THE CONVERSATION
Detroit election workers brace for absentee ballots
JPMorgan Chase Co.’s Terrah Opferman steers middle market businesses through tough times PAGE 22
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CRAINSDETROIT.COM I NOVEMBER 2, 2020
WHAT THE VOTE MIGHT MEAN FOR BUSINESS We asked experts in sectors from health care to real estate to manufacturing how Tuesday’s vote will affect Michigan Eager for direction after a chaotic year, industry leaders in Michigan are tuning in closely to this year’s elections. Top of mind for executives across sectors is emerging from the COVID-19 pandemic and returning to some form of business as usual. A host of other issues, from immigration and trade policy to health care and tax plans, will have a big impact on what that looks like. Key to most sectors is a second federal stimulus or relief package, which has been held up for months. Whether Joe Biden takes the White House or President Donald Trump wins four more years, business leaders agree they are ready for 2020 to be over — the election, the pandemic, the uncertainty. SUPPLIERS
READ THE REPORTS, PAGES 20-21
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WORKFORCE
Shyft Group shifts gears
Company rides wave of rising e-commerce spending
As COVID cases surge, big firms stress safety outside work
BY DUSTIN WALSH
BY CHAD LIVENGOOD
For 40 years, Spartan Motors operated out of a manufacturing plant and headquarters in Charlotte, a town between Battle Creek and Lansing of fewer than 10,000 residents. A
public company, but run by two generations of the Sztykiel family since its founding in 1975, it focused primarily on building firetruck engines and ambulances and expanded into delivery box trucks at the turn of the last decade.
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In 2014, Spartan Motors stock traded at a mere $5 per share and it ended the year with net income of only $1.2 million after a loss of $6 million the year prior. But it also ended that year with a new CEO in longtime auto supplier executive Daryl Adams. Adams led a major overhaul of the business, resulting in new lean processes, 12 new operations across the U.S., the sale of the company’s legacy emergency response vehicle business, a major contract with Amazon and a new headquarters in Novi and new name, The Shyft Group Inc. The move and name changed occurred in July of this year. See SHYFT on Page 17
After reporting $218 million in third-quarter profits, Consumers Energy Co. CEO Patti Poppe ended a quarterly earnings call with Wall Street analysts last Thursday using what she calls her “mom voice.” “Please be safe, be well and make sure to wear your darn mask,” Poppe said. Eight months into a global pandemic that has upended American life, some of Michigan’s business leaders are trying to reinforce their internal company and public messaging about the seriousness of the novel coronavirus amid a resurgence of infections, COVID fatigue and a divisive national election just days away.
As public health experts have predicted for months, the second wave of COVID-19 infections has arrived in Michigan, sending the seven-day average of new cases skyrocketing from 854 on Oct. 1 to 2,623 on Thursday and an 8.6 percent testing positivity rate. While the average number of deaths is a fraction of the first wave, the rapidly rising number of hospitalizations has some business and health care leaders warning that there may be worse days ahead as the holidays approach and families gather indoors, where transmission of the virus is most common. See COVID on Page 17
NEED TO KNOW
REAL ESTATE
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT JOBLESS CLAIMS CONTINUE AT RECORD PACE THE NEWS: Michigan’s economy is still struggling nearly eight months after the coronavirus pandemic broke out. For the week ending Oct. 24, 16,073 Michigan residents filed for unemployment. The week prior, 7,310 filed new claims. Representatives from the Michigan Department of Labor and Economic Opportunity could not explain the drop after more than two months of new claims holding steady between 14,000 and 16,000. WHY IT MATTERS: COVID-19 cases are once again spiking across Michigan with the state reporting a new single-day high of 3,675 new COVID-19 cases Thursday. The impact of the coronavirus on the economy and jobs may also increase in coming weeks and months.
SBA FOCUSING ON PPP LOANS FORGIVENESS THE NEWS: Amid a record year for lending due to the pandemic-induced economic crisis, officials with the U.S. Small Business Administration say they are trying to make loan forgiveness an easier process. The SBA recently released a simplified loan forgiveness form that can be filled out in about 15 minutes. WHY IT MATTERS: Michigan companies were the beneficiaries of about
343,000 Paycheck Protection Program loans totaling about $22 billion, for an average loan size of roughly $64,000, according to SBA figures released last week. While talk of additional stimulus for businesses has been rampant for months, policymakers have yet to reach consensus around the size and scope of any further relief.
