THE CONVERSATION CEO of the Charles Stewart Mott Foundation, Ridgway White, is ‘nervous about Flint.’
NONPROFITS: Gleaners aims to tackle hunger through the schools. PAGE 3
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CRAINSDETROIT.COM I JANUARY 27, 2020
Third woman accuses Lucido of sexual harassment Alleges touching at trade-group meeting BY CHAD LIVENGOOD
LANSING — At the Michigan Credit Union League’s annual government affairs conference last May, Melissa Osborn stood at a table in the Radisson Hotel handing out name badges to legislators as they arrived for lunch with credit union executives from across the state. One veteran male lawmaker who arrived at the downtown Lansing hotel’s second-floor conference center complimented Osborn about her reddish hair. Osborn, a regulatory affairs specialist for the trade group, thought nothing of it. About 10 minutes later, Osborn said, she felt a hand on her hip. It was state Sen. Peter Lucido, she said. Osborn said she suddenly found herself being “uncomfortably” held by the first-term Republican senator from Shelby Township as he started commenting about her red-and-black plaid pencil dress and how it looked on her. “He was looking at me up and down,” Osborn told Crain’s. “And he stayed there for several minutes, making these comments about my appearance and my look and what he liked about it.” During the entire interaction, Lucido’s hand remained on what Osborn described as “my lower back/ upper butt.” “He wasn’t cupping my butt, but (his hand) was definitely not really all on my back either,” Osborn said. “It was in a strange spot, like he was toeing the line intentionally but still making me very uncomfortable.” Osborn, 40, is the third woman who works in Lansing to come forward in the past two weeks and publicly accuse Lucido of workplace sexual harassment in and around the Capitol. See LUCIDO on Page 21
Casinos go all in on sports bets
Progress, but only so much
Newly legal activity to generate fresh customer base, millions in revenue
Survey: Women inch closer to parity in Michigan boardrooms, but less so in the C-Suite | BY DUSTIN WALSH
BY KURT NAGL
Detroit’s three casinos are betting big on sports gambling with expectations for the newly legal activity to generate a fresh customer base and millions of dollars in additional revenue. Even before sports betting became legal in December, MGM Grand Detroit’s $6 million Las Vegas-like sports lounge was open. The 4,400-square-foot area was packed to the gills for the recent Conor McGregor-Donald Cerrone UFC match,
“THEY HOPE BY MARCH MADNESS. WE’RE HOPING TO MOVE IT ALONG.” — Mary Kay Bean, Michigan Gaming Control Board spokeswoman
W
omen-held board seats at Michigan public companies have hit record highs. By the start of 2020, women held 21 percent of board seats, compared with just 15 percent in 2017. Michigan’s 77 public companies are keeping pace with the S&P 500. Michigan companies added 121 board members between 2017 and 2019 and 26 percent were women, compared to 30 percent women among the S&P 500, according to a new study released today by Wayne State University for Detroit-based Inforum. However, that progress is mostly accounted for by heavy pressure from institutional investors demanding more gender equality on boards because research has revealed more gender parity equates to better financial performance.
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When it comes to the C-suite, gender parity has further to go. Women comprise only 12 percent of named executive officers — the CEO, CFO and at least the next top three compensated management employees as required to be named in U.S. Securities and Exchange Commission filings — a figure that hasn’t budged in 13 years. “We’ve seen board numbers (for women) improve as there has been tension placed on board members by institutional investors,” said Terry Barclay, president and CEO of Inforum. “The new frontier is the talent pipeline. It’s the broken rung. This all starts with the first promotion women don’t get, and we’re seeing the effects of that as it moves through the pipeline.” See SURVEY on Page 18
FOCUS | HEALTH CARE Insight Institute invests in health care, community in Flint. PAGE 10 ‘Healing center’ aims to put services under one roof. PAGE 11
said Louis Theros, legal counsel for MGM. While nobody there bet a legal dime on the 40-second fight, the turnout had operators itching to open their sports book and expand the casino’s dominant share of the Detroit market. “We think this will bring a tremendous amount of money out of the illegal market,” Theros said. “I think we have a very unique opportunity in Michigan to capitalize. Let’s face it, we’re a sports-crazy community.” The start is waiting on rules to be finalized. MGM Grand Detroit, MotorCity Casino Hotel and Greektown Casino-Hotel are waiting on the Michigan Gaming Control Board’s go ahead. The upcoming NCAA men’s basketball championship tournament, which kicks off March 17, is the launch target. “They hope by March Madness,” said Mary Kay Bean, Michigan Gaming Control Board spokeswoman. “We’re hoping to move it along.” The control board said last week that unlike on-site sports gambling, online betting is still about a year away from reality given the greater complexity of the rules needed. Greektown Casino is putting sports betting at the center of its business — physically, anyway. Penn National Gaming Inc., which in a $1 billion deal bought the casino from Dan Gilbert’s Jack Entertainment LLC last year, is investing upward of $1 million into a temporary sports betting lounge, Greektown General Manager John Drake said. See BETTING on Page 20
NEED TO KNOW
SMALLER-TOWN SPORTS
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` BLUE CROSS GETS INTO DRUG BUSINESS THE NEWS: Blue Cross Blue Shield of Michigan is joining an effort to form a new company with the goal of lowering prescription drug costs. Civica Rx, the Blue Cross and Blue Shield Association and 18 independent BCBS companies on Thursday announced the new Civica subsidiary, which will aim to seek approval to manufacture existing generic drugs for which there is only one, high-cost source. WHY IT MATTERS: Prices for many generic prescription drugs have skyrocketed in the past several years because of a lack of competition among makers of certain drugs. The Blues participants’ $55 million investment hopes to bend that curve, bringing the first drugs to market by early 2022.
` GM DEAL DISCLOSES MEGA VALUE, CUTS STATE LIABILITY THE NEWS: For the first time since 2014, General Motors Co. is publicly disclosing the value of its state business tax credits in a deal that will reduce the financial liability to Michigan taxpayers by $325 million over 10 years. The Detroit-based automaker will remain eligible for $2.27 billion in Michigan Economic Growth Authority tax credits through the end of 2029, according to the Michigan Eco-
nomic Development Corp. GM’s agreement to voluntarily reduce the remaining value of its MEGA credits from $2.6 billion is part of a deal the Michigan Strategic Fund’s board approved Wednesday.
Ann Arbor-based university last week received “several allegations of sexual misconduct” by Philbert, the email said. The university hired an outside law firm, Washington, D.C.based Wilmer Cutler Pickering Hale and Dorr LLP, to investigate. WHY IT MATTERS: Philbert, a former dean of public health at the university, is the No. 2 executive at the university and has served as its top academic official since 2017.
` TESLA DEAL WILL LET IT SELL IN MICHIGAN WHY IT MATTERS: The deal commits GM to invest $3.5 billion in the state by 2029, while saving taxpayers some money on the original 2009 deal. It also brings transparency: GM’s MEGA credits were last valued at $2.1 billion in July 2014. Since then, the value of those tax credits has been shielded from public disclosure.
` UM PROVOST ON LEAVE OVER SEX MISCONDUCT ALLEGATIONS THE NEWS: The University of Michigan has placed its provost on paid administrative leave after sexual misconduct allegations, according to an email from President Mark Schlissel. Martin Philbert, who also holds the title of executive vice president for academic affairs, was put on leave effective Tuesday, Schlissel said. The
THE NEWS: Michigan has cleared the way for Tesla to sell more electric vehicles in the state and get them serviced under a deal that settles a lawsuit by the automaker. It won’t be as simple as Tesla opening a dealership on a corner lot. But consumers at least won’t have to leave Michigan to buy a car or SUV. Tesla had sued Michigan in 2016, challenging a 2014 law that ensured automakers could only sell through independent, franchised dealers and not directly to customers. The company claimed it was unconstitutional. WHY IT MATTERS: Tesla has what it calls a “gallery” at Somerset Collection shopping mall in Troy. Employees there have been barred from talking about pricing or completing sales deals, but those restrictions were lifted under the settlement.
Mayors take on MLB’s minorleague contraction push ` Dozens of mayors from across the United States, including mayors of Lansing and Grand Rapids, have formed a task force opposing a proposal by Major League Baseball to eliminate 42 affiliated minor league franchises for the 2021 season. The mayors held a news conference Wednesday in New York City, saying they were frustrated to have been left in the dark on the MLB-NAPBL negotiations despite having provided public money for stadiums. Grand Rapids Mayor Rosalynn Bliss estimated the West Michigan Whitecaps generate $15 million annually for her city’s economy. Others pointed to the social positive of relatively inexpensive, family-friendly entertainment. Asked about publicly financing upgrades to avoid contraction, Lansing Mayor Andy Schor said “we’ve been doing a lot of that partnership for years.” The Lansing Lugnuts
Corrections ` A story on Page 3 of the Jan. 20 issue listed an incorrect operating budget for the Detroit Institute of Arts. It should have said that millage revenue accounts for about $25 million, or about 65 percent, of the museum’s an-
nual operating budget of $38 million. ` A story on Page 3 of the Jan. 20 issue incorrectly spelled the name of CEO of Friends of the Children, Terri Sorensen.
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MERGERS & ACQUISITIONS
Is Atwater’s sale last of big brewery deals for Michigan? BY DUSTIN WALSH
Detroit-based Atwater Brewery’s deal last week to sell itself to the largest U.S. brewing company could mark an end to the big purchases, now that most of the largest breweries in the state are owned by large, multinational beer companies. The companies announced the deal Wednesday for Atwater to be acquired by Molson Coors Beverage Co. Terms of the deal were not disclosed. Under the agreement, Atwater and all of its assets, including its Detroit and Grand Rapids taprooms as well as its biergarten in Grosse Pointe, will be wholly owned by Molson Coors under its craft beer division Tenth and Blake. The transaction is expected to close by the spring. Atwater owner and CEO Mark Rieth and the Detroit company’s management will continue to lead the brewer under Tenth and Blake.
Under the deal with Molson Coors, Atwater and all of its assets will be wholly owned by its craft beer division Tenth and Blake. | LARRY PEPLIN FOR
Atwater’s 95 employees will remain in place. Rieth said he had been in “serious discussions” for a few years about finding a partner to fund expansion of the maker of Dirty Blonde, Vanilla Java Porter and other brews. “As a regional brand, we wanted to find something that made the most sense for us,” Rieth said. “We could go it alone, talk to private equity to get some capital or look for a strategic partner. That really ramped up over the last six months.” Rieth said the decision was made after discussing Molson Coors’ ownership with its other craft brands, such as Jacob Leinenkugel Brewing Co. The Wisconsin brewer sold to Miller Brewing Co. in 1988 and the big brewer kept the family at the helm to run the operations. Through a series of acquisitions and divestitures, Miller Coors is now known as Molson Coors in the U.S. See ATWATER on Page 21
CRAIN’S DETROIT BUSINESS
Michigan’s largest brewers, by the pint The largest breweries in Michigan by 2018 sales, self-reported in barrels and calculated out to pints for reader consumption: Founders Brewing Co., Grand Rapids: 140 million pints Bell’s Brewery Inc., Kalamazoo: 117.1 million pints Short’s Brewing Co., Bellaire: 11.3 million pints New Holland Brewing Co., Holland: 10.4 million pints Atwater Brewing Co., Detroit: 8.8 million pints Old Nation Co. LLC, Williamston: 5.1 million pints Saugatuck Brewing Co., Saugatuck: 3.2 million pints Griffin Claw Brewing Co., Birmingham: 3.1 million pints Keweenaw Brewing Co., Houghton: 3 million pints Blackrocks Brewery LLC, Marquette: 1.9 million pints Dark Horse Brewing Co., Marshall: 1.9 million pints Northern United Brewing Co. (Jolly Pumpkin and North Peak), Dexter: 1.9 million pints ** PERRIN BREWING CO., COMSTOCK PARK, AND ODD SIDE ALES, GRAND HAVEN, DID NOT REPORT BUT WOULD LIKELY MAKE THE LIST. *** SOURCE: BREWERS ASSOCIATION
NONPROFITS
RETAIL
Fairlane mall owner falls behind on loan Company works to restructure debt BY KIRK PINHO
FOOD SECURITY
Students at Pearl Lean Elementary School get a chance to try their hand at cooking a healthy meal during a Cooking Matters class launched as part of a 10-year pilot in the Warren Consolidated Schools district. | GLEANERS COMMUNITY FOOD BANK OF SOUTHEASTERN MICHIGAN
Gleaners looks to tackle hunger through schools BY SHERRI WELCH
Can ensuring students and families are 100 percent food secure also translate to better educational outcomes and economic stability for families? A 10-year pilot led by Gleaners Community Food Bank of Southeastern Michigan, the Food Bank Council of Michigan, the Michigan Department of Education and Warren Consolidated Schools is looking to prove it can and to create a scalable model that can be replicated in other districts around the state. Launched in October, Best Food Forward is working to eliminate hunger for students and families at the five schools participating in the
pilot and to track the impact that has on education, health and family stability. The pilot is coordinating support from new and existing food pantries and programs, federal child nutrition programs in the schools, and other community hunger assistance and pairing it with environmental changes (such as murals of fresh food in schools), nutrition education, school, parent and youth engagement and policy change, said Rachelle Bonelli, vice president of programs at Gleaners. The Michigan Department of Education, which facilitates the school meal programs, has contributed $221,000 to the pilot for the next two years, and Tyson Foods is funding mobile pantries at
the middle and high schools participating in the pilot. The education department also secured a two-year, $500,000 grant from the Michigan Health Endowment Fund to support Wayne State University’s evaluation of the pilot and a similar effort launched by the Food Bank Council and Westwood Heights school district in Flint. WSU will track a broad number of behavioral, health, aggregate education and socioeconomic indicators for 100 students — from grades 3-12 — and 100 parents of those students in each city, in the hopes of attracting future funding from the National Institute of Health, Bonelli said. See HUNGER on Page 18
Rachelle Bonelli, vice president of programs, Gleaners Community Food Bank of Southeastern Michigan.
In the latest sign of the times for struggling regional malls, the owner of Fairlane Town Center has become delinquent on its $135.7 million loan on the Dearborn mall as well as two others in Virginia and Texas. New York City-based Trepp LLC, which tracks commercial mortgage-backed securities debt, says that Miami Beach, Fla.-based Starwood Capital Partners Inc. received a two-year extension in November 2017 until last November to pay off the balance of the loan, but failed to do so. Trepp says a debt servicer is processing a second 60-day forbearance period as a loan modification and extension are considered. Starwood Retail Partners, a division of Starwood Capital Partners, said in a statement emailed Thursday afternoon to Crain’s that it is “actively working to extend and restructure our financing at Fairlane Town Center.” “In the interim, it is business as usual at the property,” the statement says. The debt could be transferred to a special servicer, Trepp says. “In general, the special servicer will try to come up with a resolution or workout strategy to maximize the amount recovered for the lender and CMBS bondholders, whether that’s a loan modification, extension, or injecting extra capital to re-tenant the property, etc.,” said Catherine Liu, a Trepp research associate. Regional malls have been battered as online retail has claimed brickand-mortar stores by the thousands around the country, ranging from small mom-and-pop shops to major department stores. See FAIRLANE on Page 17 JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 3
D
REAL ESTATE INSIDER
The $533 million Wayne County Consolidated Jail construction project at I-75 and East Warren Avenue is one of the most expensive currently underway in Detroit. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
Projects under construction in or near downtown total $3.4B, report says
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A lot of Detroit developments have hit roadblocks lately, largely due to construction costs increasing. But a new study makes note Kirk of what actually is PINHO being built: $3.4 billion worth in and around downtown Detroit, according to the Royal Oak office of Chicago-based brokerage house JLL. More than half of that tallied is by billionaire Quicken Loans Inc. and Rock Ventures LLC founder and Chairman Dan Gilbert across the development on the site of the former J.L. Hudson’s department store downtown ($1 billion, give or take, although we still don’t know exactly how tall it’s going to be); the Wayne County Consolidated Jail complex project at I-75 and East Warren Avenue ($533 million); the redevelopment of the Book Tower and Book Building on Washington Boulevard ($313 million); and the City Modern project across 8.4 acres of Brush Park land ($100 million-plus, but we’ve never gotten a precise amount). Others included in the JLL overview are Ford Motor Co.’s $350 million redevelopment of Michigan Central Station in Corktown and the Ilitch family’s new Little Caesars Global Resource Center ($150 million). Billionaires and billionaire families, all. The majority of those projects have been many years in the making. Harrison West, senior research analyst at JLL, went back to 2012 and tallied construction projects completed or announced valued at $1 million or more: 167 in total representing at least $10.4 billion (including the QLine). Of that investment figure, 35 percent has been completed, 33 percent is under construction and 32 percent hasn’t yet started.
