseen by Waterford Bancorp Chairman and CEO Michael Miller. Clarkston State Bank President and CEO Grant Smith will report to Miller and head up the bank’s Michigan operations. Clarkston State Bank had 31 employees across its two locations. The bank,
CRAIN’S AWARDS
Nominations sought for Notable Women in Finance Know a remarkable woman CFO, banker, wealth manager, venture capitalist, CPA or other financial professional in Michigan? We want to know about her. Nominate a Notable Women in Finance and we may honor her in a special recognition section on April 27. The nomination deadline is Feb. 7. Nominees will be invited to complete a separate application, which is
due Feb. 14. Winning candidates will be notified directly. Any woman currently working in finance in Michigan and who has not earned a Notable Women in Michigan honor in the past 12 months is eligible for this recognition. For questions, contact special projects editor Amy Bragg: abragg@ crain.com or 313-446-1646.
founded in 1998, grew to $219 million in total assets. It closed two of its branch locations in the past five years. The acquisition’s impact on staffing is unclear. Waterford Bancorp. opened as a de novo institution in 2007. The privately held company has $748 million in assets and 75 employees across two branches. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
9 5 9 1 600
There’s always another tax code change coming.
CRAIN’S AWARDS
Nominations now open for 20 in their 20s awards Crain’s Detroit Business is now accepting nominations for this year’s 20 in their 20s awards. We’re looking for professionals under 30 who have made an outstanding contribution to their business, industry and community — leaders, founders, mentors, executives and other rising stars. Who should the world be watching from metro Detroit in 2020?
Tell us at crainsdetroit.com/nominate. The nomination deadline is Feb. 7, 2020. Candidates will have until Feb. 14 to complete a separate application. Winners will be notified directly and announced in our May 4 issue. For questions about the program please contact special projects editor Amy Bragg: abragg@crain.com or (313) 446-1646.
We’re on it. A S S U R A N C E | TA X | A D V I S O R Y
cohencpa.com/michigan JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 5
MARKETING AND PUBLIC RELATIONS
TECHNOLOGY
Ripple Science nabs VC interest in $2.5M round Ann Arbor firm makes clinical research software BY ANNALISE FRANK
An Ann Arbor-based maker of HIPAA-compliant clinical research software has raised $2.5 million in equity financing, with more than 80 percent coming from funds outside Michigan. Ripple Science Corp.'s funding round was led by Omaha-based Dundee Venture Capital, according to President and CEO Peter Falzon. Other participants include the Rise of the Rest seed fund, from AOL co-founder Steve Case's Wa s h i ng t o n , D.C.-based RevFalzon olution Ventures; Houston-based Mercury Fund; Denver-based SpringTime Ventures; Chicago-based M25; and Red Cedar Ventures in East Lansing. Previous investors also returned to contribute to the cloud-based software company's new financing: Invest Detroit Ventures, Invest Michigan and the University of Michigan's Michigan Investment in New Technology Startups initiative, according to a news release. Before this, Ripple had raised $2.5 million since its founding in 2016. Ripple Science aims to hire 10 more employees next year, including beefing up its sales and marketing teams, and release new product features. Its employee count has grown over the past year from four to 12, Falzon said. The company's annual recurring revenue from product subscriptions rose 270 percent in 2019, ending the year at $380,000. It estimates $1.9 million in current, cumulative total contract value. Ripple’s biggest shareholder is the University of Michigan, followed by Mercury and Dundee. Falzon declined to disclose ownership percentages.
“...THERE’S A LOT OF FOCUS ON ACCELERATING AND IMPROVING AND USING TECHNOLOGY TO MAKE CLINICAL TRIALS MORE EFFICIENT.” — Peter Falzon
Falzon, a University of Michigan graduate who returned to the region two years ago after 25 years in Silicon Valley's biotech industry, said Ripple wouldn't have grown without the funding ecosystem in metro Detroit and Michigan. He cited groups including Invest Detroit Ventures and Invest Michigan, and "efforts being made to create the startup environment by setting up these sources of capital for early stage companies." Ripple is riding on a tide of local support, but it has also nabbed significant backing from VC firms across the country. Another metro Detroit company to do so recently is Detroit-based online plant startup Bloomscape, which got $7.5 million from Revolution Ventures and others. Teams running clinical trials for pharmaceutical and medical device companies make up Ripple's main customer base. "In the U.S., about $80 billion per year is spent on clinical trials, and there's a lot of focus on accelerating and improving and using technology to make clinical trials more efficient," Falzon said. Ripple's online systems are there to streamline clinical trial processes, lowering costs and reducing the time it takes to bring products to market, he said. Ripple's client base also includes public health researchers and market researchers. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
Detroit-based marketing firm MCCI, founded in 1993, has been sold by Terrence Oprea (center), to (from left) Jennette Smith Kotila, Chris Heaton, Richard Donley and Todd Haight. | M/CCI
MCCI owner sells Detroit-based marketing firm to 4 executives
Company hires new employees, preps for expansion BY KURT NAGL
The owner of Detroit-based Mort Crim Communications Inc. has sold the marketing firm to four of its executives. Retiring President and CEO Terrence Oprea, 68, has passed on the reins of MCCI, which recently hired a half-dozen employees and is preparing for a 4,000-square-foot expansion to its downtown headquarters, according to a news release. Terms of the transaction, which was finalized Dec. 31, were not disclosed. The new owners of the marketing firm are Christopher Heaton, 48, who is majority owner and transitioning from COO and CFO to CEO; Richard Donley, 52, who moves up from vice president to president; Todd Haight, 57, who is now chief strategy officer; and Jennette Smith Kotila, 45, who will serve as chief marketing officer. “The four of us in essence have been running the day-to-day operations of the company anyway, so it’s sort of a seamless transition,” said Kotila, who was formerly editor of
Crain’s Detroit Business. “We will obviously be trying to continue the growth trend and maintain the focus on quality.” Oprea will work with the agency short-term during the transition. He had been with the company since it started in 1993, becoming president in 1998 and sole owner in 2008. “This is the culmination of years of planning between our executives and me,” Oprea said in the release. “I’m thrilled this is happening at a time when we’re experiencing unprecedented client momentum, top-line growth and significant expansion of our downtown Detroit headquarters.” The firm expects the $175,000 build-out at its Murphy-Telegraph Building base to be complete in the first quarter. MCCI promotes itself as a full-service marketing agency. Founded by its namesake, a former news anchor at WDIV-TV, the company’s roots are in traditional marketing, but it has made strides to diversify offerings amid the growing prominence of digital media. Oprea bought the company just as
the recession left it and many competitors scrambling to stay afloat. It moved from Southfield to its present location at 155 W. Congress St. in Detroit in 2014. MCCI now has more than 40 clients across various industries, including auto, supply chain, education, government and health care. Its largest customers include the Detroit Water and Sewerage Department, Pennsylvania-based supply chain firm Synovos and Detroit-based PVS Chemicals Inc. The marketing firm employs around 30 people and is gearing up for additional hires in 2020. The expansion will make room for another 25 people, and “the plan is to fill it,” Heaton said in an email. Its revenue has steadily increased over the past three years. In 2019, it was around $6 million, and it is projected to hit $7 million this year, Kotila said. “I think it’s exciting to have a company exist for 26 years and still be on a growth trend,” Kotila said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
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Bedrock hires former Honigman executive as chief development officer BY KIRK PINHO
Dan Gilbert’s real estate company has hired one of Detroit’s most prominent real estate attorneys as chief development officer and executive vice president. Lawrence McLaughlin, 68, officially started his new job last week at Bedrock LLC after more than four decades at Detroit-based law firm Honigman LLP, where he had been chairman of its real estate department for two decades before stepping down at the end of 2018 to pursue other profes-
sional endeavors. He comes to Gilbert’s company after a series of leadership changes there over the last year or so, starting with a leadership reshuffling in SepMcLaughlin tember 2018. After that, longtime Gilbert lieutenants Dan Mullen and Jim Ketai left on June 7 and Sept. 1 last year, respectively, and Matt Cullen was brought on
board as CEO effective Sept. 1. Mark Dunkeson was named president/ COO at that time, as well. McLaughlin said that even though he left Honigman at the end of 2018, he has been consulting Bedrock in the interim on projects such as the Wayne County Consolidated Jail development at East Warren Avenue and I-75. With Honigman, McLaughlin worked on a variety of development-related matters, including finance, redevelopment, construction law, incentives, joint ventures and others.
NOMINATION PROGRAMS
OPEN
Crain’s Detroit Business will name the 2020 Notable Women in Finance in a special report on April 27. In that report, we’ll profile women in finance – from controllers and CFOs to money managers and number gurus – who are considered leaders in their workplaces and in the community. NOMINATIONS CLOSE: FEB.7 ISSUE DATE: April 27
Crain's 20 in their 20s recognition program seeks young professionals who are making their marks in the region. This program recognizes the hard work of local rising stars and further propels their careers. NOMINATIONS CLOSE: FEB. 7 ISSUE DATE: May 4
For the eighth year, Crain’s will recognize the Cool Places to Work — companies that, according to their employees, go above and beyond in putting a focus on workplace culture. NOMINATIONS CLOSE: MARCH 6 ISSUE DATE: Aug. 3
Health Care Heroes honors top-notch medical innovators and patient advocates dedicated to saving lives or improving access to care. Winners are selected in multiple categories. NOMINATIONS CLOSE: MARCH 11 ISSUE DATE: June 1
Since 1991, Crain's Detroit Business has gathered 40 of the community's overachievers for a special salute. Past winners have started companies, found success at a young age, established businesses and made nonprofits stronger. NOMINATIONS CLOSE: MAY 4 ISSUE DATE: Sept. 7
For more information or to nominate, visit crainsdetroit.com/nominate
COMMENTARY
DANIEL SAAD
Gauge health of economy by household income
EDITORIAL
Nip ‘labor peace’ rule in the bud now M
ichigan’s budding — and highly regulated — marijuana industry would get an unneeded shot of extra regulation under a rule proposed by the state. In November, the state Department of Licensing and Regulatory Affairs quietly slipped into proposed licensing rules a requirement that cannabis businesses enter into so-called “labor peace” agreements. Under such a IF MICHIGAN businesses agree WANTS TO HAVE deal, not to oppose efforts to unionize their A HEALTHY workforces. (See story, CANNABIS Page 11.) It’s clearly a bone INDUSTRY, IT thrown to unions by NEEDS TO FIND labor-friendly Democrats. It’s also unneedTHE RIGHT ed — and is likely unBALANCE constitutional. Voters didn’t weigh BETWEEN in on this — the meaREGULATION sure that legalized recreational marijuana AND A FREE said nothing about laMARKET. bor unions at all. Gov. Gretchen Whitmer said the rule didn’t come from her office, but it must have come from somewhere. Unions already have plenty of protections under the federal National Labor Relations Act, which requires that employers negotiate “in good faith” once a union has been voted on by employees. The rules proposed by the state go much further, requiring companies to pre-emptively make a labor agreement before they can even open for business.
Forcing businesses to submit to and aid unionization also flies in the face of the state’s right-to-work laws, which are intended to let employees choose whether to belong to a union or not. No other industry is subject to this kind of regulation of its labor affairs, and there are precedents that have ruled these kinds of pre-emptive licensing requirements unconstitutional. As pointed out by Geoffrey Lawrence, a senior policy fellow at the Reason Foundation: “The U.S. Supreme Court ruled in 1987 that the city of Los Angeles could not withhold the license of a taxicab company based solely on the condition that the company had to resolve a labor dispute. Regulation of private-sector labor disputes, noted the court, was pre-empted solely to the National Labor Relations Board and therefore no privileged license can be conditioned on a labor peace agreement.” If Michigan wants to have a healthy cannabis industry, it needs to find the right balance between regulation and a free market. Marijuana businesses have plenty of regulatory issues to deal with already — this shouldn’t be one of them. The “labor peace” rule should be nipped in the bud now, before the Legislature and courts waste time on it.
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For the first time ever Michigan is a low-prosperity state with a strong domestic auto industry. Ten percent below the national average in per capita income. The recovery from the Great Recession has produced lots of jobs. Which Lou Glazer is is good news indeed. president of But far too many Michigan Future Michigan households, Inc., a Ann most with at least one Arbor-based working adult, are strugeconomic think tank. gling to make ends meet. Since the turn of the century — no matter who was in control in Lansing and Washington — more and more Michigan households are facing the cost of basic necessities rising faster than wages and benefits. The Michigan Association of United Ways reports that in 2017, 43 percent of Michigan households were unable to pay for housing, child care, food, transportation, health care, a cell phone and taxes. They call these households ALICE (asset constrained, income limited, employed). The ALICE data make clear that the problem is structural. ALICE is an all Michigan problem — prevalent for all ages, races and ethnicities. There are no counties in the state with less than 30 percent ALICE households. Maybe most alarming, the ALICE population in Michigan is growing in what is widely viewed as one the best Michigan economies ever. In 2017, 1.66 million Michigan households were ALICE households, compared with 1.57 million in 2010. Yes, you read that right. There are more Michigan households today unable to pay for basic necessities than there were in 2010, when Michigan was just starting to recover from the Great Recession. This is the economic challenge of our times: figuring out how you get an American capitalism that as it grows benefits all. It is far past time that we reject the notion that we have to accept a Michigan where 43 percent of households can’t pay for basic necessities in order to have a growing economy. We need, first and foremost, to define a good economy as one that is benefiting all. We need a new economic strategy in Michigan. One that starts with rising household income for all the state’s economic mission. Income needs to become the focus of economic policymaking and economic and workforce development programming. The simple reality is you do not have a good economy when more than four of 10 Michigan households cannot pay for basic necessities. The state’s focus needs to shift from a low unemployment rate and measures of economic growth to a focus on whether Michigan households can pay the bills, save for their retirement and their children’s educa-
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tion. To meet the goal of rising income for all Michigan households four structural challenges need to be addressed: 1. Too many low-paid jobs. The preeminent reason 43 percent of Michigan households cannot pay for basic necessities is that the economy is producing too many lowwage jobs. This is structural. Lots of businesses that employ lots of people have business models based on low-wage workers. We are not growing our way out of too many low-wage jobs. Sixty percent of Michigan jobs pay less than $20 an hour, 40 percent pay less than $15 an hour. More specifically, nationally 51 percent of jobs are in occupations that pay less than the national median of $38,640. In Michigan it is 58 percent. (To put the national median in context, The Michigan Association of United Ways calculates the cost of paying for basic necessities in Michigan is $61,272 for a family of two adults with one infant and one preschooler.) 2. Too few with the education attainment to get better-paying jobs. The most reliable path to the middle class is a four-year degree. Michigan is a national laggard in WE NEED, FIRST college attainment. About three-quarters AND FOREMOST, of Michigan jobs in TO DEFINE A occupations with median wages of GOOD ECONOMY $62,000 or higher re- AS ONE THAT IS quire a four-year deBENEFITING gree. And for the ALL. one-quarter that don’t require a fouryear degree, there are too few Michigan adults with the skills required to get those jobs. Even more worrisome is that our education system is almost certainly not preparing way too many of our kids for the good-paying jobs of the future. 3. Too low talent concentrations to attract high-wage employers. Michigan needs more high-wage jobs. But you can’t retain, attract and grow high-wage jobs without large talent concentrations. Talent attracts capital. Not the other way around. That is the core lesson of Michigan’s failure to have any region make the final 20 regions considered for Amazon HQ2. The asset that matters most to high-wage employers is deep pools of workers with four-year degrees, particularly young professionals concentrating in high-density, high-amenity neighborhoods where you do not need to own a car. Michigan has too few of those neighborhoods. 4. Too many Michiganders ages 16 and older don’t work. The state’s unemployment rate is at historic lows, but its employment-to-population ratio is not. In 2000, our employment-to-population ratio ranked 28th in the nation. Today, it’s even worse at 38th nationally. We can — and should — debate how to achieve an economy that benefits all. What we should not do is celebrate an economy that is leaving so many behind.
