THE CONVERSATION Jim Murray, back in the Capitol taking on Michigan’s utilities
Tigers set to return amid pandemic PAGE 3
PAGE 19 CRAINSDETROIT.COM I JULY 20, 2020
COPING WITH COVID-19
CRACKING OPEN THE GATE Business travel takes on fraught new reality
When Jimmy Pappas checked into the Homewood Suites hotel in downtown Cincinnati last week, a grocery delivery service was en route. From his rental car, he loaded two boxes onto the hotel’s bell cart — one filled with sanitizers and other cleaning materials and the other with cooking utensils and dinnerware — along with his luggage. He then proceeded to wipe down the door handles, sink handles, TV remote and other high-touch surfaces.
A passenger walks by the baggage claim at the McNamara Terminal of Detroit Metropolitan Wayne County Airport in Romulus on July 16.
See TRAVEL on Page 16
NONPROFITS
DETROIT
$10 million deficit from lost ticket, concession, events revenue
Duggan’s new blight bond plan would ‘put Detroiters to work’ — but it’s not so simple
BY SHERRI WELCH
BY ANNALISE FRANK
The Henry Ford facing budget shortfall Like other arts and cultural groups that rely on earned revenue for a significant part of their budgets, The Henry Ford has been hit hard by COVID-19 pandemic-spurred closures and cancellations. The Dearborn nonprofit is facing a $10 million to $20 million budget deficit due to event cancellations and the four-month closure of its
attractions: The Henry Ford Museum of American Innovation, Greenfield Village, Ford Rouge Factory Tour and Benson Ford Research Center. “Everything we’ve done in the past to build a robust business model to help us earn ... revenue has pretty much dissipated,” President and CEO Patricia Mooradian said. “We’ve had to look at every possible area to save and cut back.” See HENRY FORD on Page 16
NEWSPAPER
VOL. 36, NO. 29 l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
Mayor Mike Duggan’s updated plan to sell $250 million in bonds for blight removal is being pitched as a jobs initiative at a moment when Detroit is grappling with a high unemployment rate due to the coronavirus pandemic. To get a piece of the pie, contractors could be required to adhere to an executive order requiring that Detroiters perform at least 51 per-
cent of work hours for a taxpayer-financed project. But there’s an escape hatch to the rule. Duggan’s new blight bond proposal would let contractors instead take a second option — the same deal FCA US LLC got for its east-side Jeep assembly plants, prioritizing job applications from Detroiters first. See BOND on Page 15
FOCUS | HEALTH CARE ARE HOSPITALS PREPARED FOR NEXT COVID-19 WAVE? Ready or not, it’s coming: Health systems in Michigan say they are prepared for an increase in cases, but second surge predictions vary wildly. PAGE 8
NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
BY DUSTIN WALSH
NEED TO KNOW THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` WHITMER EXTENDS EMERGENCY ORDER THE NEWS: Gov. Gretchen Whitmer on Tuesday extended Michigan’s coronavirus state of emergency by another four weeks to Aug. 11 as the state’s total case count for COVID-19 topped 70,000. WHY IT MATTERS: The seven-day rolling average number of new cases was nearly 600 late last week, close to quadruple the average case count on June 14 but still well below the peak of more than 1,600 on April 7. Michigan hospitals also are reporting an uptick in the number of COVID-19 patients they’re treating.
` LIQUOR CONTROL TO EXAMINE BAR IN OUTBREAK THE NEWS: Michigan liquor regulators on Thursday ordered an East Lansing bar to answer questions about a coronavirus outbreak that infected at least 186 peoplet and attracted widespread attention, shortly after bars and restaurants were allowed to re-
open for in-person service following a monthslong shutdown. A hearing, scheduled for Thursday, could result in a license suspension or revocation for Harper’s Restaurant and Brewpub, which has been closed since June 22. But the purpose primarily is fact-finding, said Jeannie Vogel, spokeswoman for the state Liquor Control Commission. WHY IT MATTERS: The outbreak tied to the bar helped spur Gov. Gretchen Whitmer to order the closing of indoor areas of establishments that make 70 percent or more of their sales from alcohol.
` WHITMER NAMES PUBLIC SERVICE COMMISSION CHAIR THE NEWS: Governor Gretchen Whitmer announced Thursday that Michigan Public Service Commissioner Dan Scripps will assume the chairperson role later this month, replacing current commission Chair Sally Talberg, Gongwer News Service reported. Scripps, appointed to the commission to fill a vacancy in early 2019, will take over as chair of the three-person panel effective July 27. WHY IT MATTERS: The chair serves as the head of the agency regulating Michigan’s utilities. Scripps is one of two Democratic appointees to the PSC during Whitmer’s administration, giving the panel a 2-1 Democratic majority.
COLLEGE SPORTS
MSU coaches take pay cuts in COVID-19 crunch ` Michigan State University is temporarily cutting the salaries of employees in its athletics department, including men’s head basketball coach Tom Izzo and new head football coach Mel Tucker. Tucker, who was set to earn $5.5 million this year, will see a 7 percent reduction in base pay. Izzo, who was to earn more than $3.5 million this year, will also see a 7 percent cut. The salary cuts affect the athletic department’s contract employees and will be implemented on a sliding scale beginning Sept. 1 and ending Aug. 31 of next year, the university announced Thursday. Athletic Director Bill Beekman, who has a $750,000-a-year base salary, will see his pay cut 10 percent. All the other reductions range from 2 percent to 7 percent, with the largest cuts impacting those with salaries of $500,000 or more. The cuts follow campuswide pay reductions ranging from 0.5 percent to 8 percent for all nonunion employees as it grapples with an anticipated $300 million loss due to the COVID-19 pandemic.
Michigan State University basketball coach Tom Izzo (left) and new head football coach Mel Tucker are taking temporary pay cuts.
` NEWLY MERGED FCA-PSA TAKES ‘STELLANTIS’ NAME THE NEWS: The merged unit of Fiat
Chrysler Automobiles and PSA Group will be known as Stellantis, the two automakers said Wednesday. You won’t see any cars bearing the
name, though, at least not now. The automakers said the name “will be used exclusively at the group level, as a corporate brand” and that the names and the logos of the group’s constituent brands will remain unchanged. WHY IT MATTERS: The group will create the world’s fourth-largest automaker. PSA’s considerable footprint in Europe could complement FCA’s strength in North America. Fiat Chrysler’s North American headquarters is in Auburn Hills.
` AMAZON TO OPEN DELIVERY STATION IN STERLING HEIGHTS THE NEWS: Amazon Logistics will open a Michigan delivery station in Sterling Heights to support its last-mile delivery capabilities in metro Detroit. The new facility at 33600 Mound Road will create “hundreds” of full- and part-time jobs paying a minimum of $15 per hour and offering a variety of benefits packages to independent contractors, Amazon said in a Wednesday news release. Amazon expects the station to open in September. WHY IT MATTERS: The plan marks yet another expansion of Amazon locally, reflecting a national push to get its centers closer to customers to enable same-day delivery.
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FINANCE
SPORTS BUSINESS
Bad blood between mortgage competitors resurfaces BY NICK MANES
Bad blood appears to be intensifying between Quicken Loans Inc. and United Shore Financial Services LLC, two of Southeast Michigan’s largest employers and fierce competitors in the mortgage industry. Quicken Loans’ recent inroads into the wholesale lending market — a mainstay for United Shore — appear to be driving an uptick in the animosity between the industry juggernauts, which combined employ about 25,000 people in the region. That competition also appears to have played a role in incidents that spurred a lawsuit by the wife of a Quicken Loans executive against an executive with a trade group representing the wholesale mortgage business. Given that the companies are lo-
The Tigers are to start a shortened, 60-game season in Cincinnati on July 24 before their Comerica Park home opener against Kansas City on July 27. | CRAIN’S DETROIT BUSINESS
TRYING TO SALVAGE THE SEASON Tigers’ return amid pandemic is sign of life for Detroit sports Trimmed salaries
BY KURT NAGL
Major League Baseball players will be paid prorated salaries based on the number of games played. Here’s how some Tigers players are impacted:
The return of Tigers baseball in Detroit next week offers hope not only for deprived sports fans, but for the Ilitch sports and entertainment empire, which has been paralyzed by the monthslong COVID-19 pandemic. The Tigers are to start a shortened, 60-game season in Cincinnati on July 24 before their Comerica Park home opener against Kansas City on July 27. The rescheduled Opening Day will take place four months after the 2020 season was supposed to start and will look nothing like the holiday-style bash that usually signifies the return of baseball in Detroit. Playing just 30 home games in an
Miguel Cabrera (1B): $11 million of $30 million full season salary Jordan Zimmermann (RHP): $9.25 million of $25 million Jonathan Schoop (2B): $2.25 million of $6 million Matthew Boyd (LHP): $2 million of $5.3 million
empty ballpark will cost the Tigers tens of millions of dollars at the gate. Ticket and concession sales make up an estimated 40 percent of the Major League Baseball franchise’s yearly income. Millions more will be lost in parking revenue as lots and structures sit empty. It could be worse, though. At least there’s baseball. Just being allowed to play means the Tigers can make good on some of their obligation to Fox Sports Detroit, the regional sports network that pays the team an estimated $50 million annually to air its games. Playing at Comerica Park, rather than a neutral site as had been considered, also gives the Tigers opportunity to satisfy sponsor deals. Sig-
Ishbia
Gilbert
nage from major partners including Belfor, DTE Energy Co. and Meijer Inc., will be visible to TV viewers on scoreboards, behind home plate, along outfield walls and superimposed on screens. The Chevrolet Fountain, flanked by two Chevy vehicles, remains a centerfield fixture. By number of games, Tigers would be giving Fox Sports Detroit less than half the normal content, and sponsors less than half the normal exposure, as in a 162-game season. However, if recent PGA and NASCAR events are any indication, live sports during a nationwide drought of live entertainment make for big TV ratings and a premium on ad slots.
cated in the same region and effectively compete for talent, the competition comes as no shock to Guy Cecala, CEO and publisher of the Bethesda, Md.-based industry trade publication Inside Mortgage Finance. But this time does feel different, he said. “You know we’ve always heard reports about them competing for customers, one of them badmouths the other one,” Cecala said. “I don’t think anyone would term (this) ‘healthy competition.’” Detroit-based Quicken Loans and United Shore, headquartered 30 miles north in Pontiac, only truly compete over a small chunk of business.
See TIGERS on Page 16
See COMPETITORS on Page 17
TRADE
Moroun’s bid for hazmat trucks on Ambassador Bridge continues after his death BY CHAD LIVENGOOD
One of the public battles Manuel “Matty” Moroun spent years waging to strengthen his transportation business enterprise at the Ambassador Bridge is already raging on a week after his death. Before the 93-year-old businessman passed away July 12, Moroun’s Detroit International Bridge Co. had begun making another attempt to convince officials at the Michigan Department of Transportation — a longtime Moroun adversary — to let trucks hauling gasoline, flammable chemicals and corrosives materials cross over the Ambassador Bridge. Since 1994, MDOT has prohibited
Varga
Santana
Class 3 hazmat — fuel and other combustibles — as well as corrosive materials in Class 8 from being trucked across the Ambassador Bridge, North America’s busiest border crossing for commercial trucks. In 2014, MDOT kept in place a ban
on trucks carrying those hazardous materials from using Moroun’s Detroit-to-Windsor bridge, even after its own engineers signed off on the bridge company’s safety plans to use escort vehicles for trucks with diamond-shaped hazmat placards. “This comes up every so many years and I wish they would stop,” Wayne County Commissioner Ilona Varga, D-Lincoln Park, said after the commission unanimously opposed hazmat trucks on the Ambassador Bridge. “We don’t want any more hazardous waste brought into Michigan.” But the ban on hazmat trucks crossing the river in Detroit doesn’t keep hazardous waste out of Michigan.