COMCAST TO LAUNCH WI-FI HOTSPOTS AT NONPROFIT SITES THE NEWS: Comcast plans to provide a dozen Wi-Fi hotspots around Detroit by year’s end to increase digital access for students, families and adults seeking jobs. The hotspots, dubbed Lift Zones, will be located at nonprofits providing on-site assistance to students attending school virtually. WHY IT MATTERS: The Lift Zones will provide access to digital skills content to help families and site coordinators navigate online learning. Many of the sites also serve adults and can connect them to online adult education, job searches, health care information and public assistance.
KROGER INVESTING $95M IN NEW CENTER IN ROMULUS THE NEWS: The Kroger Co. is spending $95 million to build an automated customer fulfillment center in Romulus that would create 270 jobs. The Michigan Strategic Fund board on Tuesday awarded $1.6 million in a Michigan Business Development Program grant to support the project. WHY IT MATTERS: Demand for grocery delivery has surged during the pandemic. The planned 130,000-squarefoot facility will prepare and ship grocery orders to customers within a 90-mile radius. The center will support customers in several markets, including Michigan, northern Ohio and Indiana.
Judge temporarily halts sale of State Fairgrounds site A Wayne County Circuit Court judge issued an order temporarily stopping the city of Detroit from selling the former Michigan State Fairgrounds to developers for a $400 million Amazon.com Inc. facility. The deal with Detroit-based Sterling Group and Dallas-based Hillwood Enterprises LP to buy the 142 acre site for $16 million was expected to close last week. It got Detroit City Council approvals needed for the sale on Oct. 20. But the State Fairgrounds Development Coalition, which was seeking a publicly usable redevelopment of the site, has railed against the Amazon deal and sued the city over it. Judge Sheila Ann Gibson ruled Wednesday that the city may not sell the land for 14 days. A hearing for the defendants, the city, Mayor Mike Duggan and others is scheduled for Nov. 9. A court order has temporarily halted the city of Detroit’s expected sale of the former Michigan State Fairgrounds. |
DTE TO SPIN OFF GAS PIPELINE SUBSIDIARY THE NEWS: DTE Energy Co. said Tuesday that it plans to spin off its natural gas pipeline and storage subsidiary, DTE Midstream, by creating a new publicly traded company. Midstream, which will remain in Detroit, is DTE’s nonutility natural gas pipeline, storage and gathering business. WHY IT MATTERS: After the transaction is completed, DTE would revert to a pure-play regulated electric and natural gas utility. Analysts have questioned why DTE has held on to the gas pipeline business so long when other utilities have pulled out.
LARRY PEPLIN FOR CRAIN’S
Corrections In stories published Oct. 26: The original version of “Amid a pandemic, lawmakers get fewer free lunches with lobbyists” included an inaccurate number for the state’s budget. It is approximately $63 billion.
In the original version of “Detroit bakery owner finds silver lining in coronavirus pandemic,” it should have given the address for the business as 19363 Livernois Ave. in Detroit. In the same story, it should have been clear the business leases its space.
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ELECTION 2020
Detroit election workers brace for deluge of absentee ballots BY ANNALISE FRANK
On Monday at 10 a.m., Detroit election workers will take their seats in a 99,000-square-foot exhibition hall in TCF Center and begin processing an expected 165,000 absentee ballots. It’s an unprecedented election for mail-in and drop-box voting — one in which Detroit will likely be in the national spotlight as it aims to avoid repeating past Election Day failures. City Clerk Janice Winfrey has already come under fire this election cycle for allegedly violating her office’s duty to process absentee ballot applications within 24 hours. Detroit’s vote counting was also the subject of criticism after the Au-
Detroit City Clerk Janice Winfrey speaks Thursday during a media event at the TCF Center where workers will process absentee ballots next week. | CITY OF DETROIT VIA FLICKR
gust primary, during which absentee ballots were inaccurately counted in 72 percent of precincts, the same type of errors that occurred in the 2016 presidential election. That resulted in cries for an intervention from Secretary of State Jocelyn Benson, and now her office is co-managing the election. That wasn’t the first time there has been irregularities in Detroit vote-counting, either. But in a news conference Thursday at the Central Counting Board location where the record number of absentee ballots will be processed and counted, Winfrey sought to assure voters the city is prepared. The absentee ballot surge comes
as the coronavirus pandemic fuels trepidation for voting in public and more people take advantage of a state rule change letting voters request ballots without reason. “We want every voter to show up and vote in this election,” said Winfrey, who has been Detroit’s clerk since 2005. “We need you, Detroit voters.” Detroit has trained nearly 10,000 poll and ballot workers for Election Day, according to Winfrey, adding that their average age is generally 70. The clerk also sought on-the-ground leadership from members of the Divine Nine historically Black Greek organizations. See BALLOTS on Page 18
HEALTH CARE
NONPROFITS
Nursing homes also affected by surge in COVID cases, operators say BY JAY GREENE
As the organization considered opening a bakery to bring bread making back for its clients, an opportunity presented itself this summer: The owners of Dakota Bread Co., a popular West Bloomfield bakery that offers challah and other baked goods, were looking to retire. Friendship Circle closed on the purchase of the bakery in mid-October from owners Tom and Jennifer Wilson, who operated it for 20 years before retiring. With the purchase, it’s gained a third site to provide job training and jobs for adults with special needs, along with earned revenue to support its mission.