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OTHER VOICES
Another missed opportunity to fix broken school funding BY JIM STAPLETON
As a business leader in Detroit during our city’s continued resurgence, I know firsthand high quality K-12 education is imperative for our kids to compete for Jim Stapleton is in-demand, a Detroit-area good-paying businessman, past EMU Board jobs. Unfortunately, of Regents Michigan’s bromember and ken school fundSchool Finance ing approach Research continues to fail Collaborative our kids, creating member. a disheartening gap between the demands of the 21st century workforce and the skills our K-12 students graduate with. This is unsustainable for our kids and Michigan’s continued economic comeback. I realized a ray of optimism when I learned the Legislature and Gov. Gretchen Whitmer were taking a second look at school-aid funding in the 2020 budget. The supplemental bud-
get process offered a unique oppor- sure every student has the same optunity to embark on a new, fairer portunity to get a high-quality educaschool funding method that serves tion and compete for jobs, whether the unique needs of every student, that entails college, technical trainregardless of his or her circumstances. OUR STATE’S CURRENT SCHOOL FUNDING The final result of that effort, un- APPROACH FAILS TO MEET THE NEEDS OF fortunately, is an- FAR TOO MANY STUDENTS. other missed opportunity to make this long overdue change that only ing, apprenticeships or jobs right afcontinues the status quo, falls far ter high school. I am a proud member of the School short of fixing our obsolete school funding method, and causes our Finance Research Collaborative and students to continue falling further am confident our work has provided the roadmap to get us there. We are a and further behind. A new approach is needed to en- broad-based, bipartisan group of
business leaders and education experts from every corner of Michigan who all agree: It’s time to change how we fund our schools. The collaborative produced Michigan’s first comprehensive school adequacy study that determined the true cost to educate a child in our state. The report provides the building blocks for a new approach that provides a base cost per student and additional funding for students enrolled in special education, those living in poverty, English language learners, and career and technical education programs. This new approach recognizes not all kids are
college-bound, and may instead have their sights set on careers in the skilled trades or jobs right after high school. Our state’s current school funding approach fails to meet the needs of far too many students. This must change if we’re going to give all students the opportunities for college and careers they deserve. It won’t happen overnight, but we owe it to our kids and the Great Lakes State to get started today. The Legislature has missed another opportunity to get it right, but we must keep pushing forward in 2020. The future of our children depends on it.
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CONSTRU Salma Starlgn hasIte Paula Thompsom John Smith hasIte Salma Starlgn hasIte N LLP volo officte hasIte voloJOHNSO officte volo officte volo officte Russel Agency BUILD mpossitatint volut mpossitatint volut mpossitatint volut BEST Smith hasIte mpossitatint volut John Thompsom Paula fugiaec tibus, sumqui fugiaec tibus, fugiaec tibus, sumqui fugiaec tibus, sumqui volo officte Salma Starlgn hasIte hasIte volo officte volo temposa ndianti sumqui temposa temposa ndianti ndianti onserrumende temposa ndianti mpossitatint volut Jane Pool hasIte volo officte mpossita onserrumende se ettint volut ndianti onserrumende se et tint se et dolesofficte dolesmpossita cus, onserrumende se ettint volut Salma Starlgn hasIte fugiaec tibus, sumqui mpossita tibus, doles dolesfugiaec cus, quaeceres erro onserrumende se et ndianti doles doles doles doles cus, quaeceres erro quaeceresvolut erro fugiaec quia doles doles cus, tibus, sumqui tibus, volo officte temposa fugiaec sumqui temposa quia volorehendam aut cus, quaeceres erro quia quia volorehendam aut ende se et volorehendam auttemposa moloratem quaeceres erro quiandianti mpossitatint volut onserrum sumqui temposa erro s sumqui quaecere ndianti cus, moloratem cus net aperibus volorehendam aut moloratem moloratem cus net aperibus tibus, ende cus net aperibus nem volorehendam aut moloratem fugiaec doles doles onserrum ndiantidicta onserrumende se et ende se et doles doles onserrum dicta nem ligenda nditis cus net aperibus dicta nemdam aut dicta nem ligenda nditis ligenda nditis endantiaesed cus net aperibus dicta nem volorehen erro s temposa ndianti quia doles doles cus, quaecere se et doles doles cus, s erro quia ligenda nditis endantiaesed quaecere cus,quos endantiaesed doluptur endantiaesed quos doluptur quos doluptur sitaturs erro quia ligenda nditis endantiaesed onserrumende se et moloratem cus net aperibus quaecere dam aut m volorehen molorate quia aut dam m doluptur sitatur volorehen sitatur eproviduste volende quos doluptur sitatur eproviduste volende dam riatum aut moloratequos nem ligenda nditis sitatur eproviduste volende doles doles cus, volorehen m cus net aperibus dicta nemeprovidustedicta molorate aperibus doluptur net quia cus nem quos erro riatum verum expel ipicatenis volende riatum riatum verum expel ipicatenis s sed dicta verum expel ipicatenis eproviduste volende riatum quaecere endantiae cus net aperibus m dicta nem ligenda nditis doluptatiuntligenda endantiaesed voluptanditis quam, verum expelsitatur ipicatenis doluptatiunt volupta quam, volupta quam, eproviduste volende endantiaesedverum expel ipicatenissed quos doluptur volorehendam aut moloratedoluptatiunt nditis ligenda nem ommolup tatur? doluptur sitatur quosQuiaeperi expel ipicatenis auda doluptatiuntriatum volupta quam, ommolup tatur? Quiaeperi auda auda doluptatiuntendantiae volupta quam, te volendeommolup tatur? verum cus net aperibus dicta doluptur sitatur quos Quiaeperi riatum sitatur eprovidusauda volende sed eproviduste pa cus in repudionem quamus et ommolup tatur? Quiaeperi auda quam, pa cus in repudionem quamus et unt volupta volendeetriatumommolup tatur? Quiaeperi ligenda nditis endantiae pa cus in repudionem doluptati eprovidustequamus expel ipicatenis riatum verum ipicatenis auda i expel sitatur Quiaeper verum aut velluptam videlic ieniet pa cus in repudionem quamus et aut velluptam videlic ieniet aut velluptam videlic ieniet pa cus in repudionem quamus et tatur? doluptur quos ommolup verum expel ipicatenis quam, etvero cus, audit doluptatiunt volupta quam, hariam vero doluptati cus, auditunt volupta aut velluptampavidelic hariam cus, audit repudionem quamus cus inieniet eproviduste volende riatumhariam verodoluptati unt volupta quam,aut velluptam videlic ieniet i auda tatur? Quiaeperi auda tatur? Quiaeperhariam auda vero ommolup ommolup optatquatem expla doluptatur vero cus, audit optatquatem expla doluptatur videlic ieniet optatquatem expla doluptatur cus, audit et verum expel ipicatenis tatur? Quiaeperihariam aut velluptam et ommolup in repudionem quamus pa cus optatquatem et in repudionem quamus cus pa ut autatqui dolori facepro optatquatemhariam expla doluptatur ut facepro vero cus, audit autatqui dolori ut facepro doluptatiunt volupta quam,autatqui dolori in repudionem quamus pa cus videlic ieniet aut velluptam videlic ieniet r i auda doluptatu Quiaeper velluptam autatqui dolori ut facepro aut expla ieniet tatur? expla tem videlic ommolup optatqua aut velluptam hariam vero cus, audit quamus et hariam vero cus, audit r pa cus in repudionem autatqui dolori ut facepro hariam vero cus, audit r optatquatem expla doluptatu r optatquatem expla doluptatu aut velluptam videlic ieniet optatquatem expla doluptatu autatqui dolori ut faceproINSURANCE autatqui dolori ut faceproLAW ARCHITECTURE LEGAL hariam vero cus, audit autatqui dolori ut faceproACCOUNTING r optatquatem expla doluptatu autatqui dolori ut facepro Davis Design Davis Inc. SMITH GROUP Moris Law LEGAL George Group
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Quiaeperi auda ommolup tatur? Quiaeperi auda eprovidus cus net aperibus dicta ommolup tatur?ligenda nditis endantiaesed verum expel ipicatenis te volende eprovidus sed pa cus in ommolup tatur?sitatur Quiaeperi auda pa cus in repudionem et ipicatenis pa cus in repudionem quamus et pa cus in repudionem quamus et verum expel riatumquamus ligenda nditis endantiae doluptatiunt volupta quam, ipicatenis quos doluptur sitatur pa cus in repudionem verum expel quam, riatum volupta auda i repudionem quamus et aut velluptam videlic ieniet aut velluptam videlic ieniet aut velluptam videlic ieniet unt sitatur Quiaeper doluptati riatum quos doluptur te volende ommolup tatur? eprovidus unt volupta quam, et cus, audit doluptati tatur? Quiaeperi auda quamus et autipicatenis aut velluptam videlic ieniet hariam vero cus,ommolup audit hariam hariam vero quamus eproviduste volende riatum i auda pa cus in repudionem et verum expel tatur? Quiaeper velluptam videlic hariam vero cus,ommolup audit optatquatem expla doluptatur vero cus,videlic ieniet optatquatem expla doluptatur in repudionem quamus MORISvelluptam pa cus verum expel ipicatenis unt volupta quam, quamus et doluptati in repudionem autatqui LAWaut audit pa cus ieniet hariam vero Quiaeper optatquatem expla doluptatur dolori utaut facepro autatqui dolori ut facepro velluptam videlic ieniet i auda doluptatiunt volupta quam, tatur? hariam vero cus, audit ommolup velluptam videlic ieniet i auda audit aut r cus, cus, audit autatqui dolori ut facepro Quiaeper et vero doluptatu tatur? hariam quamus expla ommolup optatquatem pa cus in repudionem r hariam vero cus, audit quamus et optatquatem expla doluptatu pa cus in repudionem r autatqui dolori ut facepro aut velluptam videlic ieniet optatquatem expla doluptatu autatqui dolori ut facepro aut velluptam videlic ieniet hariam vero cus, audit autatqui dolori ut facepro CONSTRUCTION INSURANCE LEGAL LEGAL r hariam vero cus, auditACCOUNTING optatquatem expla doluptatu r optatquatem expla doluptatu autatqui dolori ut facepro Jon & Jon Co. 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Carol Strong hasIte Tina Bond hasIte Michael Banks hasIte Jenn Stone hasIte Bella Jones hasIte INSURANCE CONSTRUCTION volo officte Singletree LLP volo officte volo officte volo officte volo officte mpossitatint volut mpossitatint volut Calla LLP mpossitatint volut mpossitatint volut mpossitatint volut Marble Agency Michael Banks hasIte fugiaec tibus, fugiaec tibus, fugiaec tibus, sumqui fugiaec tibus, sumqui Ground Up Bella Jones hasIte fugiaec tibus, sumqui volo officte sumqui temposa temposa ndianti temposa ndianti Tina Bond hasIte sumqui temposa volo officte temposa ndianti hasIte mpossitatint volut Stone Jenn se ndianti onserrumende et ndianti onserrumende se et onserrumende se volo et officte tint volut onserrumende se et mpossita sumqui Carol Strong hasIte tibus, fugiaec volo officte doles doles cus, quaeceres erro doles tibus, doles sumqui doles doles cus, quaeceres errovolut onserrumende se et doles doles cus, quaeceres erro mpossitatint fugiaec ndianti doles doles cus, quaeceres erro volo officte tint volut temposa mpossita quia volorehendam aut cus, quaeceres errotemposa quia quia volorehendam aut quia volorehendamfugiaec aut tibus, ndianti quia volorehendam aut ende se et mpossitatint volut tibus, sumqui onserrum fugiaec temposa volorehendam aut moloratem et moloratem cus net aperibus moloratem cus net aperibus moloratem cus net aperibus moloratem cus net aperibus sumqui se s erro ende onserrum fugiaec tibus, ndianti doles doles cus, quaecere s erro dicta nem ligendatemposa nditis cus net aperibus dicta nem dicta dicta nem ligenda ndianti nditis dicta nem ligenda nditis cus, quaecere doles aut nem ligenda nditis doles dam et sumqui temposa se volorehen doles ende doles nditis endantiaesed aut endantiaesed quosonserrum doluptur endantiaesed quos doluptur endantiaesed dolupturende se etligenda quos quia doluptur se et aperibus s erro quosonserrum quia volorehendamendantiaesed ndianti onserrumende moloratem cus netsitatur doles cus, quaecere quia doluptur sitatur doles erro quaeceres erroquos aperibus sitaturseproviduste volende eproviduste volende sitatur volende eproviduste volende moloratem cus netsitatur aut eproviduste cus, doles doles cus, quaecere nem ligenda nditis m dicta volorehendamriatum quia dam aut molorate riatum verum expel ipicatenis nditis eproviduste volende riatum riatum verum expel ipicatenis verum expel ipicatenis riatum verum expel ipicatenis volorehen aut ligenda dam nem dicta sed quos doluptur quia volorehen cus net aperibus nem molorate doluptur voluptaendantiae net aperibus dicta doluptatiunt volupta quam, m verum expel ipicatenis volupta quam, doluptatiunt volupta quam, quam, cus volende tedoluptatiunt endantiaesed quosdoluptatiunt moloratem cus net aperibus ligenda nditis sed sitatur eprovidus dicta nem nditis endantiae ommolup tatur? Quiaeperi auda volende tatur? Quiaeperi doluptatiunt voluptasitatur quam,eprovidusteommolup ommolup tatur? Quiaeperi auda ommolup tatur? Quiaeperi auda ligenda auda dicta nem ligenda nditis verum expel ipicatenis quos doluptur sed riatum endantiae sitatur doluptur pa cus in repudionem quamus et ommolup tatur? Quiaeperi auda expel pa cus in repudionem quamus et pa cus in repudionem quamus et paipicatenis cus in repudionem quamus et volupta quos quam, riatum verum unt te volende endantiaesed quos doluptur sitatur aut velluptam videlic ienieteprovidus aut velluptam videliceprovidus pa riatum cus in repudionem quamusunt et volupta aut velluptam ieniet te volende autquam, velluptam videlicdoluptati ieniet i audavidelic ieniet doluptati ipicatenis sitatur eproviduste volende ommolup tatur? Quiaeper riatum verum expelhariam i auda hariam vero cus, audit aut velluptam videlicommolup ieniet hariam vero cus, vero cus, audit hariam vero cus, audit et audit verum expel ipicatenis tatur? Quiaeper em quamus quam, riatum verum expel ipicatenis unt volupta pa cus in repudionoptatquatem quam, optatquatem expla doluptati doluptatur optatquatem hariam vero cus, audit expla doluptatur expla doluptatur em quamus et doluptatiunt volupta ieniet i audaexpla doluptatur pa cus in repudionoptatquatem doluptatiunt volupta quam, i audaexpla doluptatur aut velluptam videlic ommolup tatur? Quiaeper autatquii auda dolori ut facepro ienietdolori ut facepro autatqui dolori optatquatem autatqui autatqui dolori ut facepro ommolup tatur? Quiaeper et ut facepro aut velluptam videlic quamus ommolup tatur? 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JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 9
CRAIN’S MICHIGAN BUSINESS: CANNABIS RETAIL
THE CANNABIS RETAIL LANDSCAPE
Marijuana grows at Real Leaf Solutions in Kalkaska.