It just diverts fuel tank trucks and other hazmat freight to the Blue Water Bridge in Port Huron or the Detroit-Windsor Truck Ferry, which transports tanker trucks carrying motor fuel, paint and even flammable distilled spirits such as whiskey and tequila from a dock in Southwest Detroit’s Delray neighborhood. “We definitely have to revisit things in the state on an annual basis,” said state Sen. Sylvia Santana, a Detroit Democrat who supports letting certain hazmat trucks cross the Ambassador. “That bridge not only supports Michigan’s economy, but it also supports economies across the Midwest.” The Ambassador Bridge is currently
INSIDE Manuel ‘Matty’ Moroun, a look back at a tough and controversial legacy. PAGE 18 approved for trucks hauling Class 2 hazmat (gases), Class 4 (flammable solids), Class 5 (oxidizing substances and organic peroxides) and Class 6 (toxic substances). The Moroun family’s DIBC is not seeking to add Class 1 hazmat (explosives) or Class 7 (radioactive materials). See HAZMAT on Page 18 JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 3
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Quicken Loans taking part of One Campus Martius addition Among the spate of new details revealed last week in Quicken Loans Inc.’s declaration that it intends to go public, we learned that Dan Gilbert’s Kirk Detroit-based PINHO mortgage giant is going to occupy a portion of the One Campus Martius building addition. Yeah, it was long suspected that Quicken would take at least a portion of the $95 million, 310,000-squarefoot addition, but a lease amendment filed with the U.S. Securities and Exchange Commission as part of its Former S-1 confirms that. Quicken is leasing 83,250 square feet of the addition as part of a lease amendment that gives Quicken part of the fifth floor, and all of the eighth, ninth, 10th, 11th and 12th floors of the building. The lease in the existing building is for 371,505 square feet, bringing Quicken’s total footprint in the building to 454,755 square feet. The lease expires Dec. 31, 2028. Other tenants taking the space are not yet known. “We have received significant interest from prospective tenants for the One Campus Martius addition that represent a variety of industries. We expect to complete the addition later this year,” Gabrielle Poshadlo, vice president of communications for Gilbert’s Bedrock LLC real estate company, said in an email last week. Gilbert and Meridian Health purchased what was then the 1 millionsquare-foot former Compuware Corp. headquarters building for $142 million in 2014. It is now owned by Gilbert and the Cotton family.
Downtown Detroit building up for auction The former Bert’s on Broadway building downtown is going to on-
4 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
The building at 1315 Broadway St. downtown is going to online auction next month with a starting price of $1.2 million. | SCREENSHOT/TEN-X.COM
“WE HAVE RECEIVED SIGNIFICANT INTEREST FROM PROSPECTIVE TENANTS FOR THE ONE CAMPUS MARTIUS ADDITION THAT REPRESENT A VARIETY OF INDUSTRIES. WE EXPECT TO COMPLETE THE ADDITION LATER THIS YEAR.” — Gabrielle Poshadlo, vice president of communications, Bedrock LLC
line auction next month. The starting bid for the roughly 16,000-square-foot building at 1315 Broadway St. is $1.2 million, according to the online listing at ten-x.com. The auction is being coordinated by Farmington Hills-based Friedman Real Estate. I left a message with one of the brokers coordinating the Aug. 10-12
auction seeking additional details. The building is owned by an affiliate of Vision Investment Partners LLC, a family office that launched in August 2016 in Bloomfield Hills. Crain’s reported that at the time, the fund purchased both 1315 Broadway as well as a building at 12241234 Randolph St. Detroit property records say Vision Investment Partners paid $1.4 million for the Bert’s building four years ago. I left messages with Vision Investment Partners executives Michael Sarafa and Kevin Denha to get more information on what happened with the building. They had retained Birmingham-based Jonna Luxury Homes as the developer and Detroit-based Archive DS as the architect. Mark Nickita, head of Archive DS, said his company produced mixeduse concepts for both buildings, but he hasn’t heard back on the plans recently from Vision Investment Partners. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
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COMMENTARY
Rate-setting proposal lets insurers ‘low-ball’ doctors EDITORIAL
Police need to step up to keep businesses open Here’s what restaurants and retailers need now that Gov. Gretchen Whitmer has made masks mandatory in Michigan: Resolve. Patience. Customers who act like grown-ups. Here’s what they don’t need: Law enforcement proactively telling the public they won’t even try to enforce a mandate intended to keep those businesses open in the first place. Nobody likes wearing masks. But the best way to keep Michigan open is to accept that they can help reduce the spread of coronavirus and the likelihood of another economic shutdown. And nobody — business owners least of all — wants to be the bad guy when Joe Customer pitches a fit at a store entrance. It’s a shame that yet another government BY ABDICATING mandate has to fall THE on businesses’ backs, while at the same ENFORCEMENT time other arms of ROLE, POLICE ARE the government say they don’t have busiPUTTING IN nesses’ backs. DANGER THE But someone has to step up, and someOFTEN one has to backstop. That doesn’t mean OVERWORKED out a squad AND UNDERPAID sending car for every mask RETAIL WORKERS. complaint. But it does mean police should send the message that a public health mandate is important and flouting it carries a consequence — in this case, a $500 misdemeanor citation. Unfortunately, retailers have been undercut repeatedly this week by some law enforcement officials whose proclamations seem prompted more by politics than public service. Some county sheriffs have proactively announced, via social media or press release, that they do not intend to enforce the mandate, including those in Saginaw, Arenac, Van Buren and Gratiot counties. Van Buren County Sheriff Dan Abbott, for example, told residents to call Michigan State Police instead. “I am a constitutional sheriff as well as a proponent of making sure people’s civil liberties and rights are not violated,” Abbott wrote July 11 on Facebook. “With that being said, a lot of the executive orders that have been issued are in question, starting at the
state level all the way down to local government…. our office questions the legality of these orders.” In Macomb County, officials have said they will not issue citations to those not wearing masks, but will respond if business owners call for assistance. Mask complaints should be referred to the state Attorney General’s office, the department said on social media. Macomb County Executive Mark Hackel, the former county sheriff, said he has a problem enforcing health orders that originate from an executive order, the Macomb Daily reported. “When it comes to making laws outside of the legislative branch, I can’t agree with that,” he said. No one wants, or expects, police to drop more urgent matters for mask enforcement. But leaving private businesses to be the bad guy — with few options if customers don’t comply — isn’t the answer. Confusion, anger and even violence follow, as illustrated by a tragic confrontation last week in Eaton County in which a knife-wielding man was fatally shot by police after stabbing a man during a convenience store mask dispute. By abdicating the enforcement role, police are putting in danger the often overworked and underpaid retail workers who didn’t sign up for the job and promoting the politicization of what is properly a public health matter. The message to businesses: It’s all on you. Walmart, the nation’s largest retailer, along with Target, Starbucks and others last week announced they would mandate masks in all stores, moves that no doubt will encourage others to follow suit and make adherence more universal. Walmart can afford critical security, though, where so many smaller businesses can’t. Retailers clearly recognize the importance of preventing the spread of COVID to keep their doors open. If customers don’t — and police won’t help — it won’t be long before the doors close again.
Every year, millions of American receive a medical bill they never anticipated. This practice, called surprise medical billing, is unfortunately an industry standard and affects patients across the country. The financial strain from these bills is Rami Khoury, devastating in a time M.D., is the when many can scarcely immediate past afford health care at all. president of the Surprise medical billing Michigan also hurts doctors, who College of don’t receive fair reimEmergency Physicians. bursement pay for their medical services as a result of the practice. While there is a movement in both the Congress in Washington and the Legislature in Lansing to end the practice, not all proposals to end surprise medical billing are equal. Some, such as insurance backed rate-setting, give insurance companies too much power. The right solution to end surprise medical billing is Independent Dispute Resolution. IDR is a proven method for ending surprise medical billing. It establishes a mediation process between providers and insurers via a third-party mediator. Patients are removed from the billing dispute and no longer receive surprise medical bills. IDR proposals such as Sen. Bill Cassidy’s Stop Surprise Medical Bills Act have garnered significant bipartisan support. The bill has over 30 bipartisan co-sponsors in the Senate and has all the right provisions, including a clause that guarantees an interim reimbursement payment while provider-insurer negotiations are ongoing. IDR has a proven track record in places like New York and Texas, where it has allowed for both doctors and providers to reach a fair agreement on reimbursement rates. Patients are always kept out of the middle. The other proposal to end surprise medi-
MORE ON WJR ` Listen to Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.
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. 6 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
cal billing is government backed rate-setting. Rate-setting allows insurance companies to set their own rates of out-of-network reimbursement pay to doctors. Health insurers prioritize their bottom line, so under a rate-setting law they would naturally pick the lowest possible rate. Some proposals include a 20 percent cut in reimbursement which would put many providers, rural ones in particular, in the red. While IDR has strong bipartisan support, rate-setting has strong bipartisan opposition. Democratic leadership has called the No Surprises Act a “giveaway to insurance companies.” Major health trade associations such as the American Medical Association and the American Hospital Association have also voiced their opposition against the bill. Rate-setting would lead to practice closures across the nation. In a time where COVID-19 is ongoing and many doctors are facing a financial crisis, rate-setting will only compound the issues facing the medical community. It must be opposed in any form, and I hope Sen. Gary Peters recognizes this is not only good policy but also good politics. Surprise medical billing has existed long before COVID-19, it has continued to persist during the pandemic. With increasing health care costs across the board, patients can scarcely afford unforeseen, high-cost medical bills. While there seems to a genuine interest to end surprise medical billing, we cannot end it on the terms set forth by health insurance lobbyists. Rate-setting would allow big insurance companies to lowball doctors across the board. This could end up being the straw that breaks the camel’s back, putting tens of thousands of frontline health care providers out of work. The right proposal to end surprise medical billing is clear. Independent Dispute Resolution levels the playing field between doctors and insurers while protecting patients from surprise bills. The independent arbitration process is the only way to truly solve billing disputes without harming the consumer.
GETTY IMAGES/ISTOCKPHOTO
BLOOMBERG
BY RAMI KHOURY
Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.
OTHER VOICES
Politicians giving motorists bad advice about car insurance BY JOHN CORNACK
We all know that Michigan’s new auto insurance law was passed with the intention of giving consumers more choices when it comes to the level of care John Cornack is they will receive the president of if they get into an the Coalition automobile Protecting Auto crash. No-Fault. But with these new choices come new responsibilities, and it’s imperative that all Michigan drivers are well-educated and positioned to make the best decisions for themselves and their families. Of course, let’s be honest — the new law is also pretty complicated, and it’s easy to get lost in the thicket of jargon and options. That’s why an insurance agent is such an important partner for consumers as they choose the level of Personal Injury Protection benefits they want when they renew their policies. Your agent knows better than anyone the importance of getting the right level of insurance — and from what we’ve heard, the vast majority of agents are encouraging their clients to maintain lifetime, unlimited PIP benefits. The honest truth is that lifetime benefits are the only way to ensure that you and your family will be protected if you get into an accident. Other options — which include care that is capped at $500,000, $250,000 or even less — might sound like a lot, but those dollars can easily be wiped out by a hospital stay alone. Meanwhile, victims who receive life-altering accidents like brain or spinal cord injuries will require a high level of specialized care for the rest of their lives. Unfortunately, some influential voices in Michigan — including Detroit Mayor Mike Duggan and Anita Fox, the director of the Michigan Department of Insurance and Financial Services and the state’s top insurance official — have not been standing up for the best interests of consumers. Duggan has been encouraging residents to get capped plans, which
won’t save them much money and body ought to buy Y isn’t, in my will put them in enormous financial mind, really serving the role of helpdanger should they get into an acci- ing you make the best choice for dent. Fox, meanwhile, recently is- your family. And you should push sued a state bulletin which THE HONEST TRUTH IS THAT LIFETIME seemed to threaten insur- BENEFITS ARE THE ONLY WAY TO ENSURE ance agents with “administrative THAT YOU AND YOUR FAMILY WILL BE action” should PROTECTED IF YOU GET INTO AN ACCIDENT. they “channel” consumers toward or away from them on that ...” Obviously, Duggan and Fox are specific coverage levels. In a recent podcast interview with looking for a political win — to be Crain’s, Fox added, “An agent who able to say with a straight face that tells you one way or the other that the new auto insurance law is saving everybody ought to buy X or every- consumers money by encouraging
them to purchase capped plans. This is doing an enormous disservice to all Michigan drivers. First, for many drivers, a capped plan won’t save them much money at all. Because the savings required under the law are based on a statewide average, that’s doubly true for places like Detroit, which already suffered from sky-high rates. To compound the issue, a loophole in the law allows insurers to continue to discriminate against consumers based on where they live. Even more importantly, a capped plan represents an enormous risk — should you suffer catastrophic injury in an accident, you may be
financially ruined and forced to declare medical bankruptcy. An unlimited plan is the only smart choice — both for your pocketbook and your peace of mind. The bottom line is that politicians who are suggesting otherwise are giving you bad advice. Ever since the new law was passed, CPAN has been working to protect Michigan’s auto insurance promise by educating residents about the enormous importance of maintaining lifetime, unlimited benefits. We call on all Michigan leaders to join us and fight for the health and safety of their constituents.
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CRAIN’S AWARDS
Nonprofit nominations due Aug. 7 Crain’s Best-Managed Nonprofit program this year will focus on how nonprofits are adapting their operations to continue meeting their missions in the age of COVID-19. Nominations are open on Crain's website and close at 5 p.m. Aug. 7. Finalists must appear for in-person interviews with judges the morning of Monday, Oct. 19. Applicants will be considered with similar-sized organizations. To submit a nomination, go to CrainsDetroit.com/nominate. Questions? Email senior reporter Sherri Welch at swelch@crain.com.
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JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 7
HEALTH CARE
READY OR NOT?