The $50 million to $60 million Asian Village development would include housing, retail and potentially offices along Grand River Avenue in Novi. | YEAGER
THE ASIAN VILLAGE PROJECT IS PLANNED ON ABOUT 10 ACRES BOUNDED BY GRAND RIVER AVENUE TO THE SOUTH, TOWN CENTER DRIVE TO THE WEST AND 11 MILE ROAD TO THE NORTH. Office trends Last week, I noted that the industrial market in the region continues to perform well for landlords and developers, with low vacancy rates and increasing rents making the sector ripe for new speculative and build-to-suit developments. The local office of brokerage firm Newmark Knight Frank said 1.5 million square feet of new spec building space opened last year. Now compare that to the region’s office market. A fourth-quarter office report from competing brokerage firm JLL says there was just 85,000 square feet of new office product that
opened last year in metro Detroit. While the region’s approximately 390 million square feet of industrial space is 4.1 percent vacant, the 67.4 million square feet of office space is 18.6 percent vacant. There are a whole host of reasons for the higher office vacancy rate, including a market that was likely overbuilt in the 1980s and companies becoming more efficient with their footprints, requiring less square footage for each employee.
Asian Village project delayed The Novi Planning Commission has tabled a rezoning request for the proposed Asian Village development, HometownLife.com reported. The project is planned on about 10 acres bounded by Grand River Avenue to the south, Town Center Drive to the west and 11 Mile Road to the north. The Asian Village development was announced in May 2018 but hasn’t yet started construction. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
NONPROFITS
Health center’s interim CEO alleges ‘malfeasance, mismanagement’ Says agency cooperating with authorities BY JAY GREENE
Farrow said in the statement she became interim CEO on Oct. 7. She The interim CEO of a Detroit fed- said her previous job as chief medierally qualified health center says cal officer gave her responsibility for some of the agency’s former leader- clinical oversight of CCIH’s medical ship and staff “are alleged to have and behavioral health service probeen active participants in malfea- grams. She said she had nothing to sance, mismanagement, gross negli- do with the agency’s financial overgence, fraud and other impropri- sight. eties committed against our “In my new role, I’ve incorporated nonprofit organization,” the organi- many proactive measures to ensure zation said in a statement last such activity will not be repeated, Wednesday. including more stringent control of “We have sev- checks and balances,” Farrow said in ered our rela- her statement. “I’ve also retained tionships with the assistance of a third-party audiindividuals who tor who is conducting a forensic auare alleged to dit of our finances in order to deterhave played a mine the full extent of the potential primary or sup- malfeasance and financial liabiliportive role in ties.” suspected crimiShe said CCIH has begun to take nal activities and steps to “ensure there is no interrupother wrongdo- tion of services to those in the comFarrow ing that is cur- munity who depend on our organirently under investigation,” Kimber- zation. This includes renegotiating ly Farrow, M.D., interim CEO of various contracts, right-sizing our Central City Integrated Health Inc., workforce, executing short-term fisaid in a statement to Crain’s. Be- nancing, and placing real estate sides operating as a federally quali- holdings for sale.” fied health center, the agency also Farrow said CCIH is now current provides housing and senior ser- with its rent payments to landlords vices. and with premiums for insurance “Their conduct not only drastical- policies. ly impacted our financial resources During Lepper’s tenure, Crain’s and damaged our longstanding rep- reported, CCIH added employees, utation, but also affected spending clients and expanded access for the available for the underprivileged 5,000 to 6,000 people it serves each consumers whom we proudly serve, year. including the Incorporated c h r o n i c a l l y “IN MY NEW ROLE, I’VE in 1971 as Dehomeless, vetertroit Central City ans and those INCORPORATED MANY Health Center, with mental ill- PROACTIVE MEASURES TO CCIH now emness,” said Farploys more than row, who had ENSURE SUCH ACTIVITY 100 people and been CCIH’s vice offers services WILL NOT BE REPEATED, president of clinthat include ical operations INCLUDING MORE physical health, and chief medimental health, STRINGENT CONTROL OF cal officer. dental services, In October, CHECKS AND BALANCES.” vision and obFarrow replaced stetrics/gynecol— Kimberly Farrow, M.D., interim CEO, Ryan Lepper, Central City Integrated Health Inc. ogy services. who had been CCIH also ofCEO since 2015. fers an array of Lepper did not respond to emails social services to the homeless by and phone messages seeking com- offering temporary housing for vetment. In its statement, CCIH did not erans and disabled people, literacy name Lepper or others who also training, employment support and have left the organization and did transportation. not provide details on what activity Lepper, who came from the inis being investigated. vestment banking industry, projectA spokesman for the agency de- ed vigorous growth for CCIH in 2018 clined to disclose additional details and 2019. He told Crain’s he expectbeyond the statement. ed CCIH to exceed $20 million in an“CCIH has zero tolerance for any nual revenue in 2019 after $17 milcriminal activity committed within lion in 2018. our organization. When evidence CCIH did not specify the current regarding improprieties began to revenue of the agency. surface within our organization, I, Farrow said CCIH held a town hall along with key leadership, engaged meeting last November to hear conCCIH’s legal counsel, the board of cerns of its clients. It also now uses directors, and appropriate local, an assessment tool based on the U.S. state and federal agencies,” the Housing and Urban Development’s statement said. quality standards. “We are fully cooperating with auIt holds monthly meetings with the thorities and support all criminal CCIH Consumer Advisory Council and civil action that may be taken. and conducts wellness checks to enThis was a shameful breach of public sure its housing units are adequate. trust, and we remain hopeful these investigations will quickly bring re- Contact: jgreene@crain.com; sponsible parties to justice.” (313) 446-0325; @jaybgreene
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REAL ESTATE
Detroit’s 2020 property value assessment showed a projected 4.67 percent increase in the value of commercial properties across the city.
Commercial property value growth slows in Detroit core But neighborhoods outside downtown see increase for first time in at least 6 years BY ANNALISE FRANK
Growth in Detroit’s commercial property values has slowed, but neighborhoods outside the downtown business district are seeing commercial values rise substantially for the first time in at least six years, officials said last week. The overall assessed value of commercial property in the city is expected to rise 4.7 percent from 2019 to an estimated $5.1 billion in 2020, according to data from the city’s 2020 property value assessment released at a Tuesday afternoon news conference. This comes after a more than 60 percent jump from 2018 to last year’s total assessed value of $4.9 billion, according to data provided by the city. The smaller rise this year is due to slowed growth in the downtown core — which the city expected, according to Chief Financial Officer Dave Massaron — and the readjustment in values that came from the
first citywide reappraisal of commercial property in decades, in the aftermath of the Great Recession and municipal bankruptcy. As for residential properties’ worth, Detroit anticipates a nearly 20 percent increase from 2019 to a total of $4.1 billion in 2020, officials announced. The city says it is the largest annual rise since 1997.
‘Pieces of the puzzle’ Massaron’s biggest takeaway from this year’s commercial property assessment is the more than 5.4 percent increase in values outside downtown. Before a couple of years ago, this figure was in “steep decline,” according to City Assessor Alvin Horhn. “We are seeing for the first time (since at least 2014) value growth in commercial properties outside of the downtown central business district,” Massaron said at Tuesday’s event. “There’s been a lot of driven investments in those neighborhoods and in
those commercial corridors, whether it be blight removal efforts, whether it be removing fences, whether it be (small business grant program) Motor City Match or infrastructure investment. All those things together, I think, are pieces of the puzzle that are causing some upward growth in the values on those corridors.” Assessed commercial values in the city’s central business district, by comparison, are set to rise an estimated 4.3 percent, according to city assessor data. As big real estate projects come online, they can significantly raise total assessed value. But work is ongoing on several highly anticipated developments downtown — Dan Gilbert’s Hudson’s site skyscraper, for example. Industrial property values saw “good, strong, sustained growth” of 12.7 percent, Massaron said.
Residential values The city announced in early 2018
that assessed residential property values had risen for the first time in 17 years, to $3 billion; 2020 is the city’s third year of increases. Detroit’s housing stock was valued at $8.8 billion in assessed value in 2008, and $2.8 billion in 2017. Total residential home values saw a $1 billion drop between 2013 and 2014. All told, 187 of Detroit’s 194 neighborhoods saw their average residential property value increase over last year; 94 saw increases of 20 percent-30 percent, according to the city, which bases its numbers on two years of market sales data. When it comes to property taxes, per state law, increases are limited to 2 percent this year. Duggan said Tuesday that approximately 98 percent of Detroiters would see that 2 percent increase. Residents in neighborhoods where property values are still falling, though, will see rates adjusted accordingly. “ ... The drive towards services, and better services, has created some resil-
iency and stability in our residential neighborhoods, which is very important for budget and the city’s future fiscal health,” Massaron said. Duggan touted infrastructure improvements including streetlights, ambulance and police response times, and park improvements. Notices to owners of the city’s more than 400,000 property parcels — with 255,000 residential structures — went out starting last week. The figures are not final. Property owners can appeal Feb. 1-22. More information can be found on the city’s website or by emailing AssessorReview@DetroitMI.gov. Detroit’s residential real estate market outperformed others in the region this year. Its median home sale price rose 23 percent in the last year to $43,063, compared with 5.6 percent for metro Detroit as a whole, according to year-end data released by Farmington Hills-based Realcomp Ltd. II. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
REDEVELOPMENT
State OKs $2.27M for food-hub project in Eastern Market building BY SHERRI WELCH
The Michigan Strategic Fund on Wednesday approved $2.27 million in brownfield financing to support the renovation of a former Detroit Water and Sewerage Department building in Eastern Market into a mixed-use food hub. The financing is part of $3.7 million in local and state tax capture for the brownfield site. It includes a 12year, $1.47 million tax abateGoodwin ment from the city of Detroit, according to a Michigan Economic Development Corp. memorandum. Local support for the $24.1 million project also includes $2.3 mil6 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
The project aims to rehabilitate this building formerly owned by the Detroit Water and Sewerage Department. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
lion in brownfield funding from the city of Detroit, said Malik Goodwin, principal at Ventra Group LLC. Ventra and Halcor Group joined as equal partners to create Riopelle Market Development LP, developer and owner of the 111,855-squarefoot building, Goodwin said. Other principals of the group include: George Jackson, former head of the Detroit Economic Growth Corp., and Ventra Group colleague Brian Holdwick, along with Grant Greschuk, principal at Halcor Group. Years in the making, the Mosaic Eastern Development Project will include an accelerator for food entrepreneurs operated by Eastern Market Corp., food-based businesses, restaurant space and just less than 17,000 square feet of common and event space. As planned, the project will include installation of a solar array on
the building’s roof and demolishing a small, ancillary building on the site to create a 370-space parking lot. “Our capital stack looks very promising right now. Getting the approval from the MEDC is going to move closer to having everything locked in place very soon,” Goodwin said. The work is expected to begin in the spring and be substantially completed by mid-2021, he said. The development group has letters of intent from some prospective restaurant, brewery and distillery tenants, Goodwin said. “It’s a derelict, abandoned building we’ve been trying for the last 10 years to put back in operation,” Eastern Market President Dan Carmody said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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COMMENTARY
How Whitmer could bypass Legislature for road money
T
o fulfill her campaign pledge to “fix the damn roads,” Gov. Gretchen Whitmer might have to use the state’s damn credit
Chad
LIVENGOOD
debate from funding to financing in making a case that transportation infrastructure is an asset not unlike a home where the owner seeks to spread out costs over time instead of shouldering the entire cost upfront. Anyone can traverse Southeast Michigan and conclude the pay-as-you-go model is not keeping up with deteriorating pavement. At current funding, MDOT projects the percentage of roads in poor condition to remain around 45 percent for the rest of the decade. The percentage of bad roads in Michigan also happens to correspond with the percentage of Michigan voters who think the roads are getting worse. New statewide polling commissioned by the Detroit Regional Chamber shows 46 percent of voters think Michigan roads are getting worse and 40 percent believe they’ve stayed the same. Interestingly, the poll reveals that the political demographic group with the highest percentage of voters who think roads are getting worse is voters who identify as strong Republicans at 53 percent, followed by 50 percent of voters who lean Republican. Pavement condition data by legislative district shows House Republicans have 2.6 times as many lane-miles of roads in poor condition in their districts than Democrats do in theirs. “Maybe those numbers are starting to catch up with voter perception,” said pollster Richard Czuba of the Lansing-based polling firm Glengariff Group Inc., which conducted the poll. But despite this dynamic, a majority of voters aren’t convinced Whitmer and the Legislature need any more of their money. About 53 percent of voters believe the state already has enough money to fix the roads. Glengariff Group’s poll found 56 percent of independent voters and 64 percent of voters who identify as strong Republicans believe there’s enough funding. And that’s the poll numbers Republican legislators are looking at and concluding that there’s no case for a tax increase. Whitmer’s people read these polls, too. The downside to bonding is there will be debt payments for another 20-30 years that eat up funding for maintenance and upkeep. But if Whitmer were to secure $3 billion in bonds without the Legislature’s involvement, that could fix a lot of roads over the next three construction seasons before she presumably stands for re-election in November 2022. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
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DANIEL SAAD
card. And that could very well be the defining political fight in Lansing this year as the second-year Democratic governor seeks ways to get around an entrenched Republican-controlled Legislature that so far is refusing to raising any new revenue for ever-crumbling roads. Whitmer herself cannot unilaterally issue new bond debt. But there is a legal pathway for the governor to go it alone, the Legislature be damned. The state constitution allows the State Transportation Commission — which Whitmer has influence over — to authorize the governor’s Department of Transportation to issue bonds against its constitutionally restricted funding. Under the commission’s debt-service limitation policy, Whitmer could secure at least $3.1 billion of bond financing today, according to figures MDOT provided Crain’s. Act 51, Michigan’s transportation-funding law that dates back to 1951, requires the State Transportation Commission to provide the Legislature’s appropriations committees with a list of road projects 30 days before issuing bonds, according to a February 2019 House Fiscal Agency memo. “Although Act 51 includes these notification provisions, the act does not require legisTHE PERCENTAGE lative authorization for OF BAD ROADS the State Transportation Commission to IN MICHIGAN issue notes or bonds ALSO HAPPENS and does not give the comTO CORRESPOND appropriations mittees or the Legislature as a whole auWITH THE to approve or PERCENTAGE OF thority reject the proposed project list,” HFA anaMICHIGAN lyst William Hamilton VOTERS WHO wrote in the 13-page memo. THINK THE A $3.1 billion bondROADS ARE ing program would MDOT’s annual GETTING WORSE. raise bond debt service from $118 million to $301 million, according to MDOT. According to MDOT officials, current payments on road bond debt dating back to the Engler and Granholm administrations are scheduled to drop to $7 million in 2027, meaning there’s potentially more room on the state’s credit card in coming years. And finance is the new key word to listen for in Whitmer’s second State of the State address on Wednesday night. For at least a decade, the debate over Michigan’s crumbling roads has centered on funding by either raising new revenue or dipping into the state’s general fund. In 2015, lawmakers voted to increase the gas tax by seven cents and hike vehicle registration fees by 20 percent in 2017, raising $600 million annually in new revenue (all of which is going to roads). But debt-averse Gov. Rick Snyder refused to let MDOT bond against the new revenue. Whitmer is expected to try to reshape this
COMMENTARY
State leadership needed on artificial intelligence BY TOM WATKINS
I read with great interest Allison Torres Burtka’s special report in the Jan. 20 issue of Crain’s about the impact that artificial intelligence will have on Michigan business. Simply put, AI is the ability a computer or machine has to think and Tom Watkins is former Michigan learn, using data and algorithms that mimic hustate man cognition in persuperintendent forming tasks more of schools. quickly and cheaply, with more guaranteed outcomes. Increasingly, AI will be used by entrepreneurs, businesses, governments, educational institutions and nonprofits to lead productivity and technology in the 21st century, producing new insights, enhancing government response times and creating entirely new approaches to citizen expectations. How can Michigan — in all sectors of the economy — lead with AI? We know artificial intelligence is becoming increasingly pervasive, soon to be ubiquitous and spurring massive innovation across private and public sectors. Not unlike the dawn of the Internet, it is not IF but WHEN AI engulfs human performance for routine tasks. Smart businesses and units of government can seek ways to better serve customers and constituents while lowering operational costs using AI. Every unit of government across Michigan, strained by tight budgets and ever-growing demands for enhanced services in our current era of anti-tax sentiment, can use AI to transform citizen-customer experiences, realign outdated organizational models and deliver better services.
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
I encourage Gov. Gretchen Whitmer to set a goal for making Michigan a leader in using AI in government, education and health care. Michigan’s Lt. Gov. Garlin Gilchrist II — with his technology background — seems a natural for leading AI initiatives. He gets it, saying, “When we use data to drive policy decisions, we can provide people with a much healthier chance of success here in Michigan.” To be successful, AI must be strategically and holistically integrated into the mission of governance, incorporating new thinking about how government delivers value to its citizens. We must seek ways to create insight into the data that government collects and AI can help with that by creating new insight from these processes that improves the return-on-investment. With the intellectual power of Michigan’s public and private institutions of higher learning and business leaders who embrace AI, we possess the natural ingredients to use big data in ways that will not only benefit taxpayers, but also make Michigan a magnet for innovation and change that propels our state forward. The Brookings Institute put it bluntly: “Governments that can successfully cultivate a culture of disruptive innovation will be strategically positioned to lead in the twenty-first century. By contrast, governments that resist AI will find themselves facing a daunting future.” Michigan might follow Canada’s lead in becoming the first U.S. state with a comprehensive AI strategy. In 2017, Canada created the world’s first national AI strategy: With imagination and effort, there is no reason Michigan cannot lead our nation and join other world leaders in tapping AI’s potential for enhancing people’s lives in both the private and public sectors.
Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.
OTHER VOICES
WSU board will continue to target cronyism, corruption BY MICHAEL BUSUITO
After my first two committee meetings with our new Wayne State University board member, Shirley Stancato, I was refreshed by her calming inMichael Busuito, fluence on a board that was M.D., is a fractured by WSU member of the President M. Roy Wayne State Wilson, M.D. University Unfortunately, Board of Wilson cronies Governors. keep resurfacing, like cockroaches, to throw gasoline on a fire that I saw dwindling with Stancato’s influence. They just can’t get beyond the fact that a faction of the board caught on to their failures and cut them off from the Wilson gravy train. To say that I presided over the largest operating losses in University Physician Group’s history is a boldfaced lie and to hide behind accusations of a vendetta is outrageous. I was brought in as chair of UPG at a time when it was in an economic free fall from decades of structural mismanagement. I was there for a year and with the team that was assembled and with the activism of the School of Medicine department chairs the brakes were put on the catastrophic plunge that I inherited. I gave up half of my practice for a year and served as a “community member” of the UPG
As a governor I questioned the Wilboard and did not collect a penny for son/Hefner plan, and I discovered a my services. Enter David Hefner. Hefner want- severe lack of transparency. I was even ed total control of the UPG Board so denied access to the compensation packages of the that he could carconsultants and ry out Wilson’s IT WILL TAKE YEARS TO as a board memplan, which we ber had to FOIA s u b s e q u e n t l y RECOVER FROM THE my own doculearned was to ments. I received “GIVE” our DISASTERS CREATED BY incomplete info School of Medi- THE CONSULTANTS. but learned that cine to Henry Ford Health System. I would not go Hefner was receiving over $800,000/ along with the plan and was subse- year for half-time work and consultant quently voted out as chair of UPG but Dwight Monson received over remained on the board until I was in- $700,000 as a part-time consultant. Monson had the nerve to state in a augurated as a member of the WSU March 6, 2019, Crain’s article that his Board of Governors.
they went to CMU, and now the pediatricians have filed a lawsuit against us and the FBI is asking questions. If Monson was smart he would stay in Utah and keep his mouth shut. It will take years to recover from the disasters created by the consultants. The people of the city of Detroit and the state of Michigan should be thankful to have board members like Sandra Hughes O’Brien and Dana Thompson as they demand accountability when others are willing to follow Wilson blindly. These are two strong and brave women who are not afraid to challenge cronyism and corruption, even at the cost of being attacked in the press relentlessly.
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work at WSU “has come at some cost to my family” and that he was “doing ‘God’s work’ in downtown Detroit.” All I can say is that Monson was paid a fortune for doing “God’s work.” Wilson never planned on rebuilding UPG, and I have the evidence. The plan all along was a giveaway of the School of Medicine to Henry Ford Health System. After 3½ years of paying millions of dollars to consultants who were doing “God’s work” in Detroit what did we get? The Henry Ford Health System deal failed, our relationship with the DMC went from bad to worse, UPG ended up in bankruptcy, our over 100-year affiliation with our pediatricians was terminated and
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JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 9
HEALTH CARE
GAINING INSIGHT
Institute invests in health care, community in Flint Insight Institute of Neurosurgery and Neurosciences founder Dr. Jawad Shah looks over a patient’s imaging in his offices.
BY JAY GREENE
In this package
When neurosurgeon Jawad Shah moved with his family to Flint in 2003 after completing advanced brain stem surgical training at the University of Arkansas Hospital, he thought a medical office building of 16,000 square feet might be large enough in 2008 to expand his growing private practice. “There was a professional center near my house. It had a good parking lot, and I thought I’d put an offer down and go from there,” said Shah, who now is president and CEO of Flint-based Insight Institute of Neurosurgery and Neurosciences. But before making that offer, he learned that the massive, 1.2 million-square-foot former General Motors World War II tank plant complex, later Delphi Technologies offices and more recently the former Great Lakes Technology Center, was available.
Insight Institute invests in health care, community in Flint. THIS PAGE
Center expands with auto accident patients. PAGE 11 Sylvester Broome center important to future of Flint. PAGE 13
Insight Surgery Hospital makes mark in Warren. PAGE 13
“WHAT WE ALL BELIEVE, OUR WHOLE TEAM, IT’S PART OF OUR DNA THAT OUR GOAL IS TO GET THE BEST POSSIBLE CARE TO THESE PATIENTS...” — Dr. Jawad Shah
10 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
“We took a look at it and my thought was, ‘This is ridiculous. It’s too big.’ This is crazy, actually. ... When I actually walked in, I said to myself, ‘Do you want this?’ It changed my thinking. My big idea became much bigger.” On Nov. 28, 2008, Insight completed the purchase of the 518,000-square-foot main building at 4800 S. Saginaw St. and a 60,000-square-foot office building on the same property from the Genesee County Land Bank for under $200,000, Shah said. There are two other buildings on the property, a smaller one housing McLaren Healthcare’s medical laboratory; another is the headquarters for Diplomat Specialty Pharmacy. “The building was getting ready to be torn down. It was going to become a parking lot,” Shaw said. “There were
other people looking at it, but once we came into the picture the leadership of the land bank thought (our plans) would be good for the city, and there was a lot of movement to very quickly get the building to me.” Shah said buying two buildings that totaled nearly 600,000 square feet “wasn’t exactly a part of my vision. It actually created a vision that was much bigger,” he said. Shah’s vision turned out to be one that created an integrated neurosurgery practice that incorporates many services related to neurosciences and orthopedics. By the end of December 2008, Insight moved in and more than a dozen other tenants began renting space, including lawyers, doctors, a hospice, a trucking transport company and a food pantry. “We lease space to others if it fits in
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Center expands with auto accident patients Adult rehabilitation facility to acquire building in Fenton
DALE YOUNG FOR CRAIN’S DETROIT BUSINESS
BY JAY GREENE
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with our mission. But in general, we have our own projects that we can fill into this space we have left. We are continuing to fill it up,” Shah said. Over the next 11 years, Shah has created a number of health care enterprises, all integrated with his practice that includes three neurosurgeons, an orthopedic surgeon and four nurse practitioners. He employs 350 at Insight and expects those numbers to grow by at least 100 this year. Insight now features an 18-bed rehabilitation center for injured auto accident patients, an imaging center, pain and addiction management, comprehensive therapy and chiropractic services, a wellness center, a business incubator,
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See INSIGHT on Page 12
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The Insight Healing Center, a 12bed adult rehabilitation facility with an additional six-bed residential-type recovery unit in Flint, plans to expand dramatically this year with the acquisition early this spring of an unoccupied building in Fenton the company plans to convert into a 40-bed longterm care rehabilitation facility. The need for rehabilitation services has grown over the last two years as Insight neurosurgeons, led by CEO Jawad Shah, concluded they could control patient outcomes more effectively after they conducted surgeries on accident victims by managing their own facility, said Atif Bawahab, Insight’s chief strategy officer. “A lot of the catastrophic (auto accident) injuries go to Hurley (Medical Center in Flint). It’s a level one trauma center,” Bawahab said. “We’ve seen countless times when our physicians are on call and they’re going in and stabilizing the patient after a catastrophic injury — a big traumatic brain injury or spinal cord injury. We do the surgery, stabilize a patient. The patient goes to some other rehab facility for continuing treatment.” While the initial surgery was successful, sometimes the rehabilitation care fell short, Bawahab said. “Two to three months into their rehab care, the patient’s condition actually deteriorated after they left the hospital,” he said. “That was the impetus behind us doing the healing center. The surgeons now are also able to more easily continue rounding on the patients. There’s some continuity there.” Nancy Petzold, R.N., Insight’s director of rehab services, said most of the patients treated have been injured in auto or motorcycle accidents either
as drivers, passengers or pedestrians. Many are from Flint or Pontiac, but they come from all over the state, Petzold said. Petzold said their length of stay varies from three to six months with six currently diagnosed as terminal cases expected to stay at the center for the rest of their lives. “They have five to seven days of intense therapy and get round-theclock care,” said Petzold. “We have CT
“WE HAVE CT AND MRI IN-HOUSE, SO THEY DON’T HAVE TO LEAVE. WE HAVE MASSAGE AND AQUA THERAPY AND SEVERAL ACTIVITIES WHERE THEY CAN GO ON OUTINGS. OUR ACTIVITIES DEPARTMENT IS AMAZING.” — Nancy Petzold, R.N., Insight’s director of rehab services
and MRI in-house, so they don’t have to leave. We have massage and aqua therapy and several activities where they can go on outings. Our activities department is amazing.” In June 2018, the healing center was licensed by the state as an adult day care facility and has permission to operate as a neuro-trauma rehabilitation center, Petzold said. Previously it was licensed as an assisted living facility, but for insurance purposes, an ADF license was required. Other services include chiropractic care, behavioral health counseling and pain management, she said. The center has a staff of 47 with nurses providing round-the-clock
care at a nurse-to-patient ratio of 1-1 and one nurse’s aide per five patients. Petzold said. “We staff with nurses so we can take higher-acuity patients,” said Petzold, adding that typical nursing homes staff one nurse for 30 patients. “We have a lot of patients with bilateral lower extremity fractures and other complications,” Petzold said. “We provide them with necessary services and as they continue to advance and ambulate, some can start doing more things on their own. We help push them toward independence.” If they improve, Insight evaluates their homes or apartments for safety and make sure they have equipment in place, Petzold said.
Insurance battles Insight is typically reimbursed by auto insurance companies for medical care, although it provides charity care that insurance doesn’t cover and fronts much of the care costs until coverage kicks in, Petzold said. Those patients injured in hit-and-run accidents are referred to the Michigan Assigned Claims Plan, which then assigns an insurance company to handle the claim. But filing auto insurance claims and getting reimbursed in a fair and timely manner for injured patients are the most frustrating aspects of the business side of medicine, Shah said. “It’s ridiculous (insurers challenge legitimate claims and refuse to pay for multiple years until just before a trial starts and they settle),” Shah said. “It hurts patients because (some providers) don’t want to treat those patients because they are catastrophically injured and know that they’re not going to be reimbursed” for years. “You are still seeing a lot of physi-
cians shying away care and with the recent auto reforms, it’s going to be much worse,” he said. Shah also is participating in the first lawsuit against the state’s new no-fault law that limits medical reimbursement. The lawsuit filed in Ingham County asks the court to declare the new law unconstitutional. Insight is one of the state’s most frequent litigants against auto insurance companies. It filed more than 30 lawsuits against 14 different auto insurance companies in 2018. Ali Madha, Insight’s COO, said most of the lawsuits are filed to require the state to cover patients injured by uninsured drivers. Shah often must file a lawsuit to force the health insurer to pay for covered claims. “We see a lot of auto accident patients,” Madha said. “Dr. Shah will bear the brunt of the costs until they get covered.” Sometimes the claim denials are nonsensical, he said. For example, Madha said an 18-year-old was injured by an uninsured driver and wouldn’t pay. “The insurer claimed her back injury was from a pre-existing condition. We showed she had a bad back because she was pregnant at the time,” he said. Another lawsuit — Jawad A. Shah MD PC v. State Farm Mutual Auto Insurance Co. — went to the Michigan Supreme Court and set a precedent for assigned claims. Before the decision, doctors were not allowed to sue insurers on their patients’ behalf. “We would have to sue our patients and they would sue their insurance company, and we would get the payment through that route,” Shah said. “We fought that and paid a lot of money to lawyers. There was no financial return to us, but we set a precedent and now it’s incorporated into the new auto reform law.” Racheal Smith administers a post-operative recovery area. | DALE YOUNG FOR CRAIN’S DETROIT BUSINESS
JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 11
FOCUS | HEALTH CARE
Warren hospital marks turnaround BY JAY GREENE
Neurosurgeon Jawad Shah felt acquiring the former Michigan Surgical Hospital in Warren, a 20-bed for-profit hospital, could be a wise investment because it could generate revenue for his Insight Institute for Neurosurgery while offering lower prices to patients than larger, full-service hospitals. Physician-owned hospitals are hard to come by since the Affordable Care Act in 2010 placed a moratorium on physicians building new hospitals and limited expansion of existing hospitals. Regulators and some experts have argued that because physician owners self-refer patients to their own facilities it often results in cherry-picking of healthier and wealthier patients. But Shah said owning a hospital gives him a place to treat patients and better control of quality. “We have very strong relationships with the big hospitals that I very much enjoy and partner with. That will continue,” Shah said. “The surgical hospital is a new opportunity for us.” On Dec. 7, 2018, Shah found out National Surgical Partners, a Chicago-based hospital chain, planned to shut down the small ambulatory surgery hospital, located in Warren at 21230 Dequindre Road, and lay off its 75 employees. There are approximately 84 non-provider employees, 48 physicians on the medical staff plus another 30 contracted nurses. “We found out about it that day and about 10 business days later we made an offer, closed on it, had the keys and began to operate it,” said Atif Bawahab, Insight Surgical Hospital’s CEO. The hospital offers a variety of services, including neurosurgery, orthopedics, interventional pain management, podiatry, gastroenterology, pulmonology and vascular medicine. It plans on offering bariatric services this year, Bawahab said. “The hospital was not solvent for at least five years on paper, but they had extremely rich owners,” Shah said. “When we came in and took it over, it was a losing institution.” Shah said the turnaround was quick. “We were starting from zero and we ended up taking it over on Dec. 14 (2018), and by Dec. 31st it was profitable,” he said. Before Insight acquired Michigan Surgical in 2018, the hospital reported an operating loss of $2.86 million on net patient revenue of $16.2 million, according to Medicare cost reports provided by American Hospital Directory. While numbers for 2019 have not been finalized, Insight projects to exceed 2018 revenue and post a profit for 2019. “We’re (Insight) exponentially stronger financially by that acquisition,” Shah said. Insight plans to build out a multi-specialty clinic adjacent to the hospital with about 15-20 examination rooms, pharmacy, laboratory, physical and occupational therapy services. The $5 million-$10 million project is expected to be completed this summer, Bawahab said. 12 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
INSIGHT
From Page 10
medical research and a partnership with Michigan State University’s philosophy department to conduct bioethics research. Atif Bawahab, Insight’s chief strategy officer, said Insight decided to integrate many support services to surgery because Shah and his associates were sending a lot of patients out for tests or treatment. “Why not bring this in-house?” Bawahab said. “We decided if we can do it better than what is out there, and 90 percent of the time we believe we can, let’s do it for patient convenience. It’s a one-stop shop kind of format.” Another reason is sometimes a patient is simply in pain and doesn’t require surgery, Bawahab said. “So we instituted physical therapy, occupational therapy, speech therapy. We have a fitness center. We utilize aqua therapy. Or maybe we’ll try something with medications and administer something like that to relieve your pain,” Bawahab said. “So then we brought pain management in-house.” Referring physicians also like having many services available to their patients in one location, he said. Over the past three years, Shah’s practice has steadily grown to 1,351 surgeries in 2019 from 1,183 in 2017, and follow-up office visits to 7,228 last year from 5,917 in 2017. Shah said he and his associates have admitting privileges and share emergency on-call coverage at a number of hospitals near Flint, including McLaren Flint Hospital, Hurley Medical Center and Ascension Genesys Hospital in Grand Blanc, where they treat seriously injured patients.