Business owners across the state talk about how things are going in the recreational marijuana market
JESSICA SAVAYA, RETAIL DIRECTOR AT FERNDALE-BASED GAGE CANNABIS USA
BY DUSTIN WALSH
Gage Cannabis operates a large grow operation in Warren with plans for 13 total marijuana retail shops. Currently, its Adrian and Ferndale locations are open to sell medical marijuana but are preparing to sell recreational soon. Gage will also open a Cookies-branded store on Eight Mile and Mound Road on Jan. 31; Gage licensed the popular cannabis brand from California rapper Berner. Savaya, a longtime general manager at Verizon Wireless, is working to instill a corporate culture at Gage while maintaining an atmosphere more in line with what marijuana consumers have come to expect.
Michigan’s nascent adult-use recreational marijuana industry continues to develop. On Dec. 1, 2019, when recreational sales went live, only four dispensaries were licensed and open to the public. Now six weeks in, an influx of new businesses is coming on line nearly daily. Between Dec. 1, 2019, and Jan. 5, the state topped $8.2 million in sales and $1.3 million in taxes from 26 retailers, six growers and a handful of processors, transporters and labs. However, the rollout has not been without bumps. Hours-long lines and product shortages have plagued the early days of legal sales. But companies continue to push forward through what is expected to be a year of uncertainty across the industry. To better understand the current state of the retail market and get a barometer on how the early days of legal recreational marijuana in the state are performing, Crain’s interviewed a selection of entrants into the market. The topics ranged from retail strategy to distribution to the prevalence of illegal product.
10 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
See RETAIL on Page 14
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Marijuana could spark new boom in an old lumber town PAGE 12
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Fight emerges over ‘labor peace’ regs Business groups oppose proposed rule state agency says is designed to stabilize workforce
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BY CHAD LIVENGOOD
` Six business owners across the state talk about how things are going in the recreational marijuana market. PAGE 10 ` Fight emerges over unions in pot shops. PAGE 11 ` Kalhashka: Marijuana could spark new boom in an old lumber town. PAGE 12
` A ‘cannabis campus’ is planned for Battle Creek. PAGE 13
“PATIENTS THAT COME IN WANT TO WORK WITH REAL PEOPLE, NOT SOMEONE THAT’S A ROBOT.” — Jessica Savaya, retail director at Ferndale-based Gage Cannabis USA
Legal sales of recreational marijuana have existed in Michigan for barely a month, and there’s already an emerging political fight over labor unions organizing pot shops. The state’s Marijuana Regulatory Agency is under fire from business groups for proposing an administrative rule that cannabis businesses have to enter into labor peace agreements with unions as a condition for licensing to grow, sell or distribute marijuana. Labor unions routinely seek peace agreements with businesses to get employers to remain neutral in a union organizing drive. Republican lawmakers aligned with business groups are questioning why a state agency wants this licensing requirement and whether it was ordered by Democratic Gov. Gretchen Whitmer. In a year-end interview last month on public television, Whitmer said she would listen "to the experts" about whether to pursue the rule. “I’ve not weighed in, personally, on that one,” Whitmer told television reporter Tim Skubick. Sen. Aric Nesbitt, a Van Buren County Republican and chair of the Senate Regulatory Reform Committee, pressed the Department of Licensing and Regulatory Affairs last week to nix the proposed rule, calling it a “mob style protection racket” for labor unions. “It is my hope that in this new year your department will refocus on efficient administration instead of handing out political favors,” Nesbitt wrote in a Jan. 8 letter to LARA Director Orlene Hawks. Hawks’ department houses the Marijuana Regulatory Agency, which is headed by Director Andrew Brisbo. He’s been empowered to regulate the industry following voter approval to legalize recreational marijuana in 2018. David Harns, spokesman for the Marijuana Regulatory Agency, said the proposed rule was designed to establish a stable workforce for the cannabis business. The proposed requirement has been met with fierce pushback from the Michigan Cannabis Industry Association, the Great Lakes Cannabis Chamber of Commerce and the Michigan Cannabis Manufacturers Association, as
well as long-established business lobbying groups in Lansing. The Small Business Association of Michigan, state chapter of the National Federation of Independent Business, Michigan Chamber of Commerce and other groups have slammed the proposal. The Reason Foundation, a Los Angeles-based libertarian think tank, submitted written testimony to Nesbitt’s committee last month arguing the rule would run afoul of the National Labor Relations Act. In 2005, a federal appeals court ruled an ordinance in Milwaukee County, Wis., that required labor peace agreements for certain government contractors wrongly attempted to preempt the NLRA. “For its part, the National Labor Relations Act only requires employers to negotiate ‘in good faith’ with a federally recognized union that has achieved majority support of workers in an NLRB-supervised election,” Reason Foundation senior policy fellow Geoffrey Lawrence wrote in Dec. 9 testimony. “It never requires an employer to enter into any form of contract with a union as a condition of opening its doors.” Lawrence noted the Michigan ballot proposal made no mention of a requirement for a labor peace agreement. The 2016 voter-approved law that legalized recreational marijuana in California required labor peace agreements for cannabis businesses with 20 or more employees. “This provision, however, was expressly included within the language of Proposition 64, the voter initiative that legalized adult-use marijuana,” Lawrence wrote in his testimony. “... Many licensed marijuana growers in California have avoided the requirement altogether by contracting with farm labor services for their labor needs ...” The MRA plans to hold a public hearing on the proposed rule in mid-February before it is sent to the Legislature's Joint Committee on Administrative Rules for review. The regulatory agency hopes to have its licensing rules finalized by June, Harns said. "We are confident that the rules, as drafted, are on solid legal footing," Harns told Crain's.
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JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 11
FOCUS | CRAIN’S MICHIGAN BUSINESS
Kal-hash-ka? Marijuana could spark new boom in an old lumber town BY TOM HENDERSON
There is a big brown sign on the east side of M-72 as it heads into the village of Kalkaska, trumpeting the village’s motto: “Room to Grow.” The motto has taken on new meaning as Kalkaska has embraced the growing marijuana economy. Many towns and villages up north have been reluctant or bureaucratic when it comes to approving marijuana dispensaries and grow facilities. In May, Traverse City held a lottery where 78 would-be owners of medicinal dispensaries who paid a nonrefundable application fee of $5,000 each were winnowed down to 13. The city has repeatedly tabled what to do about recreational pot businesses. A current draft measure under review would allow growers, processors and secure transporters but prohibit consumption establishments or temporary marijuana events. Just 25 miles away, Kalkaska hopes tourists will flock to its smoke-on-site businesses and to festivals where marijuana tents will compete for customers’ money with beer tents and food stands. There are currently three businesses growing marijuana in the village’s industrial park just east of downtown, with eight more growers rehabbing existing buildings in the park or building new ones. There are plans for 14 growers in all, ranging from huge operations with 4,500 plants to small boutique growers focused on high-potency, high-cost bud. So far, the pot economy has produced 50 jobs in a town where high unemployment has been the rule for decades. Village President Harley Wales said he expects there will be about 20 pot-related businesses in the village by the end of this year, and that total new pot jobs could hit 250 over the next two years. By then, he expects the village will earn $400,000 a year in licensing and inspection fees from marijuana businesses, critical for a town that two years ago was facing a budget deficit of $500,000. An early influx of licensing and inspection fees has allowed the village to order a new Chevy Silverado truck for the police department, expand the police force from three to four and remodel the police department. Commercial growers there are now raising their third crop. The first shop for pot sales is scheduled to open this month in a shopping center on the south side of town in a new building that just went up. The business, called Pincanna, is a northern offshoot of a flourishing Pinconning grow operation. It will sell medicinal pot at first and recreational pot soon after. Pincanna’s website says it is building a 135,000-square-foot greenhouse and processing center in Pinconning and will open “numerous provisioning centers throughout Michigan.” Across the parking lot from the new Pincanna location, a former branch of the Forest Area Credit Union has been built out as another retail pot store and is scheduled to open this quarter.
Called Riverside Provisioning, it is a sister operation to an existing Riverside facility on M-72, just west of Grayling. The branch wasn’t for sale, but a pot entrepreneur walked in last year, said he wanted to buy the building and made an offer the credit union couldn’t refuse. Wales said the building was sold that week. A third retail pot business is undergoing a buildout in the center and awaiting state licensing. There is a certain point to be made in this being a family-friendly mall, literally, that is welcoming pot. It includes, their first names a coincidence as various businesses closed and opened in recent years, a Family Dollar, a Family Fare grocery store and a Family Farm & Home store. The village itself even sold two buildings it owned to cannabis enterprises and has established a pot ombudsman to help interested business folks navigate what can be a confusing combination of local and state regulations. “I am doing what voters said should be done,” said Wales. “We had an overwhelming vote to approve medical marijuana, and then a year ago 55 percent of voters approved recreational use.” Kalkaska, like small towns around Michigan, has gone through decades of decline and hanging on. Unlike many other small towns up north, including Bellaire, Alden and Elk Rapids, which have had dramatic revivals in recent years, it is still struggling, with empty storefronts lining the main street of Cedar and the historic Hotel Sieting in the heart of downtown shuttered for 30 years despite signs in place that have long announced one renovation and reopening or another. The county seat of Kalkaska County, the small, 3.2-square-mile village had a 2010 population of 2,020, down 10 percent from 2000. To most of the people who travel through it on busy M-72, it is the two-stoplight town they have to slow down for on the way to Traverse City after they get off I-75 in Grayling. If most of those visitors notice anything, it is the tall landmark fountain downtown of a rainbow trout, standing vertically on its bent tail, just a few yards from the former train depot, where Ernest Hemingway disembarked in 1916 for some trout fishing at the nearby Rugg Pond Dam, later immortalizing the village in his story “The Battler.” Kalkaska has seen its share of boom and bust cycles over the years. The first settlers arrived in 1855 and the town was platted in 1873 by the owners of a nearby sawmill, who correctly anticipated the coming of railroads to northern Michigan and the subsequent lumber boom. The town thrived as thousands of lumberjacks filled the surrounding pine forests. The boom created more millionaires than all the gold found during California’s gold rush of the mid-1800s, though most of them lived downstate or out of state. More lumber came out of Michigan than any state in the country, hitting a peak of 5.5 billion board feet cut and
12 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
Kalk Solu
Empty storefronts still line downtown Kalkaska, but local leaders are betting on marijuana businesses creating a boom. | BETH PRICE FOR CRAIN’S DETROIT BUSINESS
taken away by train in 1889-1890. By the end of the boom, 1920 or so, 19.5 million acres had been clear cut. The owners didn’t replant, they just tried selling the stump-filled land to the gullible as farmland. It wasn’t until the Great Depression of the 1930s that the Civilian Conservation Corp., formed by President Franklin Roosevelt to put unemployed young men to work, came through the north planting the seedlings that became today’s forests. In the 1970s came a gas and oil boom that flared out in the 1980s — and that was about it for boom times for the next 40 years. In 2014 came a sure sign that good,
if not boom, times were coming to Kalkaska. Walmart announced it was building a store in the village, where previously residents had to drive at least 21 miles to large retail store. Local merchants were worried, local residents ecstatic. In 2017, though, Walmart announced it had changed its mind and was no longer coming to town. But where Walmart feared to tread, pot entrepreneurs haven’t. Wales and others in the village are betting — actually, they think it is a sure thing, no betting involved — that weed will lead to the latest boom. ` The cost of construction of new buildings or renovations of existing
buildings for the marijuana industry is projected to total $100 million over the next three years, and will double the village’s current tax base. In the last two months, the village has approved five site plans for retail operations and expects at least three of them to be open by the end of the year. They are expected to sell both medical and recreational marijuana. ` One license has been granted and two more are available for what Hales calls microboutiques, the equivalent of microbreweries for pot smokers. They will sell a variety of high-grade marijuana for consumption on premises. Currently, Kalkaska has no Uber presence and just one small cab com-
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FOCUS | CRAIN’S MICHIGAN BUSINESS his or her tan before heading over, say, to the Trout Town Tavern & Eatery to fend off the munchies.
BETH PRICE FOR CRAIN’S DETROIT BUSINESS
A symbol of change
Kalkaska Village President Harley Wales (left) and Tom Beller, owner of Real Leaf Solutions, a marijuana grower in Kalkaska.
pany with two cars, and Wales is hopeful that as pot connoisseurs cruise from one boutique to another, they will need rides and could spark an Uber presence, much like the wineries on the Leelanau and Old Mission peninsulas resulted in competitive fleets of buses driving wine aficionados from one vineyard to another. ` Kalkaska was one of the first communities in the state to get a license from the state for a recreational marijuana event license, with Wales envisioning such things as outdoor musical festivals featuring pot tents in addition to food vendors and beer tents. Land has been set aside for marijuana related events on the west side of town, out by the county airport. Tom Beller, who owns one of the growing operations in the industrial park, Real Leaf Solutions, holds the event license. ` Consumers Energy even installed a substation in the park to keep up with the growing energy demands of the burgeoning marijuana ecosytem. Beller is COO of Real Leaf Solutions and his wife, Krista, is CEO. They got their medical cultivation license last February for a facility they built on the north end of the industrial park. They began harvesting their third crop last week. They are building two additions to the facility that will take it to 12,000 feet, just got their recreational license and will build an adjacent 12,000-square-foot building for that operation in the spring. Tom Beller said they have almost 1,500 plants now and will have 2,000 more in the new facility. The company employs 14, now, and will hire another 12 for the new building.