Nursing homes and assisted living facilities in Michigan are experiencing a rapid increase in positive COVID-19 cases among residents, and even a faster rate of increase among staff, as community spread of coronavirus rips through all parts of the state in what most experts believe is the beginning of the second wave. After nearly two months of flat or declining growth in long-term care facilities, COVID-19 positive cases have increased 18 percent to 9,195 on Oct. 21 from 7,782 on Aug. 3. Deaths have risen more slowly, at 9.8 percent, to 2,222 residents on Oct. 21 from 2022 on Aug. 3, according to data from the Michigan Department of Health and Human Services. But positive COVID-19 cases among nursing home staff are increasing at an even faster rate, up 44 percent to 5,424 on Oct. 21 from 3,766 on Aug. 3. Staff deaths have remained steady at 22 for the last several months. Since Labor Day, there’s been a 23 percent increase in COVID-19 cases among nursing home workers compared with a 12 percent increase among residents. “We test and identify the staffers more quickly, so they’re not in the facility, and obviously, quarantining at home. This is why the death rates are lower, and that’s a very good thing,” said Melissa Samuel, CEO of the Health Care Association of Michigan. Samuel attributed the increases in positive cases among nursing home workers to schools and businesses re-opening in early September. She also said too many people are gathering socially without sufficient mask protections. “You have this asymptomatic phenomenon that is very real (with) everybody coming and going a bit more,” said Samuel. “And then you have them coming and going from the nursing facility. So we have seen an uptick. I’m not surprised, unfortunately.”
See BAKERY on Page 18
See SURGE on Page 6
Sam Morris of West Bloomfield puts a tray of chocolate babka into the carousel oven at Dakota Bread Company in West Bloomfield. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
A BAKERY WITH A MISSION Friendship Circle acquisition expands training, jobs for special needs adults BY SHERRI WELCH
For young adults with special needs, the repetitious rhythm of making challah bread is a perfect, comforting fit. That’s what led Friendship Circle in 2015 to create a training program around the process of making the sweet, fluffy bread that’s a staple in Jewish homes. But the bread making was a stepping stone to training clients to work in the Soul Café it opened in 2015. The bakery training program didn’t continue, and clients like Sam Morris had missed making the bread ever since, Friendship Circle’s co-founder and executive program director, Bassie Shemtov, said.
Sugar cookies at Dakota Bread Company in West Bloomfield. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 3
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Packard Plant owner makes U-turn on redevelopment vision Sweeping demolitions eyed; owner seeks build-to-suit users BY KIRK PINHO
For J.D. Power 2020 award information, visit jdpower.com/awards.