H t t F n s
Hospitals feel more prepared for next wave of COVID-19
s t b t t R F
BY JAY GREENE
As positive COVID-19 cases in Michigan increase to seven-day average highs not seen in nearly two months, the looming question is whether hospitals are more prepared with staff, supplies, drugs, equipment and ICU beds for a second coronavirus wave. Executives and physicians at several health systems in metro Detroit say they are more ready now than in March and April for what they all believe will be another strong surge of COVID-19 patients in the coming months. But the various predictive models that health systems rely on range from twice as many COVID-19 cases this fall that may again strain the health care delivery system to a simple slow burn of peaks and valleys of positive cases that the system has the capacity to handle. At the height of the COVID-19 crisis in early April, Michigan hospitals were treating more than 5,200 inpatients, including more than 1,400 on ventilators. As of July 10, hospitals had 366 COVID-19 inpatients, up from 315 on July 2, the state said. Over the past month, Michigan has seen increases in daily cases from about 262 on July 1 to 653 on July 11. The rolling seven-day average for new cases on Wednesday last week was 566, a figure that doubled in 18 days, a Crain’s analysis shows. A health care and business coalition advising Gov. Gretchen Whitmer recently released a statement that indicated concern over the rising positive COVID-19 rates. Tina Freese Decker, president and CEO of 14-hospital Spectrum Health of Grand Rapids, said “worrisome trends in Michigan” are emerging as other states, like Florida and Texas, have experienced serious outbreaks in recent weeks. “We are seeing the early signs of an upturn in Michigan. We can lower our risk if we all work together,” Freese Decker said. “We must continue to be vigilant by wearing masks, staying 6 feet apart and washing our hands.” Bob Riney, president of health care operations at five-hospital
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M t m C A Henry Ford Hospital nurse in the COVID-19 critical care unit monitors patients. | MADELYN TORAKIS
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Henry Ford Health System in Detroit, said it is much more prepared to deal with another surge. Henry Ford handled the second-largest number of COVID-19 cases in the state. “We have made sure that we stockpiled 100 days of personal protective equipment and supplies based on maximum utilization so that we would not find ourselves in the (same) crisis (as before),” said Riney, adding that in March Henry Ford had 14- to 30-day supplies. “We certainly remain very worried that certain things like isolation gowns and disinfectant wipes are still very difficult to come by,” he said. Nick Gilpin, D.O., eight-hospital Beaumont Health’s medical director of infection prevention and epidemiology, said he is thankful COVID-19 cases have dropped significantly since late April. Beaumont treated more hospitalized patients than any health system in Michigan. “We prepared, but I don’t know any amount of preparation back in March would have been enough. Since things have cooled down, we have had May and June to bolster personal protective equipment,” Gilpin said. “I feel good about supplies. We have (more than 30 days) stockpile of supplies and we have secured more reusable N95 masks for our frontline staff.” But Gilpin and Riney said their biggest concern is the impact a second surge may have on staff and employees. They said Beaumont and Henry Ford have sufficient numbers of doctors, nurses and support personnel and a good staffing playbook for another coronavirus outbreak. “The thing I am most worried about is the psychological and the emotional preparedness or readiness (of staff),” Gilpin said. “A lot of our staff are still fried. We’ve all been working extra hard even since COVID slowed down in Michigan. “We all know it is inevitable there is going to be another surge and nobody’s really taken a lot of time off to break from this mentally. So if we were to get hit again with another big wave, I think the amount of burnout you’d see among staff would be significantly greater than what we saw back in March and April.” The health care workplace has long been known for its long hours, demanding pace and emotional intensity. Hospitals have tried to put in safeguards to address burnout and post-traumatic stress disorder caused by long-term stress reaction, but shortages of workers brought on by COVID-19 created almost impossible circumstances. Jeff Desmond, M.D., Michigan Medicine’s chief medical officer, said the academic health system learned many lessons from the initial COVID-19 surge. “If we see increasing cases, and we are not seeing a big bump in hospitalizations now, we have our supply chains ready to respond,” Desmond said.
Beaumont also is starting clinical trials on remdesivir and convalescent plasma (COVID-19 antibodies in blood), he said.
State, federal support?
Health care workers in the emergency room at Henry Ford West Bloomfield. | HENRY FORD HEALTH SYSTEM
Michigan Medicine, which includes the University of Michigan Health System’s three Ann Arbor hospitals, accepted more than 300 COVID-19 transfers from metro Detroit hospitals in addition to its own patients. “Every hospital was challenged with PPE, but we never ran out. We have a more detailed and rigorous way of supplying (PPE) than we did in the past,” said Desmond. “Our hospital early on required masks for all. We have continued that policy for PPE for the pandemic.” The three health systems also have much greater ability to test patients and employees for COVID-19. “We have in-house (virus diagnostic) testing and also serology (antibody) tests now,” Desmond said. “We test all patients who come into the hospital whether symptomatic or not.” Riney said Henry Ford has more experience setting up COVID-19 intensive care units and shifting staff around from ambulatory to inpatient to maximize patient support. “We have very specific triggers as to what priority we would use to expand ICU capabilities if demand exceeded supply (on) a hospital by hospital basis,” said Riney. But hospital officials say if COVID-19 hospitalizations spike again, they must take action to manage that influx along with thousands of patients they now have in their hospitals for elective surgeries and procedures that were postponed. As Michigan set aside executive orders for nonessential medical procedures in mid-June, hospitals began to ramp up services that are now between 60 percent to 80 percent of pre-COVID volume. “We are in midst of that planning” to manage a more mixed patient
Riney
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population, Desmond said. “We can be a little more nuanced for services with cases and do more testing. We cohort those (COVID-19) patients and manage those and elective cases. We will see what decisions need to be made and adjust more nimbly as things progress.” Gilpin said Beaumont has since closed its COVID-19 ICU units, but could “flip a switch” and activate them again if the volume of coronavirus patients increase. “We are managing things on a site by site basis, looking at capacity and judging if they have the bandwidth to performing elective surgeries or not,” Gilpin said. Riney said he hopes citizens wear masks and take common-sense precautions to avoid spreading COVID-19. “We’ve run models that relate to (another COVID-19 wave) and what elective surgeries we would start to curtail,” he said. “We just hope to avoid the wholesale shutdown of elective surgeries or other care because as we’ve all learned that prolonged deferment of care too long and ended up with more complicated situations.”
Improved treatment Doctors have learned much about how best to treat COVID-19 patients. Deaths in hospitals nationwide have
fallen by 50 percent since April and many attribute that to earlier treatment and limiting ventilator use. Gilpin said mild COVID-19 cases presenting in the hospital are now handled differently. Patients are still evaluated closely, but doctors have learned to look for certain signs of deterioration. “I personally believe the best place for people to recover is out of the hospital,” Gilpin said. “Our protocols are guided toward stabilizing patients (in the ER), getting them off oxygen as quickly as possible and sending them home with instructions.” Standard treatment for moderate and serious cases also has improved based on hard-learned lessons. For example, Gilpin said Beaumont documented improved mortality rates by reducing ventilator use.. “We found out (by accident) that one of our eight hospitals performed better in terms of mortality and outcomes,” Gilpin said. “Our ICU capacity at the Grosse Pointe hospital was exhausted. We were actively trying to keep people off ventilators, purely for utilitarian reasons. We didn’t know at the time, but that was the move ... keeping people off vents reduced mortality.” Desmond said Michigan Medicine learned to position patients face down when they require ventilator support. “We have (heart-lung) bypass machines and found some success with patients needing oxygen,” he said. Gilpin said critical care doctors also use more of the antiviral remdesivir and steroids such as dexamethasone, along with oxygen and fluids. Remdesivir, which raises blood levels of liver enzymes, has been used in the past to fight SARS and MERS.
Earlier this year, state and federal officials squabbled over responsibility to assist hospitals, doctors and other first responders on supplying personal protective equipment during the pandemic. There still is no resolution to the dispute. And just in the past three weeks, COVID-19 cases have been increasing in at least 40 states. On Thursday, the US shattered another daily record. There were 77,255 new cases reported, topping a previous high set two days earlier, according to Johns Hopkins University. On Thursday, Florida and Texas both set coronavirus death records. “When I watch what is happening in Florida, I get flashbacks to when we were in the eye of the storm,” Riney said. But Jay Fiedler, the state’s director of the division of emergency preparedness and response, said Michigan is better prepared with increases in testing and diagnosis, contact tracing and personal protective equipment. “No one knows what the future holds. We are looking at what is happening down south. It is very sobering,” Fiedler said. “We are taking what is happening elsewhere into consideration and will do whatever we can to help support (health care providers).” Fiedler said hospitals have more bed capacity, ventilators and have two large alternate care sites, including the TCF Regional Care Center in Detroit, that can open if necessary. Hospitals deluged by COVID-19 also can transfer patients to lower-volume facilities. Michigan now has nearly a 90-day stockpile of supplies, Fiedler said. “We are on the open market (to purchase more supplies) and are working with vendors to create our own supply chain,” he said. The White House has said that the national stockpile gave away 18 million N95 masks, all that it had by the end of April. It now has built up a supply of 36 million N95 masks with a goal of having 152 million masks by September and 314 million by December. Riney said political and health care leaders should advocate more strongly for cooperation between all levels of government to improve supply chains. “(Government) now has data that they can use to solidify the stockpile plans for both state and national levels,” Riney said. “They may not have had the data or any understanding of the amount of PPE you can go through when you’re in a pandemic. We know that now.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 9
SPORTS BUSINESS
USPBL beefs up broadcasting, pleads for permission to host more fans Baseball league founder tries to gain solid financial footing during a shaky season BY KURT NAGL
Baseball may be back, but that isn’t saving the United Shore Professional Baseball League’s bottom line. The independent professional league rebooted its season at Jimmy John’s Field in Utica over the Fourth of July weekend. It is operating under a 100-person outdoor maximum capacity imposed by Gov. Gretchen Whitmer to slow the spread of COVID-19. That limit includes players and staff, meaning only around 50 fans are allowed in the Appleby 4 , 5 0 0 - cap a c i t y ballpark. The league makes nearly all of its revenue through ticket and concession sales, so playing without fans means operating at a loss, league founder Andy Appleby said. In a bid to keep fans engaged and satisfy sponsors that have continued their support during the pandemic, the USPBL has beefed up its online broadcasting of games. Its new broadcast format, streaming on YouTube and Facebook Live, will feature a play-by-play announcer, sideline reporter and four camera angles. “We have built up big fan bases,” Appleby said. “This is an opportunity to get in front of them, to upgrade our platform and to make it a cool broadcast … and integrate all our partners into it.” The main motivator is to keep the wheels turning on a shaky season
The USPBL opened its season over the Fourth of July weekend after being forced to delay the opening because of the COVID-19 pandemic. It also can’t host the number of fans it did last year because of a 100-person outdoor maximum capacity imposed by Gov. Gretchen Whitmer. | KURT NAGL/CRAIN’S DETROIT BUSINESS
and eventually gain solid financial footing. “We’re really playing these games with a fervent hope that the governor would allow us more fans,” Appleby said. Since its inception four years ago, Appleby has sold his startup enterprise as a departure from the typical professional sports game experience, emphasizing the USPBL’s focus on safe family fun. For the past several
months, he’s been making a similar pitch to the governor regarding health safety. “We’re crying from the rooftops to have someone notice,” he said. “No one in sports has quite the lower level of risk profile that we do.” Appleby said he made a “significant” investment in the league’s new broadcasting network. Games had always been aired on YouTube, but with minimal production.
Jeremy Otto, who also calls Detroit Mercy men’s basketball games, is the play-by-play announcer. Chelsea Estes, who also does TV reporting work for Oakland University men’s and women’s basketball games, is the ingame host and reporter. Appleby is hoping to soon be able to operate at 20 percent capacity, which would equate to around 950 fans. He said the ballpark has a footprint the size of Comerica Park and
that fans would not be within 6 feet of one another. Everybody would be required to wear masks and get temperature checks at the gate. More than 50 hand sanitizer stations have been installed at the venue. Players, who are paid $600-$700 a month and housed locally, also are required to wear masks everywhere but on the field. No more than seven people are allowed in the locker room at a time, and showers are closed. Before the season resumed, four players tested positive for COVID-19 and were sent home, Appleby said. As of last Tuesday, all 70 players tested negative for the coronavirus. “We’re very much our own bubble,” Appleby said. Thousands of people have tuned in to the past three games with the new broadcast format. Appleby said he expects the number to grow, “adding value” for partners with signage on the scoreboard, on outfield walls, behind homeplate and through other activations. Appleby said he is in discussions with ESPN about televising games, but no deals have been reached. Without filling the stands, at least at limited capacity, the league isn’t sustainable, and Appleby said he’ll have to decide whether to pull the plug until fans are allowed. “It wouldn’t make sense financially in any way, shape or form (with no fans),” he said. “In business school, you learn that no business can go as much as four months with no revenue.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
REAL ESTATE
David Stott Building emptied of tenants after water main break Building suffered ‘extensive damage to electrical, mechanical systems,’ remains without power BY KIRK PINHO
A building that’s no stranger to damage caused by burst pipes under previous ownership was vacated following a July 4 city water main break. The David Stott Building suffered “extensive damage to electrical and mechanical systems” and has been without power since the break, said Gabrielle Poshadlo, vice president of communications for Dan Gilbert’s Bedrock LLC real estate company, which has owned the 38-story tower at 1150 Griswold St. in the Capitol Park neighborhood since 2015. All of the building’s 107 apartments have been vacated. An FAQ document about the repairs provided to Crain’s says that more than a dozen contractors are working on things like elevators, plumbing, the HVAC system and generator maintenance. The Detroit-based firm also said it is in discussion with its insurance company to assess the damage and the scope of its policy’s coverage. “We continue to assess the damage to the Stott and estimate that repairs will take several weeks,” Posh10 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
The David Stott Building has been without power for over a week following a July 4 city water main break. | COSTAR REALTY INFORMATION INC
adlo said in a statement last week. “In the meantime, we are in constant communication with the building residents and continue offering reimbursement for hotel stays, along with a daily stipend for incidentals.” Bryan Peckinpaugh, deputy public affairs director for the Detroit Water and Sewerage Department, said that repairs to the water main were complete by July 7. Poshadlo says the “extended timeline” to repair the damage is prompting Bedrock to waive lease cancellation penalties and give tenants the option to move to another of its properties without a transfer fee. “Bedrock is committed to making the necessary repairs as soon as possible and doing whatever we can for the comfort and safety of our residents in the meantime,” Poshadlo said. Peckinpaugh said there were 66 water main breaks in the city following the July 4 holiday week, and that many of them were caused by large swings in temperature putting pressure on the pipes. “But we still have to study to determine the actual cause,” he said,
adding that Bedrock can file a claim about the damages to the building with the water department. Gilbert bought the David Stott Building and the Clark Lofts Building five years ago from a Chinese investment firm, DDI Group, for a combined $18 million: $14.9 million for the David Stott and $3.1 million for the Clark Lofts Building. Following a lengthy renovation, the building opened in August 2018 to residents. The Detroit Free Press reported at the time that the rents would be among downtown Detroit’s highest. Studio apartments start at $1,325 per month and two bedrooms start at $1,800. In February 2015 under DDI’s ownership, a burst pipe caused millions of gallons of water to flood the building’s basement when the tower was mostly empty. That came less than a year after the few commercial tenants and the broker on the building publicly worried that DDI was allowing the building to fall into disrepair. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
FINANCE
StockX sees growth during turbulent times Detroit-based ‘stock market of things’ focusing on products relevant to the era BY NICK MANES
Count StockX Inc. among the companies figuring out ways to make its business model work as the COVID-19 pandemic lingers. The Detroit-based “stock market of things,” with a focus on sneakers, handbags, watches and other luxury goods, now finds new opportunities for growth with other products relevant to the era. In particular, the company points to increased consumer demand for quarantine-friendly activities like puzzles as well as necessary face masks as helping drive growth in recent months. The company, which charges sellers on the platform a transaction fee, said in a report released last week that May and June Einhorn have been the most successful buying months in its five-year history. “The key takeaway from the perspective of our business is that despite the headwinds of COVID-19 we’ve been seeing some of our strongest growth to date,” StockX senior economist Jesse Einhorn said in an
StockX’s headquarters is in downtown Detroit. | NICK MANES/CRAIN’S DETROIT BUSINESS
interview with Crain’s. Einhorn declined to share a revenue figure, but the report notes that the total sales volume of merchandise sold on the StockX platform, or gross merchandise volume, has passed $2.5 billion. \The company, which has more
than 800 employees globally, also said it has closed more than 10 million lifetime trades, with more than 50 percent of those being transacted in the last year. Luxury goods, which make up a large amount of the goods sold on the StockX platform, are expected to
ANNOUNCING
THE NEW AND IMPROVED
have a rough go of it this year and for the foreseeable future, according to a May report from consulting firm Bain & Co. All told, luxury goods are expected to contract by 20 percent to 35 percent throughout 2020, according to the report. But that’s not been the experience for StockX, Einhorn said. He particularly emphasized strong demand in recent months for Air Jordan sneakers, the shoe made famous by basketball legend Michael Jordan. The former NBA star was the focus of the recent ESPN documentary series “The Last Dance,” and Jordan sales spiked as much as 40 percent while the show was airing, Einhorn said. That demand has not ceased since the documentary concluded in late May, he said. Ensuring that the products sold on its platform are authentic makes for a key part of StockX’s business, and the company said in its report that it has authenticated 3.5 million pairs of Air Jordans, with 1 million of those being authenticated in the last six months. What has helped the company sustain during the pandemic is its standing as a nontraditional retailer, Einhorn said. “We’re not constricted by the limitations of holding inventory,” he said. “We connect buyers and sellers from all over the world, and that has
allowed us to be very flexible and nimble at a time when buying patterns are really dramatically changing.” StockX, backed by billionaire Dan Gilbert — whose mortgage lending giant Quicken Loans Inc. is set to go public — has long been rumored as a possible public company as well. In June 2019, the company closed on a $110 million venture capital funding round that propelled StockX to “unicorn” status with a valuation of more than $1 billion. However, company spokeswoman Katy Cockrel declined to specifically address questions about a possible IPO or whether additional fundraising might be needed. “Our focus right now is on global expansion and category diversification, while continuing to grow our core business,” Cockrel wrote in an emailed statement. “This report demonstrates the extent of our progress: our European market has tripled since last year, our collectibles category has seen unprecedented growth, and we continue to be an industry leader in sneakers and streetwear. There are massive opportunities ahead, and our mission right now is to execute.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes
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JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 11
HEALTH CARE
Small rate hikes sought by health insurers for 2021 Michigan’s small business, individual insurers filed rates in small group market BY JAY GREENE
Despite the impact of COVID-19, Michigan’s average small business health insurance rates are set to rise only 1.5 percent for 2021, less than half the average rate increase of 3.6 percent this year, according to the state Department of Insurance and Financial Services. Some 16 health insurers filed rates in the small group market, which covers companies with 50 or fewer full-time equivalent employees, with premiums that range from a 7.6 percent reduction from Alliance Health and Life Insurance Company to a 15.3 percent increase from National Health Insurance Co. The largest health insurers serving the small group market are Blue Cross Blue Care of Michigan Mutual Insurance Co. (193,442 members), which filed a 0.9 percent increase; Blue Care Network of Michigan (105,671) is asking for 1.9 percent increase and Priority Health (56,784) with a 2.6 percent planned hike. “It is crucial that Michigan families are able to get the affordable health care coverage they need as we continue to feel the impacts of the COVID-19 pandemic,” said Anita Fox, DIFS director, in a statement.
“IT IS CRUCIAL THAT MICHIGAN FAMILIES ARE ABLE TO GET THE AFFORDABLE HEALTH CARE COVERAGE THEY NEED AS WE CONTINUE TO FEEL THE IMPACTS OF THE COVID-19 PANDEMIC.” — Anita Fox, DIFS director
“For the third year in a row, Michigan rate changes are below anticipated levels, and consumers will have a growing list of plans to choose from when shopping for health insurance coverage on the Marketplace,” Fox said. In the individual market, nine health insurers have filed rates that average a 1.4 percent increase for 2021 compared with a average rate cut of -2.4 percent this year. Executives of health insurance companies have told Crain’s they expect to post higher than expected profits this year as the COVID-19 pandemic has reduced claim expenses from elective procedures and physician office visits. Many have paid out premium refunds or reductions and offer free COVID-19 tests and treatments. Insurers were expected to request much higher premium increases in
2021, but executives said despite the uncertainty of COVID-19 outbreaks and the lack of a vaccine they don’t expect claims next year to be substantially higher than in 2019. Still, enrollment in both the small group and the individual market dropped over the past two years after years of steady gains. Small group enrollment declined by 1,613 people to 424,962 from 426,613; and individual enrollment dropped by 3 percent, or 10,109 people, to 322,874 from 332,893 insureds. A report this month from the National Center for Coverage Innovation found that Michigan’s uninsured rate has spiked to 12 percent in May, a 46 percent increase from last year, primarily because of the COVID-19 pandemic. Since the Affordable Care Act of 2010 expanded coverage, Michigan experienced a drop in the uninsured
rate from 12 percent in 2010 to 5 percent in 2016. The numbers of uninsured in Michigan have steadily increased the past three years, but the overall rate remains at 5 percent, according to the Kaiser Family Foundation. DIFS said people who have lost coverage or experienced a reduction in income may visit the Michigan Health Insurance Consumer Assistance Program website or call (877) 999-6442. Individuals and small group companies can purchase insurance on the Michigan health insurance marketplace, also known as Obamacare, with subsidies offered for eligible people and families. Open enrollment begins Nov. 1 and closes Dec. 15, with coverage effective Jan. 1. Overall, about 500,000 people each year in Michigan purchase individual policies, including 322,874 on the healthcare.gov health insurance exchange. The individual market represents less than 6 percent of people with health insurance because Michigan still has strong employer-based health insurance. While Michigan utilizes the federally facilitated marketplace, DIFS is responsible for reviewing all plans
and rates to ensure compliance with state and federal laws. Once DIFS has completed its review, approved rate changes are posted on its website. “DIFS is committed to providing transparency in the rate review process,” Fox said. “We welcome public input and are available for consumers if they have questions about their health insurance coverage.” Small group insurers also include the following: All Savers Insurance Company, Health Alliance Plan of Michigan, Humana Insurance Co., McLaren Health Plan Community, Paramount Care of Michigan, Paramount Insurance Company, PHP Insurance Company, Physicians Health Plan, Total Health Care USA, UnitedHealthcare Community Plan, UnitedHealthcare Insurance Company and US Health and Life Insurance Company. Individual insurers also include the following: McLaren Health Plan Community, Meridian Health Plan of Michigan, Molina Healthcare of Michigan, Oscar Insurance Co., Physicians Health Plan and Total Health Care USA. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
HEALTH CARE
FINANCE
Joan Budden to retire after 5 years leading Priority Health
Detroit Demo Day returns with virtual format
Spectrum hires firm to conduct national search for replacement BY JAY GREENE
Joan Budden, president and CEO at Priority Health in Grand Rapids, announced she will retire Jan. 1 after five years leading the Grand Rapids-based health insurer and 12 years with Spectrum Health, the parent company. Budden, 59, began her career at Priority Health in 2009 as chief marketing officer and was named CEO in early 2016, following the retirement of Michael Freed. Earlier this year, Budden’s personal and work life changed a lot when her husband Doug lost his sister, then the COVID-19 pandemic hit and the state went into lockdown with social distancing becoming the norm. “It gave us pause for life being so short and COVID reminded us of this,” Budden told Crain’s in an interview. “Working at home (the past several months) reminded us how much we get along and like to be with each other.” Budden said she never thought she would work until normal retirement age of 65 or more because of her family — two grown children, Mitchell and Megan — and interests outside of work. “Knowing the company is in a strong position has allowed me to plan for the next chapter in my life which includes spending more time with family and continuing my passion for mentoring and community service,” Budden said in a statement. “I’m incredibly proud and honored to have worked with exception12 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
“I’M INCREDIBLY PROUD AND HONORED TO HAVE WORKED WITH EXCEPTIONAL PEOPLE OVER THE LAST 12 YEARS WITHIN THE COMPANY, ALONG WITH OUR PARTNERS AND COMMUNITY LEADERS...” — Joan Budden, president and CEO at Priority Health
al people over the last 12 years within the company, along with our partners and community leaders to improve health. Priority Health is in good hands with a strong leadership team.” Spectrum Health has hired the Furst Group for an internal and external national search for the next president of Priority Health, said Tina Freese Decker, president and CEO of Spectrum, an integrated system that operates 14 hospitals and an employed medical group. “Joan’s focus on affordability and value have been vital in advancing us toward our vision of personalized health made simple, affordable and exceptional,” said Freese Decker in a statement. “She cares deeply about the company but more importantly she cares about individuals — and is willing to give generously of her time and talent to mentor others,” Freese Decker said. Budden said she spoke about her future two years ago with Freese Decker, who had just been hired to replace the retiring Richard Breon. “We committed to a two or three year time frame,” Budden said. “I decided (to leave) on the shorter
end. Six months notice is a lot, but we want to find the right person.” Once she steps down on Jan. 1, Budden said, she will split time in Grand Rapids and her hometown of Detroit, where she maintains a condo. Under Budden’s leadership, Priority Health has grown significantly to become the third largest provider-sponsored health plan in the country with 1 million members, the company said. Earlier this year, Priority merged with Total Health Care in Detroit and also crafted an in-state affiliation with Cigna Health that will begin early next year. “The partnership with Cigna is not an acquisition. We have a strategic partnership where Cigna is our arm outside of Michigan (for members needing coverage),” Budden said. “Now we are their strategic partner inside Michigan.” Budden said Cigna will share Priority’s provider network but the two health insurers also will work together on evidence-based medicine and healthy behavior projects. During her tenure, Budden championed many strategies, products and programs with the goal of en-
suring everyone has access to affordable care — as a member, employer, agent or provider. For example, Priority Health offered financial support to members and employers during the COVID-19 pandemic through premium credits and is waiving cost sharing for all virtual visits through the end of the year. Budden has received awards and recognitions over the years. Michigan Women Forward recently selected her as a recipient of its 2020 Woman of Achievement and Courage Award. She also was named a Detroit 500 Honoree in 2018 and 2019, a Notable Woman in Health care by Crain’s in 2018 and one of the 100 Most Influential Women in Michigan by Crain’s in 2016. She graduated from the University of Michigan with a bachelor’s degree in business administration and also received a master’s degree from Wayne State University. Before joining Priority Health in 2009, Budden held various executive positions at Blue Cross Blue Shield of Michigan. She currently serves as a board member for the Detroit and Grand Rapids Economic Clubs, Van Andel Institute, Grand Rapids Chamber of Commerce, UFP, Independent Bank Corporation and Alliance of Community Health Plans, a national leadership organization focused on advocating for better health care nationwide. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
BY NICK MANES
The Detroit Demo Day entrepreneurial pitch competition returns this year with a virtual format and a slightly tweaked name. The event, long sponsored by Detroit-based mortgage lender Quicken Loans Inc., is now called the Rocket Mortgage Detroit Demo Day. Applications for the annual pitch competition opened Tuesday morning and will remain open through Aug. 9, according to a news release. Those selected for the event will vie for more than $1 million in funding, which winners will receive in the form of grants, interest-free loans and equity investments ranging from $30,000 to $200,000. Those watching the virtual event will be able to vote for three recipients of $25,000 grants in the “People’s Choice” category. “The ongoing pandemic has forced entrepreneurs across the world to be more adaptable and resilient than ever before,” Laura Grannemann, vice president of the Quicken Loans Community Fund, the philanthropic arm of Rocket Mortgage, said in the release. Applications can be submitted at detroitdemoday.com Last year’s crop of entrepreneurs won approximately $1.2 million.