Community focus CEO Chad Grant of McLaren Flint said there are few people like Shah who both contribute to the growth of Flint from a business and health care standpoint and are also as committed to community and civic development. “He sees a need in the community, whether it is in neurosurgery and the central nervous system, which is his specialty, or if it is to for the greater Flint community, he will do it,” Grant said. U.S. Rep. Dan Kildee of Flint goes back 15 years with Shah. Kildee, who has been Flint’s congressman since 2012, was president of the Genesee County Land Bank when Shah purchased the old GM plant. He also helped Diplomat secure its headquarters location when the pharmacy was expanding. “In my view, he represents the civic leadership that is rare, all too rare, but very important for communities like Flint,” Kildee said. “His formal role, health care and his neurosurgery practice, is important for the people who benefit from it, but doing it in a place like Flint, a place that really needs economic activity, is phenomenal,” Kildee said. In 2015, Shah acquired the Sylvester Broome Empowerment Village, a youth center with a summer day camp and after-school academic and athletic program, for which he serves as chairman. The center offers youth journalism, music, and adult literacy programs (See sidebar, Page 13). “He is changing the trajectory in the lives of these kids that are really profound,” Kildee said. “He sets a really good example for being the ultimate citizen.”
Why Flint? Shah moved to Flint primarily because he felt it would be a good place to raise his four children. His wife, Muna, an immigration and civil rights attorney, is a Flint native. But she wasn’t overly excited about coming home at first because they had discussed moving to a bigger (or warmer) city after his residency, Shah said. “My parents are close by and her parents are here. We have (many) cousins, nephews and nieces,” he said. “We had seven categories (to check off for a location to live), and one was family. All the other areas didn’t meet the family criteria.” Born in Pakistan, Shah moved to Canada with his parents when he was only a year old. After growing up in Winnipeg under universal health care, Shah wanted to recreate the integration of government, academia and medicine he felt was one of the strengths of the Canadian system within his private neurosurgery practice in the American system. “I realized pretty quickly that nothing moves quickly and the best you can do is have wonderful partners. Universities for what they’re good at, hospitals for what they’re good at and government for what they’re good at. Working together, we can help each other accomplish our goals,” Shah said. “The trick is to make it sustainable.” But sustainability, Shah said, means developing businesses that generate revenue to support his vision for also being a force in the community for good. “Doing charitable work, that’s not sustainable. (Practicing medicine) has to be solvent. Now I had to put on my business hat,” Shah said. Kildee said Shah not only put the
former GM plant into productive use (and created jobs), but his research on brain science and (on people with spinal cord injuries) has changed the way people view Flint. It is now known as a place where there is cutting edge research on brain science.”
Flint’s water crisis During the fall of 2015, when the Flint water crisis was beginning, the Broome Village also became one of the first water distribution sites to help out people with potable drinking water, Kildee said. “He was one of the first people out there helping people with the water crisis,” he said. “This is who he is. He sees a problem and goes toward it.” Shah told Kildee and city officials about his water quality concerns in the months after the city switched its water supply from Detroit to the Flint River and was treating the water itself. “I showed them water with yellow coming out of the fire hydrants. I told them it’s an existential threat” to children and others who might have sensitivity, said Shaw, adding that city officials had no power to act because Flint was under a state-appointed emergency manager. “I specifically called out a couple of people and then a few months later it all broke because although the studies were, you know, coming out, like months later, the residents of Flint were showing up with bottles like this that were yellow and they were being told that it just looks like that. Go ahead and drink it. That was horrible.”
Growth plans Because Shah believes in the Islamic law of “halal,” or doing what is permissible, Insight finances its
growth by paying for properties in cash and does not have any debt, said Yusuf Hai, Insight’s financial adviser with CIG Capital Advisors in Southfield. Shah said his company also has adopted the halal principle of not charging or paying interest for debt. “There are exceptions. From a company perspective, it has made us much more disciplined and kept us a solvent company,” he said. But there are ways to finance debt with interest if risk is spread between lender and borrower, Shah said. “There are several banks that do these kinds of loans. We are looking at seven or eight major projects that will require financing. We haven’t triggered these type of loans yet, but we are looking at it,” he said. In December 2018, Insight Shah purchased, in cash, the former Michigan Surgical Hospital in Warren, now renamed as Insight Surgical Hospital, for an undisclosed price. Insight plans to acquire several more surgery hospitals in the next several years as a lower-cost alternative for patients and to generate revenue for the company. (See story, Page 12). “I see it as a service to the community when we’re building a stroke program or a neurology program or a spine program,” Shah said. “Owning a hospital also is a wonderful feather in our caps to have something that’s our own that we can develop. It’s good clinically for patients; its good financially (for our company. But) having a hospital, the value as an asset is absolutely zero without patients.” Bawahab, who also is CEO of 20bed Insight Surgical Hospital, said at least three more surgery hospital acquisitions are being negotiated, one in Michigan and the other two out of state, and the purchase of a long-term
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FOCUS | HEALTH CARE cent and was the chief medical officer. He has stepped back from any active involvement but still owns 5 percent interest in the for-profit hospital. Shah helped the Sharma family secure the bid and acquire the hospital. Bankruptcy documents show the court was impressed with Shaw’s presentation and involvement with the project. Shah, who obtained an $8 million credit line for the hospital and offered to invest $375,000 of his own money, initially was going to be the hospital’s chief medical officer. “I became less involved over time” because the hospital was going in a different direction, and he said he wanted to focus more on community projects and Insight. “We have many more projects in mind we want to put our energy into.”
DALE YOUNG FOR CRAIN’S DETROIT BUSINESS
Insight Research Institute
The Insight Institute of Neurosurgery & Neuroscience in Flint was once GM’s Flint headquarters.
care rehabilitation facility is expected to be completed in February. “Our acquisition of the hospital in Warren changed our mindset. All this goes back to overall thought process for growth: offering patient care second to none,” Bawahab said. “Owning our own hospital (and other facilities) gives us better control over patient outcomes” and post-operative quality. Shah said some acquisitions could be completed in the next four months. “There isn’t a week that goes by that we’re not offered a some form of ownership in a facility because I people have started to believe in us as management team,” Shah said. “We are being offered facilities for literally (nothing). They want us to come in and straighten it out from a management perspective.” Bawahab said talks are underway with hospital owners in Michigan, Illinois and Texas. Adam Roberts, Insight’s director of facilities, said there is room for growth at the former GM plant. “We have done a lot of renovations and upgrading. It is old, built before World War II,” Roberts said. “I looked in the ceiling one day, and there are old tracks up in the ceiling that the cars used to roll down.”
Pontiac General Shah also was one of the investors in Pontiac General Hospital, which was acquired in early 2018 out of bankruptcy by the Sharma family. Shah initially owned 25 per-
As a not-for-profit scientific organization, the Insight Research Institute sponsors a number of medical research projects. “We want to help people. That is my main mission. We’re definitely deep into the research space, and I’m very excited because we were awarded a patent (last October) for a project that we’ve worked on for years,” Shah said. “It’s an artificial spinal cord.” The invention is a motor device for stimulating muscles that sends an electric current to manipulate the spinal cord in order to enable patients to move. Two years ago, Patient Edith (not her real name) became paralyzed in an auto accident. She became the first patient in what Shah calls the Chelsea Project. “She couldn’t move anything in her lower extremities. We implanted this electrical device under her skin,” Shah said. “Now I can control her muscle extremities. This action we can do for hips or knees or ankles.” Shah said more patients will be tested with the artificial spinal cord device with the ultimate goal of connecting the brain to the device so patients can control their own movements. “These are engineering challenge, not clinical challenges anymore with this new approach,” he said. Soon, Shah said Insight plans to create a company that will develop the spinal cord device. “You are talking about a lot of money to develop the device, go through FDA trials. That’s the next step because we believe it will work and will ultimately benefit a lot of people,” he said. Abeer Al-Gharaibeh, M.D., Insight’s research director, said the main focus of the research is to improve patient care. But it also offers educational opportunities for medical students and serves as a forum for practicing doctors and scientists, she said. “We have the summer internship program for colleges where students can spend some time at Insight and be involved in research-based activities,” Al-Gharaibeh said. “Our goal is to be a world-renowned research organization.” Insight also offers a business incubator for entrepreneurs to test their ideas in a research atmosphere. Insight offers clients clinical research organization to perform patient studies on their ideas. For example, Puradigm, a Las Vegas-based purification company, asked Insight to test a device to reduce airborne health-care associated infections and contamination in patient rooms or other spaces. “We did two studies related to the
device. One of them was to evaluate the safety and effectiveness of the device,” Al-Gharaibeh said. “The study showed a significant reduction of (contaminants).”
Philosophical partnership Nine years ago Shah reached out to Jami Anderson, a professor of philosophy at UM-Flint, to suggest an idea he had for a long time. It was a partnership that would bring together doctors, scientists and philosophers to discuss the puzzling ethical questions that face medicine and challenge philosophers. “I really had no idea what he was imagining,” Anderson said. “I met with our provost at the time and asked him what he thought of it. He said, well, meet and see what comes out of it. It may be good community relations and maybe it could turn into a one-day event.” The result of that meeting became the Center for Cognition & Neuroethics, a joint venture between the University of Michigan-Flint philosophy department and Insight. The center is housed on the second floor of Insight’s corporate office in a 6,000-square-foot space with offices and meeting rooms. “What he told me was his medical training didn’t teach him anything about addressing the ethical side,” Anderson. “He said he and his fellow surgeons have conversations with each other about the deeper questions and philosophical questions. They had no way to answer them. That was so outside of their training.” Shah said his idea was to create a program that would bring together medical people, scientists “but also the philosophers who are at the beginning of any new type of science.” He said his goal was to understand the issues of the mind and the brain in a way that wasn’t being addressed anywhere else. The forums to exchange ideas are multiple conferences and meetings each year for scholars and students from around the world from all medical disciplines relevant to psychology, psychotherapy, education, development and philosophy. “The student and professional conferences are much different, although we discuss big issues,” said Anderson, adding one recent topic was about balancing the need for people to have pain management with the potential risk of opioid addiction. “We’ve had students come from Florida, Illinois, Indiana, all around Michigan, to showcase their work from philosophy departments, science departments, neuro-psychology departments, humanities departments and religious departments,” Anderson said. “They’re always surprised when they come, because all they hear about Flint is of course the bad things in the news,” she said. “They stay here and get to know the town, get to know each other and stay in touch” once they go on to their careers. Anderson, who teaches philosophy classes at UM-Flint, said one practical effect is that it has given philosophy majors a forum and confidence to get into very good graduate programs. “They weren’t getting into the top schools like they would have if they had started someplace else,” Anderson said. “It wasn’t them because their grades and work was solid, their drive and interest was great. It was one of the consequences of being from Flint and that they internalize that stigma a bit.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Broome center important to future of Flint BY JAY GREENE When neurosurgeon Jawad Shah talks about giving back to the community of Flint, Exhibit A is the Sylvester Broome Empowerment Village. Shah bought the 63,000-square-foot Broome building in 2015 for $1. But he said helping young people in the community is the real challenge and at the core of what he wants to do as a physician and CEO of Insight Institute for Neurology. “We are helping young people in Flint,” he said. “It’s the same thing as helping people with brain tumors, brain injuries and spinal cord injuries. It’s part of our overall mission. So we’re sitting in Flint and in Michigan and there’s needs in the community. ... We shouldn’t shy away from that.” Maryum Rasool, the center’s executive director since June 2017, said the Broome Village was an elementary school built in 1921 that closed in the 1990s and later housed a variety of other businesses. It became the Broome Village in 1995 and then closed in 2012 until Shah bought it and restored it. During the early days of the Flint water crisis, the village became one of the first water distribution sites. Shah and other doctors offered lead testing and a dermatology clinic was located there to treat skin conditions. At first, the Broome Village attracted about 30 children. By the end of 2018, word of mouth spread and there were
nearly 500 children and 6,000 families participating in the village’s seven after-school programs. The nonprofit started with a budget of $250,000 that is now nearly $1 million, she said. Funding comes from grants, donations and leasing space to other organizations, including Wayne State University and the Flint Area Community Health and Environment Partnership. The village is located in north Flint, one of the most financially challenged parts of the city. Shah knew he wanted to help children, then identified the building and the neighborhood he wanted to help. “It needed lots of repairs,” he said. “It was dilapidated and had drug dealers in the back. But it was a known entity in the city. Good work was done there in the past.” The Broome Village offers seven programs, including an after-school program, a sports academy, youth journalism, music and an adult literacy program. Also offered are nutrition services and classes on healthy eating and how to read food labels. “We have kids who have went from failing to having all A’s within a year,” Rasool said. “We have kids now that understand concepts. They may not be a 4.0 student. But they go to school now, when before they just didn’t want to bother with it because they didn’t know what was going on.”