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The owner of the Packard Plant has placed the property up for sale or lease, throwing in the towel on his original ambitious but unrealized redevelopment plans for it. Fernando Palazuelo on Oct. 23 hired the Southfield office of Newmark (formerly Newmark Knight Frank) to market the property to attract build-to-suit industrial users to the 40acre site, a dramatic departure from his original Bohemian vision of retail, light industrial, multifamily and senior housing, office space, recreation and art all co-existing at East Grand Boulevard and I-94. It’s been seven years since Palazuelo purchased the site and its 47 buildings at a Wayne County tax-foreclosure auction for a little more ($405,000) than the price of an average home in Ann Arbor ($390,000). Palazuelo’s tenure as the dilapidated former plant’s owner has been marked with repeated property tax delinquencies and other unpaid bills; a lawsuit over unpaid office rent; the collapse of the iconic Packard Plant bridge over East Grand Boulevard; grandiose visions that never materialized and an unfinished redevelopment of the former administration building that’s 3 1/2 years in the making. In addition, the city said Wednesday that Palazuelo’s Arte Express Detroit LLC has been issued 163 blight violations and paid less than onethird ($46,720) of the $154,965 that is due, including court fees and cleanup costs, leaving $108,245 outstanding for 79 tickets. Larry Emmons, senior managing director for Newmark, said Palazuelo would develop new buildings for users on the property after others are torn down, although it’s not clear whether he has built new buildings in the past; his reputation is primarily as a mixed-use redeveloper focusing on abandoned properties in his native Spain and his adopted hometown of Lima, Peru. An email was sent to Palazuelo seeking comment on Wednesday. Much of the decaying plant — which became a symbol of Detroit’s decay and has long been the target of vandals, arsonists, graffiti taggers and scrappers — is expected to be razed to make way for new properties for companies like auto-
Fernando Palazuelo had an ambitious vision for the site of the former Packard Plant in Detroit. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS
motive suppliers and others, Emmons said. “When we get customers, we will raze the structures and develop new properties,” Emmons said of the property, which spans several city blocks and at one point employed up to 40,000 people. Which buildings and how many ultimately would be razed would be up to the end user or users, Emmons said. “(Palazuelo) wishes that the administrative building on the north side of East Grand Boulevard be maintained, but it’s going to turn on the customer’s needs. There is definitely going to be demolition and new construction.” Palazuelo’s original vision had long raised eyebrows in real estate circles, with experts generally having a hard time imagining an economically viable redevelopment of that scale at that site and with the uses he envisioned.
Valuable land A change in course is likely a more suitable option for the 40-acre site, which contains more than 3 million square feet of Albert Kahn-designed building space on roughly 20 acres south and 20 acres north of East Grand Boulevard. In addition to its history, what’s truly valuable about it to developers is the land on which it sits
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questioning when it would happen and whether this guy was blowing smoke. We went into the tours with really high hopes, and I still hope at least some of it can be used, the administration building in particular.” Austin agreed: “Certainly, it would be great to see the administration building saved. However, coupled with the financial challenges of such a preservation effort, the market conditions in that area, the sheer size of the plant, and concerns over structural integrity following last year’s bridge collapse over the boulevard, we do not hold out hope for this once proud piece of Detroit’s automotive heritage. The Packard shows the history that we stand to lose if better efforts are not undertaken to preserve that heritage, and it is our hope that the potential demolition of the Packard casts a more urgent focus on the symbols of our region’s history that can be saved, such as what remains of the Highland Park Ford Plant.” Boettcher anticipates some preservation-community resistance to the demolitions, but perhaps a muted one. “At this point, there probably will be some sort of fight, but probably not as strong as if it were a Book Cadillac or Michigan Central because of the condition, because the complex has had such a fraught history of changing hands and everything that’s happened there.”
Tax bills mount The former Packard Plant at East Grand Boulevard and I-94 in Detroit.| CRAIN’S DETROIT BUSINESS
— large, continuous tracts of which are hard to come by in the city. “From an industrial standpoint, those types of buildings are functionally obsolete because they are multistory,” said Alan Holt, an associate broker in Los Angeles-based CBRE Inc.’s Southfield office focusing on industrial space. “They don’t build or use buildings like that anymore,” Holt said, noting that the site’s access to I-94 and railways is attractive. “Typically they take properties like that and make them lofts or office, so I can see why it may be a teardown and buildup because of the amount of land there.” The region’s 402 million-square-foot industrial and warehouse market is just 4.5 percent vacant and average asking rents ($5.90 per square foot per month) are hovering near the $6-persquare-foot figure, according to a third-quarter report from Newmark, which is based in New York City. In Detroit, there is 46.1 million square feet, with a 13.1 percent vacancy rate on space. There is 300,000 square feet under construction. The asking rate for warehouse/distribution space is $3.80 per square foot, while R&D/flex space is $5.74 per square foot and general industrial space clocks in at $4.29 per square foot, according to the report.
History lost But with planned demolition of Albert Kahn-designed buildings, the city would be losing some of its manufacturing and architectural heritage. Dