Crain's Detroit Business, March 2, 2020 issue by Crain's Detroit Business

M&A: Rocket Fiber sale marks one of first exits for a Gilbert-backed startup. PAGE 3

PLANNING FOR POT Tatiana Grant on marketing marijuana. PAGE 22

CRAINSDETROIT.COM I MARCH 2, 2020

SPECIAL REPORT

REAL ESTATE

PANDEMIC PREP

Coronavirus has companies bracing for what’s next

VW nears deal to move from Auburn Hills to Southfield Employees would move to Galleria Officentre BY KIRK PINHO

A Kalitta Air plane, chartered by the United States government, carried U.S. and Canadian citizens home from Wuhan, China, last month. The charter operator also has a big opportunity as air freight prices have spiked. | DARRYL DYCK/THE CANADIAN PRESS VIA AP

Readiness front and center for employers

BY SHERRI WELCH

With the spread of coronavirus looming over Southeast Michigan, is your business prepared? Most large employers have a pandemic policy as part of a larger business continuity strategy, but those plans may be largely untested, said Tim Williams, vice chairman of Ann Arbor-based risk management firm Pinkerton. And many small and midsized companies haven’t developed contingency plans, making their operations vulnerable in the event of a widespread outbreak, he said. And that could translate to health concerns for employees, business and market share losses and legal headaches, experts said.

Williams

Sutfin

They’re cautioning businesses that don’t have a plan in place to develop one now. But having a plan is only the first step, Williams said. Companies that practice responses to crisis events “develop a muscle memory,” he said. See PLANS on Page 20

Air freight specialists see business boom as shipping gets constrained BY DUSTIN WALSH

As factories across China continue to come on line in the coming weeks after a month-long shutdown from the COVID-19 coronavirus outbreak, the manufacturing sector is scrambling to get parts across the Pacific Ocean. Commercial flights — which carry 40 percent to 50 percent of all air freight from China — remain grounded and unable to meet the demands of the sector. But Ypsilanti Township’s Kalitta Air is waiting in the wings and may see a boon in the virus’ wake. The coronavirus outbreak slammed China right at the Chinese Lunar New Year, when most automotive and manufacturing

plants shut down between Jan. 24 and Feb. 2. But the government-mandated quarantines have lifted in most of China’s provinces and some production has resumed, albeit not at full capacity. But with typical ocean freight taking six to eight weeks to reach U.S. shores on freighters, many companies are using costly expedited air freight. “There is going to be lots of demand,” said Brandon Fried, executive director of the Washington D.C.-based Air Forwarders Association. “Shippers are not going to have time for the next ocean freighter sailing out. They are going to run out to the airport to look for air cargo space.”

REAL ESTATE INSIDER

NEWSPAPER

PRICE DROP  Ilitches say Eddystone construction costs have fallen to $35 million. PAGE 4

See FREIGHT on Page 20

Volkswagen of America Inc. is nearing a deal that would move it from Auburn Hills to Southfield. Sources familiar with the matter confirmed the contours of the German automaker’s plan, which involve moving its employees in Auburn Hills to the Galleria Officentre property near 12 Mile and Telegraph roads and building an addition west of the complex. Negotiations are not final, and no leases are signed for the property, sources said. Any number of factors could ultimately torpedo the deal, including sign-off from Volkswagen. Farmington Hills-based Friedman Real Estate owns the Galleria; David Friedman, its executive managing director and founder, declined comment. “Volkswagen Group of America is exploring its options on the leased facility in Auburn Hills. No decision has been made,” the automaker said in a statement. A site plan approved by the Southfield City Council in late January shows a 95,500-square-foot addition to the 200 Galleria building constructed across two stories. The plan refers to it as lab and tech space, but Volkswagen is not named as the user. Terry Croad, Southfield’s planning director, said representatives from Friedman Real Estate said at a public meeting there would be up to 1,800 employees across the new addition, which would cost at least $8.5 million, and 300,000 square feet-plus at the Galleria. The 200 Galleria building is 250,000 square feet across four stories, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. It is part of a four–building complex that Friedman Real Estate purchased in 2016. The 100 Galleria building is about 242,000 square feet, CoStar says. Sources said VW would take all of the 200 Galleria building and possibly part of the 100 Galleria building, which Friedman has been emptying for months to free up space for the automaker. Friedman has also been in discussions to purchase the nearby AMC Star Southfield 20 movie theater at 25333 W. 12 Mile Road. See VOLKSWAGEN on Page 18

NEED TO KNOW

FOOD HALL FLOP

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` CANDIDATES SET TO DESCEND ON MICHIGAN THE NEWS: Michigan’s March 10 primary election is a little over a week away. This week will see the final flurry of campaigning among Democratic hopefuls for the presidential nomination, especially after Tuesday, when 14 states will hold primaries or caucuses. The only poll in the past month of the state’s voters, conducted by YouGov, shows Sen. Bernie Sanders the favorite among 25 percent of likely Democratic voters, followed by former Vice President Joe Biden at 16 percent and former New York City Mayor Mike Bloomberg with 13 percent. No publicly available polling has been done on the Republican side, in which President Donald Trump faces only token opposition. WHY IT MATTERS: Michigan is likely to be a key swing state in the November election. Trump won the state in 2016 by just over 10,000 votes in a race marked by a long recount.

` ABSENTEE BALLOTS SPIKE 70 PERCENT THE NEWS: Absentee ballot requests have risen more than 70 percent in Michigan compared with the last presidential primary in 2016, according to a report in MLive based on data from the Secretary of State office. More than 744,000 ballots had been issued as of Feb. 24.

WHY IT MATTERS: A voter ballot issue in 2018 mandated that the state allow any voter to vote absentee without having to give a reason. Previously, there were set reasons that were allowed, such as if the voter would be out of town on election day. The move could increase turnout in the election.

measures would end a requirement that hospitals get clearance to add psychiatric beds but include a new mandate that psychiatric hospitals or units make half of their beds available to low-income patients referred by community mental health centers that serve those without insurance. WHY IT MATTERS: Some parts of the bills partially come in response to an outcry among mental health professionals and advocates about a shortage of psychiatric beds.

Fort Street Galley closes abruptly ` After a little more than a year marked by frequent vendor turnover and a rebranding bid, Fort Street Galley in downtown Detroit closed abruptly on Friday. It was a sudden end for the high-end food hall, which opened to much fanfare in December 2018. “There were various factors that led to this difficult outcome, among them the decision to scale back our operations nationwide and focus energy on our flagship locations in Pittsburgh & Minneapolis,” Chad Ellingboe, the company’s vice president of operations, said in an email to Crain’s. Vendors came and went quickly in the food hall, and among other challenges was a notable lack of parking.

` WHITMER, OTHER LEADERS URGE WSU ON CONDUCT CODE ` SENATE PASSES REWORK OF CERTIFICATE OF NEED THE NEWS: A split Michigan Senate voted Wednesday to let hospitals do multimillion-dollar construction projects or add psychiatric beds without needing state regulatory approval. Five Republican-sponsored bills, which were passed 21-16 on party lines, were sent to the GOP-led House for consideration. The legislation would change the certificate of need program, which is intended to ensure that only needed health services are added in Michigan. Current law requires hospitals, nursing homes, surgical outpatient facilities and others to secure state approval before doing capital expenditure projects exceeding approximately $3.3 million. One bill would eliminate the requirement. Other

Fort Street Galley said it would close last Friday after a little more than a year in business. | KURT

THE NEWS: Gov. Gretchen Whitmer, Attorney General Dana Nessel and state legislative leaders from both parties issued a letter Wednesday to Wayne State University urging it to adopt a code of conduct after months of infighting among school board members. “Wayne State University is one of our state’s greatest educational assets,” they said in the letter. WHY IT MATTERS: Hostility among the university’s board of governors has led to lawsuits between board members, sparked a vote to fire President M. Roy Wilson that Michigan’s deputy attorney general deemed to be illegitimate, and triggered an investigation into board ethics by the Higher Learning Commission, which accredits the university. The commission has required the board to adopt a code of conduct.

NAGL/CRAIN’S DETROIT BUSINESS

CORRECTIONS `In the Feb. 24 story, “Orthopedic surgeon pivots from DMC to VA, research, consulting,” Crain’s incorrectly reported that the Veterans Administration was financially supporting the Surgical Institute of Excellence for Health Services Research, a research entity founded by Khaled Saleh, M.D. The VA is only providing indirect support for

SIEHSR with staffing and meeting space. Saleh is preparing to submit a grant application for research funding. ` A story on Page 11 of the Feb. 24 edition misspelled the name of Jay Schreibman, Michigan-area chairman of Arthur J. Gallagher’s benefits and consulting division.

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Electric vehicle charging bills stalled Mobility, electrification office announced BY JAY GREENE

and begin educating physicians around the country. The U.S. Food and Drug Administration gave its blessing to Nexletol earlier this month, as Crain’s reported at the time, a move that Mayleben called “very rare.” The FDA in 2019 approved just 48 new drugs and 59 the year before, according to federal records.

Gov. Gretchen Whitmer is doing some “jump starting” of her own in the ongoing effort in Michigan to encourage electric vehicle charging stations. Last week, Whitmer announced the creation of an office of mobility and electrification and the appointment of a chief mobility officer. The executive directives require state Senate approval. While the mobility office would have broad responsibilities in promoting electric vehicles, one of its areas of responsibility would be to coordinate public-private efforts to expand and coordinate the network of EV charging stations in all parts of Michigan. Broadly, the Michigan Council on Future Mobility and Electrification would advise state government on policies that could include projects on autonomous and connected vehicle technology, electric powertrain technology, shared vehicles, commercial and public transportation and the state’s charging infrastructure. Howard Learner, executive director of the Environmental Law & Policy Center in Chicago, said creating a mobility council will “build on Michigan’s historic transportation expertise in manufacturing and research, and more recent emphasis on electri- McMorrow fication and planning for the necessary charging network.” But legislation that would encourage EV sales and help expand a small but growing network of charging stations in Michigan and the nation has been languishing in Lansing and Washington, D.C. State Sen. Mallory McMorrow, D-Royal Oak, who is co-sponsoring a bipartisan bill package that could put Michigan at the national forefront in making more charging stations available on state property, at the workplace and in condominiums and apartments, said Whitmer’s executive action could give a boost to the four-bill package. Since the summer of 2019, the charging station network bill package has been awaiting a hearing in the Michigan Legislature. “I was over the moon with (the governor’s) announcement,” McMorrow said. “I have discussed this with her and (EV mobility) is a priority for this administration. It is a strong indicator that we will move forward on (the bills) and we have to. There is too much support out there from environmental and business groups.”

See ESPERION on Page 20

See CHARGING on Page 18

A 2017 Rocket Fiber ad in downtown Detroit. | CRAIN’S DETROIT BUSINESS

‘A sign that the ecosystem has arrived’ Rocket Fiber sale marks one of first exits for Gilbert-backed startup BY NICK MANES

Rocket Fiber LLC, the Detroit-based broadband internet provider born during a resurgent time for the city, will sell its assets to Cleveland company Everstream Solutions LLC. Founded in 2014 with financial backing from Detroit billionaire Dan Gilbert — who has held the company in his Rock family of companies since that time — Rocket Fiber now becomes one of the first homegrown companies to spin out of the Gilbert sphere of influence. The deal — set to close this spring — marks a major technology exit in Detroit’s burgeoning

startup community and brings a new fiber provider in Everstream to Southeast Michigan. It also comes amid a flurry of dealmaking in the internet infrastructure and telecommunications space, as companies like Rocket Fiber sell at double-digit multiples. Terms of the deal were not disclosed. The Rocket Fiber executives said the company is profitable and that annual revenue is “well into” the eight figures. The acquisition of Rocket Fiber gives Everstream access to the Detroit company’s 41 route miles of fiber network in the downtown Detroit area and provides Southeast Michigan clients a direct connection to Ever-

stream’s existing fiber network around the Midwest. Edi Demaj, Rocket Fiber’s co-founder and COO, hopes the sale serves as an example for other Detroit-area entrepreneurs, as well as for the region’s investment community. “The hope is that others look at this (deal) and go, ‘Hey, these guys did it, we can do it also,’” Demaj said. “This is a sign that the ecosystem has arrived. It’s another sign that we’ve matured,” Marc Hudson, another Rocket Fiber co-founder and the company’s CEO, said of the exit. See ROCKET on Page 17

Demaj

Hudson

“THE HOPE IS THAT OTHERS LOOK AT THIS (DEAL) AND GO, ‘HEY, THESE GUYS DID IT, WE CAN DO IT ALSO.’” — Edi Demaj, Rocket Fiber’s co-founder and COO

HEALTH CARE

‘Dogged determination’: Ann Arbor biotech firm Esperion gets two drugs across the finish line BY NICK MANES

After a decade of clinical development, Ann Arbor-based Esperion Therapeutics Inc. has not one but two specialty cholesterol-lowering drugs headed toward pharmacy shelves. Developed as “complementary” to cholesterol-lowering medications like Lipitor, the new drugs Nexletol and Nexlizet are targeted at patients who suffer from side effects from the older drugs, known as statins. The path Esperion’s new drugs took to FDA approval spans more than a decade, multiple corporate iterations, and really two distinctly different eras of the Esperion brand. Esperion President and CEO Tim Mayleben says that market accounts

Mayleben

Newton

for about two-out-of-10 people needing medication to control their cholesterol. Mayleben says that while that may not sound like a large chunk of the population, it accounts for about 18.3 million Americans, according to the company. Analysts have said the drugs could account for around $1 billion in annual revenue.

