THE CONVERSATION
Small business: Reopening a business is not always a simple decision. PAGE 3
Christian Greer, president and CEO of the Michigan Science Center PAGE 22
CRAINSDETROIT.COM I AUGUST 3, 2020
ENTREPRENEURSHIP
MOTOR CITY MATCH HITS A CROSSROADS Small-business program faces decisions on how to evolve in a fast-changing landscape BY ANNALISE FRANK
A gardening services business with plans for a fresh market and cafe. A couple looking to revive a closed-down poetry-and-jazz lounge. These two Detroit businesses earned design awards through Motor City Match, the city's flagship funding machine for entrepreneurs looking to start up along commercial corridors with storefronts that need filling. But they had vastly different experiences, positive and negative, with the program that's been much-touted by city officials and is up for either evolution or demise at the end of this year. So what's next for the 5-year-old program? The city of Detroit, as of early this year, planned to Need to know renew the small busi- ` Small business ness-funding machine as grantmaking a "version 2.0" after its program’s contract original run, focusing up at end of year more on technical assis- ` Recipients report a tance. Some have ex- mix of experiences pressed concerns about how long the program takes to complete and its viability for cash-strapped entrepreneurs without in-depth knowledge of the ins and outs of building a successful business. But those aspirations got waylaid with the onslaught of the coronavirus pandemic. The small business financing landscape has changed. It's not clear if matching grants for storefront space are still the best way to help. "What I hear from our partners … and our team … Their concern is businesses that we help open may not survive this," Arthur Jemison, Detroit's chief of services and infrastructure, said in referencing the economic fallout from the monthslong pandemic.
Ashley Logan, an entrepreneur who started Klassic Mobile Gardens LLC and won a design award in late 2018, had a rough time in the Motor City Match program, which has had a mixed record, participants say. SYLVIA JARRUS FOR CRAIN’S
See MOTOR CITY on Page 20
FINANCE
1st-day blastoff for Rocket IPO? Stock market debut, as early as this week, comes at ripe time BY NICK MANES
Ground-floor investors of Rocket Companies Inc. have some significant tailwinds behind them as the Detroit-based mortgage lending giant finalizes its initial public offering, which is expected to happen as early as this week. Beyond being viewed as a mature, profitable company, the soon-to-be parent orga-
nization of Quicken Loans Inc. could be in the upper echelons of U.S. initial public offerings. Moreover, Rocket Companies' entry into the public markets appears to come during a ripe time, even despite broader economic pain such as skyrocketing unemployment and contracting GDP. See ROCKET IPO on Page 20
NEWSPAPER
VOL. 36, NO. 29 XX l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
EDUCATION
In Michigan schools, fall restart anxiety reaching a ‘fever pitch’ BY CHAD LIVENGOOD
During a Grosse Pointe Public School System board meeting Monday night that lasted nearly five hours, a board member asked whether classrooms will be cleaned between each period to prevent spread of the coronavirus. “This is the minutiae that we don’t think
about that is now at the top of our list,” Grosse Pointe school board member Cindy Pangborn said. The school district's deputy superintendent on the other end of a webcast — originally a math teacher by training — didn't have an immediate answer. See SCHOOLS on Page 19
FOCUS | NONPROFIT COMPENSATION Salaries for CEOs of state’s biggest nonprofits tangled in COVID-19’s web PAGE 10 Data analysis: The top-paid nonprofit executives, by category. PAGE 12
NEED TO KNOW
NEWS ABOUT HOOPS
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT
Pistons buy minor-league team
` WHITMER ALLOWS CASINOS, PULLS BACK UP NORTH
` AFFORDABLE-HOUSING TAX ON BALLOT IN ANN ARBOR
` UNEMPLOYMENT CLAIMS KEEP PILING UP
THE NEWS: Gov. Gretchen Whitmer signed executive orders Wednesday that allow Detroit's three casinos to reopen next week at 15 percent capacity, while clamping down again on northern Michigan bars and indoor venues. When they restart operations Aug. 5, casino employees and patrons will be required to undergo temperature checks before entering and they'll have to wear masks inside the gambling halls.
THE NEWS: Ann Arbor voters will decide whether to raise millions of dollars through a new property tax to build or acquire housing for people with certain incomes. The 1-mill tax would cost $125 per year for a home with a $125,000 taxable value, MLive.com reported. It could raise $6.5 million in its first year.
THE NEWS: New unemployment claims continue to pile up as long-term unemployment appears here to stay in Michigan. During the week ending July 25, 21,949 people in the state filed new jobless claims, down from 24,596 a week prior. However, more than 574,000 Michiganders remain on unemployment insurance in the state.
WHY IT MATTERS: Ann Arbor has one of the strongest economies in Michigan, although that also means higher housing costs compared with other communities.
` JON COTTON GETS INTO HOTEL BUSINESS
WHY IT MATTERS: MGM Grand Detroit, Motor City Casino and Greektown Casino have been closed since midMarch when the coronavirus pandemic hit Michigan, which has cost the city of Detroit $600,000 per day in lost tax revenue. (And incidentally, the order also prohibits smoking for the first time in Detroit's casinos, virtually the only public places where lighting up is still allowed.)
THE NEWS: Jon Cotton, the former owner and COO of Meridian Health of Detroit, is now in the hotel business. Cotton bought the Hotel Iroquois, a family-owned operation on Mackinac Island, on Friday for an undisclosed price from the McIntire family, who have owned and operated the boutique hotel since 1954. WHY IT MATTERS: It's a new venture for a scion of one of Michigan's wealthiest and most powerful families. The Cotton family sold Meridian, Michigan's largest Medicaid health plan founded in 1997 by Jon Cotton's parents David and Shery Cotton, to Tampa, Fla.-based WellCare Health Plans Inc. in 2018 for $2.5 billion.
The Detroit Pistons new G League team will play in an arena being built on Wayne State University’s campus. | ROSSETTI RENDERING
` The Detroit Pistons have purchased the Phoenix Suns' G League team, which will play in a new arena on Wayne State University's campus beginning in the 2021-22 season. The NBA minor league Northern Arizona Suns will be rebranded in their move to Detroit, the Pistons announced Wednesday. The Pistons' affiliation with the G League team Grand Rapids Drive will end after the 2020-21 season. Terms of the deal between the Pistons and Suns were not disclosed. Construction on the 70,000-square-foot arena near the intersection of Warren and Trumbull avenues in Midtown began last year. The $28.9 million arena is being financed primarily through bonds issued by Wayne State.
Correction ` An entry for Epitec Group Inc. on the Fast 50 list in the June 27 issue misstated the three-year revenue increase for the company. It should have said $57 million. The error did not affect the rankings, which were correctly calculated. ` A photo of Aptiv plc CEO Larry Clark incorrectly ran adjacent to a profile of Royal Oak Ford on the Fast 50 list. Royal Oak Ford's top executive and owner is Eddie Hall Jr.
Join our team and help us feed the world.
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2 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
WHY IT MATTERS: The number of unemployment continuing claims has remained above 500,000 since early April as the COVID-19 pandemic and subsequent closures ravaged the economy.
` MICHIGAN DRIVERS REFUNDED $95M DUE TO VIRUS THE NEWS: Michigan motorists are being refunded nearly $95 million in car insurance premiums due to a drop in driving and crash claims during the coronavirus pandemic, regulators said. The amount paid back varies by insurer. It typically was 15 percent to 20 percent for April, May and June, said Laura Hall, spokeswoman for the state Department of Insurance and Financial Services. WHY IT MATTERS: The refunds are a result of drivers' pulling back significantly on miles driven, which cut back on how many accidents there were. That cut down on insurance claims.
GOVERNMENT
No Patterson on ballot, but 4 vying for Oakland executive Tuesday’s winners will face off on Nov. 3 BY KIRK PINHO
For the first time in more than a generation, Oakland County voters won’t see L. Brooks Patterson’s name on the ballot. Four men — two Democrats and two Republicans — are vying on Tuesday to be the first person elected to replace the late Republican county executive, who died in a year ago at age 80 after a battle with pancreatic cancer. The winners will square off in the Nov. 3 general election. Democrat Dave Coulter, who the county board appointed to fill the remainder of Patterson’s term during a contentious selection process, is the incumbent; Treasurer Andy Meisner is the challenger. On the GOP side, former state senator Mike Kowall is facing Jeffrey Nutt of Troy.
COPING WITH COVID-19
CUTTING THEIR LOSSES
How to vote
Anita’s Kitchen in Ferndale intitially reopened with both dine-in and carryout service, but quickly found the volume of carryout dominated. So they decided to invest energy in restructuring their kitchen for carryout. | ANITA’S KITCHEN
Retailers, restaurants weigh risks, rewards of doing business during pandemic BY LAILA HMAIDAN AND MALIQUE MORRIS
Michigan restaurants and retailers endured months of lockdown and curtailed business before Gov. Gretchen Whitmer finally lifted restrictions in early June. The new rules allowed restaurants and retailers to reopen under strict guidelines. But just because they can reopen does not mean they will. That reality hit BarFly Ventures LLC, the parent company of the restaurant chain HopCat, when it filed for bankruptcy in June. During state-ordered restaurant closures, the firm was unable to pay rent at HopCat’s eight locations because of a 100 percent decline in income, BarFly Ventures’ founder Mark Sellers told Crain’s. HopCat was not successful in transitioning to a curbside pickup model, which could have recovered some of the revenue loss.
“We’re not really set up for curbside and delivery … (before the pandemic) we were dine in, we were an experience,” Sellers said. “We tried it for a week in March, and we weren’t doing a
“IT’S SO HARD TO PREDICT THE FUTURE RIGHT NOW. PEOPLE ARE SCARED TO GO OUT AND VISIT STORES.” — Meegan Holland, vice president of marketing and communications, Michigan Retailers’ Association
ton of takeout business.” Consequently, HopCat was evicted from its Royal Oak location by landlord Innovo Development Group, a Kalamazoo-based developer. “We weren’t paying rent at any of our locations,” Sellers said. “The difference is, this particular landlord wasn’t OK with that.” Business owners across the state are realizing there is no one-sizefits-all approach to reopening. “It’s so hard to predict the future right now,” said Meegan Holland, vice president of marketing and communications, Michigan Retailers' Association. “People are scared to go out and visit stores.”
A new, more detailed survey intended to gauge the level of support or opposition of the corporate leadership of eight-hospital Beaumont Health is being circulated among the 5,000 physicians of the Southfield-based health system by the presidents of the hospital medical staffs. Last week, Crain’s reported that a “no confidence” petition was circulating among doctors on CEO John
asked for confidentiality out of fear of management retaliation, told Crain’s Thursday morning that leaders of the new survey say they plan to present the results to the Beaumont board along with yet unspecified requests for action on Fox, Wood and COO Carolyn Wilson. “This survey, developed and managed by medical staff leaders, is being sent to physicians at each hospital in an effort to help resolve the ongoing and increasingly public controversy involving Beaumont
You do not need to wear a mask to vote on Tuesday, but it’s encouraged. Visit mvic.sos.state.mi.us/ to find your polling place.
Health. A secure platform is being utilized, guaranteeing anonymity,” according to the cover letter sent out by the medical staff presidents and the presidents’ council. Beaumont said in a statement that a survey is a good way to receive feedback. Top executives also are meeting with the medical staff presidents to listen to their concerns “and work with them on a path forward,” the statement said. See BEAUMONT on Page 17
See ELECTION on Page 17
See COPING on Page 18
New survey to gauge Beaumont physicians’ attitudes on leadership, merger Fox and Chief Medical Officer David Wood, M.D. The new survey — which the medical staff presidents plan to present to the 16-member Beaumont board of trustees as soon as possible — asks five questions designed to judge the relative confidence in the system’s top executives and whether the proposed merger with Chicago-based Advocate Aurora Health would enhance patient care. Several physician sources, who
Voters are encouraged to vote from home with an absentee ballot. In-person voting will be available in every jurisdiction. Polls will be open from 7 a.m. to 8 p.m.
Between them, Coulter, Meisner and Kowall have decades of experience in elected office at the local, county and state levels as mayors, township supervisors, state senators and representatives and county commissioners. Nutt has never been elected. The county has trended Democratic over the last decade or so, as one by one, they began plucking off formerly Republican countywide seats beginning in 2008, when Meisner unseated Pat Dohany and Prosecutor Jessica Cooper replaced David Gorcyca. Meisner comes into the Democratic primary with a clear fundraising advantage, having been in the race since March 2019 and being the lone announced candidate for months, but lacks the benefit of incumbency in the executive post, said David Dulio, a professor of political science and the director for the Center for Civic Engagement at Oakland University. “Andy has money but the power of incumbency is tough to overcome for challengers,” he said. Coulter didn’t officially enter the race until late October, 2 1/2 months after he was sworn in as the county’s top official following Patterson’s Aug. 3, 2019, death. But even in their first full campaign finance reporting period against each other, Meisner was able to flex his muscle.
HEALTH CARE
BY JAY GREENE
Michigan will hold a state primary election on Tuesday to determine candidates at the local, state and federal levels for the general election on Nov. 3.
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City Club Apartments LLC plans to build a mixed-use apartment and retail development on a site in Detroit that has long been rumored to be eyed for a Target Corp. store. | SCREENSHOT/BKV GROUP
Still hope for a Target in Midtown? Marketing document says so It’s been more than four years since chatter first became public about a possible Target Corp. store in Detroit’s Midtown neighborhood, but it’s been Kirk pretty quiet on PINHO that front since. Until last week. I wrote on Wednesday that a new 350-unit apartment development by Farmington Hills-based developer City Club Apartments LLC is planned, with a working footprint of 41,500 square feet of retail. What I didn’t include in that story is that a document marketing retail space for lease in another component of the broader South of Mack Avenue development at Woodward and Mack avenues — a parking deck and retail space under construction — identifies the Minneapolis-based shopping giant as taking 32,000 square feet in the City Club development. Let me stress: Everyone I’ve spoken to says it’s premature to say definitively that Target is coming to that overall 7-acre site, which has a parking deck under construction, freshly leased office space and a Marriott-branded hotel in the works. “We have an agreement with a national retailer in which we have mutually agreed that we will not disclose any information regarding our ongoing discussions,� Jonathan Holtzman, CEO and co-founder of City Club Apartments, said in a statement Tuesday. His company would develop a portion of the Nyman family-owned SoMA site, if all goes to plan. “We will honor that agreement,� he said. Note that Holtzman doesn’t say there is a signed lease with a national retailer, but instead only that there are discussions. Real estate negotiations are fluid and fragile in the best of times, never mind during a global pandemic. Jill Lewis, a spokeswoman for Target, said in an email Tuesday morn-
ing: “We are continually evaluating but he didn’t tell the CDC board the potential store locations to serve new name of the retailer. guests, but I don’t have any newAt 32,000 square feet, it would be store news to share at this time.� on the smaller side of a typical Target, The company that created the doc- which run more than 100,000 square ument, Farmington Hills-based bro- feet. kerage firm Howard Schwartz ComHowever, the company has started mercial Real Estate Services LLC, opening smaller-format stores in urtold me last week that it was last up- ban areas in recent years. In addition, dated in March. They are not working the Minneapolis/St. Paul Business on the City Club Apartments project, Journal reported in March that Target but instead the nearby parking deck is opening a store that’s just 6,000 that’s part of SoMA. square feet in an undisclosed locaThat March timeline is im“WE HAVE AN AGREEMENT portant beWITH A NATIONAL RETAILER cause brokers there apparentIN WHICH WE HAVE ly saw no reaMUTUALLY AGREED THAT WE son to not list Target as a WILL NOT DISCLOSE ANY tenant or possiINFORMATION REGARDING ble tenant as recently as four OUR ONGOING DISCUSSIONS.� months ago. Including the — Jonathan Holtzman, CEO and cofounder of City Club Apartments tenant name could also be problematic for City tion next year, following a series of Club Apartments if a Target deal — if store openings ranging from 13,000 there is one to be had — collapses, to 40,000 square feet. and other potential tenants are Jared Friedman, director of opspooked away. Unless publicly an- portunities for Farmington Hillsnounced and confirmed, it’s not com- based Friedman Real Estate, demon to see specific tenants listed in clined comment. He is marketing the materials like that. City Club Apartments development’s The materials also have fairly fresh retail space to tenants. Adam Nyinformation — including modified man, who owns the site with his faplans by Detroit-based Roxbury ther, George, declined comment last Group that were announced in Febru- week when I inquired about the ary of an AC Hotel by Marriott Inter- project. I sent him an email asking national instead of a West Elm hotel as about Target and the marketing mawas originally planned. In addition, it terials specifically. notes that the city of Detroit is leasing a pair of existing office buildings on From around the web the site for a variety of departments. That means Howard Schwartz bro- ` The Hotel Iroquois on Mackinac Iskers updated other parts of the devel- land sold last week to former Meridiopment site on the marketing mate- an Health COO Jon Cotton. rials for accuracy, but left the Target ` Michigan’s billionaires increased reference alone. their total net worth during the A source familiar with the matter COVID-19 pandemic, according to a said Holtzman told the Brush Park new report covered by MLive.com. Community Development Corp. last week that he was close to signing a Contact: kpinho@crain.com; lease with a major national retailer (313) 446-0412; @kirkpinhoCDB
CARING FOR KIDS SPONSORED CONTENT
Advocating for the health and wellness of children and families Host Larry Burns, President and CEO The Children’s Foundation
Advocating for the health & wellness of children and families
About this report: On this monthly radio program, The Children’s Foundation President and CEO Larry Burns talks to community, government and business leaders about issues related to children’s health and wellness. The hour-long show typically airs at 7 p.m. the fourth Tuesday of each month on WJR 760AM. Here’s a summary of the show that aired July 28th; listen to the entire episode, and archived episodes, at yourchildrensfoundation.org/caring-for-kids.
Paul W. Smith, Morning Talk Radio Host, WJR-AM 760 News/Talk and Philanthropist
Larry Burns: We started this COVID-19 journey in mid-March. How have you adjusted on your show? Paul W. Smith: Radio is extremely important at a time like this. The first 60 days I was on the air every day, including Saturday and Sunday. I had a program each day because I felt it was important to be there for our listeners. We are all broadcasting from our homes, which offers its own challenges, as well as some good things. I enjoy not having to get in the car and face traffic first thing in the morning. Burns: You and your wife, Kim, have helped raise more than $200 million for your philanthropic partners over the years, including the Paul W. Smith charities that you established through The Children’s Foundation. Smith: We really appreciate The Children’s Foundation’s help. The machine you’ve put together to help people has benefited our charities and our golf tournament tremendously. We’re approaching our 17th Annual Paul W. Smith Golf Classic tournament at the Detroit Golf Club on Monday, August 3rd. It’s a lot of work to put these things together and you guys are doing all the heavy lifting and I really appreciate it. Burns: So the 17th Annual Paul W. Smith Golf Classic is still happening. How have the sponsors responded? Smith: The sponsors for the
Paul W. Smith Golf Classic stepped up. The most difficult part is for me to call and ask for their help again, knowing how hard this year has been for them. It is a struggle for everyone in the business world. Yet they understand that the Children’s Center, Detroit PAL, the Police Athletic League, Variety Detroit, The Children’s Charity, and The Children’s Foundation all have a job to do under these less-than-ideal conditions. Those 55,000plus kids still need our help. Our sponsors know we can’t offer that help without their support. That is not to say that every sponsor we’ve had in the past has returned this year. There is still time to join us and I hope some new folks will. It’s easy to go to paulwsmithgolf.com and see all the different opportunities for sponsorships—presenting, golf carts, registration, clubhouse—the list goes on and on, all the way down to a hole sponsor for just $5,000. That gets you four playing spots as well as a spot in the program, signage and more. I have not raised the price for any of these sponsorships in 17 years. Burns: The Paul W. Smith Caring for Kids Club is a club with a membership and some things that go along it. Where can we find out more? Smith: Go to paulwsmithgolf.com. This is an opportunity for those who don’t wish to or can’t participate in golf to donate to help all of the important charities I mentioned earlier. We welcome, and frankly, we need, all the help and support we can get. It’s an especially trying and troubling year for charities and fundraising. I salute those who have already stepped up and hope that more will before August 3rd.