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Eaton
Russell Loose has joined RSM Detroit’s growing tax team as a Senior Manager. Russell spent the last 4 years with Federal Mogul / Tenneco serving a variety of roles from Tax Accounting to Global Tax Planning. Prior to Tenneco, Russell spent 13 years with PwC advising clients in all areas of tax. Russell brings extensive experience in ASC 740, SubChapter C, tax compliance, tax audit assistance, advising clients on the tax aspects of M&A transactions, and cross-border transaction analysis.
Scott Adams has been named president of Eaton’s eMobility business. In this role, he will be based in Southfield, Michigan, and reports directly to João Faria, president, Vehicle Group. Adams is responsible for leading all aspects of the business to achieve Eaton’s objectives for top-line revenue growth and profitability. He holds a bachelor’s degree in chemical engineering and a Master of Business Administration from the University of Michigan in Ann Arbor.
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MEDC takes applications until Aug. 5 for $115 million in relief grants Small business, food processors, farms are eligible BY CHAD LIVENGOOD
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Economic development agencies in Wayne, Oakland and Macomb are getting a combined $34.1 million for grants to small businesses to help entrepreneurs restart their operations. Applications for the $100 million Michigan Small Business Restart Grant Program and the $15 million Michigan Agricultural Safety Grant Program went live Michigan Economic Development Corp.’s website at michiganbusiness.org last Burton week. The deadline to apply is Aug. 5. Small businesses can apply for grants of up to $20,000 from the $100 million fund, which comes from federal coronavirus relief aid through the CARES Act. For the small-business program, “it is important to note this is not a first-come, first-serve situation,” MEDC President and CEO Mark Burton said Tuesday. The grants can be used to cover payroll expenses, rent, mortgage payments, utilities or similar business operational expenses. MEDC officials anticipate the $100 million can be spread among 5,000 businesses across the state. The state
Midland counties. Another $5.5 million was set aside for small businesses in Clinton, Eaton and Ingham counties through the Lansing Economic Area Partnership. Local economic development organizations are going to get to retain up to 5 percent of their alloted grant funds for administrative fees for processing the grants. “We didn’t land on that percentage, the Legislature did,” Burton said. “We are simply implementing what the Legislature instructed us to do.” The $15 million Michigan Agricultural Safety Grant Program is a fund set up to help defray costs food processors and farms are incurring during the coronavirus pandemic with procuring personal protection equipment and food sanitation. GreenStone Farm Credit Services is processing grants applications for farms and food processors and recommending approvals to the MEDC, Burton said. Food processors can seek grants ranging from $10,000 to $200,000 from a pool of $10 million, while farms are eligible for grants of $10,000 to $50,000 from the remaining $5 million. Under the law creating the program, the agriculture grant funds are available on a first-come, first-serve basis, Burton said.
office in Glasgow, Ky. Website: rossmortgage.com
NEW SERVICES
Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
DEALS&DETAILS CONTRACTS Qualitech, Bingham Farms, a technology company, designed and implemented a state-of-the-art conference room for Signal Restoration, Troy, a property restoration general contractor, with a 130 inch video wall and surround sound. Website: qualitech.net
EXPANSIONS Ross Mortgage Corp., Troy, a residential mortgage lender, opened an
14 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
agency has set aside 30 percent of the funds to be directed to women-, minority- or veteran-owned businesses. Businesses that previously received a Michigan Small Business Relief Program grant are not eligible for the new program, the latest effort by the state and federal governments to infuse cash into small businesses that were impacted by shutdowns in the spring because of the coronavirus outbreak. Fifteen county and regional economic development organizations are charged with awarding grants to small businesses. Each organization is getting a minimum $3.5 million in grant funds, as required by a bill setting up the program that Gov. Gretchen Whitmer signed into law last month. The Detroit Economic Growth Corp. will oversee the grant program in Wayne County and has a pool of $15.54 million in grant funds. The economic development departments of Oakland and Macomb counties have $11 million and $7.5 million, respectively, for small business restart grants. Ann Arbor Spark has $8.5 million for grants in Livingston, Washtenaw, Hillsdale, Jackson, Lenawee and Monroe counties. The Flint & Genesee Chamber of Commerce has $8 million in grant funds for small businesses in Shiawassee, Genesee, Lapeer, St. Clair, Tuscola, Sanilac, Huron, Arenac and
MERGERS & ACQUISITIONS Groundworks Companies, Virginia Beach, Va., a foundation services company, has acquired Livonia-based Foundation Systems Michigan, a foundation services company. Foundation Systems of Michigan will retain its brand identity. Websites: groundworkscompanies.com, drymich.com
MedNetOne Health Solutions, Rochester, a health care management organization, is offering a backto-work video for safe office interactions in the COVID-19 era. The video was coordinated by Practice Transformation Institute, the nonprofit training arm of MedNetOne, received funding from Blue Cross Blue Shield of Michigan’s Value Partnership Program. Websites: mednetone.net, vimeo.com/422821705
CRAIN’S DETROIT BUSINESS
July 20, 2020
July 13, 2020
”This is a way to create significant stimulus in the city of Detroit at the same time we improve our neighborhoods,” Mayor Mike Duggan said Tuesday about the new blight bond proposal. | NIC ANTAYA FOR CRAIN’S
COVID-19
Customers getting on board with wearing masks, retailers say CRAIN’S DETROIT BUSINESS
Gov. Whitmer’s no mask, no service mandate started last week BY MALIQUE MORRIS
DETROIT BUSINESS
BOND
From Page 1
“We’re going to put Detroiters to work,” Duggan said during a Tuesday news conference announcing a modified version of the bond proposal to remove neighborhood blight that failed to pass City Council in the fall . “This is a way to create significant stimulus in the city of Detroit at the same time we improve our neighborhoods.” The Duggan administration wants to get the plan, dubbed Proposal N for Neighborhoods, through City Council in the next two weeks before it breaks for recess so it could go before voters on the Nov. 3 ballot. As well as dealing with vacant, rundown houses, the plan is also being pitched as about employment, in a city with an “alarmingly high” jobless rate, according to Jeffrey Morenoff, a faculty research lead for a University of Michigan survey on the subject. And critics of last year’s proposal pointed to concerns about access for Black and minority contractors and workers. “If it’s bond proposal money that’s coming from the citizens of the city of Detroit, then we can ask that Detroit ... businesses get a fair share of that money,” Stephen Grady, chief of staff for City Council President Brenda Jones, told Crain’s on Monday, adding that the number of Detroiters working on city contracts “has to be improved.”
Preference vs. requirements A summary of Proposal N says Detroit-based companies and those that train and hire Detroiters will be given preference for work demolishing 8,000 homes and securing 8,000 others. Duggan said Tuesday the city will “require” Detroiters be hired. But it’s more complex than that. Not all contractors will have a mandate, because they can choose not to. The new version of the proposal includes a choice for all contractors: They can opt to follow the order that mandates more than half of hours be worked by Detroiters — a rule that is seen as difficult to follow due to demand far outpacing supply, but in which those who break it face fines that go toward workforce development. Or, they can choose a Fiat Chrysler-style deal. FCA must give Detroiters first priority to apply for most jobs at its Detroit plant developments expected to create 4,950 new positions, with the city funneling vetted applicants to FCA through Detroit at Work. The catch is that FCA is not ultimately beholden to hire a certain number, merely to consider them first. “(Proposal N contractors) can either opt in for one ... or, which it seems like most contractors will do, is go with No. 2 and say, ‘Hey, I’ll just commit to interview Detroit residents,’” Council President Pro Tem Mary Sheffield said Wednesday during a Council committee discussion of the proposal. “I would like stronger language around that.”
FCA and Duggan have spoken confidently, expecting to see thousands of Detroiters hired at the converted Mack Avenue engine plants and modernized Jefferson North Assembly plant. Detroiters get preference after laid-off or temporary UAW employees. Hiring continues, so final numbers remain to be seen. In a tough economic climate amid the coronavirus pandemic, it’s also not certain how many potential contractors will be rushing to hire in great waves. Michigan construction employment made gains in June, with jobs increasing by 12.8 percent from 148,600 in May, according to the state Department of Technology, Management and Budget. But it’s still down December 2019 2.8 percent 2, from the same time last year and 8 percent from February, before the pandemic.