Mayleben and other observers of the company say that Nexletol’s pricing — of about $10 per day for someone without prescription drug insurance, and far less for those with insurance — makes it a fairly priced medication at a time of increasing costs to consumers for their prescription drugs. A 30-day supply of generic Lipitor costs between $166 and $207 depending on dosage, according to online costs. “Philosophically, we want people to be able to access this medicine,” Mayleben told Crain’s. “If they need it, we want them to be able to access it.” With the drug slated to be available to consumers by the end of March, Mayleben said, the company plans to go on a hiring spree to ramp up sales territory representatives

“EVEN FOR VENTURE CAPITALISTS, THESE ARE ALWAYS MOONSHOTS.” — Erik Gordon, clinical assistant professor, University of Michigan Stephen Ross School of Business

MARCH 2, 2020 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

Ilitches say Eddystone construction costs have fallen to $35 million

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Something unexpected happened in the last nine months on a prominent Detroit historic rehabilitation project: The cost shrunk. Considering litKirk erally every other PINHO construction effort in and around downtown has grappled with increasing construction costs spurred by a shortage of skilled trades, that struck me as odd. The project was estimated to cost $40.9 million to create 96 apartments at 110 Sproat St. north of Little Caesars Arena, the $862.9 million home of the Detroit Red Wings and Detroit Pistons that anchors the Ilitch family’s District Detroit area. As Crain’s and others have reported, that 45-50 blocks north of downtown has largely not materialized in the way that the billionaire family that owns Little Caesars Pizza, the Red Wings and Detroit Tigers has previously put forward to the public. During a media tour last week at the Hotel Eddystone, executives for the family’s real estate company, Olympia Development of Michigan, said the project is now going to cost $35 million, a 14.4 percent decrease from the previous estimate. That came as a surprise to me, particularly considering that every other developer I have spoken with in the last 18 months or more has said construction costs have risen by 20 percent to 30 percent. “As every project does, you have estimates early, and we were able to take a look at it and find different ways to go about it. That’s just what you do in any project. I can’t speak specifically to what number you’re originally referencing to what we are today,” said Keith Bradford, senior vice president of Olympia Development, who was leading the company’s development team when the $40.9 million price tag was reached. “There are a lot of different ways to approach things, whether it’s our size of units, types of units, all those kind of things,” Bradford told me during the tour. “Also, whether you do third-party retail (leasing) or do it yourself (Olympia is using CBRE Inc. on the Eddystone), those are different costs. There’s a lot of things that go into that.” There’s about 3,000 to 3,500 square feet of first-floor retail space that’s expected to be divided between two tenants. Bradford continued: “I’ve got a very efficient team here that knows how to buy our projects well, so there’s a lot of lot of work that goes into that. It’s how you make development work in Detroit. Obviously you’re talking about a very sensitive issue, which is construction costs continue to go up and rent rates do not. And so that’s a problem in Detroit that you’ve heard many other developers talk about, so you gotta, you gotta work on it hard.” Charlotte Fisher, a spokeswoman for the Detroit Economic Growth Corp., said the Ilitches are in compliance with an agreement from last year establishing various milestones for completion of the project, which is expected to be funded in part with taxpayer incentives. It’s expected to be done by fall 2021.

Members of the media got a tour of the under-renovation Hotel Eddystone north of Little Caesars Arena on Monday morning. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

I asked Olympia if it wanted to share more specific information on how the cost decrease was achieved. It said: “Our conceptual budget estimates for this project have consistently ranged from $35 million to $40 million. Cost estimates of construction work and development — particularly on historic buildings of this type where we are seeking to preserve its original character — are updated frequently as the project advances towards completion.” Time will tell if this one will have to be updated again in the next 18 months. Detroit-based Kraemer Design Group is working on the project and Troy-based O’Brien Construction is the general contractor. A 2015 agreement with the Downtown Development Authority says

“I’VE GOT A VERY EFFICIENT TEAM HERE THAT KNOWS HOW TO BUY OUR PROJECTS WELL, SO THERE’S A LOT OF LOT OF WORK THAT GOES INTO THAT.” —Keith Bradford, senior vice president of Olympia Development

Olympia had one year from the issuance of a temporary or permanent certificate of occupancy for the Little Caesars Arena to redevelop the Eddystone building that opened in 1924. It failed to meet that deadline. The temporary certificate was issued Sept. 12, 2017. The Eddystone was spared from demolition in a compromise agreement with the city that allowed Olympia to implode the former Hotel Park Avenue nearby in 2015.

UAW building hits market The 420,000-square-foot UAW-GM Center for Human Resources in Detroit is officially for sale. A joint venture between the United Auto Workers union and General Motors Co. has hired the Southfield office of Los Angeles-based brokerage powerhouse CBRE Inc. to list the property at 200 Walker St. on the Detroit riverfront for an undisclosed price. We’ve known this was coming for quite some time. The sale was part of an agreement between the union and automaker reached last year.

The building could make sense for medical, educational, governmental or corporate purposes, Brendan George, who is on the CBRE team marketing the site, said in a news release. The union has been the only user.

New Eastern Market building opening Another new coworking space in Detroit is opening. This time, it’s Bea’s Detroit in Eastern Market, which has been under construction since last year at 1533 Winder St. In a change of original plans, the 4,000-square-foot former meat-packing facility had to be demolished after determining the walls weren’t structurally sound. The roughly $2 million project was led by Beatrice and Eli Wolnerman. There is shared office space, private offices, conference rooms, flexible warehouse space, event space and retail and a cafe and bakery, Beatrice Wolnerman said in an email. There is also a rooftop patio. There were no public incentives as part of the project, which began in May, she said.

Work on $36.6 million Sugar Hill project begins The Detroit Housing and Revitalization Department said work is starting on a $36.6 million development by a joint venture between nonprofit developer Develop Detroit and Preservation of Affordable Housing Inc. at the northwest corner of John R and Garfield in the Sugar Hill district of Midtown. A formal groundbreaking is expected in the near future. There would be a five-story building with 54 market rate apartments and 14 affordable units in four stories above 11,800 square feet of first-floor retail space, plus a 160-space parking structure. It was unveiled in June 2017 as a $32 million development with 84 apartments and 7,000 square feet of retail with a September 2018 groundbreaking planned. It came about as a result of a request for proposals in September 2016. It received $4 million in state financing at the end of last year. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

CITY GOVERNMENT

‘New road’ or ‘just another committee’? Duggan unveils equity council aimed at fairness amid growth BY ANNALISE FRANK

Detroit Mayor Mike Duggan says a hand-picked group of cabinet members is the driving force behind assuring the city’s growth benefits longtime residents and small businesses. In his State of the City address last Tuesday, the second-term Democrat unveiled the Detroit Equity Council. It came in a speech that looked to pivot from “decline and defeat” to an image of a hopeful, financially recovering city. Throughout Duggan’s talk that touted accomplishments and big investments from the likes of FCA US LLC and Ford Motor Co., equity was an overarching theme. To that end, the council, he said, would analyze “every single decision that’s made in the city” to get Detroiters a fair share. He called it a first for the city. Among the goals of the group are removing bureaucratic obstacles that pose special challenges to entrepreneurs who lack the capital to pay specialists to help them negotiate the red tape. Charity Dean, director of civil rights, inclusion and opportunity, chairs the nine-member group that meets at 7:30 a.m. Wednesdays ahead of the mayor’s weekly leadership meeting. The council’s meetings started early this year, though its origins came months before, through recommendations out of a Detroit Sustainability Action Agenda published in June — and conversations between Dean and the mayor. The goal? Inter-departmental coordination that leads to policy improvement and systemic change, according to Dean. “The thing is, about institutional and structural racism ... if you’re vulnerable, bureaucracy stops and hinders you,” she said. “If you have access to time and resources, bu-

policies for Detroit-headquartered businesses, versus “Detroit-based” businesses, which are defined as those with plants or offices in the city but that might have headquarters elsewhere. City Council President Pro Tempore Mary Sheffield called the council a “great idea” and a “step in the right direction.”

New road or same old?

Detroit Mayor Mike Duggan gave his seventh annual State of the State speech Tuesday at the Flex-N-Gate plant, where nearly 60 percent of its workers are Detroit residents. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

reaucracy does not stop you. ... We’re slowly chipping away at things that, frankly, Detroiters and black contractors have complained about for years.” The equity council reports to Duggan. It doesn’t have designated funding, required reporting to City Council or specific powers given through the Detroit charter. But the council’s leaders have the power to carry out action through their departments, Dean said. “Every single department, they know this is a priority for the may-

or,” Dean said. “I’ve been working for the city since 2014. I’ve never seen so many people as excited as they have been about this equity council. There’s a certain fresh energy that’s happening within city government. “... Measure our success in a year and see what we’ve done,” she said. The group is narrowing in on jobs, access to land, housing, contract procurement and entrepreneurship, with the lens that Detroit is more than 80 percent black and has “historically, had issues ad-

vancing in these areas,” Dean said. She said it’s early for major action, but that the council’s recommendations have axed a repetitive requirement for city contract procurement and are looking into making changes to city hiring processes. And the mayor has been meeting with a group of black business owners as another avenue for finding solutions, she said. City Council member Janeé Ayers said she has been working with the equity council on an ordinance that addresses contract procurement

Peter Hammer, director of the Damon J. Keith Center for Civil Rights at Wayne State University, has a question: Is the Detroit Equity Council “going down a new road” or “just another committee”? “Is this just another committee? You often make committees when you don’t want to solve problems,” said Hammer, also a law professor. “There’s no doubt it’s important to raise the issue of equity ... but the question is does the rubber ever hit the road, and what are they actually gonna do?” He said he will be encouraged if the group’s analysis comes from a historical perspective that takes into account structural racism and uses new approaches to hack away at long-standing problems. “It’s one thing to say, ‘Hey, the city’s going to consider everything as they move forward,’ and then there’s how the public will perceive it,” said Jason Cole, executive director of the Detroit-based Michigan Minority Contractors Association. “I get it, you’ve got to sharpen your pencils and work all the legalese out, but if you roll that out and the community has not had a first sniff, so to speak,” it may not work out well, he said. “The saying is, ‘if you don’t have a seat at the table, you’re on the menu.’” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

LAW

Former Michigan House speaker Leonard to join Plunkett Cooney BY CHAD LIVENGOOD

Plunkett Cooney has hired former Michigan House Speaker Tom Leonard as a partner to lead a new practice group for the Bloomfield Hillsbased law firm focused on government relations and lobbying for clients in Lansing. Leonard, who served one term as speaker in 2017 and 2018, joins the 107-year-old law firm after his nomination by President Donald Trump to be the U.S. attorney in West Michigan was blocked by Democrats in the U.S. Senate. The former three-term Republican representative from DeWitt will oversee a new six-attorney practice group centered on government relations, regulatory affairs and public policy. “We had an opportunity to have Tom Leonard come on board, and we took full advantage of that,” Thomas Vincent, president and CEO of Plunkett Cooney, told Crain’s. “He’s very knowledgeable about the state’s business community and knows how 6 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

to get things done in Lansing.” As part of Leonard’s arrival, Plunkett Cooney is moving its East Lansing office to the Comerica Bank Building in downtown LanLeonard sing to be closer to the action in the Capitol, Vincent said. Plunkett Cooney’s effort to beef up its presence in Lansing is partly a response to moves its competitors in the legal business have made to offer onthe-ground services that involve interacting with the legislative and executive branches of state government. Other big law firms in Michigan like Dickinson Wright PLLC, Dykema Gossett PLLC, Fraser Trebilcock Davis & Dunlap PC, Honigman LLP and Miller, Canfield, Paddock and Stone PLC all have offices within blocks of the Capitol that are staffed with attorneys who lobby for clients before the

Legislature and state regulatory agencies. Clark Hill PLC also has a government affairs practice with a Lansing office about a mile north of the Capitol. “For any government affairs practice to be effective, they need to be right there by the Capitol,” said Leonard, who will register as a lobbyist for Plunkett Cooney. “It’s the best way to build relationships. You need somebody there on the ground who can respond very quickly.” In the past, Plunkett Cooney has farmed out some direct lobbying work, said Douglas Bernstein, a partner who leads the firm’s business law department, which Leonard’s practice group will fall under. “When you get an opportunity to hire somebody with this type of talent and background, you don’t pass it up,” Bernstein said of Leonard. “From time to time we had clients that would require us to reach out to our contacts. But with this opportunity, we can do it all in-house and with a better contact.”