Patrick Placzkowski, Chief Executive Officer, Boys and Girls Club of Grand Rapids
Larry Burns: How have you been able to continue to provide programs to your members since the COVID-19 crisis began? Patrick Placzkowski: All Boys and Girls Clubs in Michigan shut down along with the schools on March 16. We were fortunate that we were able to immediately continue a very important aspect of what we do, which is providing a nightly hot dinner and snacks for the kids. It might seem like a simple thing, but a lot of the kids we serve rely not only on our meals, but also on food at school. Many families have two or three kids who might be in our club five nights a week. We understood that it is important to continue to provide that, not only for the kids’ health, but also for their families’ budgets. Burns: Have you seen any impact regarding the kids and their mental well-being? Placzkowski: We definitely see an expressed sense of loneliness and isolation, especially among preteens and teens. They really miss their peers. We see the younger kids exhibiting behavioral symptoms, usually of stress and anxiety that they can’t articulate. Luckily, we are wellstaffed right now and thanks to the grant provided by The Children’s Foundation, we’re launching this new program to have more tools to be able to help those kids. Burns: How is the Boys and Girls Club in Grand Rapids
going to use this grant? Placzkowski: One in four kids nationally experience what are called adverse childhood events, defined by the Centers for Disease Control as a public health issue. These events can be exposure to addiction, domestic violence, housing insecurity, food insecurity—all those kinds of things. Our kids experience these events at a higher rate than the general population. That constant level of stress can create mental health issues like anxiety and depression, but it also can bring with it chronic diseases that show up at higher rates than in the general population. What we’re going to do is twofold, thanks to the grant that we received. We’ll be working with another local nonprofit called Whole Child that specializes in training adults who are working with children and other adults to recognize the signs of chronic stress, toxic stress, anxiety and depression, and equip them with tools to help deal with those symptoms. In addition, we have a social worker from Grand Valley State University who will be doing her internship for a full year and a half within the Boys and Girls Club. She has a master’s in social work degree and a faculty member from Grand Valley working very closely with her and serving as her site supervisor. The supervisor is a therapist with experience with populations like ours. The two of them together are going to be working in the clubs and essentially just integrate it in with our daily work to gain trust and develop deeper relationships with the children. We’re committed to building on our relationship with Grand Valley so eventually we can always have an intern in each of our three clubs.
Laura Grannemann, Vice President of Strategic Investments, Quicken Loans Community Fund
Larry Burns: What is Changing the Course? Laura Grannemann: The Rocket Mortgage Classic has helped spotlight the city of Detroit on a national stage and lead toward generational, long-lasting change. Changing the Course is an opportunity to bridge the digital divide in Detroit. We know right now we have over 100,000 families without access to the internet in their home. In an increasingly virtual world, especially currently, we know that having access to the internet, digital literacy programming and technology is not a privilege anymore. It is an absolute right. Burns: Changing the Course involves more than a one-year commitment, though, correct? Grannemann: We know that this is a long-term problem and all of our partners know that as well. We are going to be committed to this for at least the next five years. Our goal is to make sure that everyone has access to digital literacy programming, technology and the internet within a 10-minute walk from their home in the next five years. Children are struggling to access the education they need, senior citizens are struggling to stay connected with friends and family, and job seekers are struggling to stay connected to employment. It’s an all-themore urgent situation given the time that we are living in right now. Burns: Tell us about the
Connect 313 Fund. Grannemann: The Connect 313 Fund is a partnership with the City of Detroit, community leaders, partners, other funders around our community, and with United Way of Southeastern Michigan to create a holistic citywide strategy around digital inclusion. We’re seeing good initiatives happening in pockets around our city but we need better access to data in terms of who has internet and technology and who doesn’t. We also need to empower our community partners: help support and stabilize neighborhood technology hubs so that our community partners are trusted places for our community members to utilize, allowing them to provide critical digital inclusion work, technology, digital literacy and internet access for all of their clients. Burns: What would be your dream of how things are in five years? Grannemann: What I would like to see is not just that everyone has access to internet in the traditional sense, but actually that we’re able to leapfrog ahead of some of our sister cities across the country. And instead of just working to install infrastructure, we’re really focused on bringing together our community in order to provide these communities safe spots where everyone knows they can access all of this holistic programming. The city of Detroit, because we are such a resilient city, because we have such a commitment from our community leaders, I really think that we have this fantastic opportunity right now to continue to build momentum towards this bigger vision of being the most connected city in America.
DEVELOPMENT
SPORTS BUSINESS
New master plan for East Jefferson Detroit City FC to sell chunk of club to fans corridor envisions public spaces — including Iggy Pop Soccer club launches campaign to sell 10 percent of team in bid to raise $1.2 million BY KURT NAGL
A new proposed plan for redevelopment of the Jefferson-Chalmers commercial corridor envisions new businesses, mixed-use commercial development and more. | EAST JEFFERSON DEVELOPMENT CORP.
Long-term east side plan rolls into next phase BY MALIQUE MORRIS
A new proposed plan for redevelopment of the Jefferson-Chalmers commercial corridor will include infrastructure improvements, public spaces, new businesses, mixed-use commercial development and more. The plan, revealed Thursday evening, comes from a collaboration between East Jefferson Development Corp., Jefferson East Inc. and the community, according to a news release. “Nobody knows and loves their neighborhoods more than Detroiters,” JEI CEO Josh Elling said in the release. “Engaging the community on this process is about more than just giving a voice to those who live and work here; it’s about ensuring inclusive and equitable development, starting with the community and continuing all the way to development.” EJDevCo CEO Derric Scott added: “We have spent the last year working closely with the Jefferson-Chalmers community to develop a plan that reflects their vision for their neighborhood, and we are excited to unveil the final project.” The effort was launched last August, with support from Houseal Lavigne Associates, an urban planning firm in Chicago, and inFORM, a design collective in Northville, the release said. Residents, business owners and other stakeholders were engaged in ongoing monthly feedback sessions, community workshops, surveys and focus groups to form the plan, which includes approximately 70 acres along Detroit’s East Jefferson Avenue corridor between Alter Road and Lakeview Street. “As development continues to move into Detroit neighborhoods, it is critical that Detroiters have a voice in the process, from ideation all the way to implementation to ensure that development happens in an inclusive way that doesn’t displace existing residents and businesses,” Scott said in the release. Although the community was involved in the planning process for the main street master plan, some longtime residents still fear that development in the area could lead to displacement. “We do not want Jefferson Chalmers to go the way of Midtown neigh6 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
Community members and planners meet to discuss a new master plan for the East Jefferson corridor in Detroit. | CONTRIBUTED
borhoods where so many of the longtime residents have been displaced as a result of the way economic development has reshaped those neighborhoods,” Linda Bowie, who has been a resident of Jefferson Chalmers for 45 years, said in a statement from Jefferson Chalmers Community Advocates, an activist organization. “In other words, with high rents, expensive restaurants and neighborhoods designed for a whiter, wealthier and younger population.” In the statement, the organization
“WE DO NOT WANT JEFFERSON CHALMERS TO GO THE WAY OF MIDTOWN NEIGHBORHOODS WHERE SO MANY OF THE LONGTIME RESIDENTS HAVE BEEN DISPLACED AS A RESULT OF THE WAY ECONOMIC DEVELOPMENT HAS RESHAPED THOSE NEIGHBORHOODS.” — Linda Bowie, longtime resident of Jefferson Chalmers
called for “economic development that intentionally addresses issues of racial equity,” which include opportunities for residents to purchase land in the area, a community center for seniors and youth and an assurance that the proposed affordable housing will be low-income inclusive. The master plan is spread across five phases, which are planned to unfold over the next 17 years at a total estimated cost of $643 million. Phase one of construction began in 2018 with developments including
23 new residential units and 60 permanent jobs, according to an outline of the plan. Phase two is planned to start before the end of this year and continue into 2021. EJDevCo, which has a $76 million development budget for 2020-21, is funding phases two and three of the Jefferson-Chalmers Master Plan, which are expected to cost about $237 million. Funding for those phases will come from $24 million in equity, $130 million in debt and $51 million in gap funding, including dollars from the city’s Strategic Neighborhood Fund as well as tax credits, Affordable Housing Leverage Fund and more, EJDevCo told Crain’s. In the middle of a pandemic that is stunting economic growth globally, backers say the Building Jefferson-Chalmers Together initiative is not wavering on its mission. “COVID-19 has emphasized the need for quality affordable housing that is prioritized by the plan. Phasing and implementation (have) been adjusted to reflect what could be a slower absorption of retail space due to the uncertainty around when and how business might resume as well as longer construction times,” organizers said in an email. “Additionally, there is a growing demand for services within the neighborhood that is easily accessible, as COVID-19 has limited accessibility to some critical services and amenities for residents outside of the neighborhood.” Contact Malique Morris: malique. morris@crain.com
Detroit City Football Club is launching what it expects to be the largest public fundraising campaign in American soccer after the COVID-19 pandemic blew up its business model. The soccer club aims to raise $1.2 million though the sale of public stock, giving fans an opportunity to own part of the team, and helping DCFC survive financial distress. The men’s team, which turned pro this year, was scheduled to restart its season Friday at Keyworth Stadium in Hamtramck, which will be empty due to restrictions on large gatherings. The women’s team, launched this year, played its first tournament last weekend in what amounts to the extent of its season as those players prepare to return to college. Not being allowed to host fans is costing the team about $100,000 in revenue per home game, and there’s no telling when that income might be restored. Gov. Gretchen Whitmer has said professional sports can resume, but not in front of spectators. “We have a sure footing at the moment, but honestly, we think the prudent thing to do is plan on the fact that we very well might not have normal crowds again until 2022,” DCFC co-owner Sean Mann said. The community investment campaign aims to sell a 10 percent minority share of the team to thousands of investors from around the world at levels ranging from $125 to $50,000. The offer would be for Class B investors, who would not have a say in the governance of the company. The team would still be majority-owned by the five original co-owners, who would equally share around 90 percent equity in the team after the community investment campaign. Inspiration and guidance for the campaign came from DCFC rival Chattanooga FC, which raised $850,000 from thousands of people worldwide in a similar campaign last year. Mann said current season ticket holders will be given the chance to convert their ticket payments into an investment in the club. They will also have the option of deferring payment to next year or receiving a refund. Investors will receive perks depending on how much they contribute. A $125 investment earns a DCFC print and invitation to an annual owners meeting, while $50,000 gets investors access to an owners’ suite at Keyworth. The club proved in its grassroots fundraising campaign to rehab Keyworth Stadium in 2016 that netting large increments is possible. That campaign, the first of its kind in Michigan, raised $725,000 from nearly 500 investors. They did not receive equity in the team, however. The investments were considered loans that were paid back with interest — two years ahead of schedule — earlier this year. Mann said some of the money raised from selling equity would be used for more renovations at Keyworth, including adding more permanent restrooms
Sean Mann
Iggy Pop
and concession stands. It would also be used to support more front office staff and salespeople to drive revenue. “We don’t see this as charity,” he said. “We’re a viable business.” To weather the financial blows from COVID-19, the team has taken around $200,000 in federal Paycheck Protection Program loan assistance. It has 22 full-time employees and provides players with salaries of around $20,000, as well as housing and food. The club’s revenue was $1.8 million in 2019, compared with $170,000 in its first year, according to the team. In that span, its total attendance has increased by more than 100,000 to 111,600. The company is valued at $10.8 million, according to a Thursday filing with the U.S. Securities and Exchange Commission. It reported debt of $338,315 in the most recent fiscal year end. It also reported a net loss of $452,499 in the most recent fiscal year, compared with a gain of $175,534 the prior year.
Quest to turn pro Not long after the club was established in 2012, its co-owners set their sites on turning professional, a difficult feat in American soccer with numerous hurdles. The major snag for DCFC was luring a high net worth investor to meet the criteria for going pro. That never materialized, but DCFC still found a path by way of the new National Independent Soccer Association. To drum up support for the fundraising, DCFC tapped Detroit-based advertising agency Lafayette American, which worked in-kind to create a marketing campaign on social media, plus a few billboards. The team will also use the halftime of its livestreamed games to air Jerry Lewis-like telethons, pre-recorded at Planet Ant Theatre in Hamtramck, to appeal to investors. Lending his voice to one of the ad spots is punk icon and Michigan native Iggy Pop, who connected with the club through his relationship with Lafayette American. “We are City until we die. Now it’s time to own up,” the former lead man of The Stooges says in a raspy voiceover during a 45-second YouTube video. One of the stipulations of the fundraising platform Wefunder is that there must be one investor who is a symbolic representative of the others. Iggy Pop agreed to the role, though his investment was minimal, and he is not regularly involved with the team. “He’s a Detroit icon, and he apparently is a fan of soccer,” Mann said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
HEALTH CARE
Henry Ford Health to test Moderna COVID-19 vaccine in Michigan Health system enrolling volunteers in clinical trial BY JAY GREENE
The road to a coronavirus vaccine is passing at least partly through Detroit. Henry Ford Health System was chosen as a late-stage trial site for the Moderna COVID-19 vaccine study, the National Institutes of Health said. Called the "mRNA-1273 coronavirus efficacy vaccine study," or COVE, Henry Ford said it is enrolling volunteers into the randomized double-blind phase 3 study of whether a two-dose vaccine prevents COVID-19 infection. Some 90 health care systems in the U.S. are trying to to enroll a total of 30,000 volunteers to participate in the Moderna vaccine study. Volunteers can sign up at henryford.com/ moderna-vaccine “Henry Ford Health System is proud to be part of the fight against this deadly virus,” said Adnan Munkarah, M.D., Henry Ford's chief clinical officer, in a statement. “As one of the region’s major academic medical centers with more than $100 million in annual research funding, Henry Ford is involved in numerous COVID-19 efforts with partners around the world.” If successful, it's unclear when the Moderna vaccine could be available for distribution. Some say early 2021 for some populations, but most experts believe not until next summer. Research subjects in the study will be monitored for two years. The study’s first two phases involved more than 600 participants and showed the vaccine to be safe, Henry Ford said. Phase 2 showed the vaccine produces antibodies; Phase 3 will determine whether the vaccine will protect against the COVID-19 virus. “Our best hope of controlling COVID-19 is with a vaccine,” Marcus Zervos, M.D., chief of infectious disease at Henry Ford, said in a statement. “The Moderna vaccine seems to be very promising. In the initial studies that have been done so far, it looks to be safe and has produced protective antibodies at the level of a natural infection.” Worldwide, more than 165 vaccines are in development with 27 in human trials, according to the New York Times Coronavirus Vaccine Tracker. The Moderna trial was the first to begin human trials. Another team of companies trying to develop a vaccine, Pfizer Inc. and Biontech, also said Monday that their vaccine research is moving along with 30,000 test subjects from Argentina, Brazil and Germany. The companies said they plan to seek regulatory review as early as October 2020. If successful, they plan to supply up to 100 million doses by the end of 2020 and as many as 1.3 billion doses by the end of 2021. Pfizer has invested in its Kalamazoo location to prepare it for COVID-19 vaccine manufacturing, if its vaccine is found to be effective. In the Henry Ford trials, researchers said, study participants will have a 50 percent chance of receiving the study vaccine or placebo, a sterile saline solution that does not contain any active vaccine. Anyone age 18 or older who is not immune-compromised or pregnant or planning to become pregnant can volunteer for the study, as long as they have not had COVID-19 or another vaccine or treatment. Volunteers will receive two shots
spaced about a month apart. They will visit their enrollment site five additional times and talk to study coordinators about 24 times over two years. During that time, participants will be closely monitored by the study team for symptoms of COVID-19 and will be tested to see if they have produced the antibodies to protect them from the coronavirus. If a participant is diagnosed with COVID-19 during their time in the study, the study team will provide the highest level of care. During that time, participants will be closely monitored by the study
team for symptoms of COVID-19 and will be tested to see if they have produced the antibodies to protect them from the coronavirus. If a participant is diagnosed with COVID-19 during their time in the study, the study team will provide the highest level of care. “Each participant’s health and safety are our top priorities,” Munkarah said. “Your participation in this trial could help determine whether the vaccine can save lives.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Henry Ford Health will be the only Michigan participant in clinical trials of Moderna’s COVID-19 vaccine candidate. | HENRY FORD HEALTH SYSTEM
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COMMENTARY
OTHER VOICES
Amid pandemic, to open or not is not the only question
Community benefits are more than just a checkbox
BY LAILA HMAIDAN
BY GEORGE GAINES AND PETER HAMMER
I
recently took a flight from one major city to another, and what I witnessed got me thinking about all this talk on when and how to reopen the economy during the coronavirus pandemic. I am a reporting intern for Crain’s Detroit Business, working remotely from New York City. When things got bad and New York shut down in mid-March, I flew home to Toronto for a few months until cases declined, and then returned. I arrived July 15 via an evening flight to LaGuardia Airport in Queens, once an epicenter of the coronavirus outbreak. As I was standing at baggage claim, I looked around at the various carousels; there were only two operative at the time. The one I was standing around had travelers socially distancing, wearing masks, some had a clear visor over their mask, as did I, and surgical gloves (courtesy of Air Canada). There was the occasional person in a hazmat suit (literally). It was clear people were nervous. So was I. Then something interesting happened. A second group of travelers arrived and surrounded the carousel next to ours. Masks on chins, groups gathered more closely together, it was the usual hustle and bustle. There were a few travelers who had their masks on properly, but it didn’t feel like it was enough. I began walking toward the passenger pickup area when I was approached by a driver who asked if I wanted a ride. His mask was covering his mouth, but his nostrils were exposed. I politely took a few steps away from him as he approached my personal space. Just 15 minutes on the ground, and already it felt like I was walking through a minefield. You see, folks, it’s not just about you, or even what your politicians are doing, it’s about what everyone is doing. We have spent the past few months looking to our governments, waiting and wanting them to make decisions on our behalf. The truth is, a big part of this is up to us. There is so much talk about the damage done to the economy, and I get it, we all want our lives back. I flew in from Toronto, Ontario, a province with a population of 14.7 million, which as of July 30 had a five-day rolling average of 89 new cases of COVID-19 a day. The flight at the luggage carousel next to ours came in from Atlanta, Ga., a state with a population of 10.7 million, with a seven-day moving average of new cases of 3,717 as of July 30. I Googled the numbers because of what I observed at the airport. (Michigan's was a little over 700 late last week.) Ontario has been effective so far in tracking and tracing cases. The province reported its first two cases on Jan. 23 and has been making an effort to trace travelers coming in since then. The airport process is rigorous. If you are coming into Canada and have no symptoms, you are required to quarantine for 14 days — and believe me when I tell you, authorities will follow up. If you are arriving and have symptoms, you are pulled aside for further
assessment at the airport. So far, 97 percent of newly reported cases have been reached within 24 hours, and 100 percent of newly reported contacts have been reached within 24 hours, according Laila Hmaidan is a to the city of Toronstudent at the Craig to’s website. Newmark Graduate You may not pay School of Journalism at the City University much attention to your friendly neighof New York and a bor up north, but we reporting intern for are not so different Crain’s Detroit from you. We have a Business. democratic system where Liberals and Conservatives vie for office once every four years. It is not exactly a two-party system, but close enough. And we love our freedom and liberties, too. But I want to say, the whole situation has not been politicized in Canada. Regardless of what political party a politician belongs to, they have been YOU SEE, FOLKS, working together to contain the coronaIT’S NOT JUST virus. In some inABOUT YOU, OR stances, they have been praising each EVEN WHAT other’s leadership; as polite as CanadiYOUR ans are, it still surPOLITICIANS prised me. My point ARE DOING, IT’S is, if there was ever a time to be united on ABOUT WHAT a front, it’s now. I reside in ManEVERYONE IS hattan, where I atDOING. tend school. In my neighborhood, I have observed everyday New Yorkers continue to be responsible. They wear their masks while walking on the sidewalks, everyone seems to respect the rules. Businesses want you to wear a mask in their space, and we do. So far, New York City has been successful at managing the numbers, with a seven-day rolling average of 291 new cases a day as of July 30, with a population of 8.4 million. We have come a long way from being an epicenter. But it’s not over. As a reporter, I have been talking regularly to business owners in Michigan about the stress they are facing with keeping their businesses afloat. But you know what else they are concerned about? Keeping their staff and customers safe. Even as they were in the eye of the storm, trying to reopen, figure out their financials and keep track of the regulations, they also talk about how much they are concerned about your safety when you visit their business. And those in doubt about whether they could achieve that decided to remain closed or rearrange their opening plans, even at the cost of their business. Let’s put our personal perspectives and political differences aside and care about each other’s safety, because many are already doing that, even when they have a lot to lose.