‘Massive infusion’? Duggan said Tuesday that he expects $250 million to make for a “massive infusion in this industry.” “It’s not conceivable to me that it won’t involve large-scale hiring,” Duggan said. “You’ve got some Detroit-based companies ... they’re going to qualify for the 51 percent ... You might have another company that has never made that commitment to hiring Detroiters and if they want to participate ... they’re going to have to hire people.” The effort would also hinge on Detroit at Work’s ability and funding to drum up the necessary pipeline — something Duggan said Nicole Sherard-Freeman, Detroit’s executive director of workforce development, will address next week. There are more pieces of the Proposal N puzzle aimed at giving Detroit-based and -headquartered businesses a leg up, though. The plan includes setting aside 30 percent of contracts for businesses certified through the city as Detroit small and micro businesses. It also has a goal (not mandated) to get more than 50 percent of all work done by Detroit companies. “There’s been media coverage about the fact that Detroit companies didn’t get a lot of the federal demolition work,” Duggan said. “That’s true. But this is city money ... which means there are preferences that have significant bid benefits ... We believe well in excess of 51 percent of the contracts will be awarded to Detroit companies.” There are several other pieces of the proposal aimed at increasing opportunities for Detroit businesses,including: Limit the capacity given to larger contractors, to give smaller companies more access More promptly pay contractors Reduce barriers for participation, such as bonding requirements Crain’s Detroit Business Senior Editor Chad Livengood contributed to this report. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
As face masks have become a hot button political issue around the country, retailers are on the front lines of interacting with people refusing to wear one. Things heated up in Michigan last Monday, when Gov. Gretchen Whitmer's no mask, no service mandate kicked in, ordering businesses to deny customers service if they are not wearing proper face coverings. The governor's new mandate for businesses open to the public requires them to post signs at entrances "instructing customers of their legal obligation to wear a face covering while inside." Major U.S. retailers including Walmart, Kroger and Kohl's got on board this week, announcing they will require masks of all customers. The mandate has also heightened concerns about employee and patron safety, with apparent good reason. In Michigan, an unmasked customer stabbed an elderly man who challenged him about not wearing a mask in an Eaton County Quality Dairy store and a security guard at a Family Dollar store in Flint was shot to death in a mask-wearing dispute. Gina Ferwerda, owner of Wet Head Beach Shop, an apparel and equipment store in Silver Lake, said
Ferwerda
London
following Whitmer’s announcement she has to remind fewer customers to put on their masks. “Since Monday, we’ve had probably over 90 percent coming over with their masks on,” Ferwerda said. Prior to the new policy, only about 50 percent of her customers came into Wet Head already wearing something to cover their mouth, she said. Ferwerda noted that because she is in a high-tourist area, some outof-towners not be aware of the CRAIN’Smay DETROIT BUSINESS rule, and she uses it as an education moment, as well as an opportunity to sell fun, stylish masks that feature graphics like Rosie the Riveter. In Royal Oak, Lori London, owner of Write Impressions, a stationery and gift shop, has found her patrons to be cooperative. “We’ve had zero pushback on the masks. We only may have had one or two people who came in forgetting,” London said. “It’s also more of
a liberal town. It’s sad that it’s a political issue.” Getting people to wear a mask throughout their shopping experience has been contentious for Nikki Bell, assistant manager at the Sherwin Williams store in Roseville. Bell said the store features ample signage that “gets repeatedly more specific,” with some signs asking customers not to pull their masks down when talking to employees or one another. Although customers have been more compliant since Whitmer’s mandate, she’s still getting pushback from at least a few customers each day, Bell added. In addition to providing free masks, she said she politely tells patrons the mask requirement is a corporate rule and in the best interest of everyone’s safety. London and Ferwerda both emophasized that there are economic implications playing a role in getting more people on board with following Whitmer’s policy. “We don’t have to want to go back into lockdown,” London said. “With Monday’s mandate, people are taking it serious,” Ferwerda said. “We do want our kids to go back to school, we do want to see our economy growing.” Contact: mmorris@crain.com
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CRAIN’S
TIGERS
ings, particularly in player salaries — its largest expense. Just when it seemed the baseball From Page 3 season would survive the COVID-19 “The viewership’s going to be very pandemic, disputes between the good, which will be great for Fox MLB and the Major League Baseball Sports, and it’ll be great for the Ti- Players Association nearly put the gers, just their brand in general, to nail in the coffin. Citing revenue loss be out in front of the public,” said from no fans and fewer games, league Michael Dietz, president of Farm- owners wanted to pay players less. ington Hills-based Dietz Trott Sports The union didn’t budge, arguing that owners are more than capable of fully & Entertainment Management. It isn’t entirely clear how the un- compensating players putting their usual season is impacting the team’s health at risk to salvage a season. The two sides finally reached an deals with Fox Sports or sponsors. The Tigers declined to comment agreement that will pay players profor this story. Neither Fox Sports De- rated salaries based on the number troit nor its national parent company of games played. Because only 37 percent of the normal season will be would discuss its deal with the team. The Ilitches’ 10-year agreement played, players will earn just 37 percent of their usual “PLAYING IN EMPTY STADIUMS IS NOT A yearly salaries. For the Tigers, GREAT DEAL FOR US ECONOMICALLY, that means paying BUT OUR OWNERS ARE COMMITTED TO out 37 percent of its $100 million payDOING THAT BECAUSE THEY FEEL IT’S roll in 2020. For example, aging slugIMPORTANT THAT THE GAME BE BACK ger Miguel Cabrera ON THE FIELD …” will collect $11 million this season, in— MLB Commissioner Rob Manfred stead of $30 milwith Fox Sports to broadcast Tigers lion, while the second highest paid and Red Wings games expires next player, pitcher Jordan Zimmermann, year. Crain’s reported last year that will take home $9.25 million instead of the family was exploring launching $25 million. Six other players on the its own regional sports network like roster will be paid at least $1 million a handful of professional teams have for the season. Operating a 41,300-capacity balldone in other markets. Dietz, who worked in senior man- park is significantly less costly to do agement positions for 18 years at Il- when it is empty. The Tigers won’t itch Holdings Inc. until 2003, said be paying for hundreds of vendors, it’s likely the team worked out a new security guards and janitors during deal with the TV network, or reached game days. Buffalo, N.Y.-based Delaware a compromise addressing the shortNorth, which operates retail and conened season. “I know that relationship goes cession stands at Ilitch-controlled Coback really far … and they want to merica Park and Little Caesars Arena, continue that relationship far into expects the venues’ 1,656 employees will remain laid off indefinitely due to the future,” he said. Assuming the baseball season the COVID-19 pandemic. The hospitality company filed a moves forward as planned, the Tigers will serve as a case study for the WARN notice with the state late last Lions, next in line to begin their sea- month that said the layoffs, which son Sept. 13. The lowly Pistons started in March and were originally didn’t qualify for the NBA’s “bubble” thought to be “short-lived,” could exexperiment in Orlando, nor are the tend past six months. “… This is an evolving situation, Red Wings a consideration in the and as business resumes, we will be NHL’s tentative playoff plans. The Lions have yet to announce recalling associates,” the letter said. It is unclear how many employees plans for the season and have deferred comment to the NFL, which the Tigers will have on hand during has stayed mostly quiet. The idea of game days this season. When the fans at Ford Field seems to be more outbreak first began, the Ilitches created a $1 million fund to assist imunlikely as the season approaches. pacted workers.
Losses and savings
MLB Commissioner Rob Manfred said the league stood to lose $4 billion this season with no fans. While that number was likely an overestimate as the league continues bickering with players over salaries, the financial hit is certainly large. “We’re a big business, but we’re a seasonal business and unfortunately, this crisis began at kind of the low point of revenue for us,” Manfred said on CNN in May. “Playing in empty stadiums is not a great deal for us economically, but our owners are committed to doing that because they feel it’s important that the game be back on the field …” The Tigers were estimated to have a net income loss of $84 million this year, according to a presentation made by the league to the players’ union in May that was first reported by the Associated Press. That was the smallest of losses among the 30 teams, with the largest being the New York Yankees at $312 million. The scaled-down season does set up the Tigers for a big-time cost sav-
Playoffs opportunity Detroit sports fans are all too familiar with the concept of a “rebuild.” Rife with young talent, the Tigers were never considered serious playoff contenders for 2020, but a shortened season would seem to play in their favor. Any team has the potential to catch fire, and with so few games, a streaky season could easily lead to a pennant run. The Tigers’ improved chances for a title — even with the asterisk — could lead to more inspired play and a more compelling product to lure viewers. Making the playoffs would earn players and teams more money, as lucrative national broadcast revenue is split among participating clubs. Not to mention a morale boost for a city that badly needs it right now. “Sports has always come back and often lead our city and country out of difficult times,” Dietz said. “We believe sports will lead us out of the COVID-19 pandemic.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
TRAVEL
From Page 1
The executive operator of Ferndale-based loss prevention, safety and risk consulting firm J&P Consulting LLC was in the middle of a fiveday business trip around Ohio, starting in Cleveland and ending in Dayton. This was his first time back on the road since the COVID-19 outbreak hit the Midwest in March. He usually spends 26 weeks a year traveling to see clients. “I have an analytical approach and this is my ‘new normal,’” Pappas said as he finished prepping a dinner in the hotel room’s kitchenette of sliced roast turkey, a spinach salad with heirloom tomatoes, Brussels sprouts and fresh berries. “You have to be prepared. You have to be deliberate about every little thing you do now.” Pappas is the new business traveler in a new world defined by a growing pandemic threat even as businesses resume operations across the country. From airline boarding and hotel cleaning protocols to learning local regulations, getting from the home office to a client in another state is less about accumulating frequent flyer miles than avoiding a one-way ticket to the intensive care unit. Pappas only stays with Hilton or Marriott hotels because he feels most comfortable with their COVID-19 room cleaning regimen, which includes a sprayed electrostatic sanitizing application and sticker seals on doors indicating that rooms have been cleaned and no one else has entered. The rooms must have a kitchenette, so he can prepare healthy meals in his room and avoid eating out at restaurants. Pappas chooses to rent a car over flying over the inability to socially distance on a flight. “I need to be very careful because I
HENRY FORD
From Page 1
The Henry Ford furloughed 1,400 employees, or 80 percent of its staff, cut executive and management-level pay by 10-20 percent and Mooradian’s pay by 25 percent before the end of March when it became apparent the closures would not be short term, she said. Those and other cost-cutting moves, along with seven months of operating cash on hand, sustained the nonprofit short term as the pandemic settled in. But as of June, it had only two months of operating cash left, said Brent Ott, vice president of business services and CFO. “We’ve been a strong financial organization, but we’re a large employer with a high reliance on earned revenue. And we were not eligible for PPP or government relief funding ... those three things put us in this position where we are,” Ott said. The July 2 reopening of the museum and Greenfield Village at reduced capacity is bringing in some new revenue. And the Reactivate The Henry Ford Fund, a campaign to raise $10 million or more, launched early this month with a commitment from an unnamed member of the nonprofit’s board to match all gifts. The revenue gap is forcing the organization to look at its options for taking on new debt, which would add to a $29 million bond previously issued for the restoration of Greenfield Village, Ott said. “There’s a reality that we’re still operating at a loss moving forward,” he said. “We need to be able to finance and
16 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
United Shore Tigers
am an only child with two elderly parents with underlying conditions,” Pappas said. “I’m the only caretaker if something happens. I just can’t test positive for this disease ... for them.” Business travel by car is rebounding slightly faster than air travel, David Reimer, executive vice president and general manager for the Americas for American Express Global Business Travel, told Crain’s in an email. But overall business travel through early July is down 93 percent, he said. Only 295,299 passengers flew in and out of Detroit Metropolitan Airport in May, according to the latest available data from Wayne County Airport Authority. That’s down more than 90 percent from nearly 3.3 million passengers in May 2019. But flights have been increasing in recent months across the U.S. Delta Air Lines Inc. told Crain’s the airline is averaging 2,200 flights per day in July, compared to 1,040 daily flights across the U.S. in May. Yet, July’s total remains down roughly 60 percent, year over year. Flight hours for Corporate Eagle, which sells fractional ownership of private jets to corporate and private clients and managers flights at Oakland County Intentional Airport, are down 74 percent from 2019, said CEO Rick Nini. But after an initial drop, flight hours were only down 50 percent in the first half of July. “We’re open, we’re here, but a lot of members simply don’t have any place to go,” Nini said. “This is unchartered territory, but frankly, it feels great we’re only down 50 percent.” Corporate Eagle hired two new pilots during the COVID-19 pandemic in preparation for the return of business travel, which Nini predicts will increase tremendously by the first quarter of 2021. “Business travel never completely stopped,” Reimer said. “Sectors infund that loss until we can ramp back up to our full operation.” The financial vulnerabilities of arts and cultural organizations and other large nonprofits with low operating cash is something Jeff Williams, director of the community data and research lab at Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy, called out in the late spring. His analysis of the 2017 forms of more than 5,000 Michigan 501(c)(3) nonprofits showed those organizations had a median of two months of cash on hand and five and a half months of cash and savings. Arts, culture and humanities groups in Southeast Michigan generally fared a little better, with 2.2 months of cash on hand, according to Williams’ analysis.
Revenue evaporated As everyone hunkered down in March as the coronavirus outbreak worsened, much of The Henry Ford’s revenue evaporated. Nearly two-thirds of the $77 million annual budget with which it started the year hinged on earned revenue from admission tickets, food and retail purchases, event rentals and memberships. It now expects to end the year with a budget half that size, with costs outpacing revenue by $10 million or more, Mooradian said. A year and a half ago, at the end of 2018, it reported $421 million net assets or fund balances on its 990 filing with the Internal Revenue Service, but that amount included restricted and permanently endowed funds that can’t be tapped to help improve liquidity, Ott said.