Leonard lost the 2018 race for attorney general to Democrat Dana Nessel. Since then, he has been running a small consulting business in Lansing called MiStrategies LLC. His clients have included Quicken Loans Inc. Chairman Dan Gilbert, helping Gilbert’s company navigate the Legislature last year to get auto insurance reform passed. Leonard said getting public-policy changes for business clients depends on having “relationships.” “I believe that’s what is going to set me apart and set Plunkett Cooney apart from others,” Leonard told Crain’s. “I’ve been there. I’ve been in the caucus room. I’m one of the few who knows how to mesh these issues together.” Leonard’s MiStrategies consulting firm will be dissolved. He said he will be bringing a couple of clients to Plunkett Cooney. He declined to disclose which ones. In August 2019, Trump nominated Leonard for the U.S. attorney post in

Grand Rapids. But the nomination fizzled by the end of the year after Michigan Sens. Debbie Stabenow and Gary Peters wouldn’t support the nomination. Stabenow cited “deep policy differences” in her opposition to Leonard being the U.S. Department of Justice’s top attorney in west Michigan, The Detroit News reported. “Unfortunately, I wasn’t able to get a meeting with either one,” Leonard said of Stabenow and Peters. “It would have been an honor to serve the people of the Western District of Michigan, but this is an incredible opportunity that’s opening up.” Leonard’s move to Plunkett Cooney comes six months after his wife, Jenell, purchased the Lansing-based corporate and political communications firm Marketing Resource Group from longtime owner Tom Shields. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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COMMENTARY

$240M pension payment threatens Detroit’s future BY SCOTT BENSON

Dan Gilbert speaks at Crain’s Newsmakers of the Year event Friday at the MGM Grand Detroit. | ANDREW JOWETT FOR CRAIN’S DETROIT BUSINESS

Here’s one way Dan Gilbert could make a difference on Detroit stroke care On Feb. 21, Dan Gilbert mesmerized an audience of 700-plus people at the Crain’s Newsmaker of the Year luncheon. When the house lights went up after a short Gilbert-related video, there he stood, behind the podium, ready to talk to a truly adoring crowd. If psychic energy is a salve, Gilbert got slathered. Deservedly so. Detroit was hoping that he would return to active civic duty, and Dan made it clear that he was on his way. In his interview with Crain’s prior to the lunch, he also spoke at length about his recovery from a stroke nine months ago. He expressed admiration for health care workers and spoke highly of the team aiding his own recovery. And he hinted that he may be doing something in the future to advance care for stroke and brain injury survivors. I have a modest PEOPLE ALL OVER suggestion: Buy the InstiTHE COUNTRY — Rehabilitation tute of Michigan. RIM is part of the THE WORLD Detroit Medical Cen— ARE ter, which is owned by RESPONDING TO Tenet Healthcare, a publicly traded, GILBERT’S SAGA for-profit, 65-hospital company based in OF RECOVERY. Dallas. Tenet’s stock price has dropped in recent months, even after it replaced its CEO in 2017 when shareholders were restless. Job cuts across the system and off-shoring of even some administrative work has followed. But the stock price is still down. So Tenet might consider an offer. Why invent something new when you can build on a foundation that’s already here? Tenet is restricted from closing or selling

Mary

KRAMER

Group Publisher parts of the DMC until 2021 as part of the original agreement hammered out when the DMC was acquired by its original for-profit owner, Vanguard. Ironically, the CEO of the DMC at the time was Mike Duggan. My own family member was a patient at RIM — before they did an addition with physical therapy space and an overall facelift. The facilities at the time weren’t that pretty. But the staff was incredible. And I saw my brother gain back some of what he had lost. In 2019, it was the worst-kept secret in town that Gilbert recovered initially at the Shirley Ryan AbilityLab in Chicago. The lab is the former Rehabilitation Institute of Chicago, renamed for a donor. It has a world-class reputation. It’s the Cleveland Clinic or Mayo Clinic of the rehabilitative medicine world. Makes sense to seek the best. But if Dan wants to make a difference in this region, he might look to Midtown. People all over the country — the world — are responding to Gilbert’s saga of recovery. Members of his team say that people who are experts in brain injury recovery as well as patients have reached out in recent days after Dan opened up to Crain’s about his path to recovery. You just know, the way the guy’s mind works, that he plans to do something. Maybe he could start with RIM.

Pension payments aren’t usually top of mind for most people. But I can’t stop thinking about the city of Detroit’s inability to pay a looming $240 million pension payment. This $240 million would be 24 percent of our general fund when it’s due as early Councilman as July 1, 2023. Scott Benson If we don’t have the represents the funding we need, it means 3rd District on the city easily could slide the Detroit City back into bankruptcy and Council. we would break promises we made to retirees who depend on and deserve their pension checks. As a General Retirement System Detroit trustee, I am not an alarmist, but a realist. However, I’m compelled to inform Detroiters about the gravity of our situation. I also believe it’s critical for the public to understand our pension plan and how it relates to our budget. When we emerged from bankruptcy, the Plan of Adjustment, the playbook for the city’s fiscal operations, incorrectly projected a $111 million annual pension payment that would start in fiscal year 2024 and decline every subsequent year. But in reality, the amount of our annual pension payment fluctuates depending on how the stock market and our investments perform, the pension payback period (payment amortization period) and how much we owe in pensions (unfunded actuarial liability). As a result, the pension payment has increased and now ranges from $140 million to $240 million. So, instead of a declining annual pension payment totaling about 11 percent of our budget or less, it will range from 14 percent to 24 percent of the budget. Now imagine how hard it would be if your rent or mortgage payment had these type of fluctuations and you were required to continue providing the basic services of a home like: security (police and fire), transportation (DDOT & roads), medical (health department) and utilities (streetlights). This is the same situation Detroit will be in when the first pension payment is due. A pension payment that equals 24 percent of our $1 billion general fund would mean employee layoffs, drastic cuts and/or the outright elimination of many key services including police, fire, street repairs, bus service, etc. To proactively prepare and offset the strain

Detroit’s skyline as seen from the Detroit River. | BLOOMBERG

Mary Kramer is group publisher of Crain’s Detroit Business.

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 | MARCH 2, 2020

of the forthcoming pension payments, the city established the equivalent of a savings account, the Retiree Protection Fund, in 2017. This fund is projected to grow to $370 million by fiscal year 2024 and will be used to soften the blow of the looming $240 million pension payments. The RPF funds will be paired with the city’s pension contributions from the general fund in chunks annually over 14 years, until the city can, in theory, make the pension payments with a much smaller amount of trauma to our general fund. So $70 million from the RPF plus $170 million from the general fund would equal a $240 million pension payment in a worst case scenario year. Still, these dollars will eventually be exhausted, which will leave the city without a cushion. The closer we get to making our obligatory pension payments, the more critical it becomes that we continue to pass conservative budgets that reflect the fiscal realities of our AS WE CONTINUE tenuous situation. Because if we don’t, we TO RECOVER run a high risk of not FROM THE being able to make our pension payments, FISCALLY being forced back into TRAUMATIZING bankruptcy and eliminating critical services. AND As we continue to STIGMATIZING recover from the fiscally traumatizing and BANKRUPTCY, stigmatizing bank- WE MUST LIVE ruptcy, we must live beneath our means BENEATH OUR and always put some MEANS... money away for a rainy day. That means we must be willing to make difficult decisions to decline some programs and services we, or special interest groups, would love to have, but Detroit can’t afford to offer — right now. In addition to passing fiscally conservative budgets, Detroit must continue growing our general fund and prioritizing our most vulnerable residents, retirees and city services. Because without providing high-level city services, to which Detroiters have become accustomed, we won’t be able to attract and retain residents. And if we can’t grow our population and attract businesses, we will be unable to grow our general fund. And if we can’t grow our general fund, we will be unable to make our pension payments and pay our bills, which will trigger us sliding back into bankruptcy. None of us wants to see the impact of that.

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.

LETTERS TO THE EDITOR

Telehealth is great but has its limits TO THE EDITOR: My pediatric practice offers telehealth appointments for families in my practice and finds it invaluable. The convenience of not leaving home or having an appointment while away at college or on vacation can’t be beat. Allowing parents/patients to better communicate with us in a variety of ways makes their lives easier. Telehealth has its limits though. Using virtual visits to assess and treat illnesses that either could have serious complications or need a test to diagnose them is risky. Sore throats and flu-like illnesses are two examples the telehealth industry gives of “great” uses of virtual visits. Let’s walk through these common symptoms to demonstrate the pitfalls.

Sore throats cannot be diagnosed as viral, strep — or in older people — a symptom of an STD without an exam and a diagnostic test. Even after 30 years of experience I am frequently fooled by the visible appearance of a throat and find strep tests surprisingly negative (or positive). The temptation in a telehealth setting is to treat most sore throats with antibiotics. This can lead to allergic reactions, side effects like diarrhea, and frustration when the illness isn’t improving as expected. Drug resistance is another, bigger issue. Drug resistance is a growing problem for individuals and society. Using antibiotics wisely is essential to ensure we have medications available when we really need them. Flu-like illnesses are another slip-

pery slope. During influenza season, it’s tempting to assume that everyone who comes in with fever, cough and runny nose is afflicted. The reality is that most are not. Most folks have other viruses causing their symp-

WHAT IS NEEDED IS AN INDUSTRYWIDE TELEHEALTH STANDARD OF CARE OUTLINING APPROPRIATE CONDITIONS FOR VIRTUAL VISITS. toms. Without performing a specific diagnostic test, it is impossible to know. In addition, telemedicine vis-

its don’t provide the opportunity to perform an exam to diagnose more serious complications like pneumonia in the folks who do indeed have influenza. I suspect many more people are prescribed medication for “flu-like” symptoms through telemedicine visits than those seen in their primary care offices or even urgent care facilities. Telehealth providers are unlikely to end the visit with reassurance and no prescription. Without the benefit of an exam or test to give weight to their medical decision-making, it is difficult to give a confident “No medication is needed” when a desire for medication was the reason for the virtual visit. Overuse of medication is bound to happen, which encourages people to expect a prescription

whether it is needed or not. That is in no one’s best interest. What is needed is an industrywide telehealth standard of care outlining appropriate conditions for virtual visits. Understanding the need to decrease the costs associated with overuse of ER and urgent care facilities, telehealth can be a great alternative for specific issues. The problem becomes when telehealth results in incomplete medical decision making and overuse of prescription medications. Directing patients back to their medical home or, when needed, to an urgent care may actually be the best care, even when it costs more. Molly O’Shea, M.D., pediatrician, Birmingham Pediatrics + Wellness Center.

Bloomberg can restore dignity of presidency TO THE EDITOR: In this exceptional political climate, we all sense a threat to the institutions of democracy in the United States that we had never thought possible in our lives. As one who has rarely been active in a campaign, it seems inevitable to become proactive in changing the dangerous trajectory that impacts the country, our children and grandchildren. We need to restore the dignity and trust in the office of the president, reassure our allies and address the enormous

WE NEED TO RESTORE THE DIGNITY AND TRUST IN THE OFFICE OF THE PRESIDENT... existential threats that endanger the future of our planet. Mike Bloomberg is uniquely qualified to address the challenges of economic growth and fairness, health care, gun safety, education, and perhaps mostly urgently, the climate. Mayor Bloomberg will restore gravitas and credibility to the office of the president. His history of serious attention and investment in the issues most urgent both domestically and globally will reassure and restore credibility and trust which is the basis of leadership. Bloomberg’s philanthropic record demonstrates credible understanding and commitment to those critical challenges in which he is deeply invested. That same integrity and consistent leadership will restore the stability and unity of our deeply divided county. Respectfully, Gary L. Wasserman CEO Allied Metals Corp, Auburn Hills Founder Wasserman Projects Detroit

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MARCH 2, 2020 | CRAIN’S DETROIT BUSINESS | 9

FINANCE

EDUCATION

Moody’s outlook brightens on Detroit debt Unchanged rating, but ‘positive direction’ BY ANNALISE FRANK

` Outstanding restaurateur: Sameer Eid and Samy Eid, Birmingham and Detroit (Phoenicia, Forest, Leila) ` Rising star chef of the year: Lena Sareini, Selden Standard, Detroit Best chef Great Lakes region: ` Abra Berens, Granor Farm, Three Oaks ` Ji Hye Kim, Miss Kim, Ann Arbor ` Andy Hollyday, Selden Standard, Detroit ` James Rigato, Mabel Gray, Hazel Park ` Mike Ransom, Ima, Detroit ` Sarah Welch, Marrow, Detroit

Moody’s Investor Service bumped up its outlook on Detroit’s debt from stable to positive, though its overall bond rating stayed put. The credit rating agency is maintaining the Ba3 rating on Detroit’s general obligation debt that it set in May 2018, it said in a news release Tuesday. At that time Moody’s raised the city’s grade up from B1. The Ba3 level is three steps below investment grade. But Detroit has been on a streak of credit rating upgrades the last couple of years. And the outlook revision from stable to positive — while not directly impacting the rating — does mean there’s a better chance of getting an official upgrade in a year or two. Moody’s said the outlook improvement comes in response to the “improving, though still tenuous, capacity of the city’s budget to finance service improvements, capital investments and accommodate a large spike in pension contributions.” Moody’s assesses the financial health of bond issuers, the city of Detroit in this instance. Its credit rating system can be used by potential investors to gauge risk. In an updated credit analysis released Wednesday, Moody’s outlined city strengths and challenges familiar to those who follow its finances: The city has better capacity to provide services and prepare for future costs, stronger financial planning and more income tax revenue — but its economy is still closely tied to auto manufacturing, and its school district’s challenges in education and dilapidated facilities could “weigh on taxpayers and hinder sustained economic revitalization.” “It’s gratifying to see Moody’s recognize the fiscal responsibility of City Council and the administration,” Detroit Chief Financial Officer David Massaron said in a city news release Wednesday in response to the outlook change. “While we’re making extensive progress, we have to continue to plan for financial contractions and set aside funds for our pension obligations while making investments that improve quality of life in the city.” Moody’s also applauded Detroit’s “conservative” fiscal 2020 budget last spring, highlighting the city’s efforts to save up surplus revenue to fund post-bankruptcy pension obligations coming due in four years. This year’s budgeting process is coming up, with Mayor Mike Duggan’s budget presentation slated for March 6. Detroit’s fiscal health has dramatically improved since its exit from bankruptcy five years ago, but its high pension and debt burden, coupled with low assessed property value and low median income, still constrict it. Moody’s also said in December that Detroit was among cities weakest in preparedness to withstand a potential recession.