D
etroit is the largest majority Black City in the nation and should celebrate and preserve that distinction. Historic residents have stayed when others left, but nevertheless remain marginalized and misrepresented in democratic processes. We are denied meaningful voice in the policies that impact our lives. The name George Floyd has come to symbolize the cumulative effects of 400 years of racism in America. The violence of police brutality is physical and structural. Other aspects of racialized violence are also structural, as revealed by the health disparities of COVID-19. The systematic disinvestment in cities like Detroit is yet another form of structural violence, as is the diversion of public resources to subsidize private economic development. During the past decade, corporations doing development in Detroit by our estimates have been awarded nearly $1.5 billion in tax abatements, mostly concentrated in the downtown business district. And yet, Detroit remains one of the nation’s most impoverished cities. It is obvious that majority Black Detroit is not benefiting from these public investments. In this national moment, business as usual is no longer acceptable. Existing processes are structurally flawed and fundamentally unfair. We need to adopt new practices to ensure more equitable outcomes. How corporations engage with Detroit residents is a good place to start to repair these long-standing injustices. The Equitable Detroit Coalition calls on corporations receiving public subsidies and engaging in negotiations for Community Benefit Agreements (CBAs) to commit to set of principles toward racial equity both as a process and and outcome. As a process, we apply racial equity when those most impacted are meaningfully involved in the creation and implementation of the institutional policies and practices that impact their lives. As an outcome, we achieve racial equity when race no longer determines one’s socioeconomic outcomes.
Corporate Commitments to Racial Equity as a Process ` Respect the community. The community has deep expertise that others lack, particularly about the impact of development on the neighborhood and the needs of the people. ` Be transparent. Be forthcoming and timely with information and honest about your plans and intentions. Engage community early, not after all decisions are made. ` Engage authentically in the process. Negotiating Community Benefits Agreement (CBAs) is not a check box activity. The Community Benefits Agreement (CBA) process is an opportunity for building racial equity. ` Take the time needed to do it right. Racial equity cannot be rushed. There is nothing in the Detroit’s Community Benefits ordinance
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
George Gaines is a former Detroit city official and part of the Equitable Detroit Citywide CBA Coalition. Peter Hammer is professor of law and director of the Damon Keith Center for Civil Rights at Wayne State University Law School. that prevents a corporation from spending more time in the negotiating process than designated. ` Act in good faith. Acting in good faith requires a commitment to good will and the exercise of best efforts, an admonishment against forms of opportunistic and exploitive behavior and clear standards of accountability towards the community. It's also vital that corporations make com-
DURING THE PAST DECADE, CORPORATIONS DOING DEVELOPMENT IN DETROIT BY OUR ESTIMATES HAVE BEEN AWARDED NEARLY $1.5 BILLION IN TAX ABATEMENTS. AND YET, DETROIT REMAINS ONE OF THE NATION’S MOST IMPOVERISHED CITIES. mitments on the outcomes side: ` Commit to a fair rate of community return on the public investment. Outcomes of Community Benefits Agreements (CBAs) should reflect the principle of reciprocity. Community Benefits should meaningfully correspond to the size of the public subsidy. ` Commit holistically to enhancing the quality of life in the Detroit neighborhoods along a number of dimensions — environment, housing, education, employment, recreation and youth and senior services. ` Commit to do no harm. ` Commit to accepting the Community Benefits Agreement as binding and agree to forfeit the value of the public subsidies if the conditions of the Agreement are not met. Corporations should commit to using Community Benefits Agreements to support quality developments in the neighborhoods they are subsidized to invest in so that these neighborhoods will look like the neighborhood that their executives go home to at the end of the day
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.
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
Implicit bias training needs to be more than checking a box BY ASHA SHAHJAHAN, M.D.
An African American female had been to the hospital three times in a week for severe abdominal pain. Yelling for pain medication, she returned with the Asha Shajahan, M.D., is medical same complaint. Abdominal imdirector of community aging two weeks health at earlier was norBeaumont mal, and doctors Grosse Pointe. had labeled her a “drug seeker.” Now, after a few hours, the physician reluctantly ordered another abdominal scan that showed ischemic colitis, a serious illness. She was taken for emergency surgery and died in the operating room. If she were white, would the scan have been done earlier? If she hadn’t been labeled a “drug seeker,” would she be alive today? Discrimination kills. This incident occurred during my residency, and it lit a fire within me to get further training on minority populations and implicit bias. Several years later, I started teaching implicit bias to my medical residents because I realized too many patients suffer the health consequences of discrimination. In talking with colleagues around the nation, the story was consistent — pain medication had been denied, treatment delayed and misdiagnoses had occurred. Patients get labeled as “frequent flyers” and drug seekers. We all have unconscious or implicit bias, social stereotypes about certain groups of people that individuals form outside their own conscious awareness. Medicine is not exempt. For example, African Americans with severe depression are more likely to be misdiagnosed with schizophrenia compared with white Americans showing the same symptoms. As a result, they are put on the wrong medications. When a person has an addiction, a serious heart condition can be missed because of bias associated with addicts. The systemic consequences of racism and discrimination are a public health issue because, like COVID-19, they are worldwide, contagious and taking lives. Michigan’s governor recognizes this. Gretchen Whitmer put forth an executive order earlier last month mandating implicit bias training for all health care workers to address the glaring racial disparities with COVID-19. According to state officials, despite being only 14 percent of Michigan’s population, Black people make up 30 percent of all coronavirus cases and 40 percent of COVID-19 related deaths. But does implicit bias training work? There is no evidence it does. Then why do I teach it? The governor’s task force said people of color suffer in medical settings from the unconscious bias by medical professionals. This is only part of the problem — it’s also the social determinants of health, the circumstances of where we live, work, play and pray. Efforts to improve health in the U.S. have traditionally looked to health care as the key driver of outcomes. However, evidence shows improving health and achieving health
In my experience, medical profesequity requires broader approaches that address social, economic and sionals express gratitude after atenvironmental factors that influence tending unconscious bias sessions. health. For example, the accessibility Thoughtful discussions follows, but it stops there. Ofof public transten this educaportation affects TOO OFTEN MEDICAL tion is limited to access to emtwo hours. It’s a ployment, af- PERSONNEL BELIEVE THEY checkbox to fulfordable healthy TREAT ALL PATIENTS fill a requirefoods, and other ment. important driv- EQUALLY. EVIDENCE This is because ers of health. SHOWS OTHERWISE. most unconUnconscious bias training in medicine helps pro- scious bias training was created not as viders recognize bias. Too often med- a solution for systemic bias, prejudice ical personnel believe they treat all and discrimination, but as a risk-mitipatients equally. Evidence shows gation and compliance tool to protect organizations from litigation. otherwise.
Also, implicit bias training targets the individual and not the biased system. If health care industries want employees and leaders to learn more about discrimination, biases and stereotyping, having unconscious bias training may be the first step to bring about awareness. But if an organization strives to become more equitable, inclusive and diverse — and be positioned to leverage that diversity — it has to dig deeper, making a commitment to take a hard look at services, processes, systems, employees, communications and to redesign the system for greater equity and inclusion. It is impossible to change longterm behaviors and perceptions via a
few hours of training. We have to do more. There should also be measures to assess incremental changes and progress. Data should be collected at several stages of training and be used to ensure its effectiveness. Understand that everyone has bias and that discrimination is something we all need to work on together as a society. I applaud the governor’s executive order as an initial step but it can’t stop there. Perhaps years from now, I won’t be wondering if a patient would’ve been treated differently based on the color of her skin or if she would have lived if she hadn’t been labeled a “drug seeker.”
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AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 9
WHO’S ON TOP OF THE NONPROFIT EARNINGS LIST? Find the top-paid nonprofit CEOs list on PAGE 12
NONPROFIT COMPENSATION TRENDS
Nonprofit CEO compensation growth comes to halt amid pandemic, will fall for many in 2020
Nonprofit CEO compensation growth comes to halt amid pandemic, will fall for many in 2020
BY SHERRI WELCH
Compensation for the top-paid nonprofits in Southeast Michigan in 2018, the latest data available, was, by all accounts, fairly average. But contrasted to the havoc the pandemic is wreaking on nonprofit CEO pay this year, compensation from two years ago takes on a rosier hue. With cuts to CEO salaries and incentive pay questionable for 2020, it could be a few years before compensation returns to 2018 levels. Average pay increases for nonprofit CEOs in 2018 were in the range of 2-5 percent, commensurate with for-profit peers, according to consultants. And incentive or performance-based pay continued to make up a significant chunk of the salaries of nonprofit CEOs. Fast forward to this year, and compensation for many of those CEOs has taken a sharp downward turn, with pay freezes, pay cuts in the 10 percent to 33 percent range, and expectations that missed financial targets will lead to significant declines in incentive pay or no payouts this year for many nonprofit CEOs and other executive employ-
10 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
ees who typically earn incentives, consultants said. Some nonprofit boards are signaling they could still make discretionary bonuses this year, consultants said, to recognize management efforts and the fact that the pandemic is a macro trend that is out of their control. But Detroit Zoo Chairman Tony
Need to know Nonprofit CEOs have deferred raises, skipped bonus payouts for last year and taken pay cuts CEOs in health care and arts and culture seeing deepest cuts Incentive or performance-based payouts questionable for 2020
MARK DANE
ANOTHER CASUALTY OF COVID-19 Earley Jr., who also serves on the boards of United Way Worldwide and the hands-on science center Exploratorium in San Francisco and several for-profit companies, said everyone is taking a wait-and-see attitude on whether incentive pay will be awarded for this year. “It’s just too early too tell,” he said. Nonprofit leaders were not trained to deal with a pandemic and the unprecedented financial impact it’s brought, Earley said. They’ve had to figure out what to do about employees, how to secure paycheck protection loans through a very complex process and, in the case of the zoo, ensure animals are cared for during a pandemic. But despite extraordinary efforts by nonprofit CEOs and their teams, “if organizations are still facing an uncertain future, the boards are going to have make some difficult decisions,” Earley said.
Nonprofit CEO pay cuts started early Nonprofit CEO pay — which had been growing the past several years — took a downward turn when organizations began freezing pay and cutting the compensation of CEOs and other executives and employees as early as March, as soon as it became clear the pandemic wasn’t going to be short-lived. Closures and cancellations and other pandemic-spurred business changes resulted in significant revenue declines for many nonprofits, with health care and arts and culture organizations among those taking the hardest hit, said. The top executives at Cranbrook Educational Community, Detroit Institute of Arts, Detroit Symphony Orchestra, Detroit Zoo and The Henry Ford are among arts and cultural leaders who’ve taken pay cuts
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since the pandemic began. Most took a 20 percent salary reduction. Some took more. Ron Kagan, executive director and CEO of the Detroit Zoo, and five other executives took 33 percent pay cuts to help conserve cash during the first three months of the pandemic as nearly half of the zoo’s staff was laid off. The pay cut was lessened to 20 percent as the zoo reopened in mid-June. Kagan also told the board he would not to take the 10 percent incentive payout for 2019, which would have been awarded in March 2020, Earley said. There’s been no discussion yet of whether the 2019 incentive pay is being deferred or will be skipped altogether, he said. “Quite honestly, we haven’t thought about whether we’ll exert discretion on 2020 incentive pay because we don’t know what conditions the zoo will be facing,” Earley said. The zoo is a lot better off than it was in March when it closed its doors to public. It was able to secure PPP funding and reopened in June, which is bringing in some revenue, Early said. “But there’s still a significant shortfall.,” he said. Incentive pay awards for 2020 will be “a delicate balancing act,” he said, since nonprofits can lose top talent if they get out of line with the market. The Henry Ford’s President and CEO Patricia Mooradian took a 25 percent pay cut before the end of March as part of wider cost-savings efforts that furloughed 1,400 employees — 80 percent of the organization’s staff — and cut executive and senior leadership pay by 10-20 percent. “The plan we put in place was shared with our board chair and finance committee chair and ... implemented pretty much right away ... when it became apparent that this wasn’t just a short-term thing. ... and this was going to be a huge impact to our budget,” Mooradian said. Though her board has discretion over her pay, Mooradian said following a conversation with board chair S. Evan Weiner, it was mutually decided she will not receive incentive pay for 2020. “I think it’s absolutely necessary and appropriate. The institution that I love and that I‘m passionate about is in a serious, crippling situation,” she said. “While I have to lead it, and I get paid for a reason, I think there are certain things CEOs need to do during times like this.”
Health care CEO cuts Revenue losses due to COVID-19 are also hitting the pocketbooks of health care CEOs. “Each organization is certainly having to deal with their own individual situation. Some sectors are being hit hard, but even within those … some are being hit harder than others,” said Susan Sulisz, managing director-executive compensation in the Southfield office of Willis Towers Watson (NASDAQ: WLTW). In health care, a lot depends on the payor mix, she said. Health systems and hospitals serving larger populations of Medicaid-dependent patients vs. private pay are likely to see lower reimbursement, generally put-
Nonprofit compensation by the numbers Compensation paid in calendar 2018 is the most recent available for nonprofit CEOs and other top-paid executives. The 990 financial disclosure forms nonprofits are required to file with the Internal Revenue services are due four and a half months after the close of their fiscal year. But nonprofits can request a six-month extension which gives them 10 and a half months to file their 990 for the previous tax year. This year, due to the pandemic, the IRS automatically extended the due date for nonprofits operating on a calendar year who would have needed to file their fiscal 2019 990 by May 15 by two months. For calendar year 2018, compensation data reported on nonprofit 990 filings with the Internal Revenue Service for the 59 Southeastern Michigan executives on Crain’s top-paid nonprofit CEOs list:
3.4 percent ` Median base pay increase
2.99 percent ` Median total compensation increase
$390,088 ` Median base pay
$467,669 ` Median total compensation
ting them in a more vulnerable position financially. And that’s impacting executive compensation, Sulisz said, as evidenced by executive level pay cuts at health systems locally and around the country. Among local health care executives, Rob Casalou, president of Trinity Health Michigan in Ann Arbor, and his boss, Michael Slubowski, CEO of Livonia-based Trinity Health, took early pay cuts after the pandemic hit, Crain’s reported in April. And health system executives at Beaumont Health, Detroit Medical Center, McLaren Health Care Corp., Henry Ford Health System and Michigan Medicine at the University of Michigan followed suit. Henry Ford Health CEO Wright Lassiter III and COO Bob Riney agreed to donate 10 percent to 25 percent of their compensation into two employee relief funds. Those cuts came as the health system temporarily furloughed up to 2,800 workers in April. When it comes to incentive payout considerations for this year, health systems are “really struggling with what to do ... because whatever metrics they set may just not be relevant anymore,” Sulisz said.
“Most places are softly communi- Not all seeing cuts Given the high likelihood of missed performance targets, many cating the idea that there will not be nonprofit and for-profit boards are incentive pay this year,” said Matthew On the flip side, some nonprofit opening up the idea of using discre- Pulliam, principal consultant at Delv CEOs had seen lesser or no impact tion at the end of the year to award Partners LLC in West Bloomfield. to revenue and by extension, their “The targets are just too far off … compensation as of July, consulbonuses of some amount, despite particularly in health care where you tants said. missed targets, Dupuis said. Generally that discretion isn’t had companies that were unable leThat’s because not all nonprofits used, but this is one of those years gally to perform certain services. It’s have been adversely impacted by where it could be to continue to mo- just too hard to make up for three COVID-19. “I work with nonprofit health intivate CEOs and recognize the pan- months’ of business.” But he said it would not surprise surers ... and for the most part, it’s demic is something beyond their him if those companies decided to been business as usual …(they) control, he said. “What I’m hearing from boards is issue discretionary spot bonuses in haven’t seen executive pay cuts even if discretion is used and a bonus the fall as a retention tool. Those pay- and things of that nature,” Dupuis is appropriate, we’re going to see sig- outs could give boards the opportu- said. Dental insurers have also avoided nificantly less payouts than we’ve nity to make executives who have executive cuts and seen in past years.” other cost-cutting For nonprofit “NONPROFITS AREN’T ABOUT measures, Sulisz CEOs, missed perPROFITS AND CATERING TO said. “They are takformance goals aren’t only centered SHAREHOLDERS. THEY ARE FOCUSED ing in all the premion financial targets, ums, but nobody is ON THEIR MISSION, WHICH IS Sulisz said. going to the dentist For example, so they aren’t payGENERALLY FOCUSED ON PROVIDING … Medicare has said ing claims.” A SERVICE TO THE COMMUNITY.” health systems don’t However, if the have to report quality — Susan Sulisz, managing director-executive compensation pandemic and quarmetrics during the in the Southfield office of Willis Towers Watson antine continue, pandemic, she said, along with furloughs and some of the metrics around per- taken pay cuts whole even if they and layoffs, and people lose their formance are based on Centers for can’t increase their pay, he said. benefits, premiums will dry up as It takes roughly 30 percent of a well, she said. Medicare and Medicaid Services data. “Nonprofits aren’t about profits CEO’s cost, or third of their pay, to reA large mental health clinic Pulland catering to shareholders. They place them, Pulliam said. iam counts among his clients has “If the leaders of the boards can ... seen a substantial uptick in clients are focused on their mission, which is generally focused on providing a give the CEO a spot bonus of 10-15 due to its ability to shift to a teleservice to the community,” Sulisz percent of their pay, that ultimately is health model, he said. It ended up going to be a cost save over the basic with more clients due to the stress of said. So metrics might be based on costs of replacing them,” Pulliam said. dealing with COVID-19. But discretionary bonuses aren’t quality and service, “which they “They’ve cut their costs, and their might be able to meet quite well, even an option for some nonprofit revenue is growing — so it’s the best even if they’re struggling financially,” boards, he said. of both worlds,” Pulliam said, for the “In some cases, the CEO executive organization and its CEO. she said. But that means executives could earn plans are written in a way where a bonus on paper that their organiza- boards only have negative discre- Contact: swelch@crain.com; (313) tion” to lower payouts. 446-1694; @SherriWelch tion doesn’t have the cash flow to pay.
Incentive pay wait and see Many nonprofits are in wait and see mode when it comes to incentive pay considerations for 2020, said Tim Dupuis, a Detroit-based vice president for Chicago-based compensation firm Pearl Meyer & Partners LLC. They set performance goals at beginning of the year that most likely will not be reached in 2020, he said.
AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 11
FOCUS | NONPROFIT COMPENSATION TRENDS
CRAIN’S LIST | TOP-PAID NONPROFIT EXECUTIVES Ranked by 2018 total compensation per category Crain’s compiles a database of compensation of the top executives at prominent Southeast Michigan nonprofits. This year’s review focused on compensation data for calendar year 2018, which is the most recent available, given that nonprofits can get extensions of up to 10.5 months after the close of their fiscal year to file their 990 tax forms. This year, due to the pandemic, the IRS automatically extended the due date for nonprofits that would have needed to file their fiscal 2019 990 by May 15 by two months. It includes large nonprofits and smaller organizations that in our judgment merited inclusion, such as civic and business organizations and smaller nonprofits whose CEOs earned compensation comparable with their peers at larger nonprofits. The total compensation for some executives, where noted, is net of deferred compensation reported on a prior-year 990 to give a more accurate picture of that executive’s actual compensation and a truer ranking. In the interests of transparency, some nonprofits still completing 990s provided compensation data for their top executives upon request, as noted. Published here are some of the top-paid nonprofit executives in Southeast Michigan, broken out by the type of nonprofit. An expanded version of this list is available with a Crain’s enhanced membership at crainsdetroit.com/data. 2018 top executive
Nonprofit organization
2018 CEO total compensation
2018 base compensation
2017 CEO total compensation
Base pay change 2018/2017
BUSINESS ORGANIZATION Doug Rothwell, president 1
Business Leaders for Michigan, formerly Detroit Renaissance Inc.
$848,468
$580,053
$832,423
3.9%
Detroit Regional Chamber
$554,306
$388,185
$627,946
3.0%
SME (formerly Society of Manufacturing Engineers)
$498,700
$232,434
$485,473
N/A
Terry Barclay, president and CEO
Inforum
$343,764
$332,440
$326,229
8.8%
Glen W. Long Jr., president and CEO
Detroit Economic Growth Corp.
$314,590
$240,818
$268,389
18.4%
Anthony Michaels, president and CEO 4
Michigan Thanksgiving Parade Foundation/The Parade Co. /Woodward Dream Cruise
$705,585
$605,585
$639,800
12.2%
Patricia E. Mooradian, president & secretary 5
The Henry Ford (The Edison Institute Inc.)
$573,307
$407,456
$515,637
9.9%
Dominic DiMarco, president
Cranbrook Educational Community
$515,276
$430,150
$549,112
5.3%
Detroit Zoological Society
$482,043
$421,601
$457,086
6.1%
Detroit Symphony Orchestra
$467,857
$406,742
$452,998
0.2%
Margaret Cooney Casey, president, treasurer 7
Beaumont Health Foundation
$725,980
$391,992
$953,923
2.1%
Susan Burns, vice president for development and alumni affairs and president of Wayne State University Foundation
Wayne State University Foundation
$379,305
$308,505
$371,363
3.5%
William Shepard, VP for advancement/executive director 8
Eastern Michigan University Foundation
$347,260
$248,043
$248,297
N/A
Scott Smith, president 9
St. John Providence Health System Foundation (dba Ascension St. John and Providence Foundations)
$252,867
$129,944
$312,801
N/A
Paul Miller, president
Presbyterian Villages of Michigan Foundation
$151,841
$143,834
$156,410
7.8%
Sandy Baruah, CEO and president
2
Jeffrey Krause, former exective director and CEO
3
COMMUNITY AND ARTS AND CULTURE
Ron Kagan, executive director and CEO
6
Anne Parsons, director, president and CEO FUNDRAISING FOUNDATION
GRANTMAKING FOUNDATION Richard (Rip) Rapson, president & CEO
The Kresge Foundation
$909,227
$787,061
$855,093
6.1%
Audrey Harvey, executive director and CEO
Blue Cross Blue Shield of Michigan Foundation
$781,223
$289,634
$918,952
3.0%
Mariam C. Noland, president
Community Foundation for Southeast Michigan
$639,494
$556,705
$650,095
-1.9%
Tonya Allen, president, secretary & COO
The Skillman Foundation
$493,762
$417,294
$483,212
-1.7%
David Egner, president and CEO
Ralph C. Wilson Jr. Foundation
$488,373
$455,373
$465,710
13.4%
$12,104,983
$1,537,661
$13,421,863
0.0%
10
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BY S
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HEALTH CARE Dan Loepp, president and CEO
Blue Cross Blue Shield of Michigan/Blue Care Network
Philip Incarnati, president and CEO
McLaren Health Care Corp.
$7,311,341
$1,977,959
$6,929,688
8.2%
John Fox, president and CEO
Beaumont Health
$4,224,061
$1,848,289
$5,674,842
4.6%
Wright Lassiter III, CEO 12
Henry Ford Health System
$3,569,911
$1,493,805
$3,328,358
1.9%
Richard Gilfillan, president and CEO 13
Trinity Health
$2,951,758
$1,429,249
$2,725,228
0.0%
Kevan Lawlor, president and CEO 14
NSF International
$1,876,069
$647,436
$2,186,082
3.5%
Lincoln Smith, president and CEO
Altarum Institute
11
Other $1,183,650
$394,733
$1,493,205
5.0%
W. Clark Durant, president 16
New Common School Foundation
$843,475
$475,000
$523,294
0%
Larry Alexander, president and CEO
Metropolitan Detroit Convention and Visitors Bureau
$435,053
$414,576
$422,919
2.9%
Kristen Holt, president and CEO
GreenPath Financial Wellness
$434,054
$320,294
$397,508
3.4%
Michigan Future Inc.
$215,500
$200,000
$215,500
0.0%
Kathleen Zaracki, CEO
National Association of Investors Corp. (dba Better Investing)
$177,378
$173,275
$180,448
-2.0%
Michelle Reaves, executive director
Detroit Area Pre-College Engineering Program
$168,850
$141,485
$162,235
-3.0%
Daniel Carmody, president and CEO
Eastern Market Corp.
$153,298
$133,142
$161,588
-1.2%
Robert Cahill, president and CEO
Hospice of Michigan Inc.
$724,031
$495,743
$685,086
5.3%
Louis Glazer, president/secretary
15
17
Researched by Sonya D. Hill: shill@crain.com | NOTES: 1. The president of the organization is provided a membership to the Detroit Athletic Club for the purposes of networking. The organization treats this as nontaxable compensation. 2. Compensation from nonprofit. $415,729 from related organization. Revenue: Nonprofit estimate. 3. Compensation from the organization and related organizations. Jeffrey Krause left the organization in August 2018. Sandra Bouckley is currently serving as interim CEO and executive director. 4. 2018 Total Compensation: $48,000 comes from Woodward Dream Cruise. 2017 Total Compensation: $48,000 comes from Woodward Dream Cruise. 5. The president receives a social club membership for business purposes. The Henry Ford is reimbursed for any personal use of the membership. 6. The land, buildings and animals of the Detroit Zoo are owned by the city of Detroit. A residential home is located on the grounds of the Detroit Zoo and the executive director is required to live in this residence. The residence is not considered taxable to the executive director, given that it is a requirement of the position. 7. Related organization is Beaumont Health. Compensation reported as deferred on prior Form 990 was $208,260. 8. William Shepard had half year compensation for 2017. Shepard was named vice president for advancement, executive director effective April 17, 2017. 9. Scott Smith left the organization, effective July 2018. Renee Peck, Ascension St. John Foundation’s chief development officer, and Sara Thompson, chief development officer of Ascension Providence Foundation, are currently leading the foundations. St. John Providence is a related organization. Compensation from the organization and related organization. 10. Social club dues are paid for the president, so that the organization might hold meetings there. No part of this benefit was treated as taxable income. 11. Compensation reported as deferred on prior Form 990 was $1,708,820. 12. Wright Lassiter III serves as CEO of Henry Ford Health System and president of Henry Ford Health System Foundation. 13. Richard Gilfillan retired in June 2019. Michael Slubowski succeeded him as CEO in July 2019. 14. Compensation reported as deferred on prior Form 990 was $279,400. 15. Compensation reported as deferred on prior Form 990 was $487,347. 16. As reported, $810,000 in base compensation paid. Per Chairman Jeffrey Neilson, actual base pay was $475,000. W. Clark Durant received a bonus of $235,000 and an incentive retention bonus of $100,000. 17. Revenue: Nonprofit estimate.
Download the complete Top-paid Nonprofit Executives list in Excel or PDF format. Become a Data Member: CrainsDetroit.com/data 12 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
Oak top tion Mill In “boa term she “W es . CEO edg eno boa lead gere S CEO tire tinu S nam in O John ing O Edu es o P nou He June tion sear
ent for ss
Nonprofit CEO turnover mixed so far this year Some searches slowed, halted amid pandemic BY SHERRI WELCH
3.9%
3.0% N/A
8.8%
8.4%
2.2%
9.9%
5.3%
6.1%
0.2%
2.1%
3.5% N/A N/A
7.8%
6.1%
3.0%
1.9%
1.7%
3.4%
0.0%
8.2%
4.6%
1.9%
0.0%
3.5%
5.0% 0%
2.9%
3.4%
0.0%
2.0%
3.0%
1.2%
5.3%
ation xecuursed ence on for evelorgaealth 7,347.
The pace of nonprofit CEO turnover — a factor that’s helped increase pay overall in the sector in the past — has been mixed this year, according to nonprofit consultants. While some say it’s been consistent as previously announced searches continue and new ones are taken up, others have seen turnover decline, as boards negotiate to keep CEOs in place while the pandemic plays out. Ongoing retirements and leaders departing for other opportunities have been fueling nonprofit CEO searches in recent months, said Blaire Miller, managing partner and owner of the Hunter Group, an national executive search firm based in Bloomfield Hills. The company completed several searches during the pandemic to fill positions including: a CEO for Oakland Community Health Network, chief strategy officer and provost for
stay on until a leadership transition could take place. Cranbrook named Schools Director Aimeclaire Roche as its new president on Thursday. “I think the turnover has slowed down considerably,” said Gary Dembs, president, Non-Profit Personnel Network. “Boards are negotiating with CEOs to stay longer…even though they would have preferred to be retired.”
Expanded skill sets sought Regardless of whether nonprofit CEO searches are on hold or happening now, search firm consultants said the list of skills nonprofit boards are seeking in candidates is expanding even more as new needs surface with COVID-19. “It’s not enough to just have great experience in the field,” Miller said. Boards are also looking for digital and financial savvy, a track record of being collaborative and being able to inspire employees, skills that are crit-
“WE ARE DOING CONFIDENTIAL SEARCHES ... (FINDING) A REPLACEMENT FOR A CEO WITHOUT IT BEING PUBLIC KNOWLEDGE. IT’S NOT HAPPENING A LOT BUT ENOUGH TO RECOGNIZE SOME NONPROFIT BOARDS AREN’T HAPPY WITH THE CURRENT LEADERSHIP. I BELIEVE THAT’S BEEN TRIGGERED BY THE PANDEMIC.” — Blaire Miller, managing partner and owner of the Hunter Group
“I THINK THE TURNOVER HAS SLOWED DOWN CONSIDERABLY. BOARDS ARE NEGOTIATING WITH CEOS TO STAY LONGER…EVEN THOUGH THEY WOULD HAVE PREFERRED TO BE RETIRED.”
When Employees Thrive, Companies Thrive Mark J. Rogers, CIMA® Graystone Consulting Executive Director Institutional Consulting Director Family Wealth Director 35055 W. Twelve Mile Road Farmington Hills, MI 48331 800-819-0949 Mark.J.Rogers@morganstanley.com
Morgan Stanley Financial Wellness: A customizable solution for organizations to empower their employees by making their finances a source of wellness – and not a source of stress. Call me to learn more. Investments and services offered through Morgan Stanley Smith Barney LLC. Member SIPC. Graystone Consulting is a business of Morgan Stanley. © 2020 Morgan Stanley Smith Barney LLC. Member SIPC. CRC3153340 07/20 CS 873606 07/20
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Oakland Community College and the top development and finance positions at The Heat & Warmth Fund, Miller said. In a small number of cases, “boards are reaching out to us to determine other leadership options,” she said. “We are doing confidential searches ... (finding) a replacement for a CEO without it being public knowledge. It’s not happening a lot but enough to recognize some nonprofit boards aren’t happy with the current leadership. I believe that’s been triggered by the pandemic,” she said. Some searches for successors to CEOs who signaled their plans to retire before the pandemic have continued, consultants said. Southwest Solutions, which named Joseph Tasse as interim CEO in October 2018 after longtime CEO John VanCamp retired, has an ongoing search, a spokesman said. Other nonprofits, like Cranbrook Educational Community, put searches on hold for a while. President Dominic DiMarco announced his plans to retire last fall. He was set to depart at the end of June, but in late April the organization announced it was pausing its search and DiMarco had agreed to
ical right now to rapidly transform organizations, she said. The complexity of the nonprofits in this region requires a sophisticated, experienced leader who has all of the functional skills as well as the top leadership skills, like the ability to listen, inspire, innovate and collaborate, she said. Those skills “are increasingly important right now to inspire, execute and provide vision in a very nebulous environment,” Miller said. “The pandemic has only accelerated the need and the pace of change.” Advocacy experience is also increasingly something nonprofit boards seek, Dembs said, given that CEOs are spending more and more time on advocacy vs. fundraising. As for CEO candidates, there are lots of people in the market, said Cyd Kinney, partner at DHR International in Birmingham. “We haven’t seen this for a very long time, probably not since 2008-09.” “With the number of people who have filed for unemployment in our region, I am hoping boards … will be open to nontraditional candidates,” she said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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CRAIN'S LIST | LARGEST LOCAL AUTO DEALERS Ranked by 2019 revenue COMPANY ADDRESS PHONE; WEBSITE
TOP EXECUTIVE(S)
REVENUE ($000,000) 2019
REVENUE ($000,000) 2018
PERCENT CHANGE
NUMBER OF DEALERSHIPS
NUMBER OF NEW VEHICLES SOLD, LEASED 2019/2018
NUMBER OF USED VEHICLES SOLD 2019/2018
1
THE SUBURBAN COLLECTION
David T. Fischer, Jr. president
$2,730.8
$2,619.7
4.2%
43 1
35,799 1 35,830
23,453 1 23,228
2
VICTORY AUTOMOTIVE GROUP INC.
Jeffrey Cappo president
$2,122.1 1
$1,864.6 1
13.8%
45 1
39,768 1 37,093 1
24,885 1 NA
3
LAFONTAINE AUTOMOTIVE GROUP
Michael LaFontaine chairman/owner
$1,156.6
$1,021.9
13.2%
20 1
18,462 1 16,976
11,227 1 9,026
4
FELDMAN AUTOMOTIVE INC.
Jay Feldman chairman and CEO
$1,043.8
$918.0
13.7%
13
16,530 13,712 1
10,870 9,523 1
5
SOUTHFIELD CHRYSLER DODGE JEEP RAM
Chris Snyder general manager
$441.0 2
$441.5 2
-0.1%
NA
NA NA
NA NA
6
JIM RIEHL'S FRIENDLY AUTOMOTIVE GROUP INC.
James Riehl Jr. president and CEO
$358.1
$359.4
-0.3%
NA
NA NA
NA NA
7
ELDER AUTOMOTIVE GROUP
Tony Elder president
$331.0 2
$336.5 2
-1.6%
NA
NA NA
NA NA
8
PRESTIGE AUTOMOTIVE
Gregory Jackson chairman and CEO
$309.4
$306.5
0.9%
2
8,325 8,301
1,511 1,497
9
STEWART MANAGEMENT GROUP INC.
Gordon Stewart president
$301.1 1
$330.5
-8.9%
NA
NA 5,970
NA 3,468
10
ROYAL OAK FORD/BRIARWOOD FORD
Eddie Hall Jr. president and CEO
$270.5
$230.8
17.2%
NA
NA NA
NA NA
11
SNETHKAMP AUTOMOTIVE FAMILY
Mark Snethkamp president
$264.0 2
$268.0 2
-1.5%
NA
NA NA
NA NA
12
BUFF WHELAN CHEVROLET
Kerry Whelan president
$254.5
$243.3
4.6%
NA
NA NA
NA NA
13
PAT MILLIKEN FORD INC.
Brian Godfrey president Bruce Godfrey chairman
$230.0
$195.0
17.9%
1
NA 4,217
NA 1,133
14
MATICK AUTOMOTIVE 3
Karl Zimmermann owner and operator
$207.6
$217.3
-4.5%
2
4,491 4,589
2,467 2,473
15
BOWMAN AUTO GROUP (BOWMAN CHEVROLET)
Katie Bowman Coleman president and owner Katie Bowman president and founder
$172.4
$170.6
1.0%
1
3,839 3,189
1,252 1,305
16
JEFFREY TAMAROFF AUTOMOTIVE FAMILY
Jeffrey Tamaroff chairman and CEO; Marvin Tamaroff chairman emeritus; Jason Tamaroff and Eric Frehsee vice presidents
$154.9
$153.0
1.3%
NA
NA 4,082
NA 2,277
17
RAY LAETHEM INC.
Jeff Laethem president
$150.0 2
$157.6
-4.8%
NA
NA 3,416
NA 803
18
MILOSCH'S PALACE CHRYSLER-JEEP-DODGE INC.
Donald Milosch president
$147.0 2
$148.8 2
-1.2%
NA
NA NA
NA NA
19
AVIS FORD INC.
Mark Douglas president Walter Douglas Sr. chairman
$132.1
$128.7
2.6%
NA
NA NA
NA NA
20
GORNO AUTOMOTIVE GROUP
Ed Jolliffe president
$127.3
$125.0
1.8%
NA
NA NA
NA NA
21
VILLAGE FORD INC.
James Seavitt president and CEO
$125.0 2
$122.9
1.7%
NA
NA 1,636
NA 785
BILL PERKINS AUTOMOTIVE GROUP
Bill Perkins president
$118.7
$110.1
7.7%
1
2,358 2,222
1,645 1,739
23
GOLLING CHRYSLER DODGE JEEP RAM OF ROSEVILLE 4
Michael Riehl president
$111.0 2
$115.6
-3.9%
NA
NA 2,578
NA 527
24
GLASSMAN AUTOMOTIVE GROUP INC.
George Glassman president
$90.9
$74.1
22.7%
91
2,430 1,891
901 756
25
MICHAEL BATES CHEVROLET
Michael Bates owner
$87.0 2
$88.7 2
-1.9%
NA
NA NA
NA NA
22
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22025 Allen Road, Woodhaven 48183 734-676-2200 www.gornoford.com 23535 Michigan Ave., Dearborn 48124 313-565-3900 www.villageford.com 13801 S. Telegraph Road, Taylor 48180 734-287-2600 www.taylorchevy.com
25800 Gratiot Ave., Roseville 48066 586-859-2500 www.gollingroseville.com/
28000 Telegraph Road, Southfield 48034 248-354-3300 www.glassmanautogroup.com 23755 Allen Road, Woodhaven 48183 734-676-9600 www.michaelbateschevy.com
Researched by Sonya D. Hill: shill@crain.com | This list of local auto dealers is an approximate compilation of the largest such businesses in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Dealership companies must have local stores to be included on this list. Penske Automotive Group is not on this list because, while it is locally headquartered, it doesn’t have local car dealerships. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Actual revenue figures may vary. NA = not available. NOTES: 1. Automotive News. 2. Crain's estimate. 3. Includes George Matick Chevrolet, Matick Toyota and Matick Auto Exchange. 4. Formerly Roseville Chrysler Jeep Inc.
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AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 15
OBITUARY
Advertising Section
PEOPLE ON THE MOVE
To place your listing, visit www.crainsdetroit.com/ people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com ENGINEERING / DESIGN
INSURANCE / BROKERAGE
Burns & McDonnell
Lighthouse Group
Russell Hughes joins Burns & McDonnell in Detroit to lead and expand water supply and design-build project delivery services throughout the Upper Midwest. With nearly a decade of experience, Russell has led multidiscipline teams executing a broad scope of projects regionwide. He recently managed preparation of a state-level funding plan and service line replacements for a five-year, $500 million program to restore thousands of miles of water distribution and sewer collection systems in Detroit.
Shamus and Stacey O’Keefe have joined Lighthouse Group as Vice Presidents. With a combined 50 years of benefit consulting Shamus experience in the Detroit area, the O’Keefes will be leading Lighthouse Group’s eastern expansion and spearheading their newest office in Troy. Stacey has previously served 20 years at a Stacey large consulting group where her roles included Executive VP and COO while Shamus has held Senior Executive roles for some of the nation’s top benefit solutions carriers. The O’Keefes’ people-first approach, combined with their knowledge of custom benefit plan design and cost management options, will provide metro area employers with unique, data-driven plan options to align with their budgets and human capital retention efforts.
HEALTHCARE / PROVIDER
Covenant Community Care Covenant Community Care’s Board of Directors has approved the hire of Joslyn Pettway as Chief Executive Officer. Pettway holds a Bachelor of Arts in Sociology and Master of Health Services Administration from the University of Michigan and completed a Community Health Center Executive Fellowship at the University of Kansas. Her first 90 days as CEO will be spent evaluating and assessing evolving needs of the community during the COVID-19 pandemic. More info at www. covenantcommunitycare.org/ceo.
NEW HIRE? PROMOTION? BOARD APPOINTMENT?
NONPROFIT
United Way for Southeastern Michigan United Way for Southeastern Michigan has announced the addition of a new member to its executive leadership team. As Vice President of Fund Development, Shelly Watts will work proactively to expand engagement with current corporate partners and their employees. Bringing a wealth of development experience to this new role, Watts will be responsible for energizing fundraising efforts to boost funds available for local nonprofits to make the biggest impact for people, families, and communities.
PROMOTE.
PROMOTE.
September 2, 2019 | crainsdetroit.com
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Dandridge Floyd, 37
UNDER
Assistant Superintendent of Human Relations and Labor Relations, Oakland Schools
T
October 30, 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
October 30, 2017 | crainsdetroit.com
• UBS plans to open wealth management office in Detroit in mid-2018 • Office to include 6,000-squarefoot space30,nonprofits and civic October 2017 | crainsdetroit.com groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings office in Detroit “I’m impacting lives now. management I know undergoing renovations in mid-2018
UBS to open downtown Detroit office
By Annalise Frank
UBS to open downtown Detroit office
Bedrock LLC
6,000-squarethe effect food insecurity• Office had onto includeUBS plans to open an office in downfoot space nonprofits and civic Detroit in mid-2018, the company Annalise Frank growing groups meByand my peers up, andcan usetown free of charge announced Monday. • Bedrock-ownedUBS buildings Group AG’s U.S. and Canadian UBSan plans to open wealth this•was opportunity toundergoing make a renovations wealth management business, New Jermanagement office in Detroit sey-based Wealth Management change I wish an adult UBScould plans to open an office UBS in downin that mid-2018 Americas, to lease 13,000 square UBS will lease 13,000 feet from Bedrock LLC starting around mid-2018 in two buildings: the Grintown Detroit in mid-2018, theplans company • Office to include 6,000-squarefeet on the connected sixth floors of nell Building (center left) at 1515 Woodward Ave. and the Sanders Building (center right) at 1529 have made for me.” announced Monday. foot space nonprofits and civic buildings at 1515 Wood- Woodward Ave. Group AG’sneighboring U.S. and Canadian groups can use free UBS of charge ward Ave. and Fourteen metro Detroit employees don’t really have adequate resources wealth management business, New 1529 Jer- Woodward Ave. • Bedrock-owned buildings The twoManagement buildings built around 1900 are will move to the downtown office to or adequate office space to host dosey-based UBS Wealth undergoing renovations by Detroit-based will lease LLC 13,000 feet from Bedrock LLC starting around mid-2018 buildings: Grin- meetings or things nor events the or board start, but the office has the capacity toin two Americas, plans toowned lease 13,000 square UBSBedrock nell Building (center at 1515 Woodward andnew the Sanders Buildingalong (centerthose right) at 1529 Bush said. and are undergoing said left) lines,” hold another six toAve. eight staff memon inthe connected sixth floors of renovations, Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All RightsUBS reserved. plans to open anfeet office downAve. for bers, Bush said. It will act as an extension John Bush, 60, WoodMichiganWoodward market head UBS’s investment in the new ofneighboring buildings at 1515 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD1134 town Detroit in mid-2018, the company UBS Wealth ManagementFourteen Americas.metro of fice will resources be “significant,” he said, as its the other wealth management offices. don’t really have adequate Detroit employees announced Monday. ward Ave. and 1529 Woodward Ave. “The real impetus open atonew The twoCanadian buildings built around 1900 arefor us “uniqueness Bush is based Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofortheadequate UBS Group AG’s U.S. and office inBedrock Detroit is to support what’s owned by Detroit-based LLC he could or not yet provide an estimate but travels to to the will meetings norothers eventsand or board things start, but the goofficeoffice, has the capacity wealth management business, New Jering renovations, on in the city, ” saidhold Bush, a Detroit and are undergoing said on the be spending in thealong Detroit branch. those lines,” Bush said.cost of the build-out, as some another six to eight new stafftime memsey-based UBS Wealth Management nativemarket who grew City. “We John Bush, 60, Michigan headup forin Garden have yet The location have a less UBS’s investment in the new of- to be finalized. said. will act asDetroit an extension fromBush Bedrock LLCItstarting around mid-2018 in twowill buildings: the Grin- contracts Americas, plans to lease 13,000 square UBS will lease 13,000 feetbers, UBS Wealth Management Americas. really felt like we wantedofto have a physfice will be “significant,” hecompany said, as its the other wealth management offices. The plans to start its buildtraditional, more “urban” feelright) than 1515 Woodward Ave. and the Sanders Building (center atthe 1529 feet on the connected sixth floors of nell Building (center left) at “The real impetus for us to open new ical presence downtown to reinforce “uniqueness comes at saidnext year, depending Bush is based outothers, of the he Birmingham outa price.” processHe early said. New York-based architecAve. a neighboring buildings office at 1515 Wood- toWoodward in Detroit is our support go-particular vision what’s for this areatravels and toture he will could not yet an estimate office, but the firm others and will Cale on when renovations on the buildings Verderame design the provide ward Ave. and 1529 ing Woodward don’t really have adequate resources Fourteen metro Detroit employees on in theAve. city,”tosaid Bush, a Detroit reinforce our on Barton the cost of the build-out, as some be spending time inspace; the Detroit branch. are complete. Southfield-based Malow The two buildings builtnative around 1900 areup in adequate office space to have host dowill moveCity. to tothe officelocation to or will who grew Garden “Wedowntown commitment contracts finalized. The Detroit have aon less based in Switzerland, employs Co. has signed as general contractor.yet to beUBS, owned by Detroit-based Bedrock nor events or board or things start, thea physoffice has the capacity really felt likeLLC we wanted tobut The company plans to startacross its buildtraditional, moreto“urban” than the outmeetings the city. ” have 60,000 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, along those lines,” Bush said. early next year, depending hold six to eight new he staff memical presencesaid downtown toWealth reinforce others, said. New office York-based architecUBS another — 6,000 square out feetprocess — at no cost percent of them work in the AmeriJohn Bush, 60, Michiganour market head UBS’s investment the renovations new of- on the buildings bers, said. It will act an extension vision for for thisMparticular oninorganizations, when tureasfirm VerderametoCale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and UBS Wealth Management will beMalow “significant,” he said, as its of the other also wealth management offices. ficeBarton to Americas. reinforce our Americas are be complete. space; Southfield-based Bush said. The space will called UBS Wealth Management Americas em“The real impetus for commitment us to open a new “uniqueness comes at a price.” He said is based thehas Birmingham to has Bush based signed on as Woodward general contractor. metro De- out ofCo. ploys 280employs in Michigan, 225 of whom Gallery. Its UBS, design and in artSwitzerland, office in Detroit is to support what’s go- office, but travels to theUBS heabout couldhalf not an estimate others and the city. ” 60,000 across 54 countries. 34 Detroit. plans towill rent will out of yet the provide troit offices in are basedAbout in metro aim to showcase Detroit’s history ing on in the city,” said Bush, on the cost the build-out, asthem somework in the Amerispending Detroit branch. UBS a Detroit Wealth B be percent office — 6,000 square at noofcost irm i n g h a time m , in the The wealth management business andfeet a— hub-and-spoke layout ofwill renative who grew up in Garden contracts have yet tocas, be finalized. M a n a gCity. e m“We e n t Troy, The Detroit locationtowill have a and less other according to a news release. UBS nonprofits organizations, Farmington recorded operating income of $2.13 flect the city’s road system. really felt like we wanted to have a physAmericas also Hills, The plans to startManagement its buildtraditional, more “urban” Wealth Americas em- quarter of 2017 — a Bushfeel said.than The the space will becompany called Plymouth in the third “Some of theUBS organizations that op- billion ical presence downtown reinforce has tometro De- others, he said. New York-based outdesign process early year,280 depending architecploys in Michigan, 225 of whom Woodward Gallery. Its and art next John Bush erate and Dearborn. and provide services in the city 7 percent increase over last year. our vision for this particular area and troit offices in ture firm Verderame Cale when renovations the buildings the onDetroit’s in metro Detroit. willwill aimdesign to showcase history areonbased to reinforce our B i r m i n g h a m , space; Southfield-based complete. Malow arelayout The wealth management business andBarton a hub-and-spoke will reReprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. commitment to Troy, Farmington Co. has signed on as general UBS, basedis prohibited. in Switzerland, employs income recorded operating contractor. flectFurther the city’s road without system. duplication permission Visit www.crainsdetroit.com. #CD936of $2.13 Hills, Plymouth the city.” billion in About the third “Somehalf of the organizations that op60,000 across 54 countries. 34quarter of 2017 — a UBS plans to rent out about of the John Bush and Dearborn. UBS Wealth 7 percent and provide city work percentinofthe them in theincrease Ameri-over last year. office — 6,000 squareerate feet — at no cost services Management to nonprofits and other organizations, cas, according to a news release. UBS Reprinted with permission from Crain’s Crain Communications Inc. All Rights reserved. Americas also Wealth Management Americas emBush said. The space will be Detroit calledBusiness. UBS © 2019 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936 has metro DeWoodward Gallery. Its design and art ploys 280 in Michigan, 225 of whom troit offices in will aim to showcase Detroit’s history are based in metro Detroit. Birmingham, The wealth management business and a hub-and-spoke layout will reCRAINSDETROIT.COM I MARCH 9, 2020 I Troy, Farmington recorded operating income of $2.13 flect the city’s road system. Hills, Plymouth THE CONVERSATION “Some of the organizations that op- billion in the third quarter of 2017 — a John Bush erate and provide services in the city 7 percent increase over last year. and Dearborn.
Bedrock LLC
hroughout Dandridge Floyd’s careers — whether as a social worker, attorney or assistant superintendent of Oakland Schools — making change has always been a center point. When United Way pitched a framework to Oakland Schools for a countywide breakfast program to address poor nutrition as a way to improve academic achievement, Floyd — who experienced food insecurity growing up — knew firsthand the powerful impact it could have. To secure the needed funds, Floyd led a team that earned support from all 28 local districts to finance the program — despite the fact that a majority of them would see no benefit. “The local districts were phenomenal,” Floyd said. “The biggest surprise was how quickly it happened. Education is a democratic system and democracy can be very slow, but this happened in six to seven months. That showed how committed people were to making sure the students of Oakland County have everything they need to be successful.” In a county where over 7,000 children suffer from hunger, and only two in five eligible students access a school breakfast, Floyd said a common misperception is that “Oakland County is rich.” “That makes this program all the more important, because if that is the bias or the thought process people have about Oakland County, then these kids would have never gotten help.” In a groundbreaking public/nonprofit partnership between the Oakland County Board of Commissioners, Oakland Schools and United Way, Oakland County is Better with Breakfast was born. “I’m impacting lives now,” Floyd said. “I know the effect food insecurity had on me and my peers growing up, and this was an opportunity to make a change that I wish an adult could have made for me.” — Laura Cassar
PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S
Contact: Debora Stein at dstein@crain.com
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Albert Berriz talks workforce housing, Ann Arbor and Cuba
Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. | BY KIRK PINHO Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936
MCKINLEY INC.: Ann Arbor-based real estate company McKinley Inc. saw the writing on the wall for its retail portfolio a few years ago and cut bait, turning its focus primarily to its large crop of tens of thousands of workforce housing units across the country. One of the people at the helm of that decision was Albert Berriz, CEO and managing member, who came to America as a young boy fleeing Cuba and now steers a large company with a portfolio valued at more than $4 billion.
`You were talking a little bit earlier about how McKinley got out of retail and office. What led to that decision and how has that reflected or shaped your business strategy? It was a risk profile that we were just not comfortable with. We are a generational business and so we look at our assets in
a way that we never expect to sell them. We expect to invest in them so they last for long term, and we just couldn’t see that on retail. We saw a significant degradation of our rent rolls. We had buildings that were, let’s say, 70 percent to 80 percent investment-grade credit tenant composition and then we saw that we saw that quickly degrade. We just didn’t see a place where we could really have an asset class retail that would last for the long run. And then office in many ways, the same way. The way people are shopping and the way people are occupying offices today, the risk profile is very different than it was, let’s say, when we were making those investments 20 and 30 years ago, so for us, it was the right move. It’s paid off because, had we held many of the assets today, they would be significantly compromised. I think they would be worth a lot less. We started those sales about six years ago, and we sold a lot of that early on, so we sold them still at a time they were being valued significantly more than they would be worth today, in our opinion. And we sold some big buildings. I mean, these weren’t small buildings. We sold a 1 millionsquare-foot shopping center, for example, in Norfolk, Va., which is one of the largest power centers in the state of Virginia. So these weren’t small assets. So they were important for us to move them out at the right time, and for people that thought that was there was a good upside for them, so we actually sold them at good prices, and certainly we couldn’t have sold them at those prices today.
trajectory was to where you are today in terms of the head of McKinley. I left (Cuba) compliments of Fidel Castro in early 1959 because of the Cuban Revolution. We had to flee. It was survival to leave the country at the time and my parents relocated to Miami. We were fortunate for that. We’re fortunate to have left alive, fortunate to have resettled in what is without question the greatest country on the planet. I was not born here. I was born in Havana and I emigrated as a Cuban refugee just before I was 4 years old with my parents. `What consumes your day outside of the office? My wife and I walk. We like to boat, so those are the two things. In our summers we live at Saugatuck, and it’s a great place to live. We’d live there year-round, but it’s a little too cold in the winter.
`Can you give thumbnail sketch of coming here and what your
September 2, 2019 | crainsdetroit.com
Albert Berriz, CEO and managing member, McKinley Inc.
Reprinted with permission from Crain’s Detroit Business. © 2020 Crain Communications Inc. All rights reserved. Further duplication without permission is prohibited. #CD1156
Dandridge Floyd, 37
Assistant Superintendent of Human Relations and Labor Relations, Oakland Schools
T
Laura Picariello
Reprints Sales Manager Phone: (732) 723-0569 Fax (888) 299-2205 Email: lpicariello@crain.com
hroughout Dandridge Floyd’s careers — whether as a social worker, attorney or assistant superintendent of Oakland Schools — making change has always been a center point. When United Way pitched a framework to Oakland Schools for a countywide breakfast program to address poor nutrition as a way to improve academic achievement, Floyd — who experienced food insecurity growing up — knew firsthand the powerful impact it could have. To secure the needed funds, Floyd led a team that earned support from all 28 local districts to finance the program — despite the fact that a majority of them would see no benefit. “The local districts were phenomenal,” Floyd said. “The biggest surprise was how quickly it happened. Education is a democratic system and democracy can be very slow, but this happened in six to seven months. That showed how committed people were to making sure the students of Oakland County have everything they need to be successful.” In a county where over 7,000 children suffer from hunger, and only two in five eligible students access a school breakfast, Floyd said a common misperception is that “Oakland County is rich.” “That makes this program all the more important, because if that is the bias or the thought process people have about Oakland County, then these kids would have never gotten help.” In a groundbreaking public/nonprofit partnership between the Oakland County Board of Commissioners, Oakland Schools and United Way, Oakland County is Better with Breakfast was born. “I’m impacting lives now,” Floyd said. “I know the effect food insecurity had on me and my peers growing up, and this was an opportunity to make a change that I wish an adult could have made for me.” — Laura Cassar
40 40 UNDER
October 30, 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
October 30, 2017 | crainsdetroit.com
• UBS plans to open wealth management office in Detroit in mid-2018 • Office to include 6,000-squarefoot space30,nonprofits and civic October 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings
office in Detroit “I’m impacting lives now. management I know undergoing renovations in mid-2018 6,000-squarethe effect food insecurity• Office had onto includeUBS plans to open an office in downfoot space nonprofits and civic Detroit in mid-2018, the company Annalise Frank growing groups meByand my peers up, andcan usetown free of charge announced Monday. • Bedrock-ownedUBS buildings Group AG’s U.S. and Canadian UBSan plans to open wealth this•was opportunity toundergoing make a renovations wealth management business, New Jermanagement office in Detroit sey-based Wealth Management change I wish an adult UBScould plans to open an office UBS in downin that mid-2018 Americas, to lease 13,000 square town Detroit in mid-2018, theplans company • Office to include 6,000-squarefeet on the connected sixth floors of have made for me.” announced Monday. foot space nonprofits and civic
UBS to open downtown Detroit office Bedrock LLC
`I don’t think it’s overblown to use the word “crisis” for Ann Arbor’s affordable housing situation. Give us your perspective on how the city should go about addressing it. I think it’s a supply issue. The reality is that Ann Arbor has not really welcomed solutions from the private sector and has only sought solutions from the public housing side or the community nonprofit side. And both of those groups, while I think they’re very well intentioned, don’t have the capital and the expertise to resolve the problem at the scale it’s needed. To put it in perspective, you know, the Washtenaw County study that came out had a need of about 3,000 units. And if you look at the cost per unit today, and let’s say $250,000 or $300,000 per unit to build a brand new unit today, you know, it’s an $800 million to a $1 billion problem, so I don’t think that’s a problem that gets resolved on the public side or on the community nonprofit side. You know, they have to go to places to seek capital and there just isn’t enough capital, nor do they have enough resources or expertise to resolve the problems. So the city I think, by and large, has attempted to do this in those ways because they really haven’t welcomed the private side. And there is a lot of expertise and there’s a lot of capital that could do this, from the private side perspective. It just hasn’t been the way that Ann Arbor operates, so you see what has happened in Ann Arbor year over year, decade over decade is there’s a lot of conversations about affordable housing, but there’s no solutions.
UBS will lease 13,000 feet from Bedrock LLC starting around mid-2018 in two buildings: the Grinnell Building (center left) at 1515 Woodward Ave. and the Sanders Building (center right) at 1529
buildings at 1515 Wood- Woodward Ave. Group AG’sneighboring U.S. and Canadian groups can use free UBS of charge ward Ave. and Fourteen metro Detroit employees don’t really have adequate resources wealth management business, New 1529 Jer- Woodward Ave. • Bedrock-owned buildings The twoManagement buildings built around 1900 are will move to the downtown office to or adequate office space to host dosey-based UBS Wealth undergoing renovations by Detroit-based will lease LLC 13,000 feet from Bedrock LLC starting around mid-2018 buildings: Grin- meetings or things nor events the or board start, but the office has the capacity toin two Americas, plans toowned lease 13,000 square UBSBedrock nell Building (center at 1515 Woodward andnew the Sanders Buildingalong (centerthose right) at 1529 Bush said. and are undergoing said left) lines,” hold another six toAve. eight staff memon inthe connected sixth floors of renovations, Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All RightsUBS reserved. plans to open anfeet office downAve. for bers, Bush said. It will act as an extension John Bush, 60, WoodMichiganWoodward market head UBS’s investment in the new ofneighboring buildings at 1515 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD1134 town Detroit in mid-2018, the company UBS Wealth ManagementFourteen Americas.metro of fice will resources be “significant,” he said, as its the other wealth management offices. don’t really have adequate Detroit employees announced Monday. ward Ave. and 1529 Woodward Ave. “The real impetus open atonew The twoCanadian buildings built around 1900 arefor us “uniqueness Bush is based theadequate Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofor UBS Group AG’s U.S. and office inBedrock Detroit is to support what’s owned by Detroit-based LLC he could or not yet provide an estimate but travels to to the will meetings norothers eventsand or board things start, but the goofficeoffice, has the capacity wealth management business, New Jering renovations, on in the city, ” saidhold Bush, a Detroit and are undergoing said on the be spending in thealong Detroit branch. those lines,” Bush said.cost of the build-out, as some another six to eight new stafftime memsey-based UBS Wealth Management nativemarket who grew City. “We John Bush, 60, Michigan headup forin Garden have yet The location have atheless UBS’s investment in the new of- to be finalized. said. will act asDetroit an extension fromBush Bedrock LLCItstarting around mid-2018 in twowill buildings: Grin- contracts Americas, plans to lease 13,000 square UBS will lease 13,000 feetbers, UBS Wealth Management Americas. really felt like we wantedofto have a physfice will be “significant,” hecompany said, as its the other wealth management offices. The plans to start its buildtraditional, more “urban” feelright) than 1515 Woodward Ave. and the Sanders Building (center atthe 1529 feet on the connected sixth floors of nell Building (center left) at “The real impetus for us to open adowntown new ical presence to reinforce “uniqueness comes at saidnext year, depending Bush is based outothers, of the he Birmingham outa price.” processHe early said. New York-based architecneighboring buildings at 1515 Wood- Woodward Ave. office in Detroit is our to support go-particular vision what’s for this areatravels and toture he will could not yet an estimate office, but the firm others and will Cale on when renovations on the buildings Verderame design the provide ward Ave. and 1529 ing Woodward don’t really have adequate resources Fourteen metro Detroit employees on in theAve. city,”tosaid Bush, a Detroit reinforce our on Barton the cost of the build-out, as some be spending time inspace; the Detroit branch. are complete. Southfield-based Malow The two buildings builtnative around 1900 areup in adequate office space to have host dowill moveCity. to tothe officelocation to or will who grew Garden “Wedowntown commitment contracts finalized. The Detroit have aon less based in Switzerland, employs Co. has signed as general contractor.yet to beUBS, owned by Detroit-based Bedrock nor events or board or things start, thea physoffice has the capacity really felt likeLLC we wanted tobut The company plans to startacross its buildtraditional, moreto“urban” than the outmeetings the city. ” have 60,000 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, along those lines,” Bush said. early next year, depending hold six to eight new he staff memical presencesaid downtown toWealth reinforce others, said. New office York-based architecUBS another — 6,000 square out feetprocess — at no cost percent of them work in the AmeriJohn Bush, 60, Michiganour market head UBS’s investment the renovations new of- on the buildings bers, said. It will act an extension vision for for thisMparticular oninorganizations, when tureasfirm VerderametoCale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and UBS Wealth Management will beMalow “significant,” he said, as its of the other also wealth management offices. ficeBarton to Americas. reinforce our Americas are be complete. space; Southfield-based Bush said. The space will called UBS Wealth Management Americas em“The real impetus for commitment us to open a new “uniqueness comes at a price.” He said is based thehas Birmingham to has Bush based signed on as Woodward general contractor. metro De- out ofCo. ploys 280employs in Michigan, 225 of whom Gallery. Its UBS, design and in artSwitzerland, office in Detroit is to support what’s go- office, but travels to theUBS heabout couldhalf not an estimate others and the city. ” 60,000 across 54 countries. 34 Detroit. plans towill rent will out of yet the provide troit offices in are basedAbout in metro aim to showcase Detroit’s history ing on in the city,” said Bush, on the cost the build-out, asthem somework in the Amerispending Detroit branch. UBS a Detroit Wealth B be percent office — 6,000 square at noofcost irm i n g h a time m , in the The wealth management business andfeet a— hub-and-spoke layout ofwill renative who grew up in Garden contracts have yet tocas, be finalized. M a n a gCity. e m“We e n t Troy, The Detroit locationtowill have a and less other according to a news release. UBS nonprofits organizations, Farmington recorded operating income of $2.13 flect the city’s road system. really felt like we wanted to have a physAmericas also Hills, The plans to startManagement its buildtraditional, more “urban” Wealth Americas em- quarter of 2017 — a Bushfeel said.than The the space will becompany called Plymouth in the third “Some of theUBS organizations that op- billion ical presence downtown reinforce has tometro De- others, he said. New York-based outdesign process early year,280 depending architecploys in Michigan, 225 of whom Woodward Gallery. Its and art next John Bush erate and Dearborn. and provide services in the city 7 percent increase over last year. our vision for this particular area and troit offices in ture firm Verderame Cale when renovations the buildings the onDetroit’s in metro Detroit. willwill aimdesign to showcase history areonbased to reinforce our B i r m i n g h a m , space; Southfield-based complete. Malow arelayout The wealth management business andBarton a hub-and-spoke will reReprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. commitment to Troy, Farmington Co. has signed on as general UBS, basedis prohibited. in Switzerland, employs income recorded operating contractor. flectFurther the city’s road without system. duplication permission Visit www.crainsdetroit.com. #CD936of $2.13 Hills, Plymouth the city.” billion in About the third “Somehalf of the organizations that op60,000 across 54 countries. 34quarter of 2017 — a UBS plans to rent out about of the John Bush and Dearborn. UBS Wealth 7 percent and provide city work percentinofthe them in theincrease Ameri-over last year. office — 6,000 squareerate feet — at no cost services Management to nonprofits and other organizations, cas, according to a news release. UBS Reprinted with permission from Crain’s Crain Communications Inc. All Rights reserved. Americas also Wealth Management Americas emBush said. The space will be Detroit calledBusiness. UBS © 2019 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936 has metro DeWoodward Gallery. Its design and art ploys 280 in Michigan, 225 of whom troit offices in will aim to showcase Detroit’s history are based in metro Detroit. Birmingham, The wealth management business and a hub-and-spoke layout will reCRAINSDETROIT.COM I MARCH 9, 2020 I Bedrock LLC
` Explain workforce housing versus affordable housing. We’re not in luxury housing. Our residents are working. They’re going to wake up tomorrow morning and go to work. Our average rents are, for example, in Washtenaw County, about $1,100 to $1,200 or in Orange County, or Seminole County, Florida, $1,400 or $1,500. So these are affordable rents. And the difference between us and affordable housing is our buildings are not subsidized. They’re all market rate, and they’re all privately owned. The owners are not receiving any form of subsidy, nor are the residents. However, if you wanted to sort of assess residents and low-income housing tax credit deals compared to ours, they’re probably not too dissimilar, the median incomes. The McKinley residents in, let’s say, Washtenaw County, when you look at the numbers are probably not going to be too much different than what you would see in a traditional LIHTC deal. But again, our buildings, the primary differences, our buildings are market rate and they’re not subsidized any way.
Bedrock LLC
`Crain’s Detroit Business: Can you talk a little bit about how the McKinley portfolio began and where it’s at today? Berriz: McKinley started in 1968 in Ann Arbor, and it was founded by (former U.S.) Ambassador Ron Weiser. It started in the student housing business and eventually transitioned into more traditional multifamily housing, and in addition to that, office and retail, as well. Today, we’re primarily a workforce housing multifamily operator. We have essentially disposed of our retail and office assets in an effort to really focus on multifamily and also focus on an asset class that I think is more in line with our current goal, which is to have a generational multifamily real estate enterprise and a pool of assets that really are long term in nature.
PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S
16 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
‘Larger-than-life’ John Thompson of Honest John’s bar dies
Cass Corridor native saw bar as a neighborhood gathering spot BY ANNALISE FRANK
John Thompson, the former owner of Honest John’s bar and restaurant in Detroit known for his fierce generosity and crass sense of humor, died July 10 at age 66. Thompson had congestive heart failure, according to Michael Kiewicz, the nephew of Thompson’s late wife, Irene. Thompson grew up in the Cass Corridor in Detroit, but spent his final days in Florida, where he moved about four months after his wife died in 2018. Former employee Steve Reinke called Thompson “larger than life.” A ruthless boss, he owned Honest?John’s Bar and No Grill on the city’s east side for 13 years before moving it to the Cass Corridor in 2002. Then it went from “No Grill” to “Grill,” serving all-day breakfast and other bar food. It remains there, at 488 Selden St., under current owner Dave Kwiatkowski, who also owns Sugar House in Corktown, and Wright & Co. and Bad Luck Bar downtown, among others. Honest John’s sold in December 2014. Kiewicz, who spoke with Crain’s over the phone from Thompson’s home in Cape Coral, Fla., said his wife, Laurie, spent time caring for Thompson in recent years. She traveled back and forth from her Ohio home, managed his affairs and — as Thompson put it, according to Michael — Laurie ended up as his “platonic wife.” “He was a whole lot of different things,” Kiewicz said of Thompson. As recorded in a Detroit Metro Times profile in 2002, Thompson was a character with a big personality. He told the Metro Times in 2002 he was moving from the east side to Cass Corridor because “Those people who are spending $150,000, $200,000 to live in the Corridor? As soon as they realize what they’ve done, they’re gonna start drinkin’.” Kiewicz recalled Thompson as “incredibly, to a fault, generous.” He hosted cheekily themed fundraisers for churches and community groups, giving money and donations under the organization name Honest John’s Shakedown Society. There was a raft regatta, the Moon Drop that involved — you guessed it — mooning, and the Devil’s Night Barbecue. As a business owner, Thompson was strong-willed and left little room
John Thompson and Laurie Kiewicz, his nephew’s wife and caregiver in his last months. ”This is one place in Detroit where we can be black, white, old, young, and we’ll treat you all the same,” Honest John’s owner John Thompson said of his Detroit bar. | CONTRIBUTED
for error, said Reinke, who is a teacher and tended bar for Thompson over the years starting in 1997. The Cass Corridor native saw his bar as a true neighborhood gathering spot. It was a place for free-flowing conversation
HE’D OFTEN SAY, “THE BEST BAR OWNERS IN DETROIT WILL BE LOVED BY HALF THE PEOPLE AND HATED BY THE OTHER HALF.” and it brought people together, Reinke said. “John’s good side was awesome. There were so many great things about him,” Reinke said. “He had a dark side ... he had a very bad temper. He did fire me like five times throughout my 20-year tenure. Just for screw-
ing up, doing something. Then he’d hire me back.” He’d often say, “The best bar owners in Detroit will be loved by half the people and hated by the other half,” according to Reinke — Thompson cared little what others thought because he knew what was right for his bar. Kiewicz also said Thompson laid down some strict rules. “You didn’t demean anybody, and no pictures,” he said. “If the cat sat in your chair, if you got up to go to the bathroom, it was the cat’s chair. Don’t move the cat.” A former alley cat, Smirl, had run of Thompson’s bar. And when Smirl died around the time of the move from Field Street to Selden, a big wake was held. Thompson also loved bouvier dogs. Another of Thompson’s pets, a bouvier named Ester, will be going home with the Kiewiczes to Ohio. “All the time, he had bouviers. They went with him everywhere,” Michael Kiewicz said, adding later: “He roller skated around Belle Isle all the time with my Aunt Irene. They loved to do it. And they did it with their dogs.” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
MANUFACTURING
Marelli to permanently close Clarkston plant Lighting supplier to end production in January, affecting 263 employees BY SARAH KOMINEK PLASTICS NEWS
Marelli Automotive Lighting USA LLC will close its Clarkston factory, affecting 263 employees. The closure is due to “a number of prolonged challenges” including downward trending vehicle volumes “exacerbated by COVID-19” and new technology from nontraditional suppliers, Marelli said in a WARN notice filed July 27 with the Michigan Department of Labor and Economic Opportunity. Production will end in January, it
said in the notice. The automotive supplier is not a part of a union, the notice said. “As part of Marelli’s ongoing strategy to strengthen its market position, we will consolidate our U.S.-based automotive lighting manufacturing in a single, existing locations in Pulaski, Tenn.,” it said. “This move will increase efficiency, enabling the company to become more cost competitive while meeting customer demand.” Marelli did not immediately respond to request for comment. In March, the supplier said it
would consolidate three metro Detroit offices to a new North American headquarters in Southfield after Fiat Chrysler Automobiles sold the parts unit Magneti Marelli, renamed Marelli, to Japan’s Calsonic Kansei in a $6.5 billion deal last year. Later that month, Marelli said it would temporarily suspend all operations in North America as the coronavirus pandemic intensified. Plastics News is an affiliated publication of Crain’s Detroit Business.
CRAIN’S DETROIT BUSINESS
July 27, 2020
BEAUMONT
From Page 3
Two Beaumont physicians said more than 1,000 doctors have responded to the survey, which was emailed to many of the 5,000 members of Beaumont’s medical staffs on Wednesday. The physician survey is intended to replace the no confidence petition, said the physician author of the petition. The petition asked the Beaumont board to immediately fire Fox and Wood because of a “rapid and progressive deterioration in every aspect of patient care at Beaumont Health” and loss of confidence in the “administration’s ability to provide a safe place for us to care for our patients.” Several dozen physicians signed the petition, but the physician author said some top doctors were unhappy with the wording of his petition and refused to endorse it because of the implication that Beaumont’s quality has worsened. “They want to go through official channels, using elected medical representatives,” said the author, who requested anonymity. “I am willing to comply as long as they really represent the medical staff. From what I can tell the pressure from the staff was so great that they had to agree to represent us. If they get afraid I will continue to push them. My involvement does not stop here.” In the end, the physician author said he agreed to hold his petition in favor of the medical staff presidents’ survey of Beaumont doctors. He added that he still maintains the only solution is a change in management. Phone messages seeking comment from several medical staff presidents and chiefs of staff were left by Crain’s
Thursday. One chief of staff said the survey results will be tabulated over the next several days. “We thought it was an important way to capture medical staff sentiments for the board to consider,” said the hospital chief of staff, who asked for anonymity. He said the presidents will present the board with action suggestions. “We wish to address the board and have more input into strategic decisions regarding mergers, contracts and capital allocations,” the chief said. Each of the questions in the survey has five choices: strongly agree, somewhat agree, neither agree nor disagree, somewhat disagree and strongly disAugust 3, 2020can add comments at agree. Doctors the end of the survey. The five questions ask the following: `I have confidence in corporate leadership. `The proposed merger with Advocate Aurora Health is likely to enhance our capacity to provide compassionate, extraordinary care. `Corporate leaders are fostering a culture of excellence. `Corporate leadership is helping to make Beaumont the workplace of choice. `Corporate leadership appropriately prioritizes and allocates resources to support quality and patient safety. During the past month, Crain’s spoke with nearly two dozen doctors about the direction Beaumont has been headed the past five years since Fox was hired from Emory Health in Atlanta. All doctors asked for anonymity and said they feared retribution if their names were known by Beaumont executives. In a previous interview, Fox and Wood said they are taking complaints
ELECTION
would drop a previously announced bid for the state House or seek a full four-year term in 2020 if named to the county executive, which comes with a $197,248-per-year salary.
From Page 3
The Huntington Woods resident raised nearly as much in the most recent reporting period as Coulter, a Ferndale resident, has this entire election cycle, according to campaign finance reports. He nearly doubled Coulter’s haul. For the reporting period from Jan. 1 to July 19, Coulter reported having raised nearly $229,247, with total contributions during the election cycle of $446,172. He’s spent $375,450 of that, leaving him with $70,723. Meisner, on the other hand, raised $420,279 in the reporting period alone, with $1.1 million raised throughout the cycle. He’s spent $736,236 of that, leaving him with $184,093. Kowall, a White Lake Township resident only entered the race in April, has raised just $39,395 and spent $23,731, leaving him with $15,664. Nutt, a resident of Troy, has raised $18,250 and spent $14,990, leaving him with about $3,260 in the bank.
Setting stage for November The election, which has become contentious on the Democratic side, sets the stage for a November contest, with a global pandemic as the backdrop. “Andy is in a spot where he has to battle an incumbent, one who has had a pandemic thrust upon his administration and I think you see the Coulter campaign talking about how they have responded to it,” Dulio said. “They are using it in their commercials, in their ads, as he probably should. He has managed this thing at the county level and has been at the helm, and that’s what incumbents do.” Meisner has peppered Coulter on
by physicians seriously, but that they need to understand more specifically what those complaints are. Over the past week, Fox and other Beaumont executives have been holding Zoom teleconference meetings with doctors to hear their thoughts. Two doctors told Crain’s that Fox appears to be listening to concerns, but said Fox also used the opportunity in one Zoom meeting to criticize reports on the controversies as overblown. There have been ongoing reports for the last two years about various problems doctors have with Beaumont’s leadership. In December 2017, United Physicians, one of the largest physician organizations in Southeast Michigan with nearly 2,000 doctors, began a running dispute with Beaumont over managed care contracts that led UP to sue Beaumont last year and withdraw from the system’s provider network. During the past year, top doctors have left for other systems. For example, two of Beaumont’s top heart surgeons — Marc Sakwa and Jeffrey Altshuler — resigned and left late last year. They are now top surgeons and clinical leaders at the MemorialCare Heart and Vascular Institute in Los Angeles. Others who have left for various reasons include David Walters, former senior vice president of Beaumont Health Physician Partners and an ER physician; Brian Berman, chair of pediatrics; Leslie Rocher, senior vice president and former chief medical officer at Beaumont Hospital Royal Oak; Matthew Zimmie, M.D., vice president and system chief medical informatics; and Paul LaCasse, executive vice president of post-acute care and diversified business operations and former Botsford Hospital president.
Winds change Coulter
Kowall
Meisner
Nutt
television in a series of television ads that the former Ferndale mayor has denounced as false and misleading. Some of Coulter’s supporters on the county board have criticized Meisner over a tax foreclosure in 2014 over $8.41. The Democratic primary was never going to be particularly cordial. Coulter, when he was still mayor of Ferndale, endorsed Meisner on June 20, 2019, about a month and a half before Patterson died and two months before he was appointed to the executive position. Coulter unexpectedly emerged as a candidate as leader of Michigan’s second-largest county shortly before the board voted him in on a party-line vote Aug. 16, 2019. He had not applied for the position but was floated for Patterson’s unfinished term after a committee couldn’t make a recommendation to the 21-member board, which is controlled by Democrats 11-10. He said at the time, addressing Democratic caucus members, that he had not made a decision on whether he
If Coulter or Meisner win in November, it would be the latest countywide post that the voters flipped to Democrats, following decades of Republican domination in Oakland County. In 2004, the party didn’t bother to run a candidate against Patterson at all, even as the Kerry/Edwards presidential ticket edged out Bush/Cheney in the county by less than 3,000 votes. In 2012, three days after the Aug. 7 primary in which Patterson took 90 percent of the Republican vote, he was nearly killed in a car crash. He did virtually no campaigning that year and still defeated the Democrat by 14 points as the Obama/Biden ticket took 53 percent of the vote to Romney/ Ryan’s 45 percent. But political winds started changing in 2008 — amid anger over the economic collapse and Iraq War, and heightened turnout for the historic candidacy of Barack Obama — when Meisner and Cooper won their positions. Then there was Lisa Brown, the former state representative from West Bloomfield Township who came into the clerk/register of deeds office and Jim Nash, a Farmington Hills Democrat, who won the water resources commissioner post. The remaining Republican holdover is Sheriff Michael Bouchard. A trio of Democrats are vying on Tuesday to unseat him in November: Vincent Gregory, Barnett Jones and Randy Maloney. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
There are two major controversies that cut across Beaumont hospital medical staffs. The first is a new employed physician compensation plan, called CARTS 2.0., that Beaumont has been rolling out by specialty for the 1,300 employed doctors in the Beaumont Medical Group. Several doctors told Crain’s the new compensation plan would drastically cut their compensation, some up to 50 percent, even though their production is high. Fox has said that some doctors will be paid less, but he said some underpaid doctors will receive pay boosts. CRAINsaving ’S DETROIT BUSINESS “We aren’t money. We are real-
locating money,” he said. The second major issue, which some doctors say was the tipping point that caused them to sign petitions and object to Beaumont’s executive leaders, is the proposed merger between Beaumont and Advocate Aurora Health. In mid-June, Beaumont signed a letter of intent to merge with Advocate Aurora Health, a 28-hospital system in Illinois and Wisconsin with $12 billion in revenue. Sources, all of whom asked for anonymity, tell Crain’s that the Beaumont board is nearing a decision to approve the merger. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
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MARKET PLACE
MARKET PLACE REQUEST FOR PROPOSALS Requests for Proposals are being accepted for: Commercial Office Space East Side Career Center Response Due: August 10, 2020, Re-Issued: July 17, 2020 The Mayor’s Workforce Development Board (MWDB) is directly responsible and accountable to the State of Michigan, Labor and Economic Opportunity-Workforce Development (LEO-WD) for the planning and oversight of talent development programs in the City of Detroit. Designated by the MWDB, Detroit Employment Solutions Corporation (DESC) serves as the fiscal and administrative entity that provides workforce services to job seekers and employers. DESC’s primary funding streams include Workforce Innovation and Opportunity Act (WIOA), Temporary Assistance to Needy Families (TANF) that funds Michigan’s PATH (Partnership. Accountability. Training. Hope.) employment program, Food Assistance Employment and Training (FAE&T), Wagner-Peyser Employment Services (ES), and other public and private funding. The Corporation enters into contracts with qualified entities to provide workforce development programs and services to job seekers and employers. DESC is seeking proposals from qualified individuals and/or firms with Commercial Office Space.
Bid package for this RFP is available for download at this DESC website: https://www.descmiworks.com/opportunities/rfps-and-rfqs/. Mayor’s Workforce Development Board Cynthia J. Pasky, Co-Chairperson David E. Meador, Co-Chairperson
Detroit Employment Solutions Corporation Board Calvin Sharp, Chairperson Detroit Employment Solutions Corporation Terri Weems, Interim President and Chief Executive Officer
An equal opportunity employer/program. Supported by the State of Michigan, Labor and Economic Development, Workforce Development (LEO/WD). Auxiliary aids and services available upon request to individuals with disabilities. 1-800-285-WORK. TTY: 711.
AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 17
COPING
From Page 3
Unlocking the doors and putting up an “open” sign is far from simple for many of these businesses. Restaurants and retailers have to put what might be limited finances toward restocking, rehiring and paying vendors, including bills that may still be open from March. For many of them, once they are back in business, collectors will be at their door and many will not be able to pay up. The growing number of new cases in Michigan have only exacerbated circumstances for businesses like HopCat’s. Sellers said sales across his remaining seven locations in the state are down by 60 percent. “This is a very, very dark time for the restaurant industry,” Sellers told Crain’s. “We have so many people who love us and don’t want us to go out of business, but they don’t want to come out to restaurants right now.” Restaurant owners across Michigan are grappling with the same fears. With a 50 percent capacity limit and an uncertainty as to whether people will even come out, there is little hope that restaurants will be able to break even or guaranteed they won’t have to shut down again in the event of a second wave. “I am not open and I was hoping to get open by August,” said Dean Bach, owner of Dino’s Lounge, a Ferndale-based bar and eatery, as well as Ferndale’s M-Brew. “But if I was and loaded for the Dream Cruise and they shut us back down again that would be the end of everything.” Bach would normally be preparing for the annual mid-August Dream Cruise, which was canceled in late June.The day normally brings in for Bach three times the amount of revenue than his next busiest night. But even if the event was not canceled this year, he still would not open. “To throw out all our food in March and restock again in June and have it happen again, it just gets really hard and at some point owners have to weigh the options,” Bach said. “We are getting killed by this bug, literally. I don’t see a lot of restaurants surviving this and I don’t even know what my future holds in restaurants right now.” The food and hospitality industry nationwide is projected to lose up to $240 billion this year, due to coronavirus related closures, Justin Winslow, president of Michigan’s Restaurant and Lodging Association told Crain’s. And Holland said curbside amounted to less than 10 percent of normal sales for small retailers, based on a recent survey by the MRA. And just 50 percent to 60 percent of pre-pandemic level of sales is expected to be regained during the reopening stage, she added. For some businesses, the uncertain landscape does not seem to be derailing long term plans. The Birmingham Shopping District has had almost every business reopen. Although the district lost a few retailers, the occupancy rate remains at 96 percent for stores and 88 percent for offices, according to Ingrid Tighe, the organization’s executive director. The BSD has been working alongside the city and business owners to help provide much-needed support, including working with restaurants to expand their outdoor dining space on to streets and parking spaces to alleviate losses from indoor dining restrictions. The BSD is also working with the county to provide businesses with PPE to mitigate additional expenses. 18 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
“Everyone is trying to get back to normal, but I don’t think anyone is there yet. We are lucky we have had great weather,” Tighe said. “Our restaurants have been extremely busy; they are taking reservations and people. Our retailers have reported things are going ok. It depends on which retailer.”
OPEN 7 DAYS, A RETAILER WAITS TO REOPEN Je Donna Matthews Dinges’ new location of her resale dress shop in Ferndale, Margaux & Max, had been open for just seven days when she shut down the store on March 17, following Whitmer’s orders. The 3,000-square-foot space on Nine Mile Road was an upgrade from her previous 750-square-foot store on Livernois Avenue. Dinges, who started her family-run business six years ago at her dining room table selling a pair of her earrings on her Facebook page, was left with $200,000 worth of unsold inventory in a bigger space. When Whitmer allowed retailers to conduct curbside pickup during lockdown, Dinges was able to pivot back to online sales by hosting weekly QVC-style Facebook Live events, where she virtually walked customers through the “previously loved” hand-picked selections in her store, which range from high-end labels like Diane Von Furstenberg and Detroit’s own Tracy Reese to Ann Taylor and J. Crew. In a matter of weeks, she saw her audience grow from 12-15 loyal customers to around 50-60 people on average. But she said this was not enough to sustain her business, which is down 80 percent from last year. And with new COVID-19 cases still emerging, her client base is not eager to patronize the store yet, even though restrictions prohibiting in-store traffic have been lifted. “Now that businesses are starting to reopen, my clients are sending me messages (saying), ‘we love you but we’re not coming,’” Dinges said. In response, she is planning to reopen by appointment only, where she will assist one client, who spends about $100 on average, for one to two hours and conduct a 40-minute sanitization routine between appointments. To ensure she is compensated for her time, she will institute a $25 nonrefundable appointment fee to be applied to anything the customer purchases. She said this format could be lucrative. “You always sell a little bit more when customers have the showroom and sales assistance to themselves,” Dinges said. “You have an opportunity to generate more revenue.” She added that the appointments will not close her revenue gap completely but could help her achieve 30 or 40 percent of her 2019 sales, which she declined to share. But her customers’ health, as well as her own, is still a primary concern. “People are worth more than money,” Dinges said. “It’s more important to me that my clients are well.”
AN ANN ARBOR ICON COMES TO AN END Carl and Elaine Johns were planning to celebrate the 60th anniversary of their consignment shop, Treasure Mart in Ann Arbor, and then COVID struck. Now the landmark store, which opened in April 1960 and was founded by Elaine Johns’ mother, closed its doors for good on Aug. 1. Before the shutdown, the couple
Treasure Mart’s Carl and Elaine Johns made a tough decision for their store. | CONTRIBUTED PHOTOS
Je Donna Matthews Dinges’ shop had been open a week when shutdowns began.
was planning to sell their storied resale shop after Elaine Johns was diagnosed with amyotrophic lateral sclerosis (ALS) in 2019. Carl Johns said they received an offer at the beginning of the year, but it was rescinded when the novel coronavirus became a global pandemic. When Whitmer allowed retailers to reopen for foot traffic, Treasure Mart’s 19 employees were not willing to return to work, which affected the couple’s access to government assistance. “We got approved for PPP but couldn’t use it because employees did not want to come back,” Carl Johns said. “We’re in an old building that was built in 1883 … we don’t have the greatest air flow in that place.” During the mandated closure, Carl Johns said the store experienced a small 20-25 percent drop in sales. He stressed that this decline, along with employee hesitance, were just contributing factors that put the store, which had 800 regular consigners on the books, out of business. “It’s mostly my wife’s health,” Johns said. “She can’t work anymore,” and he has to stay home and care for her. He also said none of his current staff, many of whom are part time, are financially equipped to take over the store. And he has not received any offers to buy the business since the initial deal fell through. He added that he thought “since so many people in Ann Arbor have fur-
nished their home with things that have come through the store,” someone would think it was a worthwhile business to save. But he remains optimistic about the future. “It’s time to move on,” Johns said last month. “There’s still hope that someone will step up (and take over Treasure Mart).”
A DOUGHNUT SHOP IN A DESERTED DOWNTOWN For Karla Willis, co-owner of Detroit Mini Donut, the struggle in reopening her Harmonie Park shop is a dearth of customers. “What’s going on downtown is that many of the businesses are still working from home,” Willis said. “Our customer base is fairly nonexistent.” She said the store, which started as a small doughnut cart at a flea market in Warren and opened on Grand River in July 2019, sees an average of three to six customers a day during the week, and about eight to 10 on Saturday when they offer curbside pickup only. As of now, they have not returned to profitability. And her eight employees have not returned to work because of the lack of demand, although she said she is working on bring them back in and can pay them, despite the dip in revenue, through an Economic Injury Disaster Loan that provides economic relief to small businesses experiencing a temporary loss of income, which gave her money per employee.
Since reopening on June 30, some customers are traveling from the suburbs to support them by placing orders for multiple bags worth of donuts, which retail for $5 a bag, Willis said. The majority of her local customers are now coming from the Hudson construction site or are residents in the area. But there is a saving grace. Willis said the catering segment of the business has started picking up since Whitmer has allowed people to gather in smaller numbers. As a result, events that were canceled are starting to reschedule, like graduation parties and small weddings. Now, clients are beginning to rebook her services, which is $995 for a two-hour minimum and includes unlimited doughnuts for up to 300 customers. “If things continue to go as they look on the catering end, that gives us a very positive outlook,” Willis said. “The catering portion can help subsidize the store.” She notes that revenue will still be in decline even with the strength of the business’s catering jobs. “We will be lucky if by the end of the year at the store we are back to 50 percent, (which is a generous projection),” Willis said. At the start of the pandemic shutdown, all the catering events she had booked were canceled within 48 hours, about 75-100 jobs gone, she said. Luckily, many of her clients did not immediately request refunds for their deposits, and now a good portion of them are going forward with their events, which could help her recover 75-80 percent of Mini Donut’s catering income, she added. “If things continue to go as they look on the catering end, that gives us a very positive outlook,” Willis said.
A FAMILY-OWNED RESTAURANT GROUP Joe Vicari Restaurant Group, the family-owned and operated business that owns Andiamo along with various other restaurants, reopened all 19 locations on June 8. The restaurants, which span a wide range of concepts, from high-end steak and seafood to quick casual, are taking all the precautions to keep guests and staff safe. They have implemented non-contact infrared thermometers that check employees’ and guests’ temperatures, according to a video on Andiamo’s website. Anyone who registers a fever will not be allowed
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entry. Touchless hand sanitizers, gloves and masks for staff, one-time use menus and an option to download the menu to a phone. The restaurant will also be using highgrade fogging disinfectant on the surfaces of frequently touched areas. But even at the 50 percent limited capacity, the dining areas are not filing up. Joe Vicari worries that as long as cases are spiking across the country, people will be afraid to dine out. Lunch hours have been slashed at some locations as offices continue to be closed. Vicari’s restaurants have managed to stay afloat because of the PPP program, bank deferrals on payments and landlords that have been sympathic. “We have cash flow because we are able to use the PPP money and we are able to defer bank payments. If we had to make the payments and we had no PPP assistance, all my restaurants would be under water right now,” Vicari said. The bank originally gave the company a 90-day deferral on payments and in June agreed to extend the deferral for another 90 days until September. “If they don’t find a vaccine and we are in the same position 90 days from now as we are today, I don’t know if the United States can afford to give away another 3-4 trillion dollars like they did the first time,” Vicari said.
A FAMILY-RUN EATERY IN FERNDALE On July 7, Anita’s Kitchen had its grand reopening in Ferndale. The family-run eatery closed its dining area in March and began carry-out service for a short period before closing for renovations. The reopening plan was to provide customers with both dine-in and carry-out options, but it soon became evident that being everything to everyone would present challenges. “We opened up and went through a week. We were doing 15-20 percent dine in so we made a decision yesterday to just do carryout. We were already doing 40 percent carryout prior to COVID and now it looks more like 75 percent carryout, so we have decided to invest all our energy into carryout,” said Jared Groth, director of operations. “We want to focus on what people are telling us they want which after (reopening) is clearly curbside and carryout pick up. We just think we will be a more effective business that way and we can guarantee quality because we can restructure our kitchen for carryout,” Groth said. The restaurant plans to return to dining services when things calm down but for the foreseeable future, which is likely until the end of the year, they will stick to their new business model. Anita’s Kitchen has been doing well. Groth felt overwhelmed by the amount of support they received from the community. Overall, sales will drop by 15 percent because of the decision to close dine-in service. “We are pretty pleased with the fact that the community has supported us. We are a great example of how to pivot in this moment because we came back expecting to be everything to everyone, but it was immediately apparent that the need for carryout was so great that we had to adjust our business model” Groth said. Anita’s Kitchen reopened its airport location and plans to reopen the Lake Orion location soon. The location in Detroit, known as AKtakeaway, will be the last on the list to reopen.
SCHOOLS
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“That’s absolutely something we’re working on,” said Jon Jean, who oversees education services for Grosse Pointe’s 7,200-student school district. “And I’m not trying to be vague — the governor provided some recommendations but not hyper-detailed recommendations. You don’t want Jon Jean to make that decision because frankly I’m not a cleaning expert.” “I want to make sure we get that out there,” Pangborn replied. “Because that’s what people pivot on: Is the desk clean?” In the virtual boardrooms of Michigan’s 894 school districts and charter schools, administrators and unpaid elected board members are scrambling to rewrite the operational playbook for running a school as they prepare to reopen buildings by Sept. 8 that were shuttered in midMarch as the pandemic swept into Michigan. A month ago, Whitmer directed school leaders to map out different plans depending on whether southern Michigan remains in Phase 4 of her reopening plan that would allow in-person instruction or if coronavirus case growth worsens and they’re forced back into remote instruction online under Phase 3. Now, it’s decision time. And anxiety is building among parents, teachers, administrators and school board members who face the challenge of resuming education of Michigan’s 1.6 million school-age children. “The stress and anxiety within every community is at a little bit of a fever pitch as we get ready to launch,” said Scot Graden, superintendent of Saline Area Schools. School boards are mapping out whether to return students to the classroom, start the year totally online or adopt a hybrid of the two. “There are no good options here,” Christopher Profeta, an educator in Roseville and secretary of the Grosse Pointe board, lamented during the meeting. “There’s nothing that’s perfect. All-online is not perfect. Faceto-face is not perfect. Hybrid is not great, either.” The decision to reopen buildings comes with a daunting maze of new procedures for cleaning classrooms, how students and staff enter buildings, procuring hard-to-find personal protection equipment and buying duplicate supplies to limit touching that can spread the virus. Middle and high school teachers who see hundreds of students each day are especially concerned about their potential exposure to the virus, said Paula Herbart, president of the Michigan Education Association teacher’s union. “Everybody wants to quantify it by ‘I can go to the grocery store, I can go to school,’” Herbart said. “Well, you’re not hanging out in the grocery store talking with that clerk six hours a day and 30 other people. You’re in (the grocery store), you’re out ... and you’re going back home again.” “It’s a very different environment,” she added. Whitmer’s return-to-school plan provides requirements for schools to resume in-person instruction, including a mandatory mask-wearing rule for all staff and middle and high school students throughout the school day in regions in Phase 4. Younger children in kindergarten through fifth grade would be required to wear face masks in school
hallways and buses, though schools can choose to mandate them in class. The plan mandates schools in downstate regions disinfect every desk between periods in middle and high schools and clean frequently touched surfaces in classrooms and bathrooms “at least every four hours.” School libraries, computer labs and arts classrooms “must undergo cleaning after every class period,” the governor’s plan says. “The cleaning costs are going to be astronomical,” said Robert Shaner, superintendent of Rochester Community Schools, who served on Whitmer’s council that devised the cleaning protocols. “In a high school, every time kids get up and leave a room, the surfaces have to be cleaned before someone else comes in.”
Reopening plans vary greatly Whitmer’s reopening guidelines let local school boards decide whether to offer classes in-person, online or a hybrid. Districts that have announced their plans are so far all over the map. Grosse Pointe and Saline schools are both planning to open up schools to in-class instruction, while providing an online-only option for students and teachers who want to opt out for health or safety concerns. In Detroit, the state’s largest school system is planning to offer fully in-person, half-time in-person
an online model for the time being is they don’t have any funding certainty from the state in terms of being able to buy the equipment necessary to keep students safe in an inclass environment,” said Bob McCann, executive director of the Tri-County Alliance for Public Education, an advocacy group for school superintendents in Macomb, Oakland and Wayne counties. The Tri-County Alliance estimates Michigan schools need another $1 billion just to pay for all of the personal protection equipment and staff to screen the health of children and educators entering buildings, McCann said. “Until Lansing wants to prioritize school funding finally, you’re just jeopardizing any district’s ability to put together and implement a safe reopening plan,” McCann said. “It’s just not going to happen.” At this point, Lansing is in a political holding pattern on funding as the Democratic governor and Republican-controlled Legislature wait for Congress to decide whether there will be additional federal aid sent to the states and schools — money that could come with strings attached. Lawmakers and Whitmer also are at odds over requiring school districts to offer in-person instruction, effectively putting a stop to districts going all virtual. The governor said this week she opposes any plan to “force” students and teachers back into the classroom.
“THE GOVERNOR PROVIDED SOME RECOMMENDATIONS BUT NOT HYPER-DETAILED RECOMMENDATIONS.” — Jon Jean, who oversees education services for Grosse Pointe Public School System
“WHATEVER YOUR NEIGHBORING DISTRICTS CHOOSE, THAT PUTS PRESSURE ON YOU AS A DISTRICT.” — Don Wotruba, executive director of the Michigan Association of School Boards
or entirely online instruction, according to its 42-page reopening plan. Melvindale-Northern Allen Park Public Schools are starting entirely online. “At some point when things become more stable in our state, we can easily transition back into classroom learning,” the district’s superintendent, Kimberly Soranno, wrote in a July 20 letter to parents. Hartland Consolidated Schools plans to offer in-person instruction Monday through Thursday and then be virtual on Fridays to allow for teaching planning and “deep cleaning” of schools, according to the plan. In Birmingham, the school board is mulling a hybrid of half-days or going completely virtual. School boards in Ann Arbor, Grands Rapids, Holt, East Lansing, Lansing and Okemos have opted to start the 2020-2021 school year online — taking a wait-and-see approach to both the pandemic and an unsettled $1.1 billion deficit for the state’s school aid fund that could result in up to $700 less per student in state aid. “The reason so many school districts are kind of throwing their hands up in the air and reverting to
‘A herculean task’ In Ingham County, the Lansing school system’s decision to start the school year online had a quick ripple effect. Holt and Williamston’s school boards have voted to start virtual. Like calling off school for snow, the movement to go virtual is creating pressure for school boards in the same labor market — such as Dewitt, Grand Ledge and Mason — to follow suit. “Whatever your neighboring districts choose, that puts pressure on you as a district,” said Don Wotruba, executive director of the Michigan Association of School Boards. Social media is filled with posts in local groups about each school system’s reopening plans — with no shortage of opinions from parents and internet gadflies. “If you’re a school board or superintendent, are you responding to those who are calling you or blowing up social media or are you responding to the actual survey results of the community you surveyed?” Wotruba said. “Because what social media brings you ... may not be representative of your community.” Ann Arbor’s decision to start the
school year online served as a “wake-up call” in neighboring Saline, Graden said. “I think some people had not been thinking that was a real option,” Graden said. “So then it did light up the community to say, ‘I want my child to be in-person.’ We’ve gotten a lot of feedback following Ann Arbor’s announcement.” In Rochester, Shaner said he’s unsure whether the district’s instruction will be in class or online because “there’s so many other complicating factors” to opening school buildings. One of those factors is testing students and teachers who may have symptoms and how long those tests take, Shaner said. “Testing’s going to have to be better than 10 days for results,” Shaner said. “I can’t contact trace in a school building when I’ve got to wait 10 days for results.” Wotruba said the move by some districts to start the year online may reflect the narrow timeline to make all of the necessary staff and operational changes. In Grosse Pointe, parents have until Aug. 7 to decide whether to enroll their children in the district’s virtual school — and they can’t switch back to in-person instruction until January. School systems that start on the Tuesday after Labor Day typically have to negotiate changes in working conditions that affect health and safety with labor unions by mid-August, Wotruba said. “To get that done by August 15 is a herculean task,” Wotruba said. “If a district says we’re going to go virtual for the first six weeks of the year, that just pushes things out for them — they have more time to sit down and more time to talk.”