cluding government, health care and energy have continued essential travel since February. But we’re now seeing the prioritization of revenue-generating, customer-facing trips.” A client in Seattle went through a major business restructuring in June and Troy VandenBosch, associate vice president of investments for Farmington Hills-based Raymond James, decided it was important to be there, in person, for support. In addition to employee furloughs and executive pay cuts, The Henry Ford deferred updates to its website and campus restaurants and other expenditures. It also shifted its annual Invention Convention to a virtual event that drew hundreds of inventors. “While we can’t do everything online, there’s a lot we can do and we’re trying to keep our mission active and alive,” Mooradian said. Still, many of its costs are fixed, she said. The Henry Ford has responsibility to care for 26 million artifacts, 83 historic structures in Greenfield Village, historic rides like its steam locomotive, the museum, Benson Hall, 250 acres of grounds including the areas that touch the Rouge River, sheep (which gave birth to a dozen or more young during the pandemic), and other live animals including horses, cows, pigs and chickens. It employs staff trained to present expertise on various subjects to guests, stakeholders and viewers of its weekly national television series. “This is why it’s so complicated to run an institution of our size and magnitude,” Mooradian said. The Henry Ford is continuing to modify spending wherever it can, she said. “We need to stay open and have that opportunity to offer all of that programming so we can continue to impact our community ... and serve them in a way that helps them create a better future,” Mooradian said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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Joel Whitehead of Olla, La., waits in line to check his bag at the McNamara Terminal of Detroit Metropolitan Wayne County Airport in Romulus on July 16. Whitehead, a service technician for Oxidizers Inc. based in Corona, Calif., usually travels about three times a month by plane for work, however, this was the first time he was traveling by plane since April. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
“I wasn’t nervous, but maybe a little bit anxious,” VandenBosch said of flying. “We (family) didn’t leave our house for the first few months. But I’ve started reading more data on protocols and understanding the risks. And I’ve known my clients for a long time and I knew that’s where I needed to be, so I decided to suck it
COMPETITORS
From Page 3
While Quicken Loans does operate in the wholesale mortgage market — which is dominated by United Shore and its network of tens of thousands of independent brokers — the soon-tobe-public Dan Gilbert-owned company is most known for its direct-to-consumer retail model. Both Gilbert, 58, and United Shore President and CEO Mat Ishbia, 40, are graduates of Michigan State University and both are known for being fiercely competitive. Officials at United Shore say that overall they view the increasing competition with Quicken Loans as “healthy,” but believe that “independent mortgage brokers are what’s best for borrowers because they’re given access to endless options allowing brokers to provide consumers with the best rates, excellent service and speed, therefore this is the only way we do business,” according to a statement from the company. “In recent years, Quicken Loans has started to more aggressively enter this space as they saw it is a growing channel in the market. But have also continued to stay in retail as that is where the larger margins and profits are,” the statement continues. “From our perspective, offering both direct-to-consumer (or retail) lending in addition to working with mortgage brokers creates a conflicting ideology of what’s best for borrowers versus what’s best for the bottom line, and that’s where the competition lies.” Quicken Loans officials did not respond to requests for comment for this
up and go do what I needed to do.” VandenBosch discussed the risks of travel and whether he should quarantine in a hotel when he returned with his wife. Ultimately, they decided he did not have to quarantine upon his return, as long as he was safe. That included packing various sanitizers and cleaners for the report. The narrow, but increasing overlap of wholesale mortgage competition appears to be in the background of a lawsuit filed earlier this month by Theresa Niemiec of West Bloomfield, who is married to Austin Niemiec, the executive vice president of Quicken Loans Mortgage Services, the company’s wholesale mortgage lending operation. The lawsuit names as defendant Anthony Casa, a New Jersey resident and chairman of the Association of Independent Mortgage Experts, a Clarkston-based nonprofit trade group for the wholesale mortgage industry. The association is closely aligned with United Shore, according to the lawsuit. In the lawsuit, Theresa Niemiec alleges Casa sent lewd text and video messages to Austin Niemiec and others in the mortgage industry. The taunting messages suggest, without evidence, that Theresa Niemiec was previously sexually involved with Ishbia. The lawsuit states: “Casa and his affiliates’ key objective is to injure Quicken Loans’ business activities in wholesale lending, because Casa and his comrades fear the competition from (Quicken Loans) and anything that is detrimental to Quicken Loans’ wholesale lending business is viewed by Casa as beneficial to himself, Ishbia, (United Shore) and AIME.” In a video posted to Facebook, Casa expressed regret for sending the messages. On Thursday, he announced he would take a leave of absence from the organization. United Shore, in a statement to industry trade publication Housing Wire, condemned Casa’s actions, but expressed support for the organization.
hotel as well as packing clothes in sealed bags inside his luggage to prevent any contamination, he said. “I am a bit of a germaphobe, so I am always careful about getting sick,” VandenBosch said. “I wasn’t going to belly up to a bar with clients or anything and I am wary of going where there’s an outbreak. I have clients in
In a video posted to Facebook, Anthony Casa apologized for sending crude text messages and videos about an Quicken Loans executive’s wife. | FACEBOOK
“(United Shore) stands behind AIME and the mortgage broker channel,” the statement reads. “What AIME has done for the mortgage broker channel over the last two and a half years has provided independent mortgage brokers with a voice, a community, and advocacy beyond anything that has ever existed in the broker channel, even at its peak. ”
Fight over BRAWL Much of the animus stems from a mortgage industry trend a few years ago. Niemiec’s lawsuit states that Casa founded the now-defunct advocacy group known as Brokers Rallying Against Whole-tail Lending, or BRAWL, in 2017. BRAWL was closely connected to United Shore and wholesale brokers
Texas and Florida and those are not But for self-described “road warrior” places I wanted to go. I would be pet- Cathy Henderson, it’s time to return to rified of being in an airport in Florida business travel. The senior consultant right now. Maybe if it was life or at business advisory firm Broadsword death for a client.” Solutions Corp. typically spends more Access to and understanding the than 42 weeks a year traveling. safety guidelines and cleaning protoShe booked client meetings, and cols of airlines and hotels is critical to flights, coincidentally in Cincinnati getting business travelers back, ac- and Dayton, Ohio, for August. Hencording to a recent survey by Ameri- derson flew last week to Georgia, a can Express. Of those surveyed, 82 current COVID-19 hotspot, last week percent said they would consider for a baseball tournament for her son. traveling this year if they had access “It was what I expected and I felt to reliable information. safe,” Henderson said. “Every passenThat’s where David Fishman, presi- ger had a mask and no one comdent of Southfield-based Cadillac Trav- plained about it. For as much as I travel, comes in. The veteran travel agent el, I am more worried about delays ad has spent time with Delta and airport other passengers causing concerns. staff learning about the health and safe- We didn’t have any this time and I am ty protocols so they can pass that infor- comfortable with the safety protocols. mation to clients. When a business cli- “I’VE KNOWN MY CLIENTS FOR A LONG ent calls about booking a trip, Fishman re- TIME AND I KNEW THAT’S WHERE I searches the local NEEDED TO BE, SO I DECIDED TO SUCK IT COVID-19 information and hotel proper- UP AND GO DO WHAT I NEEDED TO DO.” ties to provide the lat- — Troy VandenBosch, associate vice president est information. of investments for Raymond James “I want to make all the information available to them; So, for now, August is a go.” that’s my job,” Fishman said. “I’m not Pappas has no intention of returntrying to decipher their risk but I also ing to boarding airplanes, but is travdon’t want to put them in a situation eling to Florida for a two-week stint that isn’t safe. We don’t want to send at the end of the month. Florida rethem somewhere where they’ll end corded 14,000 new COVID-19 cases up quarantined for 14 days for a two on July 16 and 156 more deaths as the day business trip.” state faces the worst outbreak in the Fishman said overall travel is down country. 90 percent, but business travel, which “This is all I do, mitigate risk. It’s makes up 35 percent of Cadillac’s my job,” Pappas said. “Working with revenue, is returning in fits and starts. my clients on their on COVID-19 pro“There’s definitely been an in- tocols, I’ve never been so impressed crease. We were seeing maybe 50 and with the private sector’s ability to 100 (business) bookings in a week,” adapt and overcome. Of course I’m Fishman said. “Then the big out- nervous, but so is everyone else. But breaks in Arizona and Florida hap- if we’re all concerned and proactive, pened and caused another setback. we can do this. Safely.” It’s a complete moving target now. No one knows what’s going to hap- Contact: dwalsh@crain.com; pen tomorrow.” (313) 446-6042; @dustinpwalsh who accused retail lenders like Quicken Loans of being “(l)enders that pose as wholesale lenders, but steal business away from brokers by retaining loans and repurposing them for their retail division,” according to the lawsuit. In a 2017 United Shore promotional video, CEO Ishbia commended the BRAWL “movement,” noting that he believed brokers would stop using lenders perceived to be stealing clients. “These brokers, these originators, are really rallying together and really making a stand, which is really interesting to see,” Ishbia said in the video. “They’re basically saying, ‘How do we create the awareness that this is going on in the marketplace and then how do we change how these wholesale lenders are treating us and make them treat us more like partners rather than just take our loan and then take our customer?’.” Around the same time in 2017, Quicken Loans President and COO Bob Walters dismissed the increasing anger toward his company and others. “The entire premise of ‘BRAWL’ — that some wholesale lenders are ‘safe’ to sell to while others are not — is flawed,” Walters told HousingWire at the time. “Those lenders that are considered ‘safe’ are generally those that immediately sell large portions of their servicing rights to companies that have powerful origination and retention capabilities. “Contrast that to a company like Quicken Loans Mortgage Services that maintains control of its servicing and commits to its partners that it won’t solicit their clients for a substantial period of time,” Walters said. In the summer of 2018, the lingering feud also spilled into public view when several United Shore employees were
found handing out fliers near Quicken Loans’ downtown headquarters. The fliers claimed that Quicken Loans doesn’t pay its in-house loan officers as well as it compensates outside brokers. Quicken Loans boasts of its workplace quality awards, so criticism of its employee business practices raises the ire of company executives, as CEO Jay Farner told Crain’s at the time. Despite the bickering over BRAWL, newly released financial information tends to point to the fact that the wholesale side of Quicken Loans’ business has been ticking up rapidly. Quicken Loans’ “partner network” generated $596.3 million in revenue in 2019, according to the company’s regulatory filing released earlier this month, ahead of a planned public offering. That made for a boost of 137.5 percent from the previous year. Quicken Loans and its various portfolio companies reported a total of $5.1 billion in total 2019 revenue. United Shore, whose business is all wholesale mortgages, in 2019 generated $3.2 billion in revenue, an increase of 138.8 percent from the previous year, according to company figures. That rapid growth has surely led to some of the bad blood, said Cecala with Inside Mortgage Finance. “The flames have been fanned by the fact that both of them have been growing very rapidly over the last five to six years,” he said. “They’ve both in their own space had a lot of success. In theory, there shouldn’t be a lot of overlap, but apparently there is. Enough to get them going after each other.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 17
MANUEL ‘MATTY’ MOROUN, 1927-2020
Self-made billionaire, owner of Ambassador Bridge dies at 93 BY CHAD LIVENGOOD AND SHERRI WELCH
Manuel “Matty” Moroun, a private, self-made billionaire trucking magnate and owner of the Ambassador Bridge, died July 11 at age 93. Matthew Moroun, vice chairman of the family’s CenTra Inc. holding company and Moroun’s only son, declined further comment to Crain’s. Moroun built a nationwide network of trucking companies from his main Warren-based business, Central Transport. Though he was still chairman of his companies, Matthew Moroun has been running the family’s enterprises in trucking, logistics, real estate development and the bridge in recent years.
In a letter addressed to “family” within Morouns’ many businesses, Matthew Moroun said his father “passed away peacefully at his home of congesMoroun tive heart failure” surrounded by family members. “While there is great sadness, there are more reasons to feel blessed by his time with all of us,” Matthew Moroun wrote in the letter. “My dad loved his family and that extended to his work family. He poured his heart into his work and over seven decades spent his time leading and protecting us.”
A first-generation American, Matty Moroun was born in June 1927 to Lebanese immigrants — two months before construction of the Ambassador Bridge began over the Detroit River. Some 49 years later, Moroun bought the bridge and became a powerful and controversial businessman. Moroun came from meager means, growing up on Detroit’s east side and working in his father Tufick’s gas station. He attended the University of Detroit Jesuit High School and earned a bachelor’s degree at the University of Notre Dame. Forbes estimates Moroun’s net worth at $1.7 billion, a calculation made based on his known and public holdings. For 2019, Crain’s estimated the Moroun family companies’ reve-
nue at $2.86 billion. Moroun rarely granted interviews. His companies often spoke through litigious actions taken to defend the bridge and related business interests. “He was a fighter from beginning to end,” his son wrote. “No matter when your paths crossed along the way, we can feel blessed by the impact he had on our lives.” Moroun’s ownership of the Ambassador Bridge since 1979 and of the former Michigan Central Station from 1992 to 2018 made him a lightning rod for criticism over the years. In 2018, the Morouns sold the boarded-up train station to Ford Motor Co. for $90 million after years of attempts to resurrect the decaying depot. After Moroun bought the bridge
HAZMAT
Lobbying the governor
From Page 3
MDOT is both regulator and competitor Bridge company officials told Crain’s they’re seeking a level playing field with the MDOT-run Blue Water, the privately owned truck ferry and the new sixlane Gordie Howe International Bridge under construction downriver that’s already been pre-approved by MDOT for hazmat trucks. When it opens in 2024, the Canadian-financed Gordie Howe bridge will be publicly owned and competing with the Ambassador for its bread-and-butter commercial truck traffic. MDOT is empowered by the federal government to decide which highways and bridges certain hazardous materials can be hauled on. In this case involving the Ambassador Bridge and its own bridge in Port Huron, MDOT is both the regulator and the competitor. “We just want to be not restricted compared to our competition, which is MDOT, and not better treated — just equally treated,” DIBC President Dan Stamper said in an interview two days before Moroun’s death. Stamper said not allowing hazmat trucks to cross the border in Detroit leaves those tractor trailers vulnerable to spills along the densely populated I-94 corridors of Wayne and Macomb counties in order to cross in Port Huron — an argument some politicians from both counties are sympathetic to. “This reduces the risk to allow that to happen,” Stamper said. “And the trucks have to ... drive 60 miles out of their way to cross the border.” MDOT’s previous review of truck routes carrying hazardous materials resulting in the 2014 denial was the end of a process that took six years to play out. In 2008, the DIBC requested MDOT reconsider the long-standing hazmat ban, triggering a study that did not get completed until 2012. The 2012 study concluded that “vehicular escorts provide an acceptable alternative to restricting certain hazardous materials” on the Ambassador. MDOT’s engineers and scientists proposed allowing all but explosives and radioactive material to be transported over the Ambassador Bridge with escort vehicles that would be similar to those that accompany oversized loads across the span. The 2012 study came out during one of the most contentious periods between Moroun, MDOT and the administration of then-Gov. Rick Snyder. 18 | CRAIN’S DETROIT BUSINESS | JULY 20, 2020
over the Detroit River, he waged a decades-long battle with the governments of Canada and Michigan over control of the crossing and against efforts to build a competing span, which is taking place downriver from the nearly 91-year-old bridge. Moroun, who lived in Grosse Pointe Shores with his wife, Nora, and his family were very private about their civic and philanthropic support until 2010-11 when several gifts were publicly announced in quick succession. The timing of those gifts was questioned, given that they came around the same time as Moroun and his Detroit International Bridge Co. were attempting to block construction of the second bridge between Detroit and Canada.
Gasoline, other flammable liquids and corrosive materials have not been allowed to be trucked over the Ambassador Bridge since 1994. The Moroun family’s Detroit International Bridge Co. has asked the Michigan Department of Transportation to reconsider its prohibition on trucks carrying those hazardous materials from crossing the 91-year-old bridge. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS
Stamper
Ajegba
In January of that year, a Wayne County judge jailed Moroun and Stamper for a night for contempt of court charges stemming from a yearslong legal fight with MDOT over construction of highway ramps connecting I-75 and I-96 to the Ambassador Bridge complex. In June 2012, Snyder inked a deal with Canadian officials to build the new bridge without any financial assistance from Michigan taxpayers. In the fall of that year, Moroun waged an unsuccessful campaign at the ballot box to block the construction of the new bridge — the end of a two-year TV advertising barrage by the DIBC to convince the public and lawmakers that a new government-owned bridge would be a boondoggle. Moroun’s camp has long suspected the January 2014 decision by MDOT’s top brass to not lift the hazmat restrictions was a form of political retribution from the governor’s office. “You had engineers who studied the problem, they did a risk analysis, the risk analysis came to a particular conclusion, the conclusion was that’s a net safety benefit to the community,” DIBC vice president Kevin Kalczynski told Crain’s. “Anything else seems like it’s
either politics or it’s past history or it’s whatever.” Community opposition to hazmat trucks in the Hubbard Richard neighborhood between the bridge complex and Corktown also was seen as a factor in MDOT’s last denial. “The 2012 MDOT report entirely failed to explain how allowing hazardous materials across the bridge would enhance public safety,” said U.S. Rep. Rashida Tlaib, a Detroit Democrat who has long clashed with the Morouns. Tlaib argues the truck ferry is “by far the safer crossing” for hazmat materials because it’s closed to passenger traffic and subject to inbound and outbound inspections by U.S. Customs and Border Protection. The Detroit-Windsor Truck Ferry, which temporarily shut down in April and May due to low traffic during the coronavirus lockdown, carries 40 to 50 trucks per day bearing hazardous materials, truck ferry President Gregg Ward said. Ward has long been aligned with Tlaib in opposition to the Morouns’ operation of the Ambassador and attempts to derail the Gordie Howe bridge project, which is being built a few hundred yards from Ward’s ferry boat dock in Delray.
New review underway Paul Ajegba, who was appointed MDOT director by Gov. Gretchen Whitmer last year, responded to the bridge company’s request to reconsider the hazmat ban in a letter last month to Stamper. Ajegba laid out a series of questions
about the Ambassador Bridge’s fire suppression system, its traffic routing and cleanup plans in the event of a fire or hazardous materials spill. He said the agency would evaluate the DIBC’s request. One reason the Blue Water Bridge is allowed to have hazmat trucks and the Ambassador cannot is the Port Huron crossing has two spans and traffic can be separated in the event of a spill or fire on one of the bridges, Ajegba said. “With the Ambassador Bridge, there’s four lanes without shoulders,” Ajegba said. “If something were to happen, how quickly can you get the first responders there when it’s backed up?” MDOT also wants the DIBC to sign a “‘hold harmless’ agreement stating that in the event of a hazardous materials spill or release into the Detroit River, all costs associated with the cleanup effort will be borne by DIBC,” Agejba wrote. MDOT wants letters from the Detroit and Windsor fire departments, as well as emergency medical services on both sides of the river, about their ability to respond to hazmat and medical emergencies on the bridge, Ajegba said. Detroit’s fire marshal inspected the bridge Wednesday and found “no violations at this time,” according to a report the DIBC released to Crain’s. Windsor’s fire chief has expressed opposition to lifting the hazmat restrictions on the Ambassador bridge, The Windsor Star reported July 8. That same day, the Windsor fire department issued a letter to the bridge company stating the fire suppression pipe system on the Canadian side of the bridge “was designed and installed in accordance” with its regulations.
Ajegba’s letter to Stamper also asked for signed letters of support from four main political leaders “in lieu of conducting several public meetings as part of showing commitment from the community.” The MDOT director specifically asked for letters from state Rep. Tyrone Carter and Sen. Stephanie Chang (who represent the area where the Ambassador bridge lands in Detroit), Mayor Mike Duggan and Wayne County Executive Warren Evans. Carter and Evans have already endorsed the bridge company’s bid for hazmat trucks. Chang sent Whitmer a letter last month expressing her “deep concern and opposition to any routing of hazardous materials onto the Ambassador Bridge.” Duggan, who may very well be the wild card on this issue, said last week that he has not yet seen a request for support or opposition to the Moroun company’s plan. Before Ajegba’s request, there was already a letter-writing campaign to convince the governor to allow hazmat trucks to cross at the Ambassador. In January, two Democratic representatives from southern Macomb County — John Chirkun and Kevin Hertel — urged Whitmer to implement MDOT’s 2012 hazmat routing recommendations to mitigate “unnecessary risk to residents” along I-94 to the Blue Water Bridge in Port Huron. In a letter sent last October to the governor, Wayne County Sheriff Benny Napoleon urged Whitmer to reconsider the 2012 study and said he “strongly supports” its conclusions. “To allow certain hazardous materials to cross over the Ambassador Bridge is an important step for the safety of our citizens because it reduces the number of miles traveled not only in Wayne County but the entire Southeast Michigan area,” Napoleon wrote. Bridge company officials say the Moroun family has invested $100 million in rehabilitating the Ambassador over the past decade. A $35 million project to finish replacing the original steel under the bridge approach decking is on track to be completed next year, Stamper said. “The investments, the goal and the design is to increase the lifespan of the bridge for another 75 years,” Kalczynski said. “So when our opponents talk about crumbling infrastructure, the old, aging bridge, they are not recognizing that we’ve made a nine-figure investment in the bridge over the last decade.”
THE CONVERSATION
Jim Murray back in the Capitol to take on state’s utilities COALITION FOR COMMUNITY SOLAR ACCESS: Jim Murray, Midwest regional director for the Coalition for Community Solar Access, is a longtime Lansing insider who worked his way up the ranks in the Legislature before spending 12 years lobbying for AT&T Michigan, the last eight years as president. After leaving the lobbying game for a few years to run the Arab American Chaldean Council, Murray is back in the mix at the Capitol. He’s joined the Washington, D.C.-based Coalition for Community Solar Access, a national group that’s seeking to open up Michigan’s utility laws to let community-based solar power installations get a foothold in the electric generation market. He recently chatted | BY CHAD LIVENGOOD with Crain’s Senior Editor Chad Livengood on the Detroit Rising podcast about his new gig. ` Crain’s Detroit Business: Tell me a little bit about this new job you have at the Coalition for Community Solar Access. What is that organization? Where are they based, what’s their general history in the solar power business? Murray: Well, the CCSA is a national coalition of businesses and nonprofits that work together to expand choice and access to solar for everybody — all households and businesses through community solar. And community solar is where it allows everybody access to solar whether or not you’re able to put rooftop solar on your house or if you have room in your yard for a solar panel. This would allow a congregation of solar where you could purchase power there to lower energy bills across the state and bring clean energy to everyone — no matter where you live. ` So what’s that look like if I live in a community? Let’s say I live in Decatur and the community wants to get together and put a solar power panel array on city-owned land. How would we go about doing that and then getting that power sold to Consumers Energy? Well, currently, you can’t. So Michigan is missing out on part of the clean energy revolution because we don’t have mechanisms in place for Michigan’s electric law to allow that to happen. And that’s what my job is going to be is open the markets through legislation and regulation. And I’m doing it not just in Michigan, but in Ohio and Wisconsin as well. ` So in other words, you’re going to war in the Capitol with DTE Energy and Consumers? Well, I wouldn’t say war. I mean, they’re friends of mine. We’ve always been part of coalitions together. I went to high school with Patti Poppe ... a small high school in Napoleon, Michigan, back in the ’80s. So we’ve been friends for a long time. One of the things
that attracted me to going to work for Community Solar, I felt when I was president of AT&T, I became president right around the time the iPhone was becoming popular — about 2008ish. And you felt right then and there that you were going to be part of something big and it was going to be life-changing. And people were going to want it. And it was fun. And I feel that same way about solar. People are starting to get the clean energy part of it. Both Republicans and Democrats are excited about it for various reasons within their philosophies. And I think that the time is right to bring some coalitions and to bring it to Michigan. ` Do you still feel excited about the iPhone? I do feel excited about the iPhone. It’s completely transformed my life, I know that. Everything is on there. I practically ran AT&T’s external affairs department from my phone for the last two years I was there. And now with this job, my bosses are in Denver, our headquarters is in D.C., we’re scattered and we do everything over that technology.
transforming us to the iPhone. That was an exciting time. I remember being a lobbyist in the Legislature and realizing for the first time that you could directly get a message right to that legislator sitting in his seat. Whereas before, you had to call their floor phone and hoped they were there or send a note in and hoped they’d come out and see you. But you could get right directly to them. That changed the lobbying world for Jim Murray, Midwest regional director, Coalition for Community Solar Access
sure. The iPhone kind of changed how government business was run as well. ` Yeah. Back to solar power. How do you intend to go about building a coalition to get the Legislature to open up the market so that other players can come in and build small arrays of solar and they get paid at a presumably higher rate to put that power onto the grid controlled by the state sanctioned monopoly? Well, there’s a lot of pluses to doing that. There’s a potential economic boon by adding jobs because clean energy leads many industries in bringing jobs. There’s additional revenues that could be possible for farmers who have land that they could use to put solar arrays on. You can tax revenues for municipalities that don’t cost anything to the taxpayer. And what we’re finding out is that energy independence at the local level because of the technological advances ... makes it more and more affordable each time. So I’m going to be seeing what kind of broad coalition I can get from the right and the left to try to bring community solar to Michigan. ` One of the arguments you sometimes hear about allowing other players into the market is that it will cost residents or businesses more to buy electricity if the two big boys are required to buy from other sources as you’re proposing here. Eventually what you’re looking to do is to lower the cost for consumers, not to lower the cost for DTE and Consumers Energy. The potential economic boon that’s created with the additional jobs and the farmers getting some revenue, I think we can make a pretty compelling case.
` Well, for full disclosure I’ve owned an iPhone for every year since 2010, I think, and it was always on Verizon. But the last time I had AT&T it was on a Blackberry and I kind of miss that Blackberry. I miss the Blackberries to be honest. That was transformative as well. It ended up
`Well, based on the weather we’ve had the last couple of weeks, it would have produced a lot of solar power. (Laughs) Yeah, no doubt.
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RUMBLINGS
Rocket Mortgage Classic raises $1.4 million for internet access The second Rocket Mortgage Classic golf tournament in Detroit has raised $1.4 million so far to increase internet access in Detroit. Organizers of the PGA Tour event, played July 2-5 without fans due to the coronavirus pandemic, hopes to raise another $600,000 by year’s end for a total of $2 million, the city and Detroit-based Quicken Loans Inc. said Wednesday. That sum will be the initial funding for Connect 313, a public-private effort with Quicken Loans, the city of Detroit, nonprofits and others building a digital inclusion strategy.
The Rocket Mortgage Classic was played July 2-5 at the Detroit Golf Club. | KURT NAGL/CRAIN’S DETROIT BUSINESS
Quicken Loans’ Rocket Mortgage division is the golf tournament’s ti-
tle sponsor. Last summer, the event raised $1.2 million for local nonprofits. “We have to understand across the entire city, who has what and what resources already exist, and I think our mission is to then link all those resources together. So you’re gonna see the first big effort being that data collection,” Quicken Loans CEO Jay Farner said at the Wednesday news conference. More than a quarter of Detroit residents lack internet access, according to city estimates. Connect 313 is an umbrella for a variety of
potential solutions to the so-called “digital divide,” including creating internet access “hubs” around the city, increasing low-cost residential internet access, getting residents internet-connected devices and teaching technology skills. Other efforts to address the digital divide include a public-private fund put together this spring, alongside the Detroit Public Schools Community District, to spend $23 million to give students computer tablets and internet connectivity with schools closed for months.
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.
JULY 20, 2020 | CRAIN’S DETROIT BUSINESS | 19