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

The renovation of University of Detroit Mercy’s Student Union will be the first part of a four-year campus overhaul plan. | UNIVERSITY OF DETROIT MERCY

Detroit Mercy to overhaul, consolidate campus $60 million project to include new construction, demolitions, renovations BY KURT NAGL

Sweeping changes are in store for the University of Detroit Mercy’s McNichols campus, including the demolition of more than 100,000 square feet of building space and renovations to nearly every one of its other structures. The 143-year-old school will start the four-year renovation project in July, university President Antoine Garibaldi said. It is expected to cost $56 million to $60 million. The university, which recently closed a record $115 million fundraising campaign, aims to fund the project through separately raised

donations totaling $30 million and the rest through bonds and loans. Garibaldi said the project has been in the works for the past two to three years and is centered on consolidating the campus. “We really want to do this in such a way that we’re bringing everybody a little closer together,” he said. “We’re really consolidating space, and there will be many more central areas.” The first phase of the project will involve an overhaul and expansion of the 55,000-square-foot Student Union. Around $8 million will be invested to renovate it and add 15,000 square feet. It will serve as the hub

for student life, admissions and financial aid. It is expected to be done within two years. Following the Student Union, the university will construct new graduate student apartments with the expectation of housing around 300 students. The Fisher Administration Center, which houses the president’s office and other administrative operations, will eventually be torn down, Garibaldi said. The aging 50,000-square-foot building’s maintenance issues cost more than the price of demolition. Additionally, Reno Hall will be bulldozed. It was built in 1954 as a

residence hall and contains the university’s counseling and psychology clinics and international study offices, all of which will be relocated. New graduate student apartments will be built in its place. Garibaldi said the project is a statement that the university is committed to the northwest Detroit neighborhood and its revitalization. “Another strong sign that this campus is not going away from this neighborhood,” he said. “We’re going to be here for another 143 years is what we hope.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

FOOD AND DRINK

Chefs, restaurants named Beard Award semifinalists James Beard Foundation names a dozen from Michigan for honors BY KURT NAGL

A generous helping of metro Detroit restaurants and chefs have made the list of semifinalists for James Beard awards this year. A dozen local chefs and restaurants are up for a prestigious award from the venerable James Beard Foundation, entering its 30th year of the awards program, according to a Wednesday announcement. Saffron De Twah in Detroit is in contention for best new restaurant, while Sugar House got the nod for outstanding bar program. Sister Pie’s Lisa Ludwinski is a semifinalist for the outstanding baker category, and Lena Sareini 10 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

Sareini

Ludwinski

of Selden Standard is competing in the rising star chef of the year category. Six chefs in Michigan were identified as semifinalists for Best Chef Great Lakes. Several of restaurants and chefs have been nominated in previous

years, including Ludwinski, Sareini, James Rigato of Mabel Gray and Zingerman’s Roadhouse. More than 600 judges from across the country will vote on the semifinalists. Finalists are to be named March 25 and winners announced at an awards gala in Chicago on May 4. The full list of Michigan semifinalists: ` Best new restaurant: Saffron De Twah, Detroit ` Outstanding baker: Lisa Ludwinski, Sister Pie, Detroit ` Outstanding bar program: Sugar House, Detroit ` Outstanding hospitality: Zingerman’s Roadhouse, Ann Arbor

COMMERCE

Congressmen call on feds to examine inconsistencies that hamper Michigan ports Peters, Walberg ask GAO to study issues in screening standards BY TOM HENDERSON

Frustrated with progress in their attempts to get the Detroit field office of U.S. Customs and Border Protection to treat Michigan ports the same way other Great Lakes and ocean ports are treated, U.S. Sen. Gary Peters and Rep. Tim Walberg have called on the federal Government Accounting Office to study inconsistencies in cargo screening standards. “CBP’s inconsistent approach gives a strategic advantage to some ports while placing burdensome infrastructure requirements on other ports, such as demands from CBP to purchase expensive scanning equipment that is provided by the federal government at other points of entry,” they wrote in a letter dated Feb. 24 to Gene Dodaro, comptroller general of the U.S. in the GAO. “Other coastal and Great Lakes ports have not been subjected to the same strict screening requirements,” said a news release accompanying the letter. “The change in requirements has severely impacted the Port of Monroe’s operations and undermines Michigan’s economic competitiveness.” On Dec. 8, a Crain’s report detailed how stricter policies for Michigan ports have affected job creation and income for ports, focusing on the Port of Monroe. The Detroit office of CBP, which sets rules for Michigan ports, requires shipping containers to be scanned and X-rayed. However, none of Michigan’s 40 ports has the technology to meet those requirements, effectively shutting the state out of the growing volume of shipping container traffic on the Great Lakes. Many cargo ships unload at the Port of Toledo, instead, just 17 miles from the Port of Monroe. The Chicago office of CBP oversees ports in Ohio and has far more lenient rules than the Detroit office. According to a University of Michigan study of port activity highlighted in the Crain’s report, the rules established by the Detroit office of CBP have created millions of dollars in docking and unloading fees in Toledo and Cleveland and has cost Michigan hundreds of jobs. The Detroit office also has stricter screening requirements for what is called breakbulk cargo, which is cargo wrapped or boxed but not in steel containers. Toledo doesn’t have scanning or X-ray equipment, either. The Port of Cleveland has two radiation scanners but no X-ray equipment. Last August, a ship arrived in Saginaw with cargo to be offloaded for a power plant under construction in Lansing. The Detroit office of CBP wouldn’t let it be unloaded, so the ship sailed back to Toledo, where the cargo was unloaded without being X-rayed or scanned, put on trucks and driven to Lansing. Last November, Paul LaMarre, the director of the Port of Monroe, joined Peters at a meeting with CBP officials in Washington, D.C., and Walberg, a Republican, talked about the issue in person with President Donald Trump in January. On Feb. 13, Walberg set up a meeting in the White House with LaMarre

and Peter Navarro, Trump’s director of trade and manufacturing policy to discuss the inequities. “In today’s age of seemingly divisive politics, it is rewarding and reassuring that Sen. Gary Peters and Congressman Tim Walberg are putting Michigan’s continued prosperity as a marine transportation hub above party differences. The fact that both legislators have engaged the United States Government Accountability Office to investigate USCBP’s inequi-

table treatment of Michigan seaports is proof positive that USCBP’s disingenuous dialogue with elected leadership will not be tolerated,” LaMarre said in response to the letter to the GAO. “To this day, USCBP refuses to answer one simple question: Why are Michigan ports being treated differently than anywhere else in the United States? They have evaded this question for months. It is time for the GAO to find out why.”

According to a report from the University of Michigan, the Port of Monroe could generate more than $50 million in docking and unloading fees within the first three years of being allowed to handle containerized cargo shipping. | PORT OF MONROE

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REDEVELOPMENT

Plant startup Bloomscape expected to occupy former supermarket Developer in Detroit’s Core City neighborhood had plans for apartments, retail space BY ANNALISE FRANK

A developer in Detroit’s Core City was transforming its 1950s supermarket building into a combination of apartments, retail and commercial — until, he says, an up-and-coming startup came calling. Bloomscape, an online plant-selling startup based in a co-working space downtown, is expected move to the near-west-side neighborhood in the coming months, according to Philip Kafka. Its employees would take up the entire approximately 13,000-square-foot building owned by his company, Prince Concepts. Bloomscape, which sells plants on its website and has them delivered from greenhouses to customers’ doors, declined to comment. The building at 5000 Grand River Ave. borders a small village of developments Kafka is overseeing, clustered around Grand River and Warren avenues. The most publicized of his structures may be the unconventional Quonset hut apartments; cafe Ochre Bakery; or stoveless, tipless restaurant Magnet. Bloomscape would be the biggest tenant so far. The startup, whose founder Justin Mast comes from a long line of horticulturalists, nabbed $7.5 million in a Series A funding round last year. Funders included AOL co-founder Steve Case’s Revolution Ventures and founder of e-commerce companies Warby Parker and Allbirds. “Every business we’ve put into Core City so far is a distribution of wealth that’s already in the region,” Kafka said. “These are dollars that are already in the region. Bloomscape is selling a product around the country. So they’re bringing New York and San Francisco and Chicago dollars to

A building at 5000 Grand River Ave. in Detroit’s Core City neighborhood is being built out for online plant-selling startup Bloomscape. Owner Prince Concepts is planting gingko trees in enclosed courtyards on the premises. | CHRIS MIELE

this neighborhood.” As of August, Prince Concepts was building out the former supermarket — dubbed “5K” — for eight apartments, three commercial spaces and a small retail section. “All I had to undo was the plumbing,” Kafka said. “We hadn’t built the apartment (walls yet).” He is footing the bill to adjust for a single office tenant. He is paying approximately $170 per square foot to

ready the building for Bloomscape by April. The company could move in May after its own short build-out process, he said. He did not disclose the cost of the lease. 5K has sections of its ceiling carved out to create three enclosed courtyards, where 23 gingko trees are being planted make the building feel like a terrarium itself, he said. According to Kafka, Bloomscape would move in around 50 employees.

Bloomscape did not disclose its employee count to Crain’s. Tenant acquisition comes as Kafka continues to widen his plans. Last year Crain’s reported he is branching out with two fitness studios and more vacant property on the city’s east side. Now he has a deal with the Detroit Land Bank Authority that gives him the option — pending development milestones — to buy approximately 100 lots

around his Core City cluster over five years, according to Kafka and land bank spokeswoman Alyssa Strickland. Kafka said he plans to cover 12 percent to 20 percent of that land with real estate projects and the rest with public space. The news was first reported by Curbed Detroit. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

HEALTH CARE

Beaumont, service workers’ union reach contract agreement Three-year pact covers nearly 1,000 employees, includes signing bonus, raises BY JAY GREENE

SEIU Healthcare Michigan, one of the largest health care unions in Michigan, reached an agreement last week with Southfield-based Beaumont Health over a three-year contract that covers nearly 1,000 Beaumont support employees. The agreement, reached after difficult discussions over 18 months, includes a 2 percent immediate signing bonus and a 5 percent raise over three years, including 1.5 percent in each of the first two years and a 2 percent raise in year three, SEIU officials said. Workers covered include service, maintenance, housekeeping workers, dietary aides, certified nursing assistants and patient sitters. Patient sitters, who were not included in the original contract, were added as a classification under collective bargaining in the new contract. They will receive a pay raise from $9.25 per hour to $12 per hour. Patient sitters will also receive some additional benefits including four additional days of paid time off and overtime with guaranteed hours for 12 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

Eight-hospital Beaumont Health is based in Southfield.

their status. “This victory could not have been achieved without dedication and strength of our union workers,” Ken Haney, SEIU Michigan’s vice president, said in a statement. “Our workers refused to give in, despite negotiations dragging on for many months.” Beaumont said it is glad to have the new contract approved. “We are pleased Beaumont ser-

vice and technical employees at our Taylor, Trenton and Wayne hospitals overwhelmingly voted to ratify a new labor contract,” Beaumont Health Chief Human Resources Officer Aaron Gillingham said in a statement. “We spent the last 20 months negotiating with SEIU Healthcare Michigan. “As always, our objective is to provide all Beaumont employees with

market-competitive wages and benefits regardless of whether or not they are represented. The wages in this new agreement are fair and consistent with pay rates elsewhere in the market. We strongly believe Beaumont Health is the best health system in our region to work and receive care.” Over the past six months, SEIU union employees at Beaumont staged several protests and rallies to promote their cause. One included a demonstration at Beaumont CEO John Fox’s house in Bloomfield Hills. Beaumont union workers were upset that Fox’s compensation increased by at least 80 percent to more than $5.6 million in 2017. “There were a few times when people wanted to give in, but they knew they needed to do right for their patients,” Haney said. “This is a fight not just for workers, but for our patients. Our workers didn’t want to put patient safety at risk, as short staffing is still a concern at Beaumont.” SEIU said one reason the contract took 18 months to achieve is that Beaumont didn’t initially want to increase union workers wages at the 2

percent level, an increase Beaumont recently granted nonunion workers, according to the union. Gillingham took issue with how SEIU characterized the union discussions. “Unfortunately, during negotiations, the SEIU made a number of false comments and allegations about our hospitals and the patient care we provide,” Gillingham said. “We’re disappointed the union used those kind of smear tactics during bargaining, and that it apparently is continuing to do so even after its members have ratified the contract. We hope the union will stop its antics and work with us to have a more collaborative process and professional relationship in the future.” Last spring, the Michigan Nurses Association started a union drive at Beaumont Hospital in Royal Oak that has turned contentious with pro- and anti-union nurses facing off. Beaumont has been cited with an unfair labor practice charge, which is under appeal. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene

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Worldwide Jan. 2020

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David Foltyn Chairman and CEO

240

169

288

326

City Club Apartments LLC, Center Rock Capital Partners, General Motors LLC, Huron Capital Partners LLC, Kellogg Co., O2 Investment Partners, Quicken Loans Inc., Rockbridge Growth Equity LLC, Taubman Centers Inc., Trinity Health

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177

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Miller, Canfield, Paddock and Stone PLC Michael McGee CEO

141

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137

159

391

USAA, Ford Motor Company, JPMorgan Chase & Co, General Motors Company, Toyota Motor Sales; U.S.A. Inc., CIBC Bank USA, ITC Holdings Corp., Fiat Chrysler Automobiles, Beaumont Health, Abbott

Butzel Long PC

Justin Klimko president and CEO

133

141

Bodman PLC

Carrie Leahy chair

125

137

Comerica Bank, Archdiocese of Detroit, Blue Cross Blue Shield of Michigan, Lear Corp., Ford family, Detroit Lions, Huntington National Bank, Cerberus Capital Management, Flagstar Bank, Freudenberg North America

Clark Hill PLC

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112

140

616

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Jaffe Raitt Heuer & Weiss PC

Jeffrey Weiss CEO

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109

AIG, Ascension, Beaumont Health, Coverys, Farm Bureau, HCR Manorcare, Henry Ford Health System, Meemic Insurance, and Tenet Health Systems

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113

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Zausmer PC

Mark Zausmer managing shareholder

C. David Miller 1155 Brewery Park Blvd., Suite 200, Detroit 48207 chairman of executive committee 313-446-1530 ; www.garanlucow.com

Giarmarco, Mullins & Horton PC

Executive committee

Brooks Kushman PC

1000 Town Center, 22nd Floor, Southfield 48075 248-358-4400 ; www.BrooksKushman.com

Sangeeta Shah CEO Frank Angileri president

Ford Motor Company, Lear Corporation, Harman International, HoMedics, Domino's, Meritor, Robert Bosch GMBH, Panduit, Whirlpool, Walmart

Kerr, Russell and Weber

Executive committee

Volkswagen Group, Reliable Carriers Inc., AVL Test Systems, Woodworth Inc., Michigan State Medical Society, Michigan Osteopathic Association, Michigan Dental Association, City of Royal Oak, Zhongli Automobile Parts

Collins Einhorn Farrell PC

Theresa Asoklis CEO and co-managing shareholder Daniel Collins president and comanaging shareholder

N/A

Harness, Dickey & Pierce PLC

Executive committee

Secrest, Wardle, Lynch, Hampton, Truex And Morley PC

Bruce Truex president, senior partner and co-managing partner Nathan Edmonds senior partner and comanaging partner

9 10 11 12 13 14 15 16 17 18 19 19

2290 First National Building, 660 Woodward Ave., Detroit 48226-3506 313-465-7000 ; www.honigman.com

500 Woodward Ave., Suite 4000, Detroit 48226 313-223-3500 ; www.dickinsonwright.com

150 W. Jefferson Ave., Suite 100, Detroit 48226 313-225-7000 ; www.butzel.com Sixth Floor at Ford Field, 1901 St. Antoine St., Detroit 48226 313-259-7777 ; www.bodmanlaw.com

500 Woodward Ave., Suite 3500, Detroit 48226 313-965-8300 ; www.clarkhill.com

1 Woodward Ave., Suite 2400, Detroit 48226-5485 313-965-7900 ; www.kitch.com 38505 Woodward Ave., Suite 100, Bloomfield Hills 48304 248-901-4000 ; www.plunkettcooney.com 25900 Greenfield Road, Suite 650, Oak Park 48237 248-968-5200 ; www.vanhewpc.com

450 W. Fourth St., Royal Oak 48067 248-645-1483 ; www.howardandhoward.com

32255 Northwestern Highway, Suite #225, Farmington Hills 48334 248-851-4111 ; www.zausmer.com

Garan Lucow Miller PC

101 W. Big Beaver Road, 10th Floor Columbia Center, Troy 48084-5280 248-457-7000 ; www.gmhlaw.com

500 Woodward Ave., Suite 2500, Detroit 48226 313-961-0200 ; www.kerr-russell.com

4000 Town Center, Ninth Floor, Southfield 48075 248-355-4141 ; www.ceflawyers.com

5445 Corporate Drive, Suite 200, Troy 48098 248-641-1600 ; www.hdp.com

2600 Troy Center Drive, P.O. Box 5025, Troy 48007-5025 248-851-9500 ; www.secrestwardle.com

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127

131

116

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Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data

This list is an approximate compilation of the largest law firms in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Total number of attorneys does not include of counsel. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the law firms. Firms with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available. 1 Succeeded Larry Shulman as chair of the executive management committee effective in January. LIST RESEARCHED BY SONYA D. HILL 14 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

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seen so much movement, especially on the north side of Flint. Burns: Skypoint Ventures has also played a role in downtown Flint with some of the renovation of buildings. Can you tell us a little bit about that? Hagerman: Skypoint Ventures had some venture capital companies that we were working with and there was also a real estate component to that. We purchased two buildings on Saginaw St. that were over 100 years old. We have now restored both of those – one’s ﬁve stories, the other one’s seven stories. They are occupied and things are thriving. We’re very excited about what’s going on in that capacity, plus also we have another couple of businesses of our own. Burns: What would you like to see The Hagerman Foundation get involved in? Hagerman: One of the things that I would like to start working on is the advocacy for children and bringing people together to move forward some of those initiatives that we already support, such as education, health and wellness. Stopping child sex trafﬁcking is another thing that I’m very interested in. We have supported some of the organizations in different ways, whether through traditional therapy, art therapy or other types of therapies. I am heading up to the Mackinac Policy Conference in May, and I hope that will open doors for more discussion about advocating for children and many causes.

Brent Wirth, CEO, Easterseals Michigan

Larry Burns: Tell us about Easterseals. Brent Wirth: This year we’re celebrating 100 years in Michigan. Most people remember us as serving kids with physical disabilities. We were founded by a gentleman who lost his child in a car accident in 1919 and established a hospital to support children because there wasn’t pediatric care at the time. What he discovered was kids with disabilities were often left at the hospital and hidden from public; he created the Crippled Children’s Society to help them. That was our name until 1967 when during a popular fundraising campaign we adopted the name Easterseals. Our early days were centered on serving kids with physical disabilities so that they could be an active part of the community. The world changed and so did Easterseals. Today we provide mental health services, including substance use, autism services, trauma services and therapy services. We served 14,000 individuals last year and 7,000 of those were kids. Burns: Tell us about the autism services you provide. Wirth: We provide services to individuals with autism, including ABA therapy, the Play

Project, speech therapy and occupational therapy. When the new insurance reform passed, a diagnosis of autism became required. Evaluation centers were created but there were often long waitlists. We do diagnostics for autism, partnering with public mental health and commercial health, because families are waiting months, sometimes years just to get an evaluation. Burns: Are you seeing more kids suffering from some sort of mental health issue? Wirth: This past year we had a 37 percent increase in serving kids with mental health needs. A recent grant puts us in schools where we’re finding people who need help. We’re not screening people out; we’re screening them into care. That’s much different than the typical healthcare system. Burns: What are your main objectives for 2020 and beyond? Wirth: A new initiative that we’re doing is trauma-informed mental health services. We are the first to be trained in intergenerational trauma. We just partnered with the state to offer maternal mental health and services. With a grant called Navigate, adults who experienced their first psychosis are getting the care they need. At Easterseals we serve the most at risk individuals. Where health care payers in typical systems may not want the most at risk people, we want to serve them because that’s who we are and that’s what we specialize in.

Dr. Patrice Johnson, Executive Director, Boys Hope Girls Hope of Detroit

Larry Burns: What is the overall mission of Boys Hope Girls Hope? Dr. Patrice Johnson: We have three programs, and through those programs we focus on holistic child development. We focus not only on a child going to college, graduating and being career-ready, but the development of that child from a social and emotional standpoint. We have our kids over eight years and we stick with them until they graduate from college. We have a 90 percent college graduation rate. Burns: What does your neighborhood-based home do for the young people you serve? Johnson: All of our afﬁliates have homebased residential care facilities. The parent and the organization make the decision to cochampion that child as a partnership, but they live in our home 24/7. Our home wasn’t up to snuff. We started on this journey to launch what I’m calling the 21st Century Urban Boarding Program, where the 3000-plus square feet of this home were transformed into programmatic space: a culinary artisan-style kitchen, art therapy room, and a reﬂection room for meditation and mindfulness.

All those were added and the basement now has a dance and ﬁtness studio, along with a therapy nook. These spaces are important for girls, particularly girls of color. We’ve envisioned a way for them to have everything they need in a very nurturing, holistic space that focuses on their health and their nutrition. There is also a media center, which is like a high-tech library. All of those spaces essentially helped us to cultivate a female leadership incubator. We’ll have six girls and a housemother, as well as residential counselors who facilitate the curriculum in the house, which is called Project Life. Burns: How are your alumni doing? Johnson: One of my favorite stories is about a young lady, Judith, who went to Cristo Rey. Judith is one of our students who faced systemic barriers but was an aspiring leader. We supplemented her tuition and she was in our after-school program. Then she graduated and went to the University of Michigan-Dearborn. She now has a job working at DTE as a special projects director. In her role she assists other students like herself. For me, that was the exact model of Boys Hope Girls Hope. We nurture young people to ensure that they become leaders for others. But more importantly, she is giving back, which is exactly what we want our kids to do.

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EDUCATION

PEOPLE ON THE MOVE

Hamilton Academy, a charter school authorized by Detroit Public Schools Community District, is one of 377 charter schools in the state.

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Cole, Newton & Duran CPAs

Flagstar Bank

Brian Simmons has been named partner at Cole, Newton & Duran CPAs. Brian has more than 30 years of experience advising entrepreneurs, privately held businesses, and high net worth individuals on a wide range of tax planning and business matters. He has extensive experience with the taxation of S corporations, C corporations, partnerships, estates, trusts, and tax-exempt organizations. Brian also regularly represents clients in tax audits and disputes before the Internal Revenue Service.

Flagstar Bank, a $23-billion Midwest regional bank, has hired Ray Green and Joe Panico to lead Flagstar Business Green Capital, the bank’s newly formed asset based lending and senior secured lending group. Green joins as senior vice president and director of Flagstar Business Capital, with experience starting, Panico growing, and leading asset based lending groups. Panico joins as first vice president and senior managing director. Previously, Green was executive vice president of Woodforest National Bank, where he built a specialty finance platform. Panico was senior vice president responsible for business development at Woodforest. Flagstar Business Capital works with companies and sponsors nationwide, providing commitments up to $30 million.

| HAMILTON ACADEMY VIA FACEBOOK

CONSULTING

CCS Fundraising CCS Fundraising, a strategic fundraising firm, is pleased to announce Lindsay Marciniak as Managing Director. Building from more than 15 years of experience, Marciniak leads a team of professionals to partner with nonprofits, helping organizations achieve fundraising goals, secure transformational gifts, and advance their missions. A proud native of Metro Detroit, she values her work with local organizations throughout Michigan.

FINANCE

Cornerstone Community Financial Cornerstone Community Financial (CCF), a leading community-focused credit union with seven branches and 25,000 members, welcomes Jennifer Dickey to its team as vice president of talent and culture. In her role, Dickey is responsible for leading all facets of CCF’s Human Resources functions for its 75 employees, including aligning the corporate culture and talent capabilities to support the credit union’s strategic priorities. Dickey is PHR-certified and a SHRM-Certified Professional. 16 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

HEALTH CARE

McLaren Health Care McLaren Health Care is pleased to announce the appointment of RoseAnn Carlsen, MBA, CLS (HEW), as the vice president of laboratory services for McLaren Health Care. Carlsen will oversee McLaren’s corporate laboratory services which serves McLaren’s 14 hospital campuses across Michigan and an extensive outpatient program. Carlsen will also coordinate the technical and business initiatives of the 14 analytical lab locations. Her start date is March 9, HIRE? 2020. NEW

Michigan far behind other states in charter school oversight, report finds Study highlights absence of enforceable rules, standards BY KURT NAGL

Charter school authorizers

A new report is casting light on a well-documented issue in Michigan’s education system: lack of oversight and accountability for the state’s charter schools and authorizers. Michigan was a leader in creating a charter school system but is now among the worst states in the country when it comes to regulating them, according to the report commissioned by Wayne State University Law School. The 60-page study, released last week, highlights the absence of enforceable rules and standards governing charter schools and their authorizers. It was conducted by the nonprofit Citizens Research Council of Michigan on behalf of the law school’s Levin Center. “The concern that this report raises is that we don’t have standards for the performance of authorizers,” said Jim Townsend, director of the Levin Center. “Do we

The largest charter school authorizers in the state by number of schools: Grand Valley State University: 78 Central Michigan University: 57 Bay Mills Community College: 46 Lake Superior State University: 21 Saginaw Valley University: 19 Ferris State University: 18 Eastern Michigan University: 12 Northern Michigan University: 10 Oakland University: 7 Detroit Public Schools Community District: 6

have mechanisms in place to oversee these charters? The answer is no.” The lack of charter school oversight and performance issues in Michigan is no secret. The Education Trust – Midwest said in 2016

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2020 Government Forecast Breakfast Join the BBChamber featured Representative Haley Stevens and guests from the US Chamber of Commerce for this informational breakfast. Full breakfast included. Tuesday, 3.17.20 – 8:00-9:30 am

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Halal Metropolis Exhibition Halal Metropolis is a travelling series of exhibitions by artist Osman Khan, photographer Razi Jafri, and historian Sally Howell, that explores the facts, fictions and imaginaries of the Muslim population(s) in Detroit and Southeast Michigan as viewed through historical/archival research, documentation of current conditions, and explorations of future desires. March 12, 6:00-8:00 pm Dearborn Foodies March 26, 6:00-8:00 pm Innovating the Halal Holiday Stamelos Gallery Center 4901 Evergreen Road, Dearborn, MI View our listing at crainsdetroit.com/ events/halal-metropolis-exhibition

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that Michigan “has a very serious authorizer performance problem,” according to its study titled “Michigan Charter Schools: A Broken Promise.” The CRC study suggests the problems will not improve until flimsy oversight is corrected. Potential ways to accomplish that are enacting statutes, adopting administrative rules for the state superintendent and making the charter school authorization process more stringent. About 150,000, or 10 percent, of K-12 students in Michigan attend 377 charter schools around the state with concentrations in urban areas including Detroit, Flint, Ypsilanti and Grand Rapids. Universities and community colleges make up most of the authorizers, which receive 3 percent of the state’s per-pupil funding — around $7,900 for charter schools, according to the state. A total of 45 states have charter school systems. Most of them are governed by a cohesive set of rules lacking in Michigan’s system, the report said. “Under the Michigan constitution, universities are pretty independent,” Townsend said. “Legislators can’t dictate to them what they can and cannot do.” Grand Valley State University is the largest authorizer of charter schools in the state with 78 schools attended by 36,000 students, according to Michigan’s Charter School Association. Central Michigan University is second with 57 schools attended by 28,000 students. (See box.) The report will be presented at Wayne State’s Law School at noon Wednesday. Townsend said he hopes it will spark bipartisan discussion about reform. He said he would like to host a conference with experts, policy makers, academics and the public to take up the topic. “While Michigan was on the forefront in allowing charter schools, the other states that followed surpassed us in installing systems of oversight,” Citizens Research Council President Eric Lupher added. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

ROCKET

From Page 3

form of Rocket Fiber creating game-changing digital infrastructure access that has helped power Detroit’s tech and business scene.” Emily Heintz, the founder and Lindsey managing partner of Ann Arbor-based entrepreneurial research organization EntryPoint, said the exit by Rocket Fiber’s founders could likely have spinoff effects for the area’s technology economy. “Rocket Fiber’s acquisition will make them one of the largest acquisitions of a telecom startup in Michigan’s history,” Heintz wrote in an email to Crain’s. “What is exciting about this acquisition is the impact it will have on the Midwest. Entrepreneurs who are dedicated to growing the region and have successfully launched a company — on top of having national recognition and capital — are exactly the type of catalyst an evolving entrepreneurial ecosystem needs.”

The move toward the Everstream deal began about six months ago, the founders said. At that time the company began exploring options to expand, which could have included heading to the capital markets, seeking out new partnerships or a sale. Ultimately, that process led to Everstream being the natural fit to buy the company, Hudson said, noting that he believes Rocket Fiber, in its hometown Detroit market, has “out-competed” bigger players like Comcast and AT&T. “And we expect that to continue with Everstream,” he said. “So it’s just going to be additional services, additional value-add to our existing clients as well ... a lot of new clients who are going to be joining the new Everstream banner in getting those same high-touch, white-glove services that were known for providing, but under a brand and under a team that has network not only here in Detroit, but throughout the entire Midwest.” Following a 60-day closing period, all of Rocket Fiber’s roughly 70 employees will become employees of Flurry of deals Everstream, a company that has been growing throughout the Midwest in The telecommunications industry recent years, both organically and by has seen a slew of dealmaking in reacquisition. cent years and multibillion-dollar Everstream President and CEO deals have become the norm. Brett Lindsey said that the Rocket FiXO Communications LLC, a Virber branding will remain in place for ginia-based telecommunications existing residential projects in down- company, was bought by Verizon town Detroit, but that enterprise and Communications for $1.8 billion in commercial projects will be ab- 2018. Shareholders of Boulder, Cosorbed into Everstream’s branding. lo.-based Zayo Group Holdings Inc. Everstream plans to complete on- last year approved a merger of $14.3 going Rocket Fiber expansion proj- billion with an affiliate of Digital Colects, such as a $2 million, 15-year ony Partners and the EQT Infrastrucproject with Grosse Pointe schools. ture IV fund. Lindsey said that Everstream, with its Those companies are much larger acquisition of Rocket Fiber, has more than Rocket Fiber, but Hudson said aggressive expansion plans around he believes Rocket Fiber “achieved a metro Detroit as well. record exit multiple for a telecom The three founders — Hudson, company in the United States.” Demaj and CTO Randy Foster — will Raj Kothari, managing director at remain part of the company during Southfield-based investment bankan undefined transition period. ing firm Cascade Partners LLC, said However both Hudson and Demaj he has been seeing multiples for teletold Crain’s they envision they’ll be communications companies like moving on to other projects in the Rocket Fiber in the range of 13 to 20 near future, likely times earnings in the area. before interest, “ENTREPRENEURS WHO “We’re all in taxes, depreciaon Detroit,” said ARE DEDICATED TO tion and amortiHudson, “and GROWING THE REGION zation. very excited to “It’s a pretty atstart something AND HAVE SUCCESSFULLY tractive market,” next here in the LAUNCHED A COMPANY — Kothari said of city.” the internet infraWhile Gilbert’s ON TOP OF HAVING structure space, holding compa- NATIONAL RECOGNITION where the two ny Rock Ventures companies operhas divested cer- AND CAPITAL — ARE ate. “Fiber-optic tain assets, such EXACTLY THE TYPE OF companies are as last year’s $1 scarce assets, so billion sale of the CATALYST AN EVOLVING they trade at preDetroit Greekmiums.” ENTREPRENEURIAL town Casino-HoFor Evertel, the deal for ECOSYSTEM NEEDS.” stream, the push Rocket Fiber — Emily Heintz, founder and for organic growth marks one of the managing partner, EntryPoint and growth by acfirst companies quisition stems to start from the ground up under from multiple drivers, according to the Gilbert umbrella and move to an CEO Lindsey. Among them are emergexit. ing technologies like 5G that require A Gilbert spokesman says this has increased fiber, and a push toward long been part of the businessman’s more cloud storage, which also regoal with his various Detroit ven- quires more fiber connectivity. tures. “Those ... things create about a de“The Rock Family of Companies cade of tailwind in our space,” Lindprides itself in supporting what is a sey said. “And so the investment in very accessible and productive start- fiber is required to deliver on the up ecosystem in the City of Detroit,” promises of all of those things. And Aaron Walker, chief communications that’s what’s really pushed the valuaofficer at Rock Ventures, said in a tions up in our specific sector.” statement. “It is amazing to see that Dan’s initial vision and faith in three Contact: nmanes@crain.com; entrepreneurs has paid off in the (313) 446-1626; @nickrmanes

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MARCH 2, 2020 | CRAIN’S DETROIT BUSINESS | 17

Julie Alexander, R-Jackson; Erika Geiss, D-Taylor; David LaGrand, D-Grand Rapids; Kim LaSata, R-Bainbridge Township; Yousef Rabhi, D-Ann Arbor; and Tim Sneller, D-Burton. If the bill package is approved this summer, McMorrow said the council would be appointed later this year and by the end of 2021 it could deliver a set of legislative recommendations. She said those could be approved in 2022 with implementation shortly thereafter.

CHARGING

From Page 3

McMorrow told Crain’s she has discussed with Sen. Tom Barrett, R-Charlotte, the possibility of holding a hearing on the EV package in the Senate transportation and infrastructure committee. She said he hasn’t committed to a date yet, but she is hopeful he will soon. Barrett, who is chair of the Senate transportation and infrastructure committee, told Crain’s he is open to the idea, but his committee has been tied down on other priority issues. “The (EV) bills are well-intentioned and have some merit,” Barrett told Crain’s. “Our agenda has been crowded out by other issues.” Issues include a controversial bill (Senate Bill 431) that would eliminate local control for aggregate mining. Another issue, he said, will be a transportation reform package his committee will consider that could address a transit plan for Wayne, Oakland and Washtenaw counties. But McMorrow said the EV bill passage also is urgent. She said electric vehicles and infrastructure needs will only multiply. “EV is happening now,” she said. “Michigan must act aggressively or we will lose out to San Francisco and China. Michigan is the home to autos, and we should be in the forefront.” McMorrow said the EV bill package seeks to further an April 2019 report issued by the Michigan Energy Office on how many public charging stations are needed in Michigan and where. The report, written with the assistance of Michigan State University, identified 35 public charging locations in nonurban areas. The cost to install the 193 recommended chargers was estimated at $21.5 million, which would be borne by the state, utilities and private property owners and vendors.

Need for fast EV chargers Thousands of private and public EV chargers are expected to be installed in Michigan over the next several years to help reduce what experts call “range anxiety,” the fear EV drivers have that they may run out of electricity on long trips. “Two years ago I got a Chevy Bolt, full electric. I had no charger at home. I wanted to see how it felt for the average person. It is 86 miles to Lansing and back. I was maxing out,” McMorrow said. “I got 170 miles in the winter with battery power. So many problems. Charging stations were mismarked and there were broken charging stations. At the Hyatt in Lansing, the charger broke, then the company went out of business. They have a Tesla charger,

Federal bills waiting

Thousands of private and public EV chargers are expected to be installed in Michigan over the next several years.

Starting with the creation of a nine-member Electric Vehicle Infrastructure Council under the state Department of Transportation, McMorrow said the council (Senate Bill 405, House Bill 4786) would consider a range of initiatives that include location of chargers and how to fund them. The EV council bill would require an interim report submitted to the Legislature in one year with a final report in 18 months. “Our goal is to bring together utilities, scientists, researchers, environmental groups, private industry and issue recommendations in a report”

due one year after bill’s passage, McMorrow said. “We want to roll out the plan on where chargers need to be. Once we settle on good locations, we would work with private companies” along with DTE and Consumers to improve infrastructure” to serve the chargers, she said. The next two bills (SB 408/HB 4787 and SB 407/HB 4788) would address state parks by allowing the state to install and lease space for charging stations. The revenue that would be generated from leasing those spaces would go toward the park system. Barrett said he would support bills that would allow parks to lease space for charging stations. The fourth bill (SB 409/HB 4789) would create tax incentives for small businesses and multi-unit housing to install EV charging stations. Barrett said he is philosophically opposed to issuing tax credits, but he is willing to listen to the arguments for EV charging stations. A number of environmental and business groups have endorsed the bills, including the Detroit Regional Chamber’s Automotive & Mobility Initiatives, the Michigan Energy Innovation Business Council and the League of Conservation Voters. “The next generation of the automobile is quickly evolving from concept to deployment. As electric vehicles begin navigating Michigan’s roads, we will require the sufficient necessary infrastructure to support them,” said Glenn Stevens Jr., vice president of Automotive and Mobility Initiatives with the Detroit Regional Chamber, in a statement. “The world is moving toward an automated, shared, and connected mobility future — and it is all going to happen on an electrified platform,” Cory Connolly, vice president of policy at the Michigan Energy Innovation Business Council, said in a statement. Besides McMorrow, sponsors of the bill also include Joe Bellino, R-Monroe;

Sources said VW would take all of the 200 Galleria building and possibly part of the 100 Galleria building, which its owner has been emptying for months. | COSTAR GROUP INC.

home to the automaker’s interface with U.S. regulators through its engineering and environmental office. The company occupies all of the roughly 365,000-square-foot building at 3800 Hamlin Road, formerly the company’s North American headquarters, which moved to Herndon, Va., in 2008. Auburn Hills Mayor Kevin McDaniel declined comment on the possible move. Crain’s Detroit Business reported in 2011 that VW was renewing its lease in the Auburn Hills building and putting $19.4 million in capital improvements into it. The property is owned by MAK Real Estate Investment Inc., which is con-

but not the same connector.” But Barrett said he believes range anxiety is overstated. “A 150-mile vehicle range is pretty limited. They are making 250- to 300-mile range vehicles now, with up to 400 miles. If you can charge it at home, you can go far,” he said. However, McMorrow, an industrial planner by training, said she believes there is one single problem that EV motorists, utilities that want to sell additional electricity and automakers and suppliers that want to sell electric vehicles are facing: lack of EV charging station infrastructure. “No other state has the history, talent and capability to design and build the next generation of electric vehicles, but we need to have the infrastructure in place to support that development,” McMorrow said.

Utilities funding chargers Over the past year, DTE Energy Co. and Consumers Energy Co. have begun issuing rebates for EV charging stations at homes and in public locations across Michigan. So far, Consumers Energy has doled out nearly 400 rebates, and DTE about 270. Consumers alone projects it will double the number of EV chargers in its territory from 4,000 to 8,000 by 2022. According to Consumers Energy, rebates were issued to 200 public station locations and 24 more “fast charging” stations that can power up most of a vehicle’s battery in 30 minutes. The fast charging stations will be located throughout the Lower Peninsula and should be operating by the end of the year, the company said.

EV growth Some 1.5 million electric vehicles were sold in the U.S. in the last decade, according to the Edison Electric Institute. By 2030, Edison predicts more than 18 million electric vehicles

will be on U.S. roads. “Ford is committed to electrification and has announced plans to invest more than $11B by 2022 to deliver all-new hybrid and fully electric vehicles, including the all-new Mustang Mach-E and our best-selling F-150 which will be produced right here in Dearborn, Michigan,” Ford Motor Co. said in a statement. “We need key stakeholders and government partners to work collaboratively to accelerate deployment of the necessary EV infrastructure to ensure successful consumer adoption of this important future technology.” GM’s Brian O’Connell, regional director of state government relations, said the auto company believes in an all-electric, zero emissions future. “We are committed to investing, incentivizing or working with companies to bring charging solutions to the market to best serve customers,” O’Connell said in a statement. McMorrow said passing the bills also sends a message to job seekers that Michigan is the place to relocate. One employer, Plymouth-based Rivian, an electric vehicle manufacturer, is expanding in Michigan with more than 1,800 workers already employed, she said.

What the bills would do

VOLKSWAGEN

From Page 1

A deal has not been reached for the 22-acre site owned by Kansas City, Mo.-based EPR Properties. Marketing materials on the Friedman website show the property being redeveloped with hotel space and outlot retail, a fitness center with outlot retail or purely retail space. Friedman’s website lists the theater at 184,500 square feet with over 6,000 seats. The automaker has 1,000 or more people in Auburn Hills, in customer relations and after-sales support, as well as engineering and environmental functions. It is also 18 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

Two congresspeople, Rep. Andy Levin, D-Bloomfield Townships, and Debbie Dingell, D-Dearborn, have introduced bills to expand and fund the nation’s charging stations. Sen. Debbie Stabenow and Rep. Dan Kildee, D-Flint, also have introduced an EV tax credit bill. Levin’s bill, the Electric Vehicles Freedom Act, would create a nationwide network of high-speed electric vehicle chargers along America’s highways within five years. The bill also would offer grants to state and local governments to develop charging stations. It also would allow private enterprises to develop networks. “(The Michigan bills) fits in with what I am doing with the larger situation nationally,” Levin said. “At this stage we are gathering co-sponsors. Our principal committee is transportation and infrastructure. We are working with that committee staff and hope for a hearing this year and move the bill” in 2021. Levin compared what is happening now to build a national electric charging station network with what President Dwight Eisenhower did in the early 1950s with his support of an interstate highway system. “The momentum behind electrification in transportation bills will result in dramatic change,” Levin said. Stabenow and Kildee’s bill, the Driving America Forward Act, would raise and extend the current tax credit of up to $7,500 to purchase an eligible electric vehicle. Dingell’s bill, The USA Electrify Forward Act, would appropriate $2.5 billion annually for the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Incentive Program from 2021 to 2035. McMorrow said the federal legislation only gives more energy to what Michigan is attempting to do with its policies. “With health care or education, federal and state policies work hand in hand. Historically, what actually pushes the federal government forward is seeing a groundswell from the states,” McMorrow said. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene trolled by Kuwaiti billionaire Fawzi Mohammed Al-Kharafi. It was built in 1991. This isn’t the first time VW has considered exiting the building. In 2011, it explored a move to Troy into what at the time was known as Baluster Park, today the North Troy Corporate Center, also at the time part of the Friedman Real Estate portfolio, although it has been selling off those buildings to users the last several years after repositioning them. VW ultimately decided to stay in 3800 Hamlin after a series of tax abatements. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

DETROIT’S REAL[I]TY CHECK WEDNESDAY

April 22

9 – 11:30 a.m. | The Fillmore, Detroit Returning for a third year, join Crain’s Real Estate insider Kirk Pinho, senior reporter Dustin Walsh and top names in metro Detroit's commercial real estate scene as they share perspectives on the reality check that is needed in the metro Detroit commercial real estate space.

WHAT YOU'LL LEARN:

■ Why some projects launched more than a year ago still haven't gotten off the ground - while others are built in record time. ■ How architects are finding efficiencies in construction design to save developers money. ■ What impacts the neighborhoods are experiencing from the realities of high construction costs and skilled labor gaps.

REGISTER TODAY: CrainsDetroit.com/RealEstateNext Event questions: Email • cdbevents@crain.com | Sponsorship opportunities: Lisa Rudy • lrudy@crain.com

PLANS

From Page 1

Delta Air Lines, the dominant carrier at Detroit Metropolitan Airport, suspended flights between China and the U.S. until the end of April. | DELTA AIR LINES

FREIGHT

From Page 1

Kalitta’s fleet of 24 Boeing 747400s, nine Boeing 767-300s and three 777 freighters provides on-demand freight and charter services and does work for the U.S. Postal Service and the U.S. Air Force as well as the auto sector. Representatives, including CEO Conrad “Connie” Kalitta, did not respond to several emails and calls seeking comment. “We see this whenever there are supply chain stoppages,” Fried said. “Now all this cargo is just stacking up at the ports and will continue to, but when this situation subsides there won’t be enough vessels to haul all that cargo. They will need to make up for lost time.” Air freight prices have already spiked from increased demand, rising to $6.65 per kilogram ($3 per pound) from $3.65 per kilogram ($1.65 per pound) in the last month, American Shipper reported on Feb. 25. “You think you’ve seen (price) increases now, just wait for a few more weeks as capacity becomes rarer and rarer,” Fried said. Prices are expected to reach $10 per kilogram ($4.54 per pound) in the coming weeks. Automakers and suppliers are reeling and having to make tough decisions, said Ann Marie Uetz, partner at Foley & Lardner LLP in Detroit. “Right now, they are all focusing on keeping the profitable lines running,” Uetz said. “(General Motors) is going to continue to build trucks. They are going to keep those lines running at the expense of other lines, like maybe the Chevy Cruze. That’s the planning going on right now.” Representatives from GM declined to confirm whether they are using expedited air freight or pro-

ESPERION

From Page 3

“Even for venture capitalists, these are always moonshots,” Erik Gordon, a clinical assistant professor at the University of Michigan’s Stephen Ross School of Business, said of the challenges with getting new drugs over the finish line, particularly with regards to the needed funding. “Esperion is a story of dogged determination. Every prospective drug candidate has its ups and downs. None 20 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

vide any specifics on how they are mitigating the effects of the outbreak. Moline, Illinois-based Deere & Co., the maker of John Deere agricultural equipment, told investors on Feb. 21 that it anticipated spending $40 million on expedited air freight on exporting out of China in the first quarter of 2020. But the automotive sector is expected to pay much more. The price increases are a model of simple supply and demand. Demand is rising because if auto suppliers don’t get parts to factories, those factories shutter and supply is constrained from the lack of available commercial passenger wide body aircraft. On Jan. 31, Delta Air Lines, the dominant carrier at Detroit Metropolitan Airport, suspended flights between China and the U.S. until the end of April to stymie potential transmission of the coronavirus, only hours after President Donald Trump signed an executive order temporarily barring entry to the U.S. by foreign nationals at risk of transmitting the virus. Competitors United Airlines and American Airlines and nearly a dozen foreign carriers quickly followed. These airlines make not an insignificant amount of money by stuffing air freight cargo, such as car parts, next to passenger luggage in the cargo hold of commercial flights. Delta Air Lines, for instance, recorded cargo revenue of $753 million in 2019 out of its overall $42.3 billion in revenue. “These wide body aircraft ... a 777 is like a freighter with seats on top,” Fried said. “These airlines make a lot of money (from freight). The discontinuance of those flights is going to hit their bottom line in a big way.” The NYSE Arca Airline Index, which tracks 16 air line carriers in North America, Latin America and budget carrier Ryanair, dropped

“FOR A SECOND DRUG (TO COME OUT OF ANN ARBOR COMPANIES), THAT’S A LEGACY THAT NOT MANY OTHER AREAS CAN BRAG ABOUT.” — Tim Mayleben, Esperion president and CEO

of them just go through on a straight line.”

more than 15 percent Feb 24-26. American Airlines (NASDAQ: AAL) shares closed Wednesday at $22.31, its lowest share price since before its 2013 merger with US Airways and United Airlines. Delta (NYSE: DAL) shares began slipping on Feb. 21, dropping more than 16 percent by Feb. 27. “Every day we think we could be near a bottom, and every day we are not,” Helane Becker, an airline analyst for investment bank Cowen Inc., said in a research note last week. Kalitta, however, is likely flying high on new contracts, Fried said. “Kalitta is not a scheduled carrier like DHL or UPS who have to worry about allegiances and contracts,” Fried said. “You hire Kalitta, tell them what the mission is and they show up with a crew and a plane. This is the perfect application for them. It’s a very large cargo hauling business and a perfect example of a company that is benefiting wildly from this.” Kalitta already has experience dealing with this particular coronavirus. The company was contracted by the U.S. State Department to evacuate 201 Americans on Jan. 28 from the epicenter of the outbreak in Wuhan, China. After leaving Wuhan, the Kalitta Boeing 747 landed at the Ted Stevens Anchorage International Airport in Alaska where passengers were screened for symptoms of the deadly virus, the Anchorage Daily News reported. All of the passengers passed the screening and the plane later departed to March Air Reserve Base near Los Angeles. Last month, a Kalitta 747 evacuated 338 Americans from a Diamond Princess cruise ship that was marooned offshore at a port in Japan for several weeks. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

The ‘hall of famer’ Esperion’s story starts with Roger Newton. The Ann Arbor scientist is considered the father of Lipitor, the world’s best-selling drug, which for years generated annual sales in excess of $10 billion before plummeting once its patent protection ended in 2011. Newton, who declined an interview request, citing his retirement last year from the company, co-founded the original Esperion Therapeutics in July 1998 with three

“Those companies ... are much more resilient than others.” Since taking root in China in December, COVID-19, the disease caused by coronavirus, has killed at least 2,859 people, most in China, of the 83,700 cases reported, the World Health Organization said late last week. It’s spread to a rapidly rising number of countries across the world in recent weeks, including the U.S., where there were 15 confirmed cases as of Friday, according to the federal Centers for Disease Control and Prevention. The CDC listed travel warnings for six countries on its website as of last Friday morning, with warnings to avoid nonessential travel to China and South Korea. It’s advising enhanced precautions for travel to Japan, Iran and Italy, and “usual precautions” for Hong Kong. In Michigan, as of Thursday, 357 people who traveled from China had been referred to the Department of Health and Human Services for monitoring, said Lynn Sutfin, public information officer. The virus has not been confirmed in Michigan but could be eventually. “There’s not a mechanism at this point where we’d be notified of individuals traveling to other countries,” Sutfin said. “Individuals should obviously pay attention to their health at this point ... practice good hygiene and simply stay home if they’re sick.”

Business prep Employers should be monitoring recommendations from the CDC and Michigan Department of Health and Human Services, experts said, but also have plans unique to their operations in place to guide management and employees in the event of a pandemic or other crisis. It’s been clear there’s potential for pandemics since the severe acute respiratory syndrome, or SARS, outbreak in 2003, Williams said. But trying to get companies to focus on a black swan event like a pandemic as part of crisis planning has been difficult when things like workplace violence and extortion are competing for attention, he said. Most large corporations have something in writing, Williams said. “How effective it is is being tested as we speak.” Beyond the impact to employee health, the absence of a policy and business continuity plan or an ineffective one could cost companies market share if competitors are more prepared, Williams said. And it could bring liability issues, said Elaine Coffman, president-Michigan for Kansas City-based Lockton Cos., a global, privately held insurance brokerage and risk management firm. “Employers need to pay attention or

they could be held liable for aspects of this by employees and ... shareholders.” Pandemic policies should consider everything from practical, basic hygiene recommendations and workplace cleaning procedures to succession planning, flexible work policies for those who can work from home, to compensation policies for those who get sick, are caring for sick family or are quarantined, said Anthony Kaylin, vice president of Livonia-based American Society of Employers. “Do they pay employees, use vacation time, (or) make this a special situation? Every company has to make their own decision on how they will (man-

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colleagues from Warner-Lambert/ Parke Davis. That company went on to be acquired by pharma giant Pfizer in 2000. The pharmaceutical company eventually shuttered Esperion when it closed all of Pfizer’s research and development operations in Ann Arbor and in Kalamazoo in 2007 and 2008. Shortly after he exited, Newton began negotiating with Pfizer to secure former Esperion intellectual property, which served as the foundation to finance and launch “Esperion Two” in May 2008.