“THERE’S BEEN NO BLOWBACK FROM THE EXISTING INDUSTRIAL TENANTS ABOUT THE NEW BUSINESSES. THEY’RE HAPPY NOT TO HAVE AN ABANDONED BUILDING NEXT DOOR TO THEIR PROPERTY, AND SEEING THEIR PROPERTY DOUBLE IN VALUE IN TWO YEARS.” — Harley Wales, Kalkaska Village president
“Kalkaska has been fantastic to work with. I couldn’t have asked for a better group of people,” he said. “The community has embraced us, and for the most part we’ve hired local people.” “There’s been no blowback from the existing industrial tenants about the new businesses,” said Wales. “They’re happy not to have an abandoned building next door to their property, and seeing their property double in value in two years.” Wales hopes all of this will help Kalkaska grab a bigger share of the winter and summer up-north tourist business, which traditionally goes farther west to Traverse City and Empire and Leland, or farther north, to Boyne City and Petoskey. He envisions the day when someone will check in to one of the town’s motels, get on an app, order a delivery of marijuana, catch a buzz and then hit the pool or relax in a chair in the sun and work on
Like acceptance of marijuana commerce, Wales is a symbol of change in an archly conservative town. Kalkaska County went in a landslide for President Donald Trump in 2016, giving him 69.2 percent of the vote to Hillary Clinton’s 25.8. And yet, in a special election in May 2018, Wales, a gay man, defeated incumbent village President Jeff Sieting, whose family has been prominent in the village for more than 100 years. Sieting’s great-great-grandfather’s brother built the Hotel Sieting in 1912 after a fire destroyed most of downtown two years earlier, and named it for the town’s sheriff, John Sieting. Jeff was also a local business owner, running a garage-door-opener business. So how did a gay man defeat an incumbent member of arguably the most prominent family in the village’s history, getting 61.4 percent of the vote? In the summer of 2017, news broke that Sieting had been making racist, anti-Muslim posts on social media. One post, titled “Kill Them All,” compared Islam to a “flesh-eating bacteria” and suggested nuclear annihilation might be a good option for Muslim-majority cities. Another post told “wannabe liberals” to adopt a “pet Muslim.” Sieting, who had been village president since 2010, the same year he bought the hotel that bears his name, refused to apologize, creating a series of protest rallies against him. One rally, billed as “No Hate in Kalkaska,” drew about 100 protesters to the trout fountain, across the street from the Hotel Sieting. It also drew some pro-Sieting supporters, who accused the protesters of violating his rights. “Those people want to shut down free speech,” one woman in a Trump shirt said in a video recording at the rally. “Most of ’em are probably from Traverse City — they’re those little snowflakes you read about that are in college campuses, hiding out with puppy dogs and coloring crayons because somebody said something they don’t like.” In February 2018 a recall campaign began and quickly got enough signatures to force a recall election. Wales, a nurse’s aide at the long-term care facility at Kalkaska Memorial Health Center, announced his candidacy and easily won the election. Wales said Sieting’s supporters made his sexual orientation a major campaign issue. “Every article about the election began with an openly gay man running against the racist village president, so it was a huge talking point,” said Wales. “So, when I met with people, I’d say it, get it out of the way and never mention it, again.” He says things have calmed down since the election. Some who oppose marijuana businesses in town will come up to him and tell him what they think, and he’ll explain his side of things. He says the conversations are respectful, and it helps that he can point out the much higher tax base, the annual revenue from licensing and inspections and the increase in jobs. “They may still not agree with me, but they’re mostly surprised by how well thought out this is.”
A ‘cannabis campus’ is planned for Battle Creek Complex is looking for larger developers BY TOM HENDERSON
The Fort Custer Industrial Park, the largest in the state at 3,000 acres and the one with the most interesting history, is about to add a new chapter by getting into the marijuana business on a large scale. Robert Corder, the vice president of business attraction for Battle Creek Unlimited, the economic development agency that helps recruit businesses to the park, says talks are underway to sell 100 acres of land on the northwest corner to a real estate developer who will build out what he calls a cannabis campus of marijuana-related businesses. “With 100 Corder acres, we’re looking at larger developers, and I’d like to think we will find a buyer in 2020. Our ideal is finding a developer who wants to develop it into a multi-tenant park within a park. We’ve had a lot of discussions and continue to meet with several real-estate companies. When restrictions for adult-use marijuana were announced, there was a dip in interest, but that’s picking up, now. Now, we have a lot of interest in people wanting to acquire the land.” Corder said that one thing in Fort Custer’s favor is that all the infrastructure, such as electricity and sewer lines, is already in place. With the high built-in costs for developing marijuana businesses, particularly application fees and licensing fees, not having to worry about infrastructure costs for developers is crucial. “We don’t have a set price that we’re asking for the land. We’re not a private entity,” said Corder. “The land is owned by the Battle Creek Tax Increment Financing Authority, so it’s public land we have a responsibility for. Our main concern is how many companies will be going in, will there be multiple buildings and multiple tenants, the total development investment, total wages and total jobs.”
Protective covenants prohibit any retail business anywhere within park boundaries, but that still leaves other categories of marijuana-related businesses, including growing pot; processing it into oils, edibles or bud to smoke; testing; warehousing; and secure transportation, the latter category aided by Battle Creek’s location roughly midway between Detroit and Chicago with quick and easy access to I-94. Quaker and Spiritualist sects founded the town of Harmonia on the site of the park in 1855, and it was once the home of antislavery activist Sojourner Truth. During World War I, Battle Creek offered the land to the federal government, and on July 1, 1917, after vacating more than 100 farms, the U.S. Army opened Camp Custer, later named Fort Custer, on 8,878 acres. About 2,000 buildings were built in six months at the cost of $9 million, and a total of 60,000 troops were housed there during the war. In 1964, Secretary of Defense Robert McNamara ordered the closing of the fort, and a closing ceremony was held in 1968. Today, there is an Air National Guard base on the site and a large National Guard armory. Soon after the fort closed, 2,000 acres were sold to the city of Battle Creek, and Battle Creek Unlimited was formed in 1972 to market an industrial park. That year, Archway Cookies became the first tenant. Another 1,000 acres were subsequently added. Today, the park is home to more than 80 companies, including 18 auto suppliers from Japan, and nearly 14,000 employees. Other companies have come from Canada, Denmark, Germany and Austria. In 2018, the Anderson Economic Group, a Lansing-based consulting company, released a report that measured the economic impact of the park. It said that companies in the park spent almost $700 million on payroll and had combined revenue of $5 billion. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2
Fort Custer Industrial Park in Battle Creek | BCUNLIMITED.ORG JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 13
FOCUS | CRAIN’S MICHIGAN BUSINESS
RETAIL
From Page 10
“My role is making sure the stores run from an efficiency and productivity standpoint. We’re really focused on staffing and leadership development right now. I lead Gage University, so we can train our team members on legality, compliance and regulations. We are taking a back-end corporate approach. We want patients to walk in and feel like they are walking into a provisioning center. But that’s the biggest thing, when you’re growing as fast as we’re growing. How do you find that balance so it doesn’t impact the patient experience? Patients that come in want to work with real people, not someone that’s a robot. We don’t want anyone to come in and be afraid to ask questions because we’re big shiny stores with employees with iPads. It’s like an Apple store … a clean itemized store, but we want people to see we love cannabis as much as they do on a very personal level. We’re really trying to take that same environment that’s been out there for years, but behind the scenes run lean and clean like a major corporation.”
` JERRY MILLEN, OWNER OF GREENHOUSE OF WALLED LAKE Millen opened Oakland County’s first medical marijuana retail shop in February 2019. Millen has long been a proponent of medical marijuana as a treatment option and has been party to lawsuits challenging the state’s rules on caregiver distribution. His shop was set to go legal for recreational sales on Jan. 4 but ran into delays. Greenhouse was awarded its recreational license on Jan. 7, but Millen has decided to delay opening to recreational sales until the end of February. “Those long lines in Ann Arbor are telling me one thing: Medical patients are getting screwed. With a shortage in product, I’ve decided I am going to hold off on rec until I have better product. Experience is everything in this business, and I don’t want to upset my (medical marijuana) patients who have been here for me since the beginning. And once you lose a customer, you’ve lost them. We have to be smart about this. There are a lot of sick people that use cannabis, and right now they’re the people getting [screwed]. I don’t want that reputation for Greenhouse.”
` STOSH WASIK, CO-OWNER OF THE FIRE STATION LLC IN NEGAUNEE The Fire Station is the first adultuse recreational marijuana retail outlet approved in the Upper Peninsula. It recently opened its doors to recreational customers and has become a hot spot for Wisconsonites with an appetite for pot. Wasik said around 80 percent of its customer base are recreational users and product shortages remain the outlet’s biggest issue. “We’re only an hour and a half from the Wisconsin border. We’re a close option for many. I’m scared we’re going to run out of product and have to turn away more than 80 percent of my customers, and many of them drive a really long way to get here. The medical market has plateaued and we’re able to meet that demand, but we’re nowhere near close to meeting recreational demand. There’s just no product left in the recreational market. I’ve talked to
“THOSE LONG LINES IN ANN ARBOR ARE TELLING ME ONE THING: MEDICAL PATIENTS ARE GETTING SCREWED.”
“I’M SCARED WE’RE GOING TO RUN OUT OF PRODUCT AND HAVE TO TURN AWAY MORE THAN 80 PERCENT OF MY CUSTOMERS...”
“MANY IN MICHIGAN WILL EVENTUALLY OPT IN BECAUSE OF THE BENEFIT OF TAX REVENUE AND LICENSING FEES. “
“ WE’RE JUST TRYING TO STAY COMPETITIVE WITH THE MARKET WHILE WE BUILD OUR BRAND AWARENESS.”
— Jerry Millen, owner of Greenhouse of Walled Lake
— Stosh Wasik, co-owner of The Fire Station LLC in Negaunee
— Vishal Rungta, president and COO of Ann Arbor-based C3 Industries
— Summer Ransom-Cleveland, president of retail for Skymint
every single licensed supplier and manufacturer that has the ability to sell us recreational products and there’s nothing. It just looks so bleak. Maybe as early as (this) week, we’ll be sold out. This puts retailers in an ugly light because the consumers come to us wondering why we don’t have product, and they are definitely upset about the pricing. It sounds like it might get worse before it gets better. The demand for recreation is so high and (the market) doesn’t look good in the immediate future.”
communities to open up. But that’s part of the gamble, right? Michigan is the second largest medical market in the country behind only California. So, really, even if these communities never open up to adult-use (recreational), we’ll still be out here trying open up more medical shops.”
specialized licenses to minorities and those harmed by strict drug laws. “There are hundreds of liquor licenses in the Detroit. With the social equity program, we don’t know if there’s going to be additional licenses at all. The public action from the city of Detroit is really frustrating. We haven’t had any public hearings. My concern is they are going to try to fix it the way they want it without considering the consequences. The existing shops (currently medical, but most, if not all, with recreational applications into the state) don’t want anybody else in. They want to keep it the same. The city is certainly not open to generating a discussion on this. Ann Arbor is going to have 25 or more dispensaries and do very well while Detroit is lagging behind.”
is more price sensitivity and less brand loyalty. Most shops carry all the brands available in the state, whereas we are a 20-80 mix, 80 percent our own product. We’re more curated than other shops. We have more depth in the brands we buy, but less assortment. Customers can go online and compare assortment and prices all across the state. You can find the same item priced four different ways in four different shops. We’re just trying to stay competitive with the market while we build our brand awareness.”
` VISHAL RUNGTA, PRESIDENT AND COO OF ANN ARBOR-BASED C3 INDUSTRIES University of Michigan graduates and brothers Vishal Rungta and Ankar Rungta have set their benchmark for success high. C3 Industries currently operates two medical marijuana shops in Detroit and Ann Arbor, under the name High Profile, with the latter slated for recreational sales in early February. But the pair plans to operate as many as 20 shops in Michigan, and they’re currently building out shops in Grand Rapids, Grant and Buchanan near the Indiana border in Southwest Michigan. C3 already operates a grow operation in St. Johns, Oregon, which it opened nearly two years ago with plans to open another grow in Massachusetts this year. Rungta said the only thing holding the company back is local communities’ not opting in to allow adult-use recreational marijuana businesses in their borders — more than 75 percent of Michigan communities have not approved the operation of recreational marijuana businesses, though many have to medical marijuana sales. “We’ve seen this play out in other markets we’re in. Conservative communities always opt out in the beginning. A lot of communities are taking a wait-and-see approach to see if people in the community get more comfortable with the idea of cannabis and whether stores around the state will have a level of professionalism. Then it becomes about revenue and tax dollars. Many in Michigan will eventually opt in because of the benefit of tax revenue and licensing fees. Over time, what we’ve seen in other markets is communities start to loosen their grip. The industry is going to become increasingly competitive, and I expect
14 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
` SCOTT SCHROEDER, COOWNER OF MEDS CAFE IN ROGERS CITY Schroeder opened up Meds Cafe back in April and began recreational marijuana sales last week. The company is also building out other locations in Lowell and Manistee. It also operates a grow operation in Rogers City. Product shortages have already been a problem for the retailer, which is facing huge demand as its the next closest recreational marijuana retail location is 230 miles away. “We’re at the mercy of the state in this business, for better or worse. Nothing is perfect and I think everything will mellow out in the coming months, but it’s going to be a struggle for a while. We prepared. We’ve been stockpiling product for months and trying to save money as best we can to prepare for shortages. We’re pretty remote up here. That’s worked for us and against us. We’re the only shop within 230 miles, so the demand is definitely there. But people aren’t used to paying dispensary prices up here. There are these things called taxes and employee wages I need to worry about. But when and where can you buy it legally is important to some. We’re the only shop in town and we’ve been slammed. It’s all and all been a blessing.”
` MATTHEW ABEL, FOUNDING PARTNER AT DETROIT-BASED LAW FIRM CANNABIS COUNSEL PLC Abel founded the firm in 2010 to assist clients in pursuing medical marijuana licenses. Since voters passed adult-use recreational sales in 2018, he’s worked with clients to get licensed and handle the increasing number of real estate, contract, landlord and merger and acquisition issues in the industry. Abel disagrees with the city of Detroit’s stalling of allowing recreational stores to operate in the city as it debates the rollout of its own social equity program to offer
` SUMMER RANSOMCLEVELAND, PRESIDENT OF RETAIL FOR SKYMINT Skymint is the retail operations of Dimondale-based Green Peak Innovations. Green Peak is the largest marijuana grower currently in the state of Michigan out of its operation near Lansing. There are currently five Skymint shops open with another opening next month. The Ann Arbor location is the only shop currently licensed to sell recreational marijuana. Ransom-Cleveland spent more than 17 years at publicly traded lifestyle and clothing company Urban Outfitters, most recently as its visual director for all North American stores. At Skymint, she’s taking what she learned in standard retail and implementing it at Skymint, which is designed to be a high-end retailer. “We want to make this retail experience like any other retail experience. It’s a perimeter-based shop with floor fixtures and wall fixtures so people can browse, then pick up and pay at the counter. We don’t want it to feel like going to a liquor store. Honestly, whether you’re shopping or working, a beautiful, clean space boosts morale. I don’t think the cannabis retail expectation should be any different from any other boutique retail expectation. There is so much competition, we have to compete in the service environment, and I think we’re winning. But there are differences from traditional retail. There are a lot of brand loyalists in retail. I’ve only been in the cannabis industry for a year, but there
` DOUG HELLYAR, PRESIDENT AND COO OF TROY-BASED LUME CANNABIS CO. Lume operates a recreational marijuana shop in Evart, 35 miles Southeast of Cadillac, under its Lit Provisioning brand name. It also operates medical-only shops in Kalamazoo and in Honor. It plans to open shops in Owosso, Mackinac City, Adrian, Petoskey, Negaunee, Walled Lake and Iron Mountain in 2020. It also operates a 50,000-square-foot grow operation in Evart with plans to expand it to more than 250,000-squarefeet by 2022. Hellyar said economic spillover is occurring in spades at his remote Evart location, but worries illegal product is filling in the gaps of the legal market and what consequences that may bring. “The demand on weekends and throughout the week, really, is extremely strong. It’s relatively remote in Evart, but the amount of traffic we’re bringing to town is really providing a benefit to other businesses. The pizza shop said it’s doing better. The local coffee shop used to be closed four of the seven days in the winter months, but now it’s open every day. It’s an exciting industry. We don’t have trouble filling jobs, which is great. My only concern is supply. We keep hearing about all these shortages, but everyone seems to be getting product. When you do the math and calculate out the numbers, there’s just not enough product being made in Michigan right now. Yet, everyone has product? We’re not out of product, but we should be. So I worry about where it’s coming from and whether it’s all legal as it should be.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
NONPROFITS
Chaldean chamber, foundation table plan for site in Iraq Satellite location was to further work in attracting investment to rebuild in area BY SHERRI WELCH
The Chaldean American Chamber of Commerce and affiliate Chaldean Community Foundation have tabled a plan to establish a satellite presence in northern Iraq to provide business investment and social services support in the region, following Iranian attacks on U.S. bases in the Middle East last Tuesday. The Farmington Hills-based Chaldean Chamber and foundation had been developing the plan for the new satellite location as an extension of their work with a U.S government agency and contractor over the past six months to help attract local investment in rebuilding efforts in northern Iraq. The proposal was set to go beManna fore the boards of the two organizations over the next two weeks but is on hold, given the escalating tensions between the U.S. and Iraq and Iran. Iran launched the attacks on U.S. bases in Iraq in retaliation for a Jan. 2 U.S. drone attack that killed one of Iran’s most powerful military generals, Qasem Soleimani, and Iraqi Shia paramilitary leaders Abu Mahdi
Faiz “Victor” Simon, senior managing partner, Birmingham-based private equity firm Simon Group Holdings, was among a group of local investors convened by the Chaldean Chamber of Commerce and Chaldean Foundation to travel to Iraq in early December to learn about investment opportunities. He spoke on investing in frontier markets. | CHALDEAN CHAMBER OF COMMERCE, CHALDEAN COMMUNITY FOUNDATION
al-Muhandis. “Our goal is to establish a presence in Nineveh, Iraq, to serve our community and help put them on a path to stability following the trauma they endured from ISIS,” Martin Manna, president of the Chaldean chamber and foundation, said Wednesday morning. “Given the recent rise in tensions between the U.S. and Iran, our efforts
will be put on hold until we can assure the conflict is over. We are praying for a peaceful resolution.” As planned, the new satellite office would assist in sustainable business development in the region and provide humanitarian assistance in areas such as counseling for traumatized villagers, Manna said. Given the dual economic and humanitarian focus of
those services, the chamber and community foundation are considering the plan and deciding which would shepherd it. The Iraq location was to launch this year with three to five employees hired from the Nineveh region and management from the offices in Southeast Michigan, Manna said. “Our thoughts (are) ... to request they spend a month here with our organizations so they can become familiar with our practices and what we’re trying to accomplish there,” he said. The chamber and foundation are operating on a combined budget of about $8 million, Manna said. Plans for the satellite presence in Iraq stemmed from the work of the chamber and foundation over the past six months with the U.S. Agency for International Development and CrossBoundary Group, a Washington, D.C.-based organization contracted to help attract investment to Iraq as part of a larger effort to help rebuild and repatriate villages that were destroyed by ISIS. The U.S. agency and contractor engaged the chamber and community foundation in those efforts given that metro Detroit is home to the largest Chaldean community outside of Iraq. Most Chaldean people living in metro Detroit are from Nineveh in northern Iraq, which is also the native home of
other Iraqi minority populations, Manna said. In early December, a dozen local Iraqi American investors convened by the local chamber traveled to northern Iraq to learn more about investment opportunities during the Nineveh Investment Forum hosted by USAID, CrossBoundary and the U.S. Chamber of Commerce, Manna said. The group included investors such as Faiz “Victor” Simon, senior managing partner of the Birmingham-based private equity firm Simon Group Holdings; and Jamal Kalabat, Detroit-based director of operations and developer, ICON Global Architecture Engineering + Project Construction Management. Both are members of the Chaldean chamber, Manna said. Simon, a native of Iraq who came to the U.S. in 1970 and is now an American citizen, said he was impressed with what he heard during the trip. He was drawn to opportunities in pharmaceuticals, energy and possibly real estate, he said, and his family-owned firm may be able to raise a $50 million fund to make investments in Iraq. But “the only way we’d look into it is if safety and corruption concerns and security of the investments there are addressed,” Simon said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 15
DEALS&DETAILS
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. ACCOUNTING
HEALTHCARE
LEGAL
Doeren Mayhew
Centria Healthcare
Kerr Russell
Doeren Mayhew is pleased to announce the promotion of Kiley Judge, CPA, MBA and Jennifer Sanderson, CPA, MST Judge to Shareholder. Kiley Judge leads assurance engagements for clients with a niche focus on privately held manufacturers, automotive dealerships, retailers, wholesalers and distributors, as well as Sanderson non-profits. Leveraging nearly 20 years of experience, Judge helps clients realize business goals and build long-term financial sustainability. Jennifer Sanderson is a leader in the Tax Group with more than 25 years of public accounting experience serving a diverse sector of closely held businesses and its owners in all aspects of domestic taxation. A former professor at Walsh College, she acts as a leader in the firm’s education program.
Centria Healthcare has appointed Eric A. Labe as President of Private Duty Nursing & Rehabilitation Services. He will oversee development of strategic direction and execution of operational plans to help Centria become the leading provider of home healthcare services nationally. Labe has more than 20 years of senior management experience in healthcare, safety management, and professional service companies.
Patricia Schabath was named member (partner) at Kerr Russell. She concentrates her practice in the defense Schabath of physicians and facilities in medical malpractice claims. She also has experience in general civil litigation, including defense of legal malpractice, personal injury, and general negligence May matters. Jeffrey May was named member (partner) at Kerr Russell. He focuses on Cybersecurity and Data Privacy Law and is credentialed in CIPP/US and CIPM. May also practices in the areas of general business law, intellectual property, and litigation. His prior experience owning and operating a technology-based business allows him to assist clients with a wide range of business issues and litigation matters.
LEGAL
EDUCATION
College for Creative Studies The College for Creative Studies is pleased to announce the appointment of Dr. Deirdre Young as the College’s inaugural Assistant Dean for Institutional Equity and Inclusion, effective January 6, 2020. In this new role, Dr. Young will guide the CCS community in campus-wide decisions, practices and policies regarding diversity, equity and inclusion. She previously served as Vice President of Health and Equity for United Way for Southeastern Michigan and as Director of the Office of Multicultural Affairs at the University of Detroit Mercy (UDM) School of Dentistry. Dr. Young holds a DDS degree from the University of Michigan, a master’s in health services administration from UDM and a B.S. in chemistry from Howard University.
Fisher Phillips LLP Susan Hartmus Hiser, President of The Murray Law Group has announced that the labor, employment, and immigration firm has combined practices with Fisher Phillips, a national workplace law firm representing employers. The Group’s 12 attorneys joined Fisher Phillips, and the physical space located in Bingham Farms, MI assumed by the Fisher Phillips brand as the firm’s 36th office location. “As part of Fisher Phillips we can better serve our clients that work on a national and/or global basis. Having offices in so many locations across the country gives our clients the high level of service they have come to expect wherever their facilities are located,” said Hiser. “In turn, we are eager to assist Fisher Phillips’ clients who do business in Michigan.”
NEW HIRE? PROMOTION? BOARD APPOINTMENT?
MANUFACTURING
Dearborn Mid-West Company Dearborn Mid-West Company, is pleased to announce the promotion of Jeff Brinker to President of Dearborn Mid-West Company. Jeff, who joined the company in 2009, oversees all proposals and operational activities for DMW, as well as developing and implementing strategic business plans. Jeff earned a BS in Electrical Engineering from LTU in 1990 and an MS Degree in Computer Science and Engineering in 2004 from OU. Jeff maintains a Professional Engineer’s license as well as a PMP certification. With more than 20 years of experience in automotive manufacturing & construction, Jeff has the technical expertise, leadership and management skills to successfully move DMW forward into 2020 and beyond with a focus on customer service.
EXPANSIONS
sites: priorityhealth.com, thcmi.com
Extra Credit Projects, Grand Rapids, an advertising agency, opened a new studio at 2200 Hunt St., Detroit. Website: extracreditprojects.com
Escalent, Livonia, a human behavior and data analytics firm, acquired Javelin Strategy & Research, Pleasanton, Calif., an advisory firm, from Greenwich Associates, Stamford, Conn., a consulting firm, for an undisclosed amount. The transaction was completed on Dec. 30, 2019. Website: escalent.co
MERGERS & ACQUISITIONS Priority Health, Grand Rapids, a health insurance plan, has merged with Total Health Care Inc., Detroit, a health insurance plan, in a merger that was announced in summer 2019. Both companies will continue to operate independently and maintain separate brands. Priority Health will continue to serve members statewide, and Total Health Care will concentrate its efforts on the city of Detroit and surrounding communities. Web-
Crain’s People on the Move showcases industry achievers and their companies to the Detroit business community. Contact: Debora Stein at dstein@crain.com
Facton Inc., Troy, a software company, released a new version of its EPC Cost Management software for integrated costing. The software includes improved comparison of project data with master data management. Website: facton.com
CALENDAR THURSDAY, JAN. 16 Global Economic Outlook for 2020 and Beyond. 8-11:30 a.m. Automation Alley. The annual economic outlook will feature international business experts discussing the shifting dynamics of the global economy and how companies can best position themselves to take advantage of the opportunities and challenges of doing business around the world in 2020. Automation Alley, Troy. $30 member; $50 nonmember; $40 member walk-in; $60 nonmember walk-in. Contact: Cathy Steiner, email: info@automationalley.com; phone: (248) 457-3200.
UPCOMING EVENTS CEO Series: Mary Corrado. 8-9:30 a.m. Jan. 23. Troy Chamber of Commerce. Mary Corrado, American Society of Employers president and CEO, will lead a preCorrado sentation on workplace flexibility topics and trends. DoubleTree By Hilton, Bloomfield Hills. $32 members. $40 nonmembers. Contact: Troy Chamber of Commerce, email: theteam@troychamber.com; phone: (248) 641-1606.
McCormack
Gilchrist
Justice and Jobs: Why Criminal Justice Reform and Access to Justice are Vital to Detroit and Michigan. 11:30 a.m.-1:30 p.m. Jan. 28. Michigan Chief Justice Bridget Mary McCormack and Lt. Gov. Garlin Gilchrist will highlight the findings and recommendations of a bipartisan task force on criminal justice reform and detail other reform initiatives ranging from online dispute resolution to easier expungement of criminal records. The Masonic. $45 members, $55 nonmembers. Website: econclub.org 2020 Detroit Policy Conference. 8:30 a.m.-4:30 p.m. Jan. 29. Detroit Regional Chamber. The 2020 Detroit
16 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
NEW PRODUCTS
Policy Conference: Defining a Decade, will discuss Detroit’s path to economic sustainability Local and national leaders will highlight the work underway, ideas, opportunities and challenges that will define the next 10 years for the Detroit region. MotorCity Casino Hotel. $169 members; $245 nonmembers. Contact: Katy Palahang, phone: (313) 596-0384. Tech248 Special Event: Business Processes that Boost Profits. 3-5 p.m. Jan. 30. Topic: “Business Processes that Boost Profits, Increase Revenue and Reduce the Need for More Staff,” by speaker Dan Izydorek, CEO and founder, PC Miracles. PC Miracles, Pontiac. Free. Advance registration required. Registration closes 9 a.m. Jan. 28. Contact: Sandra O’Connell, email: oconnells@oakgov.com; phone: (248) 858-7647. Top Ten Talk. 8:30 a.m.-noon. Feb. 3. Business Leaders for Michigan. Program will discuss where Michigan stands on 50 different indicators and reveal Business Leaders for Michigan’s new strategic plan. Lansing Center, Lansing. $50. Contact: Courtney Masiarczyk, phone: (313) 2595400. email: courtneym@businessleadersformichigan.com ; website: businessleadersformichigan.com Leadership Oakland Breakfast of Champions — Mark Ostach. 7:30-9 a.m. Feb. 4. Leadership Oakland. Leadership coach Mark Ostach will discuss “Creating a Culture of Digital Wellbeing,” on how devices impact the mind, body and spirit and provide techniques to improve the digital wellbeing of an organization. MSU Management Education Center, Troy. $45 members; $65 nonmembers. Contact: Susan Hollady, phone: (248) 495-4781; email: shollady@leadershipoakland.com; website: leadershipoakland.com 2020 MICHauto Summit. 11:45 a.m.3:30 p.m. Feb. 25. Detroit Regional Chamber. Industry leaders and stakeholders will address key industry issues, provide program updates and release MICHauto’s latest edition of the Michigan is Automobility report. College for Creative Studies. $75 chamber members and MICHauto investors; $125 nonmembers. Contact: Katy Palahang, phone: (313) 596-0384. Email calendar items to cdbdepartments@crain.com
CRAIN’S DETROIT BUSINESS
CHARITY
Page 1
2019 grants Section RAIN’S DETROIT BUSINESS CAdvertising
In 2019, the 16, core 2019 nonprofits benefiting December
From Page 3
CLASSIFIEDS
from the charity preview of the North American International Auto Show shared grants totaling more than $3.3 million, according to figures provided by DADA. That amount was down from $3.85 million to the eight core charities in 2018. DADA also made just over $209,000 in smaller grants to other charities that year.