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JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 13
MANUFACTURING
Lawmakers consider bill that would double self-distribution limit Breweries in Michigan could distribute 2,000 barrels, not count taproom sales under proposal BY KURT NAGL
A new bill that would double self-distribution limits for brewers in Michigan is being considered by state lawmakers. The bill, introduced Jan. 16 in the Michigan House of Representatives, would have a big impact on the state’s robust craft beer industry, especially for small craft brewers. The change in self-distribution limits is among the most significant items in a package that aims to untangle bureaucracy and ease barriers for small businesses, according to Pauline Wendzel (R– St. Joseph), who is sponsoring the bill. Her district, encompassing part of Berrien County, is home to a cluster of small craft brewers. If passed, the new law would double the number of barrels that can be self-distributed to 2,000 yearly, and it would no longer count taproom sales as part of that number. Under current law, if a brewer exceeds 1,000 barrels distributed and consumed on site, it must sign with a licensed distribution company or cease sales. The bill was referred to the Committee on Regulatory Reform, where it will be reviewed before being passed to the House and Senate for consideration. The bill gives small brewers more wiggle room for growth while placating bigger brewers and distributors by not asking for an excessive increase, said Scott Newman-Bale, partner at Bellaire-based Short’s Brewing Co. and former longtime president of the Michigan Brewers Guild who still handles government affairs for the group. “It’s gonna impact the smallest brewers, especially those that are trying to get going and start their brand,” Newman-Bale said. Each state differs widely in how much it allows brewers to self-distribute, and more than a dozen disallow the practice altogether. For an idea of range, Wisconsin allows self-distribution of 300,000 barrels,
A new law that would increase self-distribution limits for breweries in Michigan is being championed by small companies such as Eastern Market Brewing Co. | EASTERN MARKET BREWING VIA FACEBOOK
while Colorado allows 10,000. Each of the Great Lakes states besides brewery-heavy Michigan has a limit of at least 10,000. Newman-Bale said he’s optimistic the bill will pass sometime in the first quarter of this year. “With all of the stakeholders supportive, we hope for very swift movement,” Jacob Rushlow, legislative director for Wendzel, said in an email. While in the works for the past couple of years, the push to increase
the limit caught steam when Detroit-based Eastern Market Brewing Co. launched an online petition to support the movement. The fast-growing craft brewer, which opened in 2017 and recently bought Axle Brewing Co. in Ferndale, has bemoaned self-distribution limits as a barrier to scaling the business. Co-founder Dayne Bartscht had been pushing for a limit of 30,000 barrels but knew it was a moonshot to get distributors and big brewers on
board with that number. He said he looks at the bill as progress in a broader push to loosen regulations. “For us, it’s huge because if we would have been up against that limit this year, we would have had to change our business model and marketing strategies,” he said. The bill faced opposition from some distributors and brewers in the state initially, but most backed down after realizing the new rules would likely have a negligible impact on
their business, Newman-Bale said. Under the new law, brewers would still be required to sign with a distributor once the 2,000-barrel quota is tapped. “Distributors don’t want to deal with a hundred different brands anyway,” he said. “They’d much rather move 10 times more with one brand.” The 2,000-barrel limit also poses little threat to the state’s largest brewers, such as Bell’s Brewery Inc. and Founders Brewing Co. Most small brewers utilize self-distribution to get their beers on tap at local bars and restaurants. Distributing more widely — to Meijer or Kroger, for example — almost always requires a deal with a licensed distributor. The strongest opposition to the bill is coming from small brewers that have recently signed with distributors, Newman-Bale said. Had the limit been higher before, they would have had a little more runway before being forced into a distribution deal. Even so, cutting a check to a distributor might eat into revenue, but self-distribution can be just as expensive and challenging, said Seth Rivard, co-owner of Rockford Brewing Co., near Grand Rapids. The brewery has done distribution through Livonia-based Imperial Beverage since 2012. Rivard said he supports the legislation. His company sells around 1,000 barrels in its taproom yearly and distributes another 1,200. That would put the brewery below the proposed limit increase, but Rivard said he is on pace to exceed it this year. “What we discovered as we grew is that there’s a lot of work to self-distribute — sales, staff, people to move beer, meeting legal standards — a lot of overhead work,” he said. “There’s definitely an advantage to having a licensed distributor do the work for you.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
RETAIL
Detroit Vs. Everybody closes four locations, shifts business model Clothing company keeps Eastern Market, Twelve Oaks sites open, moves to new warehouse BY KURT NAGL
Detroit Vs. Everybody LLC closed four of its metro Detroit locations Jan. 20 shortly after moving into a new warehouse and headquarters more than triple the size of its previous base. The popular clothing company will focus on its two high-performing retail locations that will remain open: Eastern Market in Detroit and Twelve Oaks Mall in Novi, owner and founder Tommey Walker said. The closed locations include Lakeside Mall in Sterling Heights, The Mall at Partridge Creek in Clinton Township, Fairlane Town Center in Dearborn and on Southfield Road in Southfield. The company moved into a new 10,000-square-foot warehouse that became operational this month. In addition to ramping up production of clothes with the brand name that’s become iconic of the city, the company
Detroit Vs. Everybody closed four of its metro Detroit locations Monday in a move to focus on its two high-performing retail locations. | DETROIT VS. EVERYBODY VIA INSTAGRAM
14 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
is expanding into third-party printing and consulting. Through Walker’s Saluki Printing LLC, the warehouse will welcome companies or individuals looking to use the equipment for custom-designed products. Walker said customers can contract with Saluki to handle the design work as well. “With our manpower and the attention we’ve been getting, we’ve had a lot of people come in to hire me for consulting services for their brand,” Walker said. “We have everything under one roof. It just kind of happened on its own.” Around 10 people work at the new headquarters, with a total of 40 people employed by the company following the closures, Walker said. Around 35 sales employees lost their jobs as a result of the consolidation. Walker, 33, declined to comment on the financial performance of the closed stores. “The other ones (that remain open)
were performing so well,” he said. “It was just a business move.” The company’s new warehouse near Eight Mile and Telegraph roads is around the corner from where it had made clothes before in a 3,000-squarefoot space. Walker declined to say what was invested to build out the new space. Diversifying into custom printing could prove to be a smart business move for a company that’s operated in the often fickle retail industry since launching in 2012. Custom clothing maker MyLocker LLC, which recently wrapped up a $15 million move into Corktown, has seen exploding growth in custom products fulfillment. Walker declined to name any new clients for the custom printing operation but said the closures and diversification do not mean he is backing away from the brand. “I see the brand becoming stronger, larger and more influential not only in Detroit but all over the world,” he said.
CALENDAR
DEALS&DETAILS
WEDNESDAY, JAN. 29 2020 Detroit Policy Conference. 8:30 a.m.-4:30 p.m. Detroit Regional Chamber. The 2020 Detroit 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 for the Detroit region. MotorCity Casino Hotel. $169 members; $245 nonmembers. Contact: Katy Palahang, phone: (313) 596-0384. Detroit Metro Convention & Visitors Bureau 2020 Annual Membership Meeting. 9 a.m.-noon. The theme is “Impossible is Possible.” Speakers include: Larry Alexander, president and CEO, Detroit Metro Convention & Visitors Bureau; Eric Larson, CEO, Downtown Detroit Partnership; Rod Alberts, executive director, Detroit Auto Dealers Association North American International Auto Show; and Ben Nemtin, author of “The Buried Life.” TCF Center, Detroit. $60 members; $65 nonmembers. Website: annualmeeting.visitdetroit.com
THURSDAY, JAN. 30 Tech248 Special Event: Business Processes that Boost Profits. 3-5 p.m. Topic: “Business Processes that Boost Profits, Increase Revenue and Reduce the Need for More Staff,” by Dan Izydorek, CEO and founder, PC Miracles. PC Miracles, Pontiac. Free. Registration required. Registration closes 9 a.m. Jan. 28. Contact: Sandra O’Con-
nell, email: oconnells@oakgov.com; phone: (248) 858-7647.
UPCOMING EVENTS 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) 259-5400. 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” 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 the Michigan is Automobility report. College for Creative Studies. $75 chamber members and MICHauto investors; $125 nonmembers. Contact: Katy Palahang, phone: (313) 5960384.
LAW
CONTRACTS
Linda Orlans (left) and Alison Orlans
DeMaria, Detroit, a construction firm, was awarded the electrical upgrade project at chemical company BASF Corp.’s Wyandotte campus. The project includes providing a new primary electrical service from power substation buildings. Website: demariabuild. com
EXPANSIONS The Coretec Group Inc., Tulsa, Okla., developer of silicon-based materials for use in energy-related fields, opened a new office at the Michigan Innovation Headquarters, 600 S. Wagner Road, Ann Arbor, to expand material development. Company CEO Michael Kraft will work out of the Ann Arbor office. Website: thecoretecgroup.com Henry Ford Health System, Detroit, a health care system, opened a new medical center in the Village at Bloomfield, 1939 S. Telegraph Road at Square Lake Road, Bloomfield Township. The $38 million two-story, 83,000-squarefoot Henry Ford Medical Center — Bloomfield Township will offer extended hours, covered parking and self-service check-in and copay. Website: henryford.com/locations/bloomfield-township Submit Deals and Details items to cdbdepartments@crain.com
Firm takes aim at legal department innovation BY NICK MANES
A mother-and-daughter duo in metro Detroit sees an opening to bring tech innovation to the slow-toadopt corporate legal industry. Alison Orlans, CEO of Troy-based professional services company Orlans PC, and her mother Linda Orlans, the company’s founder and executive chair, last week launched Revlegal LLC. The company aims to help corporate lawyers and general counsels’ offices increase efficiencies and better use technology. The executives cite data from Ernst and Young that 27 percent of “inhouse legal professionals’ time is spent conducting routine compliance and low-value tasks.” The Orlanses, who own a suite of professional consulting companies, believe their two decades of experi-
ence streamlining their own businesses will be very much in demand. Alison Orlans was named to Crain’s 40 under 40 in 2018. At that time she hinted at the need for such a company. “Every other industry has gotten more technology focused, so, too, should the law,” she said in 2018. Revlegal launched with clients in the real estate, finance, automotive and municipal space. The Orlanses declined to share current or projected revenue. However, they point to a proprietary online “optimization engine” that they say can “diagnose, calibrate, optimize” corporate legal departments, particularly general counsels’ offices. The optimization engine means the principals can “very quickly go in and see where the gaps are in their process and how lawyers are doing things,” Linda Orlans said.
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MOBILITY
Advertising Section
PEOPLE ON THE MOVE
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INSURANCE
Truscott Rossman
Oswald Companies
Annika Clemens joined Truscott Rossman as a digital content manager in the PR firm’s Detroit office. She joins TR from Central Michigan University where she graduated with a BAA in integrative public relations and a minor in cultural and global studies. She served as social media coordinator and web manager in the Office of Student Activities & Involvement and a PR intern in the University Communications department. The firm also hired Stephen Olschanski as an account executive in Lansing.
We are pleased to announce Mark Beilein has joined Oswald Companies as an Employee Benefits Advisor. He specializes in working with clients to plan, consult and deploy strategic benefit plans. In his role, Mark will be responsible for new business development along with the service and retention of existing accounts. He has previous experience in industrial distribution sales and management. Mark earned a Bachelor of Arts from West Virginia University.
American Center for Mobility opens Technology Park for development
MORTGAGE BANKING
350,000 square feet of space available at Ypsilanti Township site
Success Mortgage Partners, Inc.
BY DUSTIN WALSH
Success Mortgage Partners (SMP) names Allison Johnston President of SMP. Allison joined SMP in 2013 and has over 25 years of mortgage experience. Many career achievements include: • Certified Mortgage Banker--2015 • State of Michigan governmental mortgage industry advisory board chairwoman • Board Member, The Mortgage Collaborative • Past President, Michigan Mortgage Lenders Association SMP currently has a presence in 28 states and the District of Columbia and has over 400 NEW HIRE? employees. PROMOTION?
The American Center for Mobility announced last week its technology park is ready for development. The proving ground for advanced safety and automated vehicle technologies at Willow Run in Ypsilanti Township recently completed general infrastructure to allow interested parties 350,000 square feet of development at the center’s 500 acres. Companies looking to locate in the park will receive heavy Chaput subsidies as it’s designated a Renaissance Zone, allowing up to an 85 percent abatement on real estate and personal property taxes through 2031, and an Opportunity Zone, which allows tax deferral of reinvested capital gains. Real estate brokerage firm Colliers International is working to secure automakers and suppliers to build office and industrial buildings between 25,000 square feet up to 250,000 square feet in the park, Mark Chaput, interim CEO of ACM, said at a media event Tuesday morning. The center expects upward of 1,200 jobs could be created at the technology park. Chaput said there’s great interest in the park, but no companies have signed a development deal. After a deal is made, development would take upward of 24 months to complete, said Paul Krutko, president and CEO of Ann Arbor Spark and an ACM board member. The technology park is the second phase of development at the center. In April 2018, the mobility center opened a 2.5-mile highway loop and sketched plans to add places for test scenarios deemed too dangerous for public roads and a cyber-security center.
ENGINEERING / DESIGN
OHM Advisors Nathaniel Cook, CPA, and Tim Keyes join community advancement firm OHM Advisors. A graduate of the Cook University of Michigan with an MBA in Finance, Cook serves as the firm’s new Vice President of Finance and Administration. Keyes, the former City of Romulus Economic Director for nearly two Keyes decades and a Central Michigan University alumnus, brings deep experience helping state and local development authorities and private investors secure financing for important community infrastructure and other public projects. He works closely with project teams to connect municipal clients with funding opportunities and incentives. In their new positions, Cook and Keyes will provide integral team and client support as we continue Advancing Communities.
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An autonomous vehicle weaves between a car that went left of center to avoid a pothole and a cyclist who entered the road from the car’s right during a live demonstration of the vehicle’s abilities during the American Center for Mobility’s live demonstration day in October. | LON HORWEDEL FOR CRAIN’S DETROIT BUSINESS
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ACM is a public-private partnership run by a nonprofit in conjunction with the state’s Department of Transportation, the Michigan Economic Development Corp., the University of Michigan, Ann Arbor’s Spark business accelerator and Ypsilanti Township. Leaders have touted it as a way to ensure high-paying auto-industry jobs remain entrenched in Southeast Michigan. The state approved $35 million to complete the first phase of construction at the original total cost of at least $135 million. Seven companies, including Toyota and Visteon Corp., paid $5 million apiece to be considered founding members of the facility. “Supporting” member Subaru and five other companies paid $2 million for ongoing use of the track. It’s not just for traditional automakers and suppliers. AT&T and Microsoft have been using the facility to advance next-generation automotive connectivity. Chaput said ACM has raised closer to $200 million. But the center’s progress has been bumpy. Krutko said the timeline for widespread autonomous vehicle deployment continues to be pushed back and it’s impacted ACM. Many executives believed driverless vehicles would be widely available by 2025, but most experts now believe it will be 2030 or later. The center also competes against Michigan’s public roadways, which are open and free to autonomous vehicle testing thanks to legislation signed into law by thenGov. Rick Snyder in 2016. It has also seen consistent turnover of its top executives. Only six months after it opened, much of its top leadership was terminated, including founding CEO John Maddox, who was let go in August 2018 with a $200,000 severance, according to court records. The center’s board wanted to “go another direction,” Maddox told the Washtenaw County court during his divorce pro-
ceedings last year. In February 2019, the board hired Michael Noblett, global segment lead of automotive industry sales for Santa Clara, California-based semiconductor manufacturer Intel Corp., to replace Maddox. Noblett was out by November and the ACM board has not confirmed whether Noblett was terminated or resigned. Krutko said the board is beginning an independent search for a permanent CEO and that Chaput is being considered. Use of ACM has been in question for the last several months as the organization provides testing that many companies already do on their own. Chaput said testing occurs every day, but that the site is only at about 30 percent capacity each day. To supplement industry demand, ACM has branched out into government contracts. In 2018, the center secured a government contract to study truck platooning — a group of trucks accelerating, braking, etc. simultaneously through automated systems — with the U.S. Army and Tank Research, Development and Engineering Center, University of Michigan-Dearborn, MDOT, U.S. Department of Energy’s National Renewable Energy Laboratory and Alabama’s Auburn University. It’s also partnered with MCity, MDOT and the city of Detroit to study automated driving simulations with plans to recreate Detroit city roads on the site. Krutko said the only concern for the center is whether, as a nonprofit without further public funding, it’s generating enough revenue to cover operating costs. He said its balance sheet performed significantly better in 2019 than in 2018, but would not comment further on its revenue or losses. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
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Its net cash flow — sider also,” Bernard said in an email. revenue minus operating and capiThe Global Polymer Group looking Business— Development/Sales tal aexpenses has increased from “Who knows what the valueis of the for $7.5 million in 2016 to $8.1 other two who mallswill arebe and if Starwood Associate expected to work with inactive accounts andmillion new in objective 2017 and to $8.2 in 2018, thinks theyto arepre-sell worth saving or keepprospects the brand with the setmillion up a meeting says.the sales team to help ing, thus affecting Manager. their decision onwill Trepp with the Regional They work with Starwood bought The Fairlane.” relations to ensure a smooth transition establish of the Fairlane account.and The Lakeside Mall in Sterling Heights Mall at Partridge Creek in Clinton Business Development Associate will need to be able to effectively sold late last year for $26.5 million af- Township plus five other malls for research and uncover newGrowth opportunities both from endemic and $1.4 billion Bloomfi eld nonHillster Chicago-based General endemic Propertiesclients. defaulted on a $144 mil- based Taubman Centers Inc. (NYSE: TCO) in a deal lion loan in 2016 announced in and the property “THE SUPER REGIONAL Visit for more information June 2014 that wentcrain.com/careers/ to special MALL BUSINESSES WERE closed in Octoservicer and availableC-III positions. ber 2014. Capital Partners AN ICON OF THE 1960S, Fairlane’s largLLC. The blightest users are Maed, vacant Sum- 1970S AND 1980S, OF THE cy’s (240,000 mit Place Mall in AMERICAN SOCIAL FABRIC square feet); J.C. Waterford TownLIKE Penney (190,500 ship atCommunications its border ANDisSOCIETY. Crain currently IT’S seeking an IT’S Accounts Receivable square feet); Ford with Pontiac sold Specialist. This position will report the Accounts Manager GOING AWAYtoSLOWLY ANDReceivable Motor Co. for $3.7 in and willmillion be located in our downtown Detroit location. The ideal SURELY.” (120,000 square 2018 as a redevelcandidate will be highly motivated, have an upbeat attitude and must feet); and AMC opment play. be a team player. — Christopher Brochert, a retail Theaters (103,000 C h r i s t o p h e r expert and co-founder and partner square feet), acBrochert, a retail of West Bloomfield Township-base, Visit crain.com/careers/ forStern more information Development Co. cording to Trepp. expert who is Lormax and availableand positions. The mall, co-founder partner of West Bloomfield Town- which was built in 1976, amounts to ship-based Lormax Stern Develop- about $39.7 million, or about 29.3 ment Co., lamented the decline of percent, of the note’s $135.7 million balance. The three malls total 3.1 milthe nation’s shopping centers. “It’s very, very sad to see that such lion square feet, according to Trepp. Sharesaid your success Brochert he believes Fairlane an icon of American history is just custom on the decline. evaporating,” he said. “The super re- has beenwith “ThReprints, at thing hasE-prints been swirling gional mall businesses were an icon bottom of the toilet for a of the 1960s, 1970s and 1980s, of the around theand more! American social fabric and society. long, long time,” he said. “They spent of money trying to keep at that It’s like it’s going away slowly and a lot Contact Laura Picariello surely. The malls that are going to thing above water, and it’s just never lpicariello@crain.com survive are the ones like Somerset succeeded.” (Collection in Troy) or the higher-end ones, or stuff that’s maybe not Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB as high end.”
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Receivership sale of assets of Visiting Physicians BusiMolex, LLC seeks Advanced Quality Planning (AQP) Engineers ness Residential Physicians for Rochester Hills, MI to work w/product dev team members to dev & mainAssociation, PLLC & RPA Management, Inc. includes account tain quality plans of a global design center for electronic cable assemblies. receivables, 7 vehicles, outstandMaster’s in Ind Eng/ Quality/Risk Advertising Section Mgmt/related field +2yrs exp OR Bachelor’s ing insurance, Medicare and Medin Ind Eng/ Quality/Risk Mgmt/related field +5yrs exp req’d. Req’d Skills: Qualicaid claims, office equipment, ofity eng w/ new product dev process w/electronic connector production facility fice furniture, medical supplies, in auto industry, problem solving methodologies (8D, root cause analysis) & and intellectual property. corrective action implementation; Supply Chain, Risk Analysis, GD&T, SupContact Sonya Goll at (248) port Environ Testing (Eng design/Design Validation/Process Validation), Proc354-7906 ext. 2234 or sgoll@ ess Improvement Coach, Change Mgmt, PFMEA/DFMEA, Control Plans, additional sbplclaw.com To placeforyour listing,inforcontact PPAP, Suzanne Janik at 313-446-0455 or email sjanik@crain.com APQP, Qualifying Suppliers using CPK, IATF, SPC, MSA, Poke-Yoke, mation, form purchase agreeSix-Sigma, Minitab. 30% travel req’d. ment, financials of business, and www.crainsdetroit.com/classifieds Send resume to: MLXjobs@kochind.com, Ref: JH deadlines for offers.
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to drive improvements into productivity, capability & speed throughout the divisional product dev. Master’s in Ind Eng or related field +2yrs exp or Bachelor’s in Ind Eng or related field +5yrs exp req’d. Req’d Skills: exp w/electronic connectors in auto industry w/business improvement projects, setting up product dev processes, & project mgmt; PLM solutions (teamcenter, enovia, windchill), SAP, JIRA, Agile, data modeling & visualization dev using Qlik, Power BI, Tableau); POSITIONS AVAILABLE Seeking Marketing andto:PR Professional Receivership sale Six Sigma. Send resume MLXjobs@kochind.com, Ref:of AJassets
of Visiting Physicians BusiThe SOFTWARE Michigan Department of Insurance and Financial Services Methode Electronics, Inc. has a job opening in ness Residential Physicians (DIFS) is seeking a creative communications professional who Southfield,Association, MI: PLLC & RPA ManDelight your Clients withwill thelead Bestthe of Department’s Michigan initiatives and convey vital informa• Senior Software Engineer (SSE001): Responsible requirements review, 2,280 ACRES ACRES Handmade FOR SALE SALE includes account agement,for Inc. 2,280 FOR Nut, Baked Goods &thatdevelopment, tion on issues touch every integration Michigan resident. software design, testing, releases, & customer support receivables, 7 vehicles, outstandChocolate GiftThis Trays. is an opportunity step intomodule, a newlyintegrated created position; initiate a financial ing insurance, and Medembedded software fortofaceplate center Medicare stack & door handle DOUBLE EAGLE EAGLE RANCH RANCH DOUBLE literacy and provide information on health insurance, auto insurance, FREE Holiday cards w/your logoprogram; & message icaid claims, office equipment, ofsensor module.. North Central Central Michigan North Michigan banking andsubmit other issues. This will fice increase publicand awareness of DIFS furniture, medical supplies, Guaranteed Christmas Delivery! To apply, resume to position resumes@methode.com reference ID#. TheDoubleEagleRanch.com TheDoubleEagleRanch.com consumer advocacy, recent auto insurance reforms, and health insurance and intellectual property.opCall Kyle: Kyle: 248-444-6262 248-444-6262 NibblesGifts.com 248-737-8088 Call tions available through the Michigan Health Insurance Marketplace. Contact Sonya Goll at (248) POSITIONS AVAILABLE 354-7906 ext.citizens 2234 or sgoll@ If you Hwy, are looking to provide to Michigan and repreVisit our store at 32550 Northwestern Farmington Hillsa positive impact for additional inforsbplclaw.com sent an important function of state government, this is a great opportunity. Senior Software Engineer,mation, SSE-HCS-M-17; form purchase agreeSee position number 6501-19-DIFS-068 SOA 17ofat: ment, financials business, and 01 position, Location Novi, MI: Executive Director, Audience Development https://www.governmentjobs.com/careers/michigan deadlines for offers. Responsible for dev production ready SW defined SW dev process. Analyzing Filter for postings under Department of Insurance and Financial Services. RESIDENTIAL PROPERTY PROPERTY RESIDENTIAL
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platform SW, dev & integrate unit test plans & verify the functionality. debug isAs a forward-thinking and transformational Audience Development sues & write test cases for unit test. design review & clarify specs doc. Lead com! g Executive, you will lead thenkstrategy, development, execution ofCustomer & Harman, inclu report & investiin munication FW &and App SW issue b/w a audience plans via effective with the goal of achieving 's rmarketing practices gate issue, identify priorities, update tracking & root cause doc. Dev & track KPIs y n pa each release, meets acceptanceto criteria. Share k’ledge with team revenue growthom across six of Crain for Communications’ brands: We are SW looking for ensure acore Project Coordinator BIDS WANTED join Plastics News and the c r to perform dev & debug activities. Requirements: Bachelor’s deg (or foreign u Automotive News, Crain’s Business Publications, Modern Healthcare, Ad o y Crain Global Polymer Group. Core competencies include t Equivalent) in ComSci/Electric/Electronic Eng or IT or equal or rel solid with 5written yrs of igh lPensions Age, & Investments, Polymer Group. By leveraging your focused h and verbal communication skills, excellent organizational skills, website g exp in the IT field. Alternate: Master’s deg (or foreign Equivalent) in ComSci/ Hi ROI mindset and your experience as aediting, modern,high multi-channel marketer Electric/Electronic Engof or IT or equal rel with 3 yrsto of exp. DevPROPERTY & debug large level detail andor the ability multi-task and meet RESIDENTIAL complex sw in real-time, embedded, environment, & dev you’ll decide how best to engage audience members during theirmulti-threaded deadlines. This position is located in the Detroit office and SW will des report to of GUI apps in Automotive domain, customer journeys, and how best to allocate resources. Position could be UI des princples, patterns, Action Script/ the Events Director. C++/QT/QML program languages, QNX/Linux Automotive infotainment p’form, 2,280 ACRES FOR SALE based in Detroit, Chicago, or New YorkShell City. Script, Lua Script, Perforce & other tools related to embedded sw dev, Exp * system analysis & profiling tools for debug & performance optimizations, Exp in Visit crain.com/careers/ for more information DOUBLE EAGLE RANCH Visit crain.com/careers/ for more information Automotive infotainment domains like Navigation, North Connectivity Media. Apply: Central&Michigan and available positions. and available positions.
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send CV’s to Harman Connected Services, C/OTheDoubleEagleRanch.com Mahesh G M; (Job Code SSEwith custom HCS-M-17); to 2002 156th Ave NE Suite 200 Bellevue, WA 98007. Call Kyle: 248-444-6262 Contact Suzanne Janik POSITIONS AVAILABLE Business Development Sales Associate at sjanik@crain.com Director, Digital Operations Principal Engineer; 1 position; Job ID: PE-HCS-M-07; work Novi, MI or 313-446-0455 Analyze customer req, design & dev solution in field of navigation domain in auThe Global Polymer Group is looking for a Business Development/Sales for details. We are seeking an exceptional Director – Digital Operations oversee tomotive infotainment sys. Create architectural docs high-level des &tolow-level
CRAIN’S READERS ARE 4.5x MORE LIKELY TO HAVE AN INFLUENCE AVERAGE CORPORATE NET WORTH FINANCING OF $1.6 DECISIONS MILLION Accounts Receivable Specialist
Reprints E-prints CRAIN’S Associate who will be expected to work with inactive accounts and new and more! ad ops and ad solutions departments. We are seeking candidates who: READERS prospects to pre-sell the brand with the objective to set up a meeting des docs, prototyping navigation sys solu. Dev & enhance dif navigation rel fea-
tures like routing calculation, efficiency, working advance graph search algorithm. through change; -Arefleet comfortable in imperfect situations; Contact LauraManager. PicarielloThey at will -Lead with the Regional work the sales team to help solu & integration. Dev unit test cases & Workwith with with other teams for end-to-end -Operate a sense of urgency; -Are fascinated by ad tech and lpicariello@crain.com tool & test apps, debug & problem solving navigation rel components. sinestablish relations to ensure a smoothimple transition of the account. The developing revenue opportunities asnavigation a functiondomain, of Ad suppliers Operations; -Love pointtoof be contact dev team for & internal Business 732-723-0569 Development Associate will gle need ableproject to effectively providing insights, analysis, and recommendations for revenue teams for tech issue. Req: Bachelor’s deg (or Foreign Equal) in CompSci, research and uncover new opportunities both endemic and non- 7 yrs of exp in IT. Alternate: Master’sElectro Eng, InfoTech rel or equal with generation and or optimization; -Take ownership of major projectsdeg and endemic clients. (or Foreign Equal) in CompSci, Electro Eng, InfoTech or rel or equal with 5 yrs vendor relationships to drive forward a corporate vision; -Work cohesively of exp in IT. Exp req: SLDC for auto infotainment sys, object-oriented program with various business units; -Are in a&technical setting; and concepts & GPS based car navig sys.comfortable Design patterns program skill in C/C++ -Are their element a problem solver and identifying opportunities Linux,inQNX p’forms. perl,aspython, vba script for test module dev. dev exp in digiVisit crain.com/careers/ for more information tal maps, loc-based service, routing algorithms, route guidance & map visualizaacross the business. and available positions. tion in RTOS (QNX,*embedded Linux). building internal representations environVisit more FOLLOW US ON mentcrain.com/careers/ useful for path plan &for control of information autonomous vehicles, des & prototyping * FACEBOOK.COM/CRAINSDETROIT for autonomous navig archit, build & deploy Machine Learning Models Tech req and available positions. analysis & decompos, usage of DOORS req mgmt, estimation tech & work break down structures, Enterprise Arch, MS Visio or other tools for creating des docs. Agile & Scrum methodology: Apply: send CV’s to Harman Connected ServContact Janik ices C/O G M; (Job Code PE-HCS-M-07); to Suzanne 2002 156th Ave NE Crain Communications is currently seeking an Mahesh Accounts Receivable Suite 200 Bellevue, WA 98007. at sjanik@crain.com
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Starwood bought Fairlane (pictured) and The Mall at Partridge Creek in Clinton Township plus five other malls for $1.4 billion from Bloomfield Hills-based Taubman Centers Inc. (NYSE: TCO) in a deal announced in June 2014 that closed in October 2014.
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JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 17
SURVEY
Women’s leadership in Michigan top public companies
For every 100 men hired or promoted to managerial role, only 72 women are promoted or hired to manager, suggesting women are more likely to get stuck in entry-level roles, said the 2019 McKinsey Women in the Workplace study. That creates a shrinking population of women in the pipeline moving up the career ladder. For instance, women hold 48 percent of entry-level jobs, but only 38 percent of manager positions, 34 percent of director jobs, 30 percent of vice president positions and so on. Of Michigan’s public companies, 58 percent have no women named executives, including large companies like Domino’s Pizza Inc., Ford Motor Co., Lear Corp., Penske Automotive Group Inc. and Taubman Centers Inc. In fact, Domino’s, Penske and Taubman have no women executives at all, named in SEC filings or not, according to the Inforum study. There are outliers in the other direction: 40 percent or more of named executives are women at Ally Financial Co., CMS Energy Corp., Kelly Services Inc. and SpartanNash Co. If companies promoted or hired women to managerial positions at the same rate as men, U.S. companies would add a million more women to management roles over the next five years, the McKinsey study said. McKinsey recommends companies set a goal for representation of women among first-level managers, require diverse candidate pools at that level and put lower-level managers through unconscious bias training. Barclay said that requires intentionality, making gender parity a top priority. “Critical mass benefits more women and more companies,” Barclay said. “Intentionality starts at that first promotion. You need to make sure you’re looking at all of your immediate pre-management employees, not just the ones you feel most comfortable around or who look like you.” Yet it’s unclear if companies will increase the share of women managers without more pressure. In 2007 only 16 percent of board seats at Michigan companies were held by women. A decade later, in 2017, it was worse at 15 percent.
The percentages of executive officer positions and board seats occupied by women at a selection of Michigan’s largest publicly traded companies, according to data contained in the Wayne State University/Inforum report:
From Page 1
Company
% Women Named Exec Officers
Agree Realty Corp. (NYSE:ADC) Ally Financial Inc. American Axle & Manufacturing Holdings Inc. (NYSE:AXL) BorgWarner Inc. (NYSE:BWA) CMS Energy Corp. (NYSE:CMS) Credit Acceptance Corp. (NasdaqGS:CACC) Diplomat Pharmacy Inc. (NYSE:DPLO) Domino’s Pizza Inc. (NYSE:DPZ)
0% 40% 0% 20% 40% 0% 0% 0%
11% 33% 20% 20% 42% 25% 29% 33%
Dow Inc (NYSE:DOW) DTE Energy Co. (NYSE:DTE) Ford Motor Co. (NYSE:F) General Motors Co. (NYSE:GM) Gentex Corp. (NasdaqGS:GNTX) Herman Miller Inc. (NasdaqGS:MLHR) Kellogg Co. (NYSE:K) Kelly Services Inc. (NasdaqGS:KELY.A) Lear Corp. (NYSE:LEA) Masco Corp. (NYSE:MAS) Neogen Corp. (NasdaqGS:NEOG) Penske Automotive Group Inc. (NYSE:PAG) Perrigo Co. (NYSE:PRGO) SpartanNash Co. (NasdaqGS:SPTN) Stryker Corp. (NYSE:SYK) Sun Communities Inc. (NYSE:SUI) Taubman Centers Inc. (NYSE:TCO) TCF Financial (NasdaqGS:CHFC) Whirlpool Corp. (NYSE:WHR)
20% 0% 0% 33% 0% 14% 0% 40% 0% 0% 20% 0% 0% 40% 0% 25% 0% 0% 0%
27% 23% 21% 55% 22% 40% 42% 30% 22% 18% 11% 23% 22% 33% 40% 29% 56% 31% 21%
SOURCE: INFORUM
Yet now that number has ballooned to 29 percent in 2020. Why? BlackRock Inc., the world’s largest money manager with stakes in nearly every public company in Michigan, notified companies it invests in that they should have at least two female directors. Investors have become more activist in companies in recent years that don’t match public sentiment on social issues. In 2016, Jonathan Litt, a Stamford, Conn.-based investor who is co-founder of Land & Buildings Investment Management LLC, sought to shake up Taubman Centers Inc.’s all-
HUNGER
male board after years of poor stock performance (see story at right). The success of BlackRock and others triggered other investors to use their financial weight toward gender equality. The $210 billion New York State Common Retirement Fund, the third-largest pension fund in the U.S., vowed to oppose re-election of directors on hundreds of boards with no women. Pension funds in California and Massachusetts did the same. California passed a law in 2018 requiring public companies operationally headquartered in the state to have two women on boards with five volunteering at the school-based pantries, Bonelli said. “One of the things we want to do is eliminate stigma and make these pantries as accessible as possible,” she said.