‘Shifting every day’ The pandemic has provided almost daily whiplash for school leaders searching for some sense of certainty. After flattening the infection curve in May, the coronavirus has made a steady comeback in Michigan over the summer months. Since July 1, the rolling seven-day average number of new confirmed cases of COVID-19 has doubled from 311 to 706 last Thursday. It peaked over 1,600 in early April before hitting a low point of 150 in mid-June. Hospitalizations and deaths, however, have remained relatively flat. The governor has indicated that epidemiological evidence of a second wave could force her to place populous downstate regions around Detroit, Saginaw, Lansing, Grand Rapids and Kalamazoo back into Phase 3, forcing schools back into all-virtual instruction. “”ou’re going to know before that first day (of school),” Whitmer said Tuesday at her weekly press briefing. “But it’s going to be a lot closer to it than anyone’s going to be happy with — and that’s just the nature of this disease.” On Monday night, while going through a 22-page presentation for Grosse Pointe’s return-to-school plan, Jean warned his board that it all might be obsolete information in a matter of weeks. “Things are shifting every day,” Jean said. “I guarantee you what ends up happening with our kids and with our staff in September will be different than what we think it will be today.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 19
ROCKET IPO
MOTOR CITY
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Jay Ritter, an IPO expert and finance professor at the Warrington College of Business at the University of Florida, noted that average first-day returns on public offerings in 2020 are at 39 percent, their highest level since the dot com boom and bust of the late 1990s and early 2000s. Ritter cautioned that doesn't mean investors into the Rocket Companies stock should expect to cash out with four times their money after a day. "Now that doesn't guarantee that Rocket's is going to go up by 39 percent," Ritter said. "In fact, if it did I would view it as a colossal failure by the underwriters to price the offering correctly." Plans as of last week called for Rocket Companies to price its stock on Aug. 5, meaning the company could have its offering as soon as the following morning. The company plans to trade on the New York Stock Exchange under the symbol RKT. It's unclear whether Gilbert or Quicken Loans CEO Jay Farner plan to be on hand for the ceremonial ringing of the bell to open the stock market on the day of the IPO. Further bolstering the company's standing as a public entity is a red-hot mortgage market driven by record-low mortgage interest rates, according to the Mortgage Bankers Association trade group. In mid-July, the group forecast that 2020 will see $2.8 trillion in mortgage originations, the strongest year for the industry since 2005 when the total landed at $3 trillion. With its proposed IPO, Rocket Companies aims to raise as much as $3.8 billion at a share price of between $20 and $22, and a valuation of around $40 billion. The proposed offering amounts to 8 percent of the new company, which will remain tightly controlled by billionaire co-founder Dan Gilbert. Gilbert's Rock Holdings Inc. will hold 79 percent of the voting power of Rocket Companies. The Rocket Companies IPO has 20 underwriters, which will have the option to purchase 22.5 million shares of the company, according to the company's S-1 regulatory filing. Wall Street heavy hitters Goldman Sachs & Co., Morgan Stanley & Co., Credit Suisse Securities, J.P. Morgan Securities and RBC Capital Markets are the representatives of the underwriters. Each firm, through spokespeople, declined to comment for this report. Normally companies going public aim to have about 90 percent of their shares allocated to those types of institutional investors, leaving a small handful available for individual investors, according to Ritter. As of July 30, there were 89 IPOs priced in 2020, a drop of 8.2 percent in the number of offerings from the same date last year, according to data from Greenwich, Conn.based investment advisory firm Renaissance Capital LLC. Rocket Companies' target raise of $3.8 billion still falls far behind the largest recorded IPOs in U.S. history, such as Chinese e-commerce platform Alibaba's raise of more than $21.7 billion in 2014 and Visa's 2008 raise of more than $17.8 billion. But the Renaissance Capital data shows that the Detroit-based company's proposed offering would still be within the 25 largest IPOs in U.S. history at $3.8 billion. The sheer size of the proposed Rocket Companies IPO makes for something of a rarity, according to Ritter, the University of Florida finance professor. "There aren't that many companies that go public with a market cap of $20, $30 or $40 billion," he said. "It's not like Facebook in terms of visibility among people, but it's certainly a wellknown, successful company that's been profitable. With any company, the stock might go up or down, but the probability that the company itself will fail is pretty minimal here. And I think that's one of the things that has a lot of investors excited about it."
The city's contract with the Economic Development Corp., which manages Motor City Match, is up at the end of the year. The EDC is staffed by the nonprofit Detroit Economic Growth Corp., the city's quasi-public development coordinating agency. Mayor Mike Duggan pitched the program in early 2015 as five years long, granting $500,000 per quarter. It garnered national attention as a first-of-its-kind revitalization effort in a city fresh out of bankruptcy.
Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes 20 | CRAIN’S DETROIT BUSINESS | AUGUST 3, 2020
Years of grants The program has made $8.1 million in grants and prompted $44 million in investment, serving 1,418 businesses in its 17 rounds, according to data provided by DEGC. Eighty-one percent of awardees are minority-owned (applicants are asked to self-identify as "minority") and 64 percent are owned by Detroiters. Those served include winners of the matching cash grants for construction of their spaces, as well as those who won smaller awards for in-kind design, space selection or business plan services. Of the 187 total cash grantees, 79 are currently open and operating, or 42 percent. That figure doesn't include grantees who are in construction or those who are selling their wares via food truck or other mobile business — and those who won the last couple of rounds may be struggling more due to COVID-19 business pressures. As of July, 86 percent of Motor City Match winners had either started to or finished using their award funds. Projects must be fully funded in order for owners to begin drawing down from their grants. Motor City Match helps new businesses get through pivotal moments in their creation process, like architectural work, said Bridget Espinosa, the owner of bilingual consulting firm Puente Cultural Integration, who was an approved DEGC vendor for a year and is a small-business coach for immigrant businesses. She said she believes in the program but that she also thinks it is understaffed, which can result in longer wait times to get through the program and receive grants than entrepreneurs expect. Asked about the DEGC's staffing, Pierre Batton, vice president of small business services for the DEGC, said like all nonprofits it could "always use more hands on deck." Officials have been planning to adjust the program for years. It has also been under federal review for its record-keeping policies — a process that halted its federal funding in early 2019. Over its yearslong run, Motor City Match has used $8.9 million in federal dollars, $5.5 million in philanthropic funds and it's been approved for $5.8 million in city of Detroit funding due to the federal review, though it hasn't used all of it. That original five-year-mark has passed, and the EDC continues its work under a contract extended through the end of 2020. Officials planned to release a request for proposals to re-
Pierre Batton, the Detroit Economic Growth Corp.’s vice president of small business services (second from left), joins a grand opening event for Motor City Match recipient Quiana Broden (in orange), founder of The Kitchen, by Cooking with Que. Mayor Mike Duggan (right) was also on hand. | CITY OF DETROIT VIA FLICKR
bid the contract by the end of March in order to launch a "Motor City Match 2.0," until the pandemic delayed it.
Wins and woes As Motor City Match finishes its final rounds, two winners of the design award shared their triumphs and pitfalls with the program. The design awards, smaller than the matching cash grants, are reserved for businesses that still need to plan out their spaces. Winners get in-kind design services, not cash, but are encouraged to apply later for the bigger grants. Wife and husband Venti and Dino Valdez won in mid-2018. They pitched reimagining their Manila Bay Café, a 7-year-old performance space that closed in 2017. The couple planned a multi-layered center with a cafe, community space, work studios and perfor-
mance space at a 5,000-square-foot building and vacant lot on Grand River Avenue near Greenfield Road. Venti said the award process took about a year and a half, but she praised Motor City Match staff for responding quickly to questions and sincerity in their quest to rebuild Detroit's small business base. The Valdezes estimate Motor City Match paid $25,000-$27,000 for their design plans. Dino Valdez said Motor City Match "really supported us" and "they're good people." The pair is now in the renovation process and looking to raise money for the Manila Bay Entertainment and Community Center. They applied for a Motor City Match cash grant, but didn't win. Ashley Logan, an entrepreneur who started Klassic Mobile Gardens LLC and won a design award in late 2018, called her experience in the
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Detroit may need to return up to $2.7 million, or nearly a third, of the federal grant money it got for Motor City Match, its flagship entrepreneur-funding project. But it expects to get it back. When the city ultimately gets back the money it returns, it will come with a warning to use it properly this time, meeting the guidelines for the U.S. Housing and Urban Development Department's Community Development Block Grant program that gives annually to states and localities to help with housing and economic opportunity. Detroit officials maintain the final number will likely end up lower, though. Detroit's government has been overhauling its business-boosting program's record-keep-
ing and policies with HUD's help following concerns about documentation that didn't show if Community Development Block Grant dollars were used properly. Many of the federal department's questions seem to be wrapping up after they first emerged in 2018. Most recently, HUD said June 3 that the city could resume using HUD funding for small-business development, after being asked to halt that spending while feds reviewed the grantmaking programs in question: Motor City Match and its smaller sister program Motor City Re-Store. HUD laid out problems the city needed to solve in order to get that money flowing again. The city's Housing and Revitalization Department on March 23 handed over a 70-page response, obtained by Crain's through the Free-
dom of Information Act. The letter by Detroit housing director Donald Rencher laid out new policies and procedures for reporting how it spends those block grant funds — more closely meeting HUD's reporting standards and incorporating more government oversight over the program. The new policies and procedures aren't in use yet and are still being worked out with technical assistance from HUD, according to Nicole Wyse, the city's associate director of community development. Motor City Match makes matching grants and provides in-kind design and business plan support to entrepreneurs in a bid to fill vacant storefronts along Detroit commercial corridors. It's administered by contractor Economic De-
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“WHAT I HEAR FROM OUR PARTNERS … AND OUR TEAM … THEIR CONCERN IS BUSINESSES THAT WE HELP OPEN MAY NOT SURVIVE THIS.” — Arthur Jemison, Detroit’s chief of services and infrastructure.
program "horrifying." She began the application process in June 2018 and discussions over her award lasted through early 2020, per emails reviewed by Crain's. "Motor City Match ended up being a setback because of the timeline," she said. "The waiting period to win or not win, then actually winning and then never getting anything, because other opportunities passed by (while waiting for the award). For me, I feel like time is money. A lot of time was invested into the program and no positive outcome." Logan ultimately declined her award in January. She said from the get-go, before being selected for any assistance, the process was rigorous for a startup business in need of cash and required "jumping through hoops." Over the last year, 852 businesses applied and 192 received one of the various awards, meaning under a quarter of applicants succeeded. The design grants were the most competitive, with a 17 percent win rate, according to figures provided by program staff. Logan also cited difficulties after she won, including being told she won a second award when she hadn't, and being asked to submit materials she'd sent in months before. "We ended up paying for our architectural services and renderings out of our own pocket, since we weren't getting anywhere (with the program)," Logan said, estimating the cost at $40,000. Logan has invested $140,000 so far in her plans for a collaborative center that extends her garden-planting business with a fresh market for local farmers and gardeners, a cafe, office space and entertainment. It would open on Detroit's east side, on Mack Avenue on the edge of the Morningside neighborhood. "I’m at the point where I really have to just step out on faith and do what I can to move my project forward," she said.
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Venti and Dino Valdez won a Motor City Match design award in mid-2018. They pitched reimagination of their Manila Bay Café, a 7-year-old performance space that closed in 2017.
Detroit entrepreneurs face an obstacle-laden path complicated by structural racism, redlining and more, said Eric Williams, a senior staff attorney in the Detroit Justice Center's Economic Equity Practice who was previously an authorized technical assistance provider for Motor City Match. "Motor City Match, like a number of other government programs, was designed to address that," Williams said. "Part of the problem is ... it's a (matching grant). And one of the things you're trying to address is the lack of capital."
Becoming capital-ready is a struggle, particularly for Black communities, immigrant communities and other communities of color that lack access to traditional financing, Espinosa said. She would recommend designated financial coaches staying with awardees throughout the process. Williams echoed longtime concerns that the program needs to link businesses with technical support in areas like accounting, legal and financing that can be tough to juggle. Motor City Match has technical assistance providers, but Williams said there could be more done to push businesses toward that help. "I think the No. 1 thing is I would eliminate as many barriers as I can to the application and receipt of funds process," Espinosa said. "You had to be able to get approved for a loan before getting money and that in and of itself was probably the hardest piece."
Road to what's next Plans for Motor City Match's future have been "on pause," according to Jemison. It could be revived and adapted, or scrapped entirely for something different. The Duggan administration wanted to wait as it assessed the business climate during the pandemic and "I think we're beginning to put our ideas together now about how we might be able to act in the fourth quarter," Jemison said. "How do we do a 2.0 that's more reflective of the moment we're in?" Jemison said. "How do we get our businesses prepared for the new normal, so they can survive, then get them stabilized and growing?" Logan said she would like to see Motor City Match, or an equivalent, fund sanitation equipment, help businesses reopen or assist in revamping their plans and services. While the DEGC says it has continued to make Motor City Match grant funding available — it's funded through the end of 2020 — it has also focused on responding to the pandemic. It has pitched in for the public-private business assistance website Detroit Means Business and doled out millions in COVID-19 relief grants. "Some of the lessons learned, there's an opportunity with COVID, I think, that exposed the importance of online sales and the ability to reach a larger market so with so many homebased businesses," Batton said. "Motor City Match, a big, integral part is to get people into a commercial space. How do we meet needs in a post-COVID landscape?" Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
se federal funding for Motor City Match again
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”(HUD SUPPORTS) THE USE OF (COMMUNITY DEVELOPMENT BLOCK GRANT MONEY) FOR THESE TYPES OF PROGRAMS GOING FORWARD AND WE’RE LOOKING FORWARD TO CONTINUING TO USE THAT AS A RESOURCE FOR OUR SMALL BUSINESSES.” — Nicole Wyse, Detroit’s associate director of community development
velopment Corp., which is staffed by the more well-known, quasi-public economic development agency Detroit Economic Growth Corp.
"(HUD supports) the use of (Community Development Block Grant money) for these types of programs going forward and we’re looking forward to continuing to use that as a resource for our small businesses," Wyse said. Detroit had replaced the federal funding source that halted in February 2019 with its own general fund. The city handed Motor City Match $5.8 million. The program hasn't used all of it, though, according to the city, with a $1.1 billion general fund budget this fiscal year. The 5-year-old program has also used $8.9 million in federal Community Development Block Grant dollars and $5.5 million in philanthropy since its inception, according to the city. In HUD's original complaints, it said Detroit hadn't created procedures to adequately docu-
ment how all of its Motor City Match spending was eligible for the Community Development Block Grant funding — it needs to follow specific reporting requirements, as well as meet goals on serving low-income business owners and residents. The city reviewed years of expenditures. Spending that didn't qualify would need to be returned to the federal government out of Detroit's general fund. However, Rencher said, the city will ultimately get the same amount back to use for Community Development Block Grant-authorized purposes. "We do get that money returned back to us in whole," Rencher said. "They’re like, 'OK, try it again.'" The city estimated in March it could need to pay back up to $2.7 million of the nearly $9 mil-
lion it got. The city has asked HUD to review the figure, and told Crain's it expects it to end up lower. The city also said in the March letter that it found no "misuse" of funds for purposes outside Motor City Match and Re-store — all of it was used for the programs, but not always in a way that conformed with the Community Development Block Grant standards. "I know we are looking forward to figuring out how we continue to help fund small businesses ... and doing it in a way that's eligible" for the Community Development Block Grant program, Rencher said. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank AUGUST 3, 2020 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
The sky (and ocean floor) aren’t even limits for Christian Greer MICHIGAN SCIENCE CENTER: As a child growing up Chicago’s south side, Christian Greer, president and CEO of the Michigan Science Center, frequently visited the lakefront and the cultural institutions along it. He had a favorite destination: Adler Planetarium. "Star Trek," "Star Wars," "Buck Rogers" and "Battlestar Galactica" spurred his young imagination to dream of one day going into space himself. Greer came close on a flight into the stratosphere as a civilian member of a NASA crew. And he dove deep into the depths of the ocean as a civilian educator joining a U.S. Navy expedition on a nuclear submarine — both during a 30-year career at cultural institutions in his hometown (including Adler Planetarium) and St. Louis before coming to Detroit last year. Now he’s looking to bring excitement and possibility to children, while still dreaming of making it to outer space himself one day. | BY SHERRI WELCH ` You come from a long line of educators, right? I’m a fourth-generation college graduate. That is pretty rare, for someone at my age (50), especially being Black, because there wasn’t as much access to education at the time. My great-grandfather taught in a one-room schoolhouse in Tennessee, and his wife, my great-grandmother, was also an educator. My uncle was a superintendent of schools, and both my parents were formal educators in the Chicago Public Schools. I was the only one who pursued education but became an informal educator. Being Black, I grew up around people who thought that education was everything. From my family’s point of view, because so many of them had gone to college and graduated, it was expected. ` You were a little reluctant to come to Detroit to take the top job at the Michigan Science Center. Why? I was reluctant about being accountable for everything at an organization that has a lot of challenges. And I know the city is tough to be a success in. The resources are not even here to be able to do some of the things I’m used to doing. There are more foundation grants, more corporations to give money, more people to be members in Chicago because it’s a bigger market. But I wanted to go out there and prove I could do something and do it in a town where these kids look like me. And I might just be able to inspire a few of them to do something as a result of coming to a science center like I did. ` You are developing an Ames room. Is the intent purely to show the physical properties of that type of room or is there something more?
We’re going through a general election for the president of the US. Inspired by the George Floyd protests, I thought OK, let’s dive into how the science center might relate to your everyday life, even something that’s totally different like your political realty. I’m hoping that if we can start to get people to look at things from a scientific lens, it might lead to more critical thinking. The Ames room will have walls that are more like trapezoids than rectangles, a slanted floor. Same-size figurines, when you put them on different sides of the room, change size because of perspective. It creates an optical illusion. As long as I am looking only in this one direction, that’s all I’ll ever see until I explore and look at things from different angles. I hope to have it up and running before the election so people can come and see it and think about how it’s all about their perspective and how different people are seeing that in different ways.
things. We need to have cool things, get people talking, have things they haven’t seen before. If we do that, more people will show up, feel that value proposition fits their budget. ` You have gone where few men have gone before. Tell me about that. I’ve likely been higher and deeper than most people on Earth. In 1994, when I was an astronomy educator at Adler Christian Greer, president and CEO of the Michigan Science Center
Planetarium, I had an opportunity to fly as a crew member on a NASA mission to the stratosphere — above where airplanes fly at almost 45,000 feet — on the Kuiper Airborne Observatory. We used the telescope to look at celestial objects like Jupiter’s moons in the infrared part of the spectrum. I was on air during the mission to broadcast airborne lessons to K-12 schools across the country. In 2011, as a civilian STEM Education Ambassador for the US Navy, I had an opportunity to dive 630 feet below the waves in a Los Angeles Class Attack Nuclear Submarine, USS Albuquerque. I also got a chance to fly on a C-2 Greyhound plane and land and take off on an aircraft carrier, spending a couple of days in the Pacific on the USS Carl Vinson. ` What do you do to get a break? The break I get during the pandemic is with my kids. They love to play video games like Roblox. I also love to sing with my daughter. Our favorite song is “A Whole New World,” the theme from Aladdin. I like to think I can sing a little bit. From an intellectual side, I like to play with nuclear reactor simulators. I get to use my physics degree and some of my leadership skills. What is more critical than the responsibility of being in charge of a nuclear power plant? Even thought it’s a game, you realize there could be a meltdown. It’s a thrill to learn how to manage these things. It makes you more confident in terms of your decision making and also your ability to read the situation.
` How are you making ends meet for the museum right now? We’re a 501c3 that receives no money from the state or city, doesn’t have a millage or giant endowment. We often live from check to check. The thing that keeps us really going is corporate donors, funders who support our work and individuals, who include our members. That’s all we have aside from general admission. We’re asking a lot of companies to give us general operating and thank goodness they do to keep the lights on. But beyond that, if I’m raising funds just to keep the basic structure going, I don’t have ability to do a lot of innovative
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Construction of new Meijer store on East Jefferson to begin this fall CONSTRUCTION OF A LONG-IN-THE-WORKS Meijer Inc. grocery store along East Jefferson Avenue in Detroit is set to begin this fall after state officials OK’d a $1.56 million brownfield tax incentive for the retail development. The Michigan Strategic Fund board on Tuesday approved an Act 381 brownfield redevelopment tax capture that includes $986,856 in local taxes and $573,144 in state taxes that can be captured by the developers over 14 years to subsidize the estimated $16 million cost of the project. Dennis Archer Jr., one of the partners in the project being developed by Jefferson Larned Development Company LLC, said construction for the 42,000-square-foot grocery store will begin within 60 days and be completed by the fall of 2021.
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Construction of a compact 42,000-square-foot Meijer Inc. grocery store at 1475 East Jefferson Ave. in Detroit is expected to open in the fall of 2021. | ROGVOY ARCHITECTS
“Given the tightness of the deal financially, the project could not go forward without approval of this grant,” Archer told the MSF board on Tuesday during a virtual meeting. “And so
we’re here before you humbly requesting support for the grant so we can move forward delivering firstclass grocery to this neighborhood.” The Meijer Rivertown Market at
1475 E. Jefferson will be the third Meijer store in Detroit, but a more compact version for the East Jefferson commercial corridor east of downtown. Walker, Mich.-based retail giant Meijer has two 200,000-square-foot supercenters in Detroit now. The East Jefferson project was originally unveiled in October 2017 with the intent of being open by the fall of 2019. Plans for a 213-unit apartment building sitting atop of the store were scrapped last year because of rising costs for construction materials and labor. Construction cost for the new Meijer is approximately $267 per square foot, according to the MEDC memo. That comes out to $16 million for the entire project.
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Taking action on our commitment to Detroit We know we must do more to address the very real consequences of systemic racism that exist in society today. The impact on communities across the country is clear, including where our teammates live and serve our clients. To drive progress, Bank of America has committed to invest $1 billion over four years to advance racial equality and economic opportunity, building on work we’ve had underway for many years. We’re partnering with community and corporate leaders to create sustainable change. Our actions will help address critical issues and long-term gaps, including: •
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