The center is seeking more major donations and grants to make up for the annual breakfast revenue it won’t see until after the close of its current To place your listing, contact Suzanne Janik at 313-446-0455 or email sjanik@crain.com fiscal year in September, she said. “We have a special committee the www.crainsdetroit.com/classifieds board has set up that’s examining how we might restructure or eliminate Section some of our expenses if we don’t GrantAdvertising amounts: REQUEST FOR PROPOSALS AUCTIONS make the dollars we hope to get,” MatChildren’s Hospital of Michigan: thews said. Requests for Proposals are being accepted for: PRIME COMMERCIAL LOCATION The Detroit Auto Dealers Associa- $674,390 (1) Career and Training Services for Justice Involved Residents tion’s decision to move the auto show ONLINE ONLY | BID TODAY DADA Charitable Foundation: Response Due: January 27, 2020 , Issued: December 10, 2019 and preview to June was driven by the $607,120 MINIMUM BID PREVIOUSLY COPPER Detroitsjanik@crain.com at Work Friends and Family (DAW F&F) place your listing, contact Suzanne Janik at 313-446-0455 or (2) email need toTo keep the events as relevant as NYON Receivership sale ofC Aassets Response Due: February 3, 2020, Issued: December 20, 2019 BREWERY Boys and Girls clubs: $508,059 possible as the needs of automakers www.crainsdetroit.com/classifi eds DESC, a non-profit corporation, A Michigan Works! Agency, in cooperation with the Mayor’s Workforce of Visiting Physicians Business Residential Physicians and expectations of consumers Development Board (MWDB) serves as the fiscal and administrative entity that provides public workforce POSITIONS AVAILABLE POSITIONS AVAILABLE Judson Center: $430,779 development programs and services for theClients city of Detroit to employers and job of seekers. Association, PLLC & RPA ManDelight your with the Best Michigan change, Executive Director Rod Alagement, Inc. includes account (1) DESC is seeking proposals from qualified applicants to provide career and training services to job seekers with criminal backgrounds (justiceChildren’s Center: $366,040 berts said in an emailed statement. Handmade Nut, Baked Goods & involved) at Detroit at Work Career Centers embedded within the Detroit Reentry Center (DRC) and the Detroit Metro Parole Office (Lawton). ENGINEERING Grakon, LLCThehas areceivables, job opening in Livonia, MI: 7 vehicles, outstandMichigan Department of Corrections (MDOC) will provide DESC and its selected contractor(s) with access to space for program delivery. “There are challenges with any Chocolate GiftProduct Trays. Development Engineer (PDE001): ingOversee insurance, Medicare and &Medautomotive interior exDetroit PAL: $285,176 (2) DESC is seeking proposals from qualified applicants to provide direct community outreach, recruitment and ongoing support of high-risk transition, but these changes are deHoliday cards w/your logo & message individuals for Detroit at Work FREE Friends & Family (DAW F&F), an innovative and intensive employment and training program launched by MOWDengineering icaid claims, office equipment, ofterior lighting product development projects from concept to proand DESC in late 2019 to address the employment opportunity gap for many involved in violence. signed to benefit everyone in the long Boys Hope Girls Hope: $252,544 fice furniture, supplies, Guaranteed Christmas Delivery! duction launch & identify & resolve technical issues withinmedical the project. CoordiMore information on these opportunities are available at the following website: and intellectual property. run,” Alberts said. https://www.descmiworks.com/opportunities/rfps-and-rfqs/ nate, propose, test & validate new designs &Contact improveSonya upon existing product NibblesGifts.com 248-737-8088 March of Dimes: $179,752 Goll th The goal with the new format is to Auction End Date: Tues., Jan.at 28(248) at 3pm designs.To apply, submit resume to Jobs@Grakon.com and reference ID#. To request a full RFP package, please email DESC at procurement@detempsol.org. Qualified applicants must submit the following or 354-7906 ext. 2234 stsgoll@ Open House: Tues. Jan. 21 12-3pm broaden the appeal to secure the information via email: Company Name, Address, Office Phone Number, Contact person’s name, Title, and Valid Email Address. Visit our store at 32550 Northwestern Hwy, Farmington Hills Receivership sale of assets for additional inforsbplclaw.com 27522 Northwestern Hwy. Southfield, MI Email Line should include: Request for Justice Involved Residents RFP or Request for DAW F&F RFP, as appropriate. event’s future and the benefit to char- istered by the Community FoundaofSubject Visiting Physicians Busimation, form purchase agreeMolex, LLC seeks Advanced Quality Planning (AQP) Engineers ities for years to come, show organiz- tion for Southeast Michigan — make ness Residential Physicians ment, financials of business, and Executive Director, Audience Development Detroit Employment Solutions Corporation Board Association, Mayor’s PLLC & RPA ManWorkforce Development Board for Rochester members to9,592 dev & SQ. mainers said in anDelight emailed your statement. to of other charities with the FT. Clients withgrants the Best Michigan deadlines for offers. Calvin Sharp, Chairperson Hills, MI to work w/product dev team J. Pasky, Co-Chairperson includes account agement, Inc.Cynthia Detroit tainEmployment qualitySolutions plansCorporation of a global design center for electronic cablePROPERTY assemblies. money they receive, rather than proDavid E. Meador, Co-Chairperson Handmade Nut, Baked Goods & & Analytics Terri Weems, Interim President and Chief Executive Officer receivables, 7 vehicles, outstandMaster’s in Ind Eng/ Quality/Risk Mgmt/related field +2yrs exp OR Bachelor’s viding services directly. Planning ahead Chocolate Gift Trays. ing insurance, Medicareand and MedAs a forward-thinking transformational Audience Development 1.83 in Ind Eng/ Quality/Risk Mgmt/related field +5yrs exp req’d. Req’d Skills:Acres Quale Children’s Foundation has two FREE Holiday cards w/yourThlogo & message icaid claims, office equipment, ofity eng w/ new product dev process w/electronic connector production facility Executive, you will lead the strategy, development, and execution of grant cycles per year, in the spring and Other nonprofits benefi ting from fice furniture, medical supplies, Guaranteed Christmas Delivery! in auto industry, problem solving methodologies (8D, root cause analysis) & audience plans via effective marketing practices with the goal of achieving and intellectual property. the preview are better positioned. fall. Moving the preview to June won’t corrective action implementation; Supply Chain, Risk Analysis, GD&T, SupNibblesGifts.com 248-737-8088 Contact Sonyaacross Goll at six (248) revenue growth of Crain port Communications’ core brands: They’ve been able to identify other impact that at all, President and CEO Environ Testing (Eng design/Design Validation/Process Validation), Procor sgoll@ 354-7906 ext. 2234 Automotive News, Crain’s Business Publications, Modern Healthcare, Ad Mgmt, Larry Burns said. revenue Visit to tide their operations ourover store at 32550 Northwestern Hwy, Farmington Hills ess Improvement Coach, Change PFMEA/DFMEA, Control Plans, SOLDBYBETHROSE.COM sbplclaw.com for additional inforThe foundation plans to once again while they wait for the charity preview PPAP,By APQP, Qualifying Age, Pensions Investments, Polymer Group. leveraging yourSuppliers focused using CPK, IATF, SPC, MSA, Poke-Yoke, mation, form&purchase agreeSix-Sigma, Minitab. 30% travel req’d. host a free, invitation-only afterglow revenue to come in. ROI mindset and your experience marketer FACEBOOK.COM/CRAINSDETROIT ment, financials of business, and as a modern, multi-channel RESIDENTIAL PROPERTY Executive Director, Audience Development Send resume to: MLXjobs@kochind.com, Ref: JH charity preview attendees “I’m glad we had the time and are to thank deadlines for best offers. you’ll decide how to engage audience members during their stillAnalytics one of those charitable organiza- who designate it as the beneficiary of & customer journeys, and how best to allocate resources. Position could be Molex, LLC seeks Business Analysts Rochester MI tions” that benefit, said Lenora Har- their ticket purchases, he said. The 2,280for ACRES FORHills, SALE based in Detroit, Chicago, or New York to City. As a forward-thinking and transformational Audience Development drive improvements into productivity, capability & speed throughout the divisiody-Foster, president and CEO of Farm- event will move to the Beacon at 1 Executive, you will lead Center. the strategy, Woodward development, and from execution of Visit crain.com/careers/ for more information DOUBLE RANCH in nal product dev. Master’s in Ind Eng or related field +2yrsEAGLE exp or Bachelor’s this June MotorCity ington Hills-based Judson North Central Michigan Ind Eng or related field +5yrs exp req’d. Req’d Skills: exp w/electronic connecaudience via effective marketing with the goal achieving Casino-Hotel where it of was hosted in Judson plans is operating on a $28.8 mil- practices and available positions. torsare in auto industry improvement to projects, setting up product TheDoubleEagleRanch.com revenue growth across six year, of Crain Communications’ core brands: We looking for w/business a Project Coordinator join Plastics News anddev the past, to be within walking distance lion budget for fiscal 2020. Last it the processes, & project mgmt; PLM solutions (teamcenter, enovia, windchill), SAP, Call Kyle: 248-444-6262 of TCF Center and Hart Plaza, where received justNews, shy of $431,000 from thePublications, Automotive Crain’s Business Modern Healthcare, Ad Crain Global Polymer Group. Core competencies include solid written JIRA, Agile, data modeling & visualization dev using Qlik, Power BI, Tableau); CharityBy Preview eventsyour will take place. preview proceeds. Age, Pensions & Investments, Polymer Group. leveraging focused and verbal communication skills, excellent organizational skills, website Business Development Sales Associate Six Sigma. Send resume to: MLXjobs@kochind.com, Ref: AJ Burns said the foundation is budCharities receive allocations from ROI mindset and your experience as a modern, multi-channel marketer editing, high level of detail and the ability to multi-task and meet RESIDENTIAL PROPERTY PROPERTY RESIDENTIAL geting to receive the same amount the net amount raised from the preyou’ll decide how best to engage audience members during their deadlines. This position is located in the Detroit office and will report to view, based on the number of from the preview as it has in previous The Global Polymer Group is looking for a Business Development/Sales customer journeys, and how best to allocate resources. Position could be Events Director. 2,280 ACRES FOR SALE ticketholders who designate them as years. 2,280 ACRES FOR SALEto workthe Associate who will be expected with inactive accounts and new based in Detroit, Chicago, or New York City. Other charities are budgeting more the beneficiary, a DADA spokesman prospects to pre-sell the brand with the objective to set up a meeting DOUBLE EAGLE EAGLE RANCH RANCH Visit crain.com/careers/ for more information Visit moreininformation DOUBLE conservatively, given the uncertainty said.crain.com/careers/ Last year's preview for brought with the Regional Manager. They will work with the sales team to help North Central Michigan North Central Michigan and available positions. moreavailable than $3.3positions. million for the benefit- with the new timing and format. and establish relations to ensure a smooth transition of the account. The TheDoubleEagleRanch.com TheDoubleEagleRanch.com Its board approved a budget that ing nonprofits. Business Associate will need to be able to effectively CallDevelopment Kyle: 248-444-6262 248-444-6262 Call Kyle: Proceeds from preview ticket sales projects the charity will take in about research and uncover new opportunities both endemic and nontypically come to the charities from 80 percent of the amount it received Business Development Sales Associate endemic clients. the preview in 2019. DADA as the tickets are sold, on a roll- from Director, Digital Operations “We do understand it was likely ing basis over a period of months. time for a change, ” given that the DeensurePolymer steady cash flow,isJudson TheToGlobal Group looking for a Business Development/Sales We are seeking an exceptional Director – Digital Operations to oversee troit show was confl icting and withnew other is expanding annual appeals to forwork Visit crain.com/careers/ for more information Associate whoitswill be expected with inactive accounts ad ops and ad solutions departments. We are seeking candidates who: auto shows and for sponautism services and foster care, Harand available positions. prospects to pre-sell the brand with the objective to competing set up a meeting -Lead through change; -Are comfortable working in imperfect situations; dy-Foster said. It’s also putting a larger sors, she said. “But we’ve been so dewith the Regional Manager. They will work with the sales team to help -Operate with a *sense of urgency; -Are fascinated by ad tech *and focus on major gifts and is already get- pendent on those dollars ... we’re realestablish relations togrant ensure a smoothly transition Crain’s readers are developing revenue opportunities as a function of Ad Operations; -Love nervous if of wethe willaccount. make the The same ting traction with new funding. Business Associate willamount need to be able tonight effectively netted for that if it had Boys & Development Girls Clubs of Southeastern providing insights, analysis, recommendations for revenue 75% more likely to BIDSand WANTED research and endemic and nonJanuary. ” Michigan is alsouncover confidentnew it willopportunities have been inboth generation and optimization; -Take ownership of major projects and * Contact Suzanne Janik be college graduates endemic In December, the DADA rolled out adequate clients. cash flow until it receives its Crain Communications is currently seeking an AccountstoReceivable vendor relationships drive forward a corporate vision; -Work cohesively allocations from the preview, Presi- a two-tiered ticket format that will inat sjanik@crain.com Specialist. This position will report to the Accounts Manager with various Receivable business units; -Are comfortable in a technical setting; and clude the traditional, black-tie event dent and CEO Shawn Wilson said. Connect with Suzanne orand 313-446-0455 and will be located in Janik our at downtown Detroit location. The ideal solver -Are in their element as a problem identifying opportunities inside TCF Center at $400 per ticket, Th e launch of adult memberships sjanik@crain.com Visit crain.com/careers/ for more information candidate will be highly motivated, have an upbeat attitude and must across the business. for details. and available facility rentals of its NFL/YET– along with a new, $200-ticket, “sumfor all your recruiting needs. and positions. be a team player. Boys & Girls Clubs at the Dick & Sandy mer chic” option held outside at Hart Visit crain.com/careers/ for more information * Dauch Campus on Detroit’s west side Plaza. *The Media Audit and available positions. Visit crain.com/careers/ for more information Alberts said DADA expects that are providing a new source of revenue and available positions. charities will still receive more than 80 this year, he said. With the launch of the new club percent of the total funds raised Contact Suzanne Janik through the And the organimodel Communications last year, “we’re (also) seeing seeking Crain is currently an preview. Accounts Receivable zation hopes the changes will draw new donors that have never given to at sjanik@crain.com Specialist. This position will report to the Accounts Receivable Manager the Boys & Girls Clubs giving,” Wilson more attendees. or 313-446-0455 and will be located in our downtown Detroit location. The ideal DADA has set a goal to sell 15,000said. “All of that is helping to offset the candidate will be highly motivated, have an upbeat attitude and must for details. Share your success 20,000 tickets to the charity preview change in calendar.” beDetroit a team PAL player. is excited about the this year. In 2019, just over 10,000 tickwith custom date shift, CEO Robert Jamerson said ets were sold to the black-tie event. Reprints, E-prints Visit for more information Another charity will share in the toin ancrain.com/careers/ email. To find out more about and our more! audience, gives us positions. a chance to showcase tal proceeds this year with DADA’s adand“Itavailable reach out to Suzanne Janik at our work to another audience of peo- dition of CS Mott Children’s Hospital Contact Laura Picariello at sjanik@crain.com ple that may be in town in the summer in Ann Arbor to the core group of eight lpicariello@crain.com months," he said. "We are truly thank- beneficiaries. Other charities outside
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Beaumont Health’s Royal Oak facilities.
BEAUMONT
From Page 3
Still, with assistance, Holden is able to attend a special education program at Macomb Intermediate School District for up to six hours per day. “Sometimes he misses halfdays, but the school has a nurse in the building. He has a (tracheostomy) feeding tube. The nurse knows how to take care of him,” Lotterman said. Similar to the other children in the Patch program, Lotterman has a team of caregivers that regularly visit the home to treat Holden. Nurses are on call 24-7 for emergencies, she said. Once a week, a nurse, physical and occupational therapists, and a social worker visit Holden. A chaplain also is available, along with a respite worker who helps out from time to time, giving the family time off, Lotterman said. “Our social worker is totally amazing. She helps with resources and worked with us for a year with state paperwork,” Lotterman said. “Holden sees seven doctors and she helps (manage) the bills. One of our children has more anxiety about Holden. She sat down with him one afternoon and talked it over.”
Beaumont steps up Susan Grant, R.N., Beaumont’s chief nursing officer, confirmed Beaumont will transition Alternate’s Patch employees back to Beaumont. She said Beaumont recognizes Patch hospice provides much-needed services to families. “Managing pediatric patients requires specialized care and expertise,” Grant said in an email to Crain’s. “(Alternate) does not typically provide care for pediatric patients and ultimately decided it was unable to continue supporting the Patch program.” While Grant said there are no plans to transition the program elsewhere, she said Beaumont is talking
with other hospice, palliative and home-care providers across Michigan “to find a more comprehensive solution.” She did not name specific providers. Grant added that Beaumont “would also like to work in partnership with families going forward to help create solutions to serve families who might need these kinds of services across the state of Michigan.” She added: “We are reaching out to multiple health systems, hospitals and organizations across the state. It will require a team effort to meet the need for these kinds of services in Michigan.”
Program shuffle Last January, it was a different story. In a move criticized by parents and employees, eight-hospital Beaumont Health sold a 90 percent majority share of Beaumont Home Health and transferred operations of its seven-county home health and hospice agency to Alternate Solutions Health Network, a Kettering, Ohio-based for-profit home health company. The new joint venture company is called Beaumont Home Health and Hospice LLC and once contained the pediatric hospice program. Two former Beaumont nurses who are familiar with the Patch program told Crain’s that Alternate never wanted to take on pediatric hospice because the company had no experience in the services and understood it was not a profitable enterprise. However, it agreed to take the program to close the deal. Last July, Alternate began plans to exit pediatric hospice and Beaumont began searching for ways to keep the program going. Alternate was unavailable for comment. “We work with very sick children,” said one Beaumont pediatric hospice employee, who asked for anonymity. “It never was a good fit with Alternate. They kept the service going as best they could to serve the families, but the last few months (of 2019) several (providers) left and they didn’t replace them.
18 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
They knew they were exiting.”