“I am very proud of (Mayleben) and the Esperion Team for their commitment and persistence,” Newton wrote in an email to Crain’s. “I am also thrilled by the upcoming launch of our drugs in patients who cannot safely reach their LDL-Cholesterol goals with current treatments, and as a result, need these new medicines to further reduce their residual risk of (cardiovascular disease).” Given the challenges associated with getting a drug approved, Mayleben and other industry stake-

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What employers should do The Occupational Safety and Health Administration of the U.S. Department of Labor and the Michigan Occupational Safety and Health Administration had not released any policies and recommendations for preventing the spread of coronavirus as of last week. But some existing policies could apply to protecting employees, the federal agency said, such as requirements for personal protective equipment and the general duty clause, which requires employers to provide employment and workplaces that are free from recognized hazards. The federal Centers for Disease Control and Prevention has released interim guidance for employers to help prevent workplace exposures to acute respiratory illnesses, including the coronavirus, in non-health care settings. Those recommendations could change, but currently are focused on things like: ` Promoting proper sneeze etiquette and handwashing ` Encouraging employees to stay home when sick

GETTY IMAGES/ISTOCKPHOTO

` Routinely cleaning work places

age) a shutdown,” Kaylin said. Experts said there may also be decisions that will differ from employer to employer. For example, the CDC may not be recommending masks, but they may help employees feel secure, Kaylin said. “And how do you handle situations when employees opt not to come to work over fears? Policies should consider all of this.” For those who can’t work from home, like those in the health care and manufacturing industries, the situation it will be more fluid, with operational policies dependent on recommendations from the CDC, experts said. “We’ve had people looking at if they should be washing parts from China. People are saying no, right now, but at what point does that change and how do they do that?”Coffman said. “This is a day-by-day situation. You want to be calm; you don’t want to create panic. But at the same time you need to think about all of these things and just try to stay ahead.” Understanding what your business holders note the significance of Newton’s involvement in both the development of Lipitor — called the “most successful drug in the history of the pharmaceutical industry” by Mayleben — as well as Nexletol and Nexlizet. “So now for a second drug (to come out of Ann Arbor companies), that’s a legacy that not many other areas can brag about,” said Mayleben. “And of course, I think that bodes well for the future as well, in Ann Arbor and more broadly, Michigan. I think it’s going to do nothing

“DO THEY PAY EMPLOYEES, USE VACATION TIME, (OR) MAKE THIS A SPECIAL SITUATION? EVERY COMPANY HAS TO MAKE THEIR OWN DECISION ON HOW THEY WILL (MANAGE) A SHUTDOWN.”

For example, some plans call for taking the temperature of people coming into a facility, Williams said. But often those plans don’t think about the people taking the temperatures and if they have redundancy to check those people. The coronavirus threat could also bring special considerations for succession planning, Kaylin said, noting the virus is reportedly impacting men worse than women.

— Anthony Kaylin, vice president, American Society of Employers

Need to train

interruption insurance will and will not cover is also important, she said. Typically, such policies cover interruptions to a company’s operations based on a physical loss like a fire, Coffman said. But coverage may not extend to interruptions due to a pandemic and may or may not cover interruptions caused by supply chain issues. Beyond broader pandemic policies and crisis response plans, employers should monitor developments and make adjustments as needed.

Employers should put contingency plans to the test through training exercises, experts said. “What company cultures need to understand is you need to practice like you fight, taking a note from the military, to prepare the company for its particular risks and vulnerability,” Williams said. “That is the key to success (and) the longevity of your company.” Employers with overseas operations should know where all of their employ-

but bolster the reputation of Ann Arbor and the broader Michigan area.” Tim Peterson, founder and managing partner at Ann Arbor-based health Peterson care venture capital fund Arboretum Ventures, shared a similar sentiment, calling the approval “another feather in our cap” for the Ann Arbor community.

Arboretum was an early investor in Esperion’s second iteration back in 2008, investing $2 million into the company and getting a seven-times return upon exit when the company went public in 2013, according to Peterson. “It was a very good investment for us,” Peterson told Crain’s, adding that Esperion is one of only two biotech companies the fund has invested in and calling Newton “a first-ballot hall of famer” when it comes to pharmaceutical executives and scientists.

ees are and have plans to connect them with health care and other local assistance, along with other help that may be needed, like overseas transport, Kaylin said. If the pandemic reaches the U.S., “employers might consider holding off on live meetings and instead hold all meetings virtually to avoid close contact with others,” Kaylin said. They should have regular leadership team meetings to discuss the outbreak, changing needs that require a response and a communications strategy so employees are not scared and feel their employer is doing its best to ensure their risk of infection at work is low, Kaylin said. “Employees could say they don’t want to risk coming to work when you have this issue,” he said. “It’s going to be very important ... that there are effective communications between employer and employees.”

` Putting in place flexible policies to accommodate increasing absences from employees who are ill themselves or caring for sick family members ` Advising employees to check the CDC’s website for any warnings when traveling for work or vacation and to monitor themselves for any symptoms The Equal Employment Opportunity Commission has also issued guidelines on pandemic preparedness in the workplace to ensure compliance with the Americans With Disabilities Act. Those guidelines address issues such as how much information an employer can request from an employee who calls in sick in order to protect the rest of its workforce. The American Society of Employers is posting biweekly updates on the outbreak and employer resources on its website, along with a sample pandemic plan and sample business continuity plan for influenza.

Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Next steps So where does a Michigan company set to deliver a $1 billion drug go from here? For their part, Experion executives are mum, saying their only goal at the moment is to get the drug to market and into the medicine cabinets of consumers in need. But analysts and closer observers of the company have some thoughts on the matter. Asked if the company could

make for an acquisition target by one of the larger drug manufacturers, Gordon, the UM business professor, noted that decision would ultimately be up to shareholders. But added that the company finds itself in an enviable position. “I wouldn’t be surprised if a big drug company comes after them,” Gordon said. “But Esperion is in the very nice position of not needing somebody to come after them.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes MARCH 2, 2020 | CRAIN’S DETROIT BUSINESS | 21

THE CONVERSATION

Tatiana Grant: Marketing marijuana one event at a time Cultivate MI Solutions LLC: With recreational marijuana sales up and running in Michigan, it’s only natural to expect marketing events to crop up. Tatiana Grant, CEO of Detroit-based Cultivate MI Solutions, was one of the first marketing firms to receive a marijuana event organizer license in the state. Grant, a former communications coordinator for Palace Sports and Entertainment in Auburn Hills and owner of Infused PR & Events as well as a Crain’s 20 in their 20s honoree, is currently planning her first, and possibly the state’s first, marijuana-focused festival that will legally sell marijuana. | BY DUSTIN WALSH ` Crain’s Detroit Business: What led you to seek out a marijuana event organizer license? Grant: In 2014, I founded a food delivery service company called Flash Delivery. I decided to walk away from the company instead of duking it out with Doordash and Uber Eats. But my mentor told me I needed to look into delivering weed since it had gone legal. So I started looking at license types and even got an investor lined up. To be honest, though, I just wasn’t getting the clarity on the projections I needed to go forward. I sought counsel of friends in Colorado and California where it was already legal. Secure transport is a really tough business, so I decided I should stay on the marketing side. I already had a thriving business on the PR and marketing side and these (cannabis) companies need those services too. A client asked for a large scale event in Detroit. I did my research and discovered the event coordinator license. The way that the legislation was written, any event where you can consume THC, buy or sell it now required you to have an event license. I saw an opportunity there. ` What are some different types of events you plan to host? We are event producers. When I worked at The Palace, I produced the event. By trade, I am technically an event planner. So any type of event, where weed is consumed or sold, really. Some clients want a dinner series. A small intimate gathering with infused meals, treats and such. That’s an example of one. Anything we can curate that elevates and showcases a brand, the potency and quality of the flower, etc. We can go all the way up to an outdoor event that is comparable to Cannabis Cup. With that type of event, you have a whole other level of interfacing with police,

fire and safety. There are more sponsors. That requires the license. When you’ve got vendors that sell marijuana to a wider event audience, we need that license. ` You’re hosting an event in Hazel Park in April. What can you tell us about that? Not much yet. We have officially submitted our application to the state of Michigan to host, to our knowledge, the first licensed event where you can consume and sell marijuana. It will be a public event featuring a celebrity host that is sort of bizarre themed. We’ll have lots of local participants on the cannabis brand side and local Southeast Michigan-specific small businesses. Also have a food truck component. It’ll be an outdoor event where people get some food, support some local small businesses along with an entertainment component. ` What sort of marijuana businesses are involved? Mostly retailers. We’re seeing companies that don’t have locations in Southeast Michigan or Detroit, but want to try to market in this region. Some companies are closer to the middle of Michigan and don’t have any other means to get access to this market. The event will allow them to have a presence even if it’s a temporary event. But it’s mostly the consumer facing brands. At these events, people can actually purchase product. They can get more familiar with the retail brands that might not be local but in the shops they visit. Our clients will be able to sell their full portfolio of products and interface with the customers. ` Who are these events targeting? Everyone that’s interested in marijuana. There’s also an increase in the elderly

and senior citizens that are taking to cannabis. Possibly perceptions are changing. These events are going to allow people not comfortable going into a dispensary, giving them the green light to check out what’s happening at this sort of event. They have less pressure and if they feel the need or desire to partake, they can. And your true die-hard consumer who has been doing it for years will be right at home. This is probably a celebratory thing for them, a way to publicly engage and enjoy (marijuana) at an event.

wide open, the costs to produce these events are extremely prohibitive. It’s going to be a case of only large events being able to go through the process. Only events where you’re projecting a sizable revenue will justify the expenses on the front end. Even our insurance partners didn’t expect it to be this high. I see the demand increasing as the market awareness and curiosity increases, but prices have to come down.

REPORTERS

Annalise Frank, city of Detroit. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter, health care and energy. (313) 446-0325 or jgreene@crain.com Nick Manes, finance and technology. (313) 446-1626 or nmanes@crain.com Kurt Nagl, higher education, business of sports. (313) 446-0337 or knagl@crain.com Kirk Pinho, real estate. (313) 446-0412 or kpinho@crain.com Dustin Walsh, senior reporter, economy and workforce, manufacturing, cannabis. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com

` What sort of challenges are you facing, given this is an entirely new industry? It’s taken us a little bit longer to even apply to the state than I’d like. Then there are the insurance implications. It’s been extremely difficult for us to find an insurance carrier. There’s one in the entire nation that we could find, and it’s extremely expensive. As much as we see the industry as

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EMU-CMU to hit Ford Field as colleges reach out A MAJOR MICHIGAN FOOTBALL RIVALRY — that’s not green and white versus maize and blue — will head to Ford Field in downtown Detroit this fall. Central Michigan University announced last week that the Chippewas will take on the Western Michigan University Broncos at the home of the Detroit Lions on Oct. 17, a home game for CMU. The matchup is an attempt to better foster relationships in the metro Detroit part of the state, according to Michael Alford, CMU’s associate vice president and athletics director. “Bringing this game — and the events surrounding it — to Detroit allows our athletics program to help engage thousands of people who are passionate about CMU.” Alford said in a statement. Universities have ramped up their 22 | CRAIN’S DETROIT BUSINESS | MARCH 2, 2020

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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

` TAB TO STATE ON CHERRY PROCESSOR FAILURE: $2.3M

Central Michigan University will take on Western Michigan University at Ford Field in October.

outreach efforts as a shrinking pool of graduating high school seniors leads to increased competition for enrollment.

MICHIGAN TAXPAYERS ARE OUT nearly $2.3 million after the state was unable to recover tax incentives paid out to a northern Michigan cherry processor. The Michigan Strategic Fund board voted Feb. 25 to write off $2.28 million of the $2.5 million performance-based grant issued to Grawn-based Cherry Growers Inc. for a processing expansion in Grand Traverse County in 2012, the Michigan Economic Development Corp. said in a memo. Cherry Growers filed Chapter 11 bankruptcy in 2017 after a series of calamities that sunk the company, including a failed cherry and apple crop season in 2012 leading to the

Cherry Growers filed Chapter 11 bankruptcy in 2017 after a series of calamities that sunk the company.

loss of several large contracts amid a $13 million expansion. The company was liquidated in early 2019 after failing to secure a bidder to take the company out of bankruptcy. The state of Michigan became a creditor during the bankruptcy process, but was only able to secure $211,637.20 on its $2.5 million claim.

Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except the third week in December, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2020 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

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