From Page 3
“Kids do better academically if hunger is taken off the table,” she said. “We want to improve graduation ... and literacy rates. That’s not going to happen in one or two years, but we think it will over time.” And by taking hunger off the table for families of students in the district, as well, it will take stress off students and enable parents to focus on other needs and opportunities such as job training, she said. “The hypothesis is if we solve food security for these families, we will see academic, health (and) behavioral improvements in the kids and greater stability within the families.” Just under three-quarters or 68 percent of students in the Warren district qualify for free and reduced-price lunch programs at school, Bonelli said. Need ranges by school, with 90 percent qualifying at one and 46 percent at another. There is a large immigrant population in the district, with 35 different native languages spoken by families
% Women Directors
Taste testing Livernois
Golzynski
there, according to the district. Families in the district are missing an average of 3.5 meals, per person, per week, Bonelli said. School meals are helping fill part of that need, and United Way for Southeastern Michigan is working to increase breakfast participation to fill the gap even further, she said. Gleaners is now also bringing food to new, school-based pantries and connecting families to community pantries that may offer more convenient hours or churches families are more comfortable visiting. And nonprofits like Blessings in a Backpack are providing backpacks of food for students to take home over the weekends. All told, the effort includes roughly two dozen community partners that are coordinating food assistance and
18 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
At the same time, new student clubs are launching to engage elementary school students in healthy cooking, taste testing and fitness, while older students and parents are being invited to help develop new ideas and approaches for ensuring families are food secure. New murals are also taking shape outside of school cafeterias to promote healthy food choices, Bonelli said. As part of the pilot, the state department of education and Michigan Food Bank Council will focus on the policy level, looking at the type of food offered in school cafeterias and vending machines and how to get federally funded school meals to low-income students when school is unexpectedly closed on snow days, Bonelli said. “We used to program just to one person who raised their hand” for
directors and three women on boards with six or more directors by 2022. That law, however, is currently being challenged in court. In Italy, Germany and several other European countries, the number of women on board seats has tripled in recent years, according to a 2019 report by the Corporate Women Directors International, a research and advocacy group. The mandates, however, have done little to increase the number of women in management, just like in the U.S. Lansing-based CMS Energy Co. has increased to five women directors from just one in 2007. Women now represent 42 percent of the energy utility’s 12-person board. Patti Poppe, president, CEO and board member at CMS, said the increase of board seats held by women is only intentional in the beginning. “Going from zero to two is on purpose, but, really, when you are looking to add someone to the board, you don’t want a stranger ... ,” Poppe said. “When you start to get gender and racial diversity on a board, the circle of who you now know grows.” General Motors not only achieved parity on the board at General Motors Co., it exceeded it, as six of the automaker’s 11 board seats are held by women. Women represent 40 percent of board seats at Zeeland-based Herman Miller Co., Grand Rapids-based Steelcase Co., Kalamazoo-based Stryker Corp. and Monroe-based La-Z-Boy Inc. La-Z-Boy had zero women on its board when Nido Qubein, president of High Point University in North Carolina, joined the board in 2005. But the board knew that needed to change, he said. “... It was our immediate goal to find and attract skilled and experienced female directors who could enhance the company’s direction,” said Qubein, who is also the chairman of the board’s nominating and governance committee. “After all, the primary customer/decision maker in our stores is typically a female.” Executive compensation research firm Equilar estimates the boards of the Russell Index 3000, the 3,000 largest U.S.-traded stocks, will achieve gender parity in 2034. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh help, she said. “To redirect so many resources to create this health ecosystem is very different.” The Best Food Forward pilot aligned perfectly with the in-school meal programs and other hunger assistance and healthy living efforts already in place at the Warren district, said Superintendent Robert Livernois. Some families, however, won’t come forward for a free lunch, though, he said, which was one of the drivers that led him to pursue the wraparound support included in the pilot. “We’ve known for a long time that a nourished student is a learning student,” Livernois said, since hungry students can’t focus or learn. The pilot “was an opportunity to take that same thinking and expand it to our community at large,” he said. “It just seemed like the right thing to do.” Over time, it will be interesting to see if there are differences in areas like discipline, attendance and educational performance at the schools participating in the pilot vs. those that are not, he said. The Michigan Department of Education can provide meals to children through the federal school meal pro-
Taubman: From zero to majority on the board BY KIRK PINHO
In a little over three years, the Taubman Centers Inc. board of directors has gone from being exclusively white men to having a majority of the seats occupied by women. The shift for the Bloomfield Hills-based shopping mall real estate investment trust was brought about at least in part by an activist investor, Jonathan Litt of Stamford, Conn.-based Land & Buildings Investment Management LLC, who pushed for more diversity on the board. At the time, it was made of all white men. Today, five of the nine board members are women. There are no people of color on the board. The women are Mayree Clark, director since 2018; Janice Fields, director since 2019; Michelle Goldberg, director since 2019; Nancy Killefer, director since 2019; and Cia Buckley Marakovits, director since 2016. Another of Litt’s planks was to de-stagger the board elections so that all members are up for election at the same time. For the first time a full board election will be at the company’s annual shareholder meeting this year, Litt said in a letter to Taubman Centers shareholders in June. Only three board members remain from before Litt began his proxy fight: Robert Taubman, the company’s chairman, president and CEO and son of founder A. Alfred Taubman; J.C. Penney Chairman Ronald Tysoe, a board member since in 2007; and former J.C. Penney Chairman and CEO Myron Ullman III, who has served on the board since 2016 (he had also served on the board from 2003-04). Michael Embler, former chief investment officer of Franklin Mutual Advisers LLC, has been a board member since 2018. grams, “but when their parents are hungry, there’s very little I can do for them,” said Diane Golzynski, director of health and nutrition. In early conversation, she, Gleaners CEO Gerry Brisson and Phil Knight, head of the Food Bank Council, “were picturing a world where families and children don’t have to worry about where their next meal is coming from,” she said. The department is looking for health improvement with reduced stress for the whole family, improved academic outcomes for students and overall improvement of the district’s culture, with parents feeling more welcomed and getting more involved. “This pilot is really helping us better define how we talk to districts and what they need to hear from us,” Golzynski said. “I don’t know of anyone else doing this kind of work,” she said. “When I talk with other states about this ... they all look at me wideeyed and say (they) can’t wait to hear more.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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Detroit companies seek big exposure in Super Bowl LIV BY KURT NAGL
The Lions might be a long way off from Super Bowl LIV, but Detroit will have plenty of representation during the broadcast of the NFL championship game Feb. 2. Little Caesars is planning to run its first Super Bowl commercial, the “Big 3” automakers each have slots locked in and Quicken Loans Inc. will have major exposure through a new sponsor deal — and maybe a separate ad of its own. The companies are capitalizing on the big game to reach an estimated 100 million viewers expected to tune into Fox when the San Francisco 49ers take on the Kansas City Chiefs.
“THERE IS STILL TIME BETWEEN NOW AND FEB. 2. THOSE WATCHING THE GAME WILL HAVE TO WAIT AND SEE IF WE DECIDE TO RUN AN AD IN THIS YEAR’S GAME.” — Quicken Loans statement
That level of exposure is valuable for brands and very expensive — each 30-second slot this year costs around $5 million. The companies will be looking to capture the same type of lightning
previous Super Bowl ad campaigns have created. Chrysler struck gold in 2011 with its “Imported from Detroit” commercial featuring local rapper Eminem cruising past iconic Detroit sites in a black Chrysler 200. Quicken Loans created a splash in 2018 with a commercial featuring comedian Keegan-Michael Key and rapper Big Sean, both from the Detroit area. While the automakers and Quicken Loans are keeping ad details under wraps until Super Bowl Sunday, Little Caesars has teased out some of its creative. The Ilitch-owned pizza giant will be promoting its new delivery service during a 30-second slot, according to a news release. The
commercial will center on actor Rainn Wilson — better known as Dwight on hit TV show “The Office” — and the theme, “best thing since sliced bread.” Rocket Mortgage, the marquee product of Quicken Loans, will have prominent visibility at the Super Bowl this year after signing a deal with the NFL to be its first “official mortgage sponsor.” The mortgage lender is running the “largest official Super Bowl squares game in history” and giving away $1 million as part of the sponsorship. Terms of the four-year deal were not disclosed. It signals a continued blitz in sports advertising for the mortgage company, which spends
BETTING
From Page 1
But the Greektown casino will invest millions more into a 5,000- to 6,000-square-foot permanent space at the center of its gaming floor, eventually replacing its Synergy electronic table games section. “That area is not as profitable as it once was,” said Marvin Beatty, vice president of community and public relations at Greektown and the only remaining partner from the casino’s original ownership group. “In this industry, you change on a dime.” The casino’s new operator, which runs 43 gambling properties across the country, has given Greektown the ability to do just that. Beatty and Drake are helping draft plans for the lounge — think walls covered in TVs, rows of betting kiosks and a full bar — and Penn is supplying the gaming equipment and expertise for a turnkey solution, Drake said. “Being downtown, what better place to be?” he said. Greektown has long been the smallest by market share among Detroit’s casinos. It reported $337.2 million in wagering revenue last year for 23 percent of the market share. MGM Grand Detroit led the way with $623.5 million in revenue and 43 percent market share, while MotorCity reported $493.6 million and 34 percent of the market. Beatty envisions sports gambling as a way to entice the coveted millennial clientele and driving up revenue. He sees it pulling in employees from the city’s largest companies, including Quicken Loans Inc. and Blue Cross Blue Shield of Michigan, whose increasingly young staff know their way around fantasy football and college basketball brackets. “Being right here in the middle of the central business district, you got thousands of people and probably thousands of them are making some kind of sports bet somewhere,” Beatty said. Americans spend about $150 billion on illegal sports gambling each year, according to the American Gaming Association, which advocates for casinos across the country. While some claim that number to be inflated, there is undoubtedly a lot of money on the table. State officials estimate about $190 million will be wagered in on-site sports betting across all casinos in Michigan, including outstate tribal casinos, in the first year. MGM hopes much of that makes it to Moneyline Sports Lounge, to be
Greektown Casino-Hotel plans to replace its Synergy electronic poker area with a new sports betting lounge. | KURT NAGL/CRAIN’S DETROIT BUSINESS
“BEING RIGHT HERE IN THE MIDDLE OF THE CENTRAL BUSINESS DISTRICT, YOU GOT THOUSANDS OF PEOPLE AND PROBABLY THOUSANDS OF THEM ARE MAKING SOME KIND OF SPORTS BET SOMEWHERE.” — Marvin Beatty, vice president of community and public relations at Greektown Casino
renamed BETMGM Sports Lounge once betting starts. Situated across from TAP restaurant, the 2,000-square-foot space is outfitted with leather chairs, 60 flat-screen TVs, 14 video poker machines, a high bar and VIP section. More than 40 new jobs are expected at MGM. Dozens of new employees will likely be hired at Greektown to help handle sports betting, Beatty said. MotorCity Casino — owned by Marian Ilitch, whose family also owns the Detroit Tigers and Red Wings — is also gearing up to make money on sports gambling. The casino declined to make anyone available for an interview but issued a statement to Crain’s: “As a premier destination for entertainment in Detroit, we look forward to offering sports betting and online gaming to our guests and fans,” the statement said. “Over the
20 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
MGM Grand Detroit’s sports lounge will become a sports betting lounge once the newly legal activity is implemented. | MGM
coming months, we will be actively exploring this matter further with key stakeholders to ensure that we deliver a best in-class experience that operates in strict regulatory and league compliance.”
Who gets a cut? The list of sports that customers will be able to bet on is still in flux as rules are finalized and deals with leagues are hashed out. The MLB, NHL, NBA, NFL, PGA and major
NCAA sports will likely be in play. International sports such as soccer and cricket will also be key. They are two of the world’s most popular sports — and most gambled upon. Casinos are keenly aware of the region’s robust immigrant population and growing affinity for the games, Theros said. Michigan joins 19 other states that have legalized sports betting. It is just one of three that require casinos to purchase official league data for certain bets. As part of the bill
more than 30 percent of its media budget on sports. (It’s also a good way to gather sales leads — the first question entrants have to answer is whether they are a current Quicken Loans/Rocket Mortgage client.) “Rocket Mortgage has advertised in the (Super Bowl) twice before,” Quicken Loans said in a statement. “Each year, we determine whether the timing and concept is right for our business. There is still time between now and Feb. 2. Those watching the game will have to wait and see if we decide to run an ad in this year’s game.” So, stay tuned. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl passed by the Michigan Legislature, casinos offering “in play” sports betting are required to buy data from the leagues to determine the outcome of a wager. The rule applies to wagers made during a game. For example, if a person bets that Matthew Stafford throws a touchdown on the next play, the casino would have to buy official data from the NFL to prove whether it actually happened and decide if the bet was won or lost. Professional sports leagues long resisted sports gambling for fear that it could compromise the integrity of play following the gambling-influenced throwing of the 1919 World Series by the infamous Chicago “Black Sox.” It didn’t help that they hadn’t found a good way to make money from it. When the U.S. Supreme Court struck down in 2018 a federal law that had banned state-sanctioned sports gambling, the leagues saw the writing on the wall and scrambled to find ways to earn revenue as states legalized the activity. The data purchase requirement in Michigan, also found in Illinois and Tennessee, was considered a win for the leagues. However, the bill does not specify the requirement other than to say data must be purchased on “commercially reasonable” terms. The gaming control board said it is working to better define the language as part of the rule-making process. Sports betting revenue tax in Michigan is set at 8.4 percent, plus 1.25 percent in city taxes for Detroit’s casinos. Operators also must pay a one-time license fee of $150,000 and $50,000 annually. The Michigan Department of Treasury said it expects legalized sports and online gambling to bring in $19 million of new yearly revenue for the state. After winner payouts and taxes, MGM hopes to make around $5 million from wagering in the first year of legal sports gambling, Theros said. The new activity will likely be a windfall in other ways, too. The influx of on-site gambling will be a boon to food, beverage and hotel room sales, Beatty said. “We look at it as just an opportunity to generate new revenue that is gonna help to support, of course, the growth of the casino but also strengthen the city’s revenue stream and the state as well,” he said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
LUCIDO
From Page 1
Lucido declined comment when told about Osborn’s allegations. “I’ve got no comment for you because I’ve got no comment,” Lucido told a Crain’s reporter. “Is that OK?” Last week, Crain’s first reported on a sexual harassment complaint Sen. Mallory McMorrow lodged against Lucido stemming from an incident when the two newly elected senators first met two days after the November 2018 election. McMorrow, 33, alleged Lucido held her lower back during a handshake greeting at new senator orientation while he scanned her head-to-toe and made a comment insinuating that she had unseated an incumbent Republican senator because of her looks. A third woman, 22-year-old Michigan Advance reporter Allison Donahue, reported Lucido made a sexist remark to her Jan. 14, insinuating a group of Catholic schoolboys would like having sex with her while she was attempting to interview him at the Capitol. The allegations leveled by all three women against Lucido underscore a common complaint by women at the Capitol that there’s an imbalance of power in their workplace that lets a male legislator in the majority party put his hands on a woman without permission or make sexually inappropriate remarks without any consequence. “The culture in Lansing is the same as it is everywhere for women, it’s just exacerbated by an environment where one group of people have power, and the rest of the people spend their days trying to keep them happy, flattering them,” said Angela Vasquez-Giroux, a former Senate Democratic caucus staffer who is now communications director for Planned Parenthood of Michigan. McMorrow and Donahue’s sexual harassment complaints are now the subject of an internal investigation by the Senate Business Office, the human resources department for the Legislature’s upper chamber. In a statement to Crain’s last week,
State Sen. Peter Lucido, R-Shelby Township, now faces accusations from three women who work in and around the state Capitol. | MICHIGAN SENATE
Osborn
McMorrow
Lucido denied McMorrow’s allegations: “I categorically deny this allegation, which I believe is completely untrue and politically motivated.” Osborn said McMorrow’s description of how Lucido touched her matched her own experience, causing her to contact Crain’s and share her own story of what she described as a “very uncomfortable” encounter with the senator in the middle of a daytime work conference in a public setting. “He’s blatantly denying something that’s identical to what happened to me,” Osborn said.
A ‘pattern’ of behavior Like McMorrow, Osborn couldn’t recall how long Lucido had his hand on her hip. But both women said Lucido kept his hand on their hips for much longer
than a one-second touch. “It felt way too long,” Osborn said. “It wasn’t quick. He left it lingering there for some time while he talked to me.” Osborn said Donahue Lucido stopped touching her when a coworker, Kevin Gawronski, stepped over and attempted to direct the senator to a room where he could meet with credit union representatives from his 8th District in Macomb County. Gawronski subtly ran interference, walking toward Osborn and Lucido "to make sure everything was OK," Osborn said. “(Lucido) finally took his hand off me and walked around to the front of the table and continued to talk about where I find my clothes and things like that because he liked the way I looked so much,” Osborn said. Gawronski was the credit union league's political affairs coordinator at the time and has since left the organization. He declined to comment for this article. As a junior aide for a business in-
ATWATER
‘I believe Melissa’ Osborn’s encounter with Lucido occurred May 1 during the type of daylong conference that’s commonplace in Lansing as members of a trade group seek face time with legislators. Osborn said she told her supervisor, Sarah Stevenson, and colleague Haleigh Krombeen, manager of legislative affairs, about Lucido’s uncomfortable touching and comments. Stevenson, senior director of regudiscussions with Tenth and Blake will be around tapping into Molson Coors’ much larger distribution network. “This is definitely a move to catapult us to the next level,” Rieth said. Atwater’s sales have fluctuated in the past few years, according to Brewers Association data. In 2018, it sold approximately 35,500 barrels, up from 24,000 barrels in 2016 but down from 48,500 in 2015, according to Brewers Association data.
From Page 3
“The family is still involved to this day,” Rieth said. “That’s what I want. That’s what I was looking for. I want the Atwater brand around for decades, and I’m not going anywhere.” Molson Coors’ Tenth and Blake also own AC Golden Brewing Co. in Golden, Colo.; Hop Valley Brewing in Eugene, Ore.; Revolver Brewing in Granbury, Texas; San Archer Brewing Co. in San Diego; and Terrapin Brewing Co. in Athens, Ga. Rieth Paul Verdu, vice president of Tenth and Blake, said Atwater fits in the company’s portfolio of regional brewers with strong brands. “We like brands that are healthy and strong and growing,” Verdu said. “We are looking forward to applying what’s worked for us in the past — investing in the brand and supporting the brand. The brand is core to hooking up with Atwater. It’s the brand, the packaging, the way they talk about their company. We have no big plans to change what’s working thus far.” Verdu said Atwater’s entry into the
dustry group that routinely lobbies the Legislature for changes in banking laws, Osborn said she didn't feel comfortable saying something to Lucido in the heat of the moment. “It’s really hard as a woman ... you can’t really be rude to a lawmaker in this industry,” said Osborn, who got out of direct lobbying for the credit union league four years ago in part because of feeling sexually harassed by male legislators. “So I gave kind of short but polite answers and didn’t quite know how to get out of it, but didn’t keep the conversation going either,” she added. McMorrow said Thursday that Osborn is one of two women who have contacted her regarding inappropriate comments or touching by Lucido. She said she notified the Senate Business Office’s general counsel of the additional complaints. In listening to Osborn tell her story, McMorrow said Osborn’s experience of being touched by Lucido was “eerily similar” to her first time meeting him. “That was the most shocking thing to me — somebody who I had not met before could feel they could hold my body,” McMorrow told Crain’s. McMorrow said Osborn’s account establishes “a pattern” of Lucido “feeling entitled” to put his hands on women. “I feel like there’s this idea that if you’re a person in a position of power, that you’re untouchable,” McMorrow said. “That’s compounded by if you’re in a safe district, you’re in the majority party and you’ve built this caricature around you.”
Acquisitions tapped out?
Atwater was founded in 1997 and later acquired by Mark Rieth in 2005. | ATWATER BEER VIA INSTAGRAM
hard seltzer market over the summer was an added bonus. “When we were getting serious (about acquiring Atwater), that didn’t exist yet,” Verdu said. “It’s a nice addition to the portfolio as we are looking at how our craft brands can approach the growing seltzer market.” Tenth and Blake brands’ volumes grew more than 16 percent in 2019. The overall U.S. craft market production volume grew at about 4 percent last year, according to data from the Brewers Association. Atwater was founded in 1997 and later acquired by Rieth in 2005. Rieth’s initial plans were to expand At-
water to be a national player in the beer scene, but has been stymied by slowing growth across the industry. Rieth abandoned plans to expand distribution and brewing operations to several states including North Carolina and Texas a few years ago, instead focusing on regional efforts to improve margins. “We pulled out of some markets because there’s so much competition,” Rieth told Crain’s in October. “We regrouped locally. Ultimately, we’re more profitable: in fewer states, but selling more product.” Rieth said the company has no plans to expand taprooms, but future
The deal may mark the last major brewery acquisition in Michigan, said Joseph Infante, partner and head of the alcoholic beverage regulation team at law firm Miller, Canfield, Paddock and Stone PLC. Atwater is the state’s fifth-largest brewer by volume (see table) based on national sales. Larry Bell, founder of the state’s largest brewer, Kalamazoo-based Bell’s Brewery Inc. (about 472,000 barrels), has said he’ll never sell. Spanish brewer Mahou-San Miguel Group owns a 90 percent stake in Grand Rapids’ Founders Brewing Co. (about 563,000 barrels) and Heineken via its Lagunitas Brewing Co. subsidiary acquired a minority stake in Bellaire’s Short’s Brewing Co. in 2017. Longmont, Colo.-based Oskar Blues Brewery acquired Perrin Brewing Co. in Comstock Park in 2015. Oskar
latory affairs for the credit union league, and Krombeen could not be reached last week for comment. Later last year, Osborn said she told her department’s leader, Kieran Marion, senior vice president of legislative and regulatory affairs at the Michigan Credit Union League. Marion could not be reached for comment. After Donahue published her Jan. 15 first-person account of Lucido objectifying and humiliating her in front of a group of high school boys, Osborn told a friend about her experience with the senator eight months prior. That friend was former state Sen. Tory Rocca, a Sterling Heights Republican, who confirmed Osborn called her a few days before Crain’s reported Jan. 21 on McMorrow’s allegations. “Sounds familiar,” Rocca wrote in a Jan. 21 text message to Osborn with a link to the Crain’s article. Rocca, who left the Legislature at the end of 2018 due to constitutional term limits, said Osborn’s account is not unusual for women who work around the Capitol. “Having worked in Lansing, you see things like this,” Rocca told Crain’s. “I believe Melissa. She would never make this up or lie to me about it.”
Bracing for backlash Osborn spoke with Crain’s after consulting with her superiors and the credit union league’s general counsel, all of whom she said supported her decision to go public. Still, she’s worried about the potential repercussions not just for her own career, but for her employer and colleagues who advocate for credit unions in the Capitol and House and Senate hearing rooms every day. “This is a career thing. What do you do with a lawmaker that if they really want to freeze you out, it could become a problem for your workplace?” Osborn asked. “That’s what I’m nervous about now. I don’t normally interact with lawmakers. But they could easily freeze out my co-workers.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood Blues is owned by Boston private equity firm Fireman Capital Partners LLC. “Frankly, it’s one of the few left that’s big enough to be considered for an acquisition,” Infante said. “There are a bunch of breweries at the tipping point; 7,500 barrels to 15,000 barrels (annually) is a weird place to be. You’re too big for the taproom-only model but too small to hit distribution really hard. I think (Big Beer) doesn’t have many dance partners left.” The craft beer industry in Michigan has also skunked in recent years. Between August 2018 and August 2019, 15 breweries in the state closed, including St. Clair Shores’ Shipwreck Brewing Co., Warren-based Falling Down Beer Co., Munising’s Pictured Rocks Brewing Co., Traverse City’s CraftHouse TC, Jackson’s Poison Frog Brewing Co. and Cellarmen’s in Hazel Park, among others. Several acquisitions have also occurred, including Eastern Market Brewing Co.’s acquisition of defunct Axle Brewing in September. Verdu said that despite the more difficult market, Molson Coors expects its craft brands to grow. “While craft has slowed, it’s still a robust market,” Verdu said. “Craft is what people drink, and it’s still a segment we want to be a part of.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
JANUARY 27, 2020 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Mott Foundation CEO ‘nervous about Flint’
crainsdetroit.com
CHARLES STEWART MOTT FOUNDATION: As president and CEO of the C.S. Mott Foundation, Ridgway White has his finger on the pulse of municipal government in Michigan in ways that no other head of a major philanthropic foundation does. That’s because the future of his foundation’s hometown rests in the balance. Flint’s lead-tainted water crisis has dominated headlines for years, but the city’s financial crisis is gaining increased attention after new projections show its declining pension fund is 31 percent funded and new budget deficits are on the horizon, even in good economic times. | BY CHAD LIVENGOOD ` Crain’s Detroit Business: Why is the C.S. Mott Foundation focused on improving municipal governance and the way cities are financed? Recession-proofing municipalities is something that’s on our mind because the city of Flint is still struggling from the Flint water crisis and the dwindling tax base. Essentially, you’ve got 90 communities that are basically in the state of Michigan that are struggling to meet basic services. And that’s in an economy that’s good right now. How do you think about preserving the good things about Headlee and Prop A while simultaneously recession-proofing Headlee and Prop A? And so my thought process is you should treat municipal tax rolls similar to a business. So during the recession, property taxes need to go down — they need to be reduced because people have less money. But they should be able to rebound at a constant of CPI (consumer price index) or inflation. So it could be down for the five or whatever years that it needs to be. But it can bounce back up. It doesn’t take 20 years to rebound. Because that’s the thing, right now we’re still getting less revenue from tax base in most cities in Michigan than we were pre-recession. If you’re a business, businesses have had, especially automobiles, have had the best seven years in their history since the recession. Or 10 years. But the municipalities haven’t. They haven’t been able to catch up.
… we’ve had an emergency manager in control of the city at least half of that time — emergency manager, RTAB (Receivership Transition Advisory Board), etc. So at some point, it’s not local people that’s made this decision, it’s the state as well. So there’s a joint responsibility there. We’ve had an equal amount of EFMs as we’ve had mayors in the city of Flint since 2000. So I’ve always said, “Even Albert Einstein can’t figure out how to pay for one police officer with $1 when it costs $90,000.” And so the EFMs, the EFM law needs to be changed. Whether it’s for schools or cities, they need to come in with additional resources. Because if you don’t bring resources, it doesn’t matter. ` I wrote a piece a year and a half ago comparing Detroit and Flint’s emergency managers. Detroit EM Kevyn Orr, when he came into town, said this was the “Olympics of restructuring.” And (former Gov. Rick) Snyder and company literally provided Detroit with the gold medalist Olympian restructuring team — $170 million worth of lawyers. And Flint got one bean counter after another, with not anywhere
near the restructuring power, brainpower and resources. Yep. Just think, when Flint was under emergency financial management and Detroit was under emergency financial management/bankruptcy, there was one decision that the governor could have made. … And that was when Flint was thinking about joining the Karegnondi Water Authority, because Detroit had raised the water prices — the water crisis came about because the price of water was too high. Everybody says it was the city wanted to save money. It was really the residents were paying too much. We’re still the most expensive water in the country for a city of our size, which is still wrong. But when Detroit was raising their rates because of their own financial crisis at 100 percent in two years and Flint had to do the same, then they started talking about Karegnondi. If Snyder had said, “Hey, you’re in emergency management, Detroit’s in that, you guys need to work together, we’re going to keep the rates (stable), you can’t raise them more Ridgway White, president and CEO, C.S. Mott Foundation
` What’s your assessment of the city of Flint’s finances? Our tax base is the thing that’s struggling the most. … We’re nervous about Flint. The new mayor (Sheldon Neeley) is coming through … and he’s doing the right thing — he’s going to do an audit. But the audit … as everybody’s suggesting is going to be challenging. But I will say this, if you take the last 10-15 years
than Detroit CPI,” we wouldn’t have had a water crisis. If the governor’s at fault for one thing — probably more than that — it was that decision. ` What do you make of Mayor Sheldon Neeley saying “I want to look at going back to the KWA now”? I don’t know if I want to comment on that, but what I will say is that every resident of Flint deserves high-quality water and affordable water. ` And you think this issue has to get solved or the city can’t recover? Yeah, I mean, people have to trust it. I think the water testing is showing that the water is testing below pre-crisis (lead) levels. But at the end of the day, it’s not affordable right now. And people still don’t trust it. I think they need to replace the last service lines. ` In Detroit the foundations came in to buy out the art, but also to get the city out of bankruptcy. It was basically that choice or go to the U.S. Supreme Court over whether you can cut a pension. I think the bankruptcy judge (Stephen Rhodes) there did a very good job. Don’t forget, the state came to the table with a lot of money ($195 million), the pensioners came to the table with some cuts to pension … and then you had this (grand bargain) … but at the end of the day it was saving pensioners from taking a complete haircut. It was the state coming together and you have the foundations as sort of the kicker to get the Legislature and everybody to come together.
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RUMBLINGS
Little Caesars hopes Super Bowl ad will deliver on delivery LITTLE CAESARS IS MAKING A BIG BET on a big game for the first time. The Detroit-based Hot-N-Ready pizza maker last week confirmed plans to run a Super Bowl commercial starring “The Office” star Rainn Wilson. The news shows some shift in thought for the nation’s No. 3 pizza chain. Little Caesars will run its first ingame Super Bowl spot to promote delivery, which is a new concept for the chain. Little Caesars is hinting that the creative will claim its “America’s Best Value, Delivered” is the “best thing since sliced bread.” Pizza chains typically advertise before kickoff in the hopes of enticing people to pick their brands during one of the busiest days of the year for pizza sales. Even Pizza Hut,
Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Group Director: Business Process Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Portfolio Manager Tim Simpson, (313) 446-6788 or tsimpson@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Chad Livengood, (313) 446-1654 or clivengood@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766
Actor Rainn Wilson is set to be featured in Little Caesars’ first Super Bowl commercial.
the official pizza sponsor of the National Football League since 2018, runs its commercials before the game begins. “While we’re not sharing the full creative yet, you can bet the ad will feature the humor and playfulness that has long been quintessentially Little Caesars,” Jeff Klein, senior VP
22 | CRAIN’S DETROIT BUSINESS | JANUARY 27, 2020
of global marketing, said in a statement. The commercial is set to run during the game’s third quarter. Prices for commercial time during the game vary by when the advertising runs and other factors, but rates of $5.6 million for 30 seconds have been widely reported.
` NOTED CARDIOLOGIST’S VEGAN CAFE TO CLOSE GREENSPACE CAFE, A HEALTH-FOCUSED RESTAURANT in downtown Ferndale created by cardiologist Joel Kahn, will permanently close this Saturday, the restaurant announced on its Facebook page. It opened in 2015 and served an entirely vegan menu. “Issues with our landlord, leases
and finances have left no options,” the announcement said. The restaurant’s fast casual concept GreenSpace & Go in Royal Oak will Kahn remain open. “The Kahn Family will remain public advocates for healthy wholefood plant eating. ... We are committed to GreenSpace & Go, meal plans and meal prep, as vehicles to assist as many as possible to have healthy eating options.” Kahn, who brands himself “America’s Healthy Heart Doc,” coowned GreenSpace Cafe with his son Daniel and wife, Karen.
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Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com 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.
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 Crain’s Excellence in HR Awards recognizes metro Detroit’s outstanding human resources executives and teams. HR professionals are the nerve centers of their businesses – taking care of its people, controlling costs, keeping the business in compliance and helping achieve its strategic goals. NOMINATIONS CLOSE: MARCH 11 ISSUE DATE: June 15 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
#1 BEAUMONT ACO
RANKED NUMBER ONE IN MICHIGAN Congratulations and thank you to Beaumont ACO members for six years of success and $133 million in total CMS shared savings created. Based on our guiding principles of trust, transparency and physician leadership, the Beaumont ACO has partnered with physicians to improve patient care and clinical outcomes. “Without the outstanding physician members of the Beaumont ACO, this success could not have been realized. I want to thank every one of our participating physicians for their willingness to collaborate across the care continuum. Their effort has resulted in improved quality and patient satisfaction while reducing unnecessary cost and utilization.� Belal Abdallah, M.D., MBA CEO & Chairman, Beaumont ACO
Join the Beaumont ACO and become a member of the most successful ACO in the state. For more information, email beaumontACO@beaumont.org or call 947-522-0037.
TRUST | TRANSPARENCY | PHYSICIAN LEADERSHIP