What is Patch? The Patch program, which stands for Palliative Team and Children’s Hospice, has been managed by Beaumont since April 2016 and is headed by Jeanne Lewandowski, M.D., a hospice and palliative care physician affiliated with Beaumont. Before Beaumont, the pediatric hospice program was part of Henry Ford Health System and operated as “Kaleidoscope Kids” until October 2014 and headed up by Nadia Tremonti, M.D., a Wayne State and Children’s Hospital pediatrician. It was then transferred to the former Ascension St. John Providence Health System as part of the home health program “Walk with Me.” The St. John program was consolidated into Reverence Home and Hospice, which is an Ascension Health subsidiary, before becoming a Beaumont program. Beaumont managed the program
“OUR SOCIAL WORKER IS TOTALLY AMAZING. SHE HELPS WITH RESOURCES AND WORKED WITH US FOR A YEAR WITH STATE PAPERWORK.” — Stacey Lotterman, mother of pediatric patient
until the Alternative Health deal in late December 2018. Barry Cargill, president of Michigan Home Health and Hospice, said few providers besides Beaumont offer pediatric home health, palliative care or hospice programs. Most children or young adults are under pediatric palliative care programs, he said. For both children and adults, hospice care is aimed at those with six months or less to live. Palliative care seeks to ease symptoms for those expected to live longer. “It is very difficult for a parent to put their child into hospice. Often-
times it is done under palliative services. Every hospice has done some level of pediatrics,” he said. “Others have specialized in it as Beaumont did.” Hospice of Michigan has the only other combination pediatric palliative care and hospice program in Michigan, said Michael Paletta, M.D., HOM’s vice president for medical affairs. He said HOM offered to take on some of Beaumont’s patients, if they met admission criteria. “We heard Beaumont was taking the pediatric program out of the joint venture (with Alternate) even as they leave the adult hospice program in place (with Alternate),” Paletta said. “We were in talks with Beaumont last summer, but we are not talking about partnering with them.” On the other hand, Paletta said HOM offered if there were families in need of pediatric palliative care or hospice care, “we would be willing to assess those families with care planning and maybe admit them into our program or maybe look at another model of care.” HOM has between 20 to 25 children in its pediatric home health program, the majority in hospice care, he said. HOM also has partnerships with the University of Michigan C.S. Mott Children’s Hospital and Spectrum Health’s Helen DeVos Children’s Hospital in western Michigan. “We have the ability to do pediatric palliative care” in northwestern Upper Michigan, he said. While Paletta acknowledged that pediatric palliative and hospice care are not profitable enterprises, HOM considers it part of its mission as a nonprofit agency. He said HOM supplements reimbursement with charitable donations and grants. “Hospice care is when a child is gravely ill and the end of life is foreseeable,” he said, adding: “Many children have significant health problems from birth on and require a lot of medical services and specialized equipment. The prognosis could be short, a few weeks or a month, or it could be longer. The general notion
of palliative care is based on individual patient need.”
The Hall and Lotterman sons Last December, Hall, Lotterman and about 10 other parents in the program formed an advocacy group when they realized Alternate was going to end the Patch hospice program. “After Beaumont decided to take back the program, they sent us a letter (on Dec. 30). We are thankful, but we don’t know what to think. We don’t know what they are planning,” Hall said. “They did tell us they didn’t understand the level of support the Patch team played” in our lives “and wanted to ensure it continues.” Hall said her son Andrew has multiple congenital anomalies and is on a ventilator 14 hours each night. Along with husband Christopher, the Halls have hired part-time private duty nursing to supplement their own care. The couple also has two other children, ages 10 and 13. “Andrew is home-schooled now,” Hall said. “He used to go to (Macomb County public school) but in 2012 he had spinal fusion and gets pressure sores if he sits too long.” Lotterman’s pregnancy with Holden was normal and the couple did not know for some time that he had the mitochondrial disorder. “He will die from the disease and complications. There is no time estimate. It is making his brain shrink. The last year he hasn’t been doing well,” said Lotterman, who had to resign her nursing job at Beaumont Hospital Troy last summer to take more care of him. “He is non-verbal and is wheelchair-bound. He can babble a little. We like to believe he can’t express his feelings. He is legally blind, too. He responds to voice and touch,” Lotterman said. “When the (other three) kids come home from school and hears their voices, he smiles.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
CONSTRUCTION
From Page 1
The Mid’s condo component is one of at least five residential projects in the city that have been scrapped or put on hold, largely as a result of high costs to build. Many developers say in general terms that they’ve seen price swings about 30 percent from when they first priced projects out as labor shortages have driven up costs and put a pinch on building plans. Cost estimating is an inexact science and varies widely depending on a host of factors, ranging from materials costs to location to the labor market. “Location, the design has an impact, the size of the units has an impact,” said Randy Abdallah, executive vice president for Detroit-based construction giant Walbridge Aldinger Co. “If you’re doing 1,000-squarefoot units, you have more kitchens and plumbing than if you’re doing a 3,000-square-foot unit.” Data from Marshall & Swift Valuation Service provided to Crain’s shows that the cost per square foot to build high-rise Class A apartment buildings in the city has increased about 21 percent since 2010, with the most recent estimate being $169 per square foot in November 2018. That figure is for new high-rise buildings — which are rare in the city — and doesn’t factor in the cost for things like balconies, sprinkler systems, fireplaces, built-in appliances and others which add to the overall cost. But local construction experts like developers and others say those Marshall & Swift figures are on the low side of things, perhaps more reflective of costs in 2016 than 2018 or 2019 (a message was sent to Marshall & Swift for comment). For example, Abdallah said multifamily projects he has priced out have ranged from about $205 to $250 per square foot. “That’s a number we are having a hard time achieving on stick-built, four-story construction projects, let alone high-rise,” said David Di Rita, principal of Detroit-based developer The Roxbury Group, which redeveloped the building now known as The Plaza, immediately north of Ciena Healthcare CEO Mohammad Qazi’s The Mid project, which was announced as having a 25-story tower and a 30-story tower on 3.78 acres of land he picked up for $15 million. It has undergone a couple modifications since. “We are doing high-rise hospitality in Midtown and I would be doing handstands doing $170 a foot.” “We have found it tough to get anything built less than $225 per square foot and even that’s a push,” said Clifford Brown, managing partner of Detroit-based developer Woodborn Partners LLC, which is working on projects in southwest Detroit as well as the Lafayette Park neighborhood. “If the costs to build were consistent with (those Marshall & Swift numbers) I think we would see significantly more construction occurring right now,” Brown said.
Shortages drive up costs The Detroit construction and development industry for over a year has been saying that labor shortages have driven up the cost of building projects, and several have been scrapped or substantially scaled back as a result. The Mid project’s condos are only the latest to be threatened. A plan that would have brought 213 apartments to East Jefferson Ave-
The Mid, a pair of skyscrapers at Woodward and Mack avenues in Midtown planned to be constructed in the next couple of years, would drastically alter Detroit’s skyline. The developer plans to break ground on the first tower along Woodward Avenue this fall. | INFORM STUDIO LLC
The property at 3750 Woodward Avenue in Midtown is 3.78 acres. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
nue along with a new Meijer Inc. grocery store has been reduced to just the Walker, Mich.-based company’s small-format store, along with parking. Dennis Archer Jr. and Bloomfield Hills-based Lormax Stern Development Co. LLC intend start construction on the project this spring, Archer told Crain’s late last year. After years of delays on a Brush Park apartment project, the city decided to cancel the sale of land to a joint venture between New York City-based RHEAL Capital Management LLC and Livonia-based Schostak Bros. & Co. for the Brush Park South project that would have brought several hundred apartments to the area. A plan to bring luxury condominiums by Detroit-based The Means Group Inc. and Holdwick Land Development LLC was scrapped in favor of a $47 million Cambria Hotel project with 154 rooms, which is under construction at 600 W. Lafayette Blvd. More high-end condos envisioned for the TechTown neighborhood have been shelved by Detroit-based developer The Platform LLC. In March, Peter Cummings, who heads up The Platform, said that construction costs increased by 30 percent. Some that have been delayed are being tinkered with. “The condos at Lafayette West are moving forward despite the absurdity of construction costs,” said Amin Irving, president and CEO of Novibased Ginosko Development Co., which is working on the Lafayette
West with 60 for-sale units and 314 apartments on the site of the former Shapero Hall in Lafayette Park. “We have been working closely with the city to ensure our design aligns with construction costs, and amending our methods of construction continuously to mitigate this very real challenge. We’re being thoughtful and flexible in our approach, and expect to go vertical in Q2 2020 as a result.”
The Mid pushing forward Those behind The Mid project remain optimistic, a little less than a year after it was first announced. “While you haven’t seen much physical activity at the site, there has been a lot of work in process to push the project forward, including finalizing construction drawings, financing, and negotiating with potential tenants, among other important planning for the construction phases,” Mullin, first vice president in the Capital Markets Group in the Southfield office of Los Angeles-based CBRE Inc., said in a statement. CBRE is the broker of record and owner’s representative on the project, while the master developers are Grand Rapids-based Rockford Construction, which has an office in Detroit, and Detroit-based Real Estate Interests LLC. Mullin added that financing is expected to be complete by the end of next month. Di Rita said the project was ambitious for the market.
“This is not at all a disparagement of the project. I think it was very ambitious and attractive, but it did not strike me as likely to be supported by the market,” Di Rita said. “That’s a function of not only construction costs, but that thing was going to just be outrageously expensive.” The Mid was revealed in March with two phases: Its first phase was slated to include a 25-story hotel and condominium building with 225 hotel rooms and 60 for-sale units, as of June when $58.3 million in brownfield financing was approved by the state. As part of a second phase, a 27-story residential tower with 180 apartments was planned, smaller than the 30-story, 250-unit residential tower that had been anticipated last spring. Also included in the second phase was a 12-story building with about 198 co-living units. Approximately 750 parking spaces were also part of the project mix, with 325 in a one-level underground garage and 419 spaces in a five-level deck above ground. Between 75,000 and 100,000 square feet of Woodward-facing and other interior retail was planned for things such as smaller neighborhood retail to grocery space.
High demand While individual laborers aren’t necessarily getting paid more as a result of the worker shortage, Walbridge’s Abdallah said, the subcontractors that employ them can charge more because of the tight market. That’s because they may be using non-regular workers and must adjust for production rates and the unknown. “If there is huge demand for a product, what happens? It goes up,” Abdallah said. “If coffee was in high demand, it goes up in price. It’s not because the labor in Colombia went up. I’ve been through seven different cycles of extremely busy to extremely slow. The only thing that changes is the opportunities for the contractors to make money. To stay in business, they have to be able to ride the markets up and down.” According to data from the Michigan Bureau of Labor Market Information and Strategic Initiatives, while there were about 1,500 fewer construction firms in the Detroit-Warren-Dearborn Metropolitan Statistical Area in 2018 (7,513) compared to 2009 (9,020), there are more than
20,000 more workers, with 70,639 as of two years ago. They are making an average weekly wage of $1,326, compared to $1,089 in 2009. There is a similar trend statewide, with 23,735 firms in 2009 employing 123,887, compared to 19,952 companies in 2018 employing 168,632. Average weekly wages have gone from $957 to 1,199. Skilled trades have been battered for years as the 2008 recession ground construction to a halt, causing workers to seek employment elsewhere or in different fields. And a decades-long emphasis on two- and four-year college degrees has kept a generation of students from considering a career in the skilled trades. “When you look at production, it’s killing the projects,” said Todd Sachse, founder and CEO of Detroit-based Sachse Construction. “A highly skilled finish carpenter can hang a door in 45 minutes. A less skilled carpenter takes two hours. When I’m the owner of the carpentry company, I can’t put 45 minutes for hanging a door anymore, I have to put two hours in, at $65 to $70 an hour, so all of a sudden that door costs 2.5 times more to hang simply because it takes longer.” Sachse also said building in Detroit costs more because of an executive order requiring that 51 percent of the construction workers on projects that receive city funding be Detroit residents, as well as city taxes.
Financing gaps Developers say that, in the end, increased construction costs have not been met with similar increases in rents, leaving a financing gap, although the number of construction projects that have been sidelined may loosen up the labor market a bit. “Projects that had been under construction for two-three years have been completed and costs have prevented more projects from getting started,” said Randy Wertheimer, CEO of Farmington Hills-based homebuilder Hunter Pasteur Homes, which is working on the City Modern project in Brush Park by Dan Gilbert and others, as well as the Pullman Parc project with Brown’s Woodborn Partners and Detroit-based Broder & Sachse Real Estate Services Inc. Di Rita echoed similar sentiment: “What will have greater downward pressure (on construction costs): Pull out all of the announced projects over the last year and tell me how many are happening.” And Kevin Johnson, president and CEO of the Detroit Economic Growth Corp., said late last year that he anticipates construction trades training programs should start bearing fruit as some of those trainees start entering the labor market. If that happens, that could help ease some of the upward pressure on costs that has been experienced. But still, Di Rita said, a realistic look at cost and rent structure is needed. “We have a cost problem in Detroit in part because we have a price point problem on the end product,” Di Rita said. “We have a price point reality. This isn’t New York. It’s not Chicago. We have good numbers for a Midwestern city of our scale, apartment and condo, but they are not numbers that can support the cost structure we have in this town. You can’t have Chicago construction costs and Detroit sales prices. That’s a prescription for projects not happening.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 19
TOLLS
From Page 1
Converting I-94 in Wayne County to a toll road would create a future revenue source that could be bonded against to generate the money needed to speed up this reconstruction project. The bonds could be repaid through future toll revenue. As Lansing enters the 10th consecutive year of a debate over long-term road funding that almost always revolves around fuel taxes, it may be time to explore different approaches to financing transportation infrastructure for specific projects of utmost importance to the state’s future. While taxing gasoline and diesel remains the fastest way to generate more revenue for roads, motor fuel taxes also are a dying form of taxation likely to shrink over time as automakers move to increase fuel efficiency and electrify their fleets. “If you only do a gas tax, mark my words, in 10 years we’ll be having the same conversation,” said Eric Morris, a vice president at HNTB who leads the transportation engineering and planning firm’s Michigan offices. “We have to find a new revenue stream.” HNTB is MDOT’s program manager for the I-94 reconstruction project. “The biggest constraint we have on the program right now is not knowing what to do. It’s funding,” Morris said. In recent months, Morris has been advising Gov. Gretchen Whitmer’s office and lawmakers on how toll roads paired with bonding could be a viable means for financing highway reconstruction and maintenance, freeing up existing funding for other trunkline roads. Whitmer’s office is listening and studying tolling as one of several alternatives to road funding after her 45-cent-per-gallon fuel tax hike sputtered out in 2019. “Given the Legislature is not serious about fixing unsafe roads and bridges, the responsible thing to do is examine other options to protect Michiganders,” Whitmer spokeswoman Tiffany Brown said in a statement. A myth that’s been spread in the Capitol for years is that the federal government won’t let Michigan create toll roads on existing roads. It’s complicated, but it can be done. Congress and the U.S. Department of Transportation have created options for states that could allow for tolling on metro Detroit’s freeways. With approval from the federal government, Michigan could potentially: ` Toll “federal aid” roads where bridges need to be replaced. This could be the pathway to tolling I-94 from Michigan Avenue on the Detroit-Dearborn border to as far east as the Roseville exits in Macomb County. It also could be deployed elsewhere in the state, assessing a toll for every bridge crossing over another road or a body of water. ` Convert High Occupancy Vehicle (HOV) lanes to a toll lane. Michigan doesn’t currently have any HOV lanes, but the fourth lanes being added to north and southbound I-75 in southern Oakland County are intended to be HOV lanes that could be used for variable-rate toll lanes. ` In other words, motorists in the HOV lane could be charged a lesser toll than single-occupant commercial trucks and passenger vehicles in the other lanes. HOV lanes could, in theory, be added to other metro Detroit freeways, such as I-696, I-275 and I-75 in Wayne County, and then converted in the future to toll lanes ` The express lanes on I-96 on Detroit’s west side could be tolled at a different rate than the local lanes, which are already physically separated. The local lanes also could be free for residents traveling from between exits, while a commuter from Northville could be charged a toll to drive in the express lanes. California, Florida and Virginia have created these socalled “Lexus lanes.” The other myth is that it would require a massive upfront infrastructure bill to add toll booths and build new interchanges to create a Chicago-style toll road. That’s a 20th century way of thinking about tollways. Modern open-road tolling systems are en-
THE OTHER MYTH IS THAT IT WOULD REQUIRE A MASSIVE UPFRONT INFRASTRUCTURE BILL TO ADD TOLL BOOTHS AND BUILD NEW INTERCHANGES TO CREATE A CHICAGO-STYLE TOLL ROAD. THAT’S A 20TH CENTURY WAY OF THINKING ABOUT TOLLWAYS. tirely electronic with overhead gantries that scan transponders and cars and trucks’ license plates as they pass under. The transponders are usually linked to a credit card or an account tied to the individual license plate to charge the toll. “When you do open-road tolling, you don’t need new interchanges, you don’t hurt other people’s businesses — you just get on and off,” Morris said. For vehicles without transponders, these tolling systems have cameras that take pictures of the license plate and send the motorist a bill. The downside to this is creating a government bureaucracy to chase down unpaid tolls. But there are always going to be tradeoffs for better roads. Most over-the-road commercial trucks already have E-ZPass transponders for driving through Pennsylvania, Ohio, Indiana and Illinois toll roads. The infrastructure for Michigan to join this interstate tolling system already exists.
Some mythbusting There’s also a reflexive argument that toll roads won’t work in Michigan because we’re a peninsula state. But when it comes to commercial trucks, Michigan is a through lane. More than 4 million commercial trucks cross the Ambassador
Bridge in Detroit and Blue Water Bridge in Port Huron annually, according to the Bridge and Tunnel Operators Association. While some trucks are running freight, car parts and finished vehicles between Michigan and Ontario, many are passing through on their way to Chicago, southern auto plants or even Mexico. In every debate about road funding, some motorists and politicians are fixated on laying more of the cost of repairing and rebuilding roads at the feet of heavy trucks. Tolling is one way to do that, especially since there’s not an easy way to bypass metro Detroit’s freeways. And if I-69 and U.S.-23 were also incorporated into a toll road system, it would be pretty hard for out-of-state truckers to avoid paying Michigan’s tolls. “It would take a pretty stiff toll to divert someone off a 70- to 80-mile-an-hour freeway onto Grand River or U.S. 12,” said Aarne Frobom, a senior policy analyst at MDOT who has studied tolling. “And that’s doubly true for truckers. As much as they object to tolls — which they do for a couple of reasons — they still won’t use the parallel roads because it’s just too slow for them to be productive.” Studies in other states that have created new toll roads show a diversion of about 5 percent of traffic to parallel roads, said Ryan Mitchell, manager of innovative contracting at MDOT
20 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
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who previously worked on a tollway project in Texas. “There is a ramp-up period where people say, ‘I’m not using that,’” Mitchell said. “But then they come around.” Motorists come around to tolls when the transportation agency can show it’s an added value or relieves congestion, Mitchell said. But to toll I-94, there would probably have to be tolls on I-696, I-96, I-75 and I-275 to prevent large-scale traffic diversion. And then there’s the Lodge (M-10), Southfield Freeway (M-39), the Davison Freeway (M-8) and M-14 in western Wayne County to account for.
Studying the possibilities Admittedly, some of this is spitballing from an experienced commuter. I’m no civil engineer. But the interest in tolling is bubbling up in Lansing to the point that lawmakers want to dive deeper into how it could be done. Sen. John Bizon, R-Battle Creek, has sponsored legislation that would require MDOT to hire a consulting firm to conduct a feasibility and implementation study for tolling state highways. Senate Bill 517, which is pending on the Senate floor, calls for a detailed plan about potential toll rates, vehicle counts and diversion rates
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Looking west from the Mount Elliott Street bridge over I-94.
CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS
The 65-year-old Mount Elliott Street bridge over I-94 is slated to be closed by the end of January and demolished in February. The Michigan Department of Transportation plans to award a low-bid $20.5 million contract to Wixom-based Toebe Construction LLC to build a new six-lane bridge crossing over the freeway. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS
The current Second Avenue bridge over I-94, and an artist’s rendering of a proposed new structure. |
within 18 months. “There is a lot of traffic that comes through there, and we have no idea what would happen if we set up a toll road. And that’s one of the reasons we need the study,” Bizon said. “We just don’t have the information we need to make a learned decision about what we’re voting on.” Bizon, who represents an I-94 corridor county, sees toll road revenue as a way to shift existing spending from freeways to other state highways and trunklines and lowering the existing tax burden for motorists. “I see there being significant advantage to toll roads for the citizens of the state if we’re able to decrease our gas taxes and vehicle registration fees,” Bizon said. If Michigan were to move forward into the tolling business, policymakers would need to consider whether the public policy goal is to better finance transportation infrastructure, reduce congestion to improve worker productivity or make users shoulder the true construction and maintenance cost of the roads they utilize.
Bay City tollers There’s one development in tolling that policymakers should take note of as they consider a study of tolls. In Bay City, the city commission voted last month to sell its two city-owned drawbridges
over the Saginaw River for $5 million to United Bridge Partners, a Denver-based firm that owns one private toll bridge in Chesapeake, Va., and is currently building a second bridge over the Indiana Harbor and Ship Canal in East Chicago, Ind. Under the deal, United Bridge Partners will repair Bay City’s Liberty Bridge and replace Independence Bridge, making it taller to reduce the number of times the drawbridge has to be lifted for smaller boats, said Jesse Dockett, president of Bay City’s commission. United Bridge Partners plans to start charging tolls to cross the two bridges in 2024. Bay City’s decision to sell the assets outright was driven by the mid-Michigan city’s shrinking tax base and inability to keep up with the $700,000 annual maintenance costs of the drawbridges. Upkeep of the drawbridges diverted half of Bay City’s annual road repair budget, Dockett said. Given the state’s disinvestment in cities and the constitutional restrictions on property tax growth, local leaders in Bay City have long given up on Lansing to help solve infrastructure problems, Dockett said. “I think it’s a model that other cities are going to have to pursue,” Dockett said. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
BRIDGES
From Page 1
MDOT
cording to MDOT. MDOT’s fourth highway overpass replacement project in Detroit this year is the reconstruction of the 66-year-old Second Avenue bridge. The Second Avenue bridge will be replaced with a tied-arch bridge similar to the I-94 bridge over Telegraph Road, creating a new landmark at the edge of Wayne State University’s campus, Morosi said. “That bridge is in poor shape,” he said.
Approximately $20.5 million of the contract will pay for replacement of the Mt. Elliott Street bridge with a new six-lane overpass that will feature two additional turn lanes. The existing Mt. Elliott Street bridge dates back to construction of I-94 in 1955 and has chunks of concrete missing in its single sidewalk crossing. For the past year, the bridge has had barricades blocking the middle lane of the bridge “due to — MDOT spokesman Rob Morosi, on the structural concerns our bridge in- 66-year-old Second Avenue bridge spectors had regarding the beams supporting the bridge deck (driving surface) Shelby Township-based infrastructure over those lanes,” Morosi said. builder Z Contractors Inc. has been awarded Before the Mt. Elliott bridge can be demol- a $25.5 million contract to replace the Second ished in February, electric and data utilities Avenue bridge, Morosi said. The new Second Avenue crossing will fearunning underneath the bridge have to relocated and asbestos must be removed, Morosi ture two lanes for vehicles, wide sidewalks said. and bicycle lanes to connect the pedestrian Commercial truck and passenger vehicles and bike-friendly corridor through Wayne that use the Mt. Elliott bridge will be detoured State’s campus and connecting to New Center east to the Van Dyke Avenue bridge over I-94, on the north side of the interstate. which was rebuilt in 2013. Grand Boulevard traffic will be detoured to the Chene Street Contact: clivengood@crain.com; bridge, which was reconstructed in 2018, ac- (313) 446-1654; @ChadLivengood
“THAT BRIDGE IS IN POOR SHAPE.”
JANUARY 13, 2020 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Living life on two tracks: architecture and trains
crainsdetroit.com
HAMILTON ANDERSON ASSOCIATES: Rainy Hamilton Jr. is principal-in-charge and president/associate of the Detroit-based architecture and planning firm Hamilton Anderson Associates, which is working on major developments in Detroit and other major cities around the U.S. When he's not on the front lines of the construction and development industry, the 63-year-old dabbles in other passions, such as model trains and science fiction. From 2009-14, he owned and ran Rainy Day Hobbies LLC, a hobby store in downtown Ferndale, while also running | BY KIRK PINHO Hamilton Anderson. ` What are some of the key projects that you have going on right now? We’re about to modify a design that we did over a year ago for a project called The Woodward that’s being shepherded through the completion process by The Platform, which is Peter Cummings’ team. (Other developer) Queen Lillian (LLC) is involved. So it’s that project, that team. We’re about to finalize our design so that we can break ground next year on that. ` It’s been seven years. And we’ve designed it, this will be the third time. The first time it was going to be office. And then they pulled back from that, and we designed it as residential, and this time around, it’s still residential mixed-use, but we’re not going to do the structured parking. We’ve had to bring the cost down, try to get more units. And one of the things that we’ve done very well is to work with our partners, especially the developers, to assist them in coming up with something that’s cost-effective and can be built in this market because, as you know, it’s been challenging. We were on (Brush Park South) project with Schostak (Bros. & Co.) and John Rhea, which collapsed and we were greatly disappointed, so I think in this market is challenging to do mixed-use residential, with numbers where the units are 200-plus ... We see the higher ed market continue to grow. We see health care continue to grow. And we opened an office in Atlanta. We’re hoping it’s going to grow this year, next year, from one person to six. We are also looking at D.C., also looking at Ohio and Nashville. ` Are these markets you’ve been in before, or are these new markets? We’ve been cultivating Atlanta for the last four years. Nashville, we’ve been looking at softly, and then the D.C.
market. We see a couple doors opening for us in that market, as well. ` What’s the difference between those markets versus here that we could point to? Atlanta’s market is a growth market. I would say their cost of living is higher than it is in Detroit. In Detroit, we struggle with our rental rate structure. If you build a project in downtown Birmingham, just up the road, and a project in downtown Detroit, it will cost the same, plus or minus 5 percent. Trouble is in downtown Birmingham, you can charge $30 plus per square foot for rent, upwards of $35. If you’re not in the CBD in one of the projects along the Woodward corridor, like in Harmonie Park/Paradise Valley, rents here are $22 a foot. Big difference in the revenue you’re going to generate on that project. So how do you close the gap on the pro forma? Atlanta, I say, has adult rents. Detroit, we’re still struggling in adolescence.
on Monday and then my manager would have Sunday, Monday off ... We did that for five years, kept growing and plateaued. And you know, internet sales has hurt many hobby stores. ` How did you get involved in it? I don’t know many people who are model train enthusiasts. You’d be surprised at the number of train lovers that there are. I mean, there’s Trains magazine, and they’re going crazy right now because they’re Rainy Hamilton Jr. is principal-incharge and president/ associate of Hamilton Anderson Associates.
` I didn’t know about your hobby shop. Did that come before Hamilton Anderson? Was it concurrently? How did that work out? It came during Hamilton Anderson. ` So you were running two businesses at once? Yes. ` How did you sleep? I did not. ` I didn’t think so. It’s fun being a retailer until it’s the holiday season. You have to be on. So running Hamilton Anderson and then being a retailer on the weekends, with the manager. We’d both be in the store on Saturdays together from overlap. Then I’d open on Sunday, we’d be closed
all covering the renovation of the train station (Michigan Central Station). But my interest came from being a boy and loving the models, and then as I became, you know, an adult later finding that all the local stores are closed. So if I wanted to buy material for my home layout, you have to go online or drive 45 minutes to get to a store. So I got tired of crying about it and decided to do something about it. So found space (in downtown Ferndale). The gentleman that owns that group of buildings is an architect. And he said, “Rainy, if you want to try your concept of having a local hobby store, I’ll lease you the space for three months, and after three months, if it works, we keep going. If it doesn’t, you close up and go home.” So we opened October 2009. ` Interesting time to open a business. Yeah, and we had a great turnout. And we grew for five years, and then it plateaued. It was about fall time (in 2014) and I looked at the inventory and said, “OK, this needs another infusion of about $15,000 worth of inventory to get it where I would like it to be for the holiday season.” And I said, “Enough.” And in that time, Hamilton Anderson, we went through the recession of 2009 and survived, and business was growing for the practice. So I said, “Well, you know, this the main practice. This is the main business.” What’s the old expression? “Don’t make your hobbies a business?” I said five years is enough, and we closed. I still see customers all the time, and kids will come up and say, “Mr. Rainy, will you open the store again?” And I say, “No.”
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RUMBLINGS
Eastern Market’s Mike Coney Island closes up shop Mike Coney Island Inc., a small restaurant whose hash browns will be missed, is no more after telling landlord Firm Real Estate that it would be closing shop by Dec. 31. That notification came in November, according to Rachel LePoudre, senior account executive for public relations firm Truscott Rossman, which represents Firm Real Estate. That is the real estate company of Sanford Nelson and other investors, who own no fewer than 20 buildings totaling more than 250,000 square feet in the historic food district in Detroit. The company’s accumulation of properties has prompted concern from some who fear rising rents, among other things, and several businesses have shuttered, including Russell Street Deli. Others in-
Mike Coney Island Inc. at 2719 Russell St. closed, leaving the building that housed it in Eastern Market vacant.
clude the Farmers Restaurant and Mootown Ice Cream & Dessert Shoppe LLC, the latter of which was replaced by Gettees, a clothing maker. LePoudre said that the owner “shifted his focus on starting a new food services business, which is expected to open in Eastern Market
22 | CRAIN’S DETROIT BUSINESS | JANUARY 13, 2020
later this year.” The business is registered to Abraham Chaalan. “(He) is opening a new supply store similar to Kay’s that operated in the market district until a few years ago: paper goods, cleaning supplies, some nonperishable grocery items,” said Dan Carmody, president of the Eastern Market Partnership. “(The) new location is next to the Chase Bank branch on Russell Street. This is a great niche to fill, serving smaller restaurants and convenience store owners, in addition to Detroit area households.” Mike Coney Island’s closure means two things: one fewer restaurant in the area, and a newly vacant 15,000-square-foot building that is expected to be demolished at some point, although Firm says a timeline still has yet to be established.
` LITTLE CAESARS TEAMS WITH DOORDASH FOR DELIVERY Little Caesars Enterprises Inc. has teamed with DoorDash Inc. to offer nationwide delivery, as it seeks to navigate the expanding world of mobile and online ordering that’s threatening to sap business from laggards. Delivery will be available at about 90 percent of Little Caesars’ U.S. locations. The prices are the same as carryout, plus a $2.99 delivery fee and 10 percent service charge. DoorDash had already been delivering for the Detroit-based chain through its own app, but orders will now be placed directly through the Little Caesars mobile app or website, Chief Executive Officer David Scrivano said in an interview.
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Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except the third week in December, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2020 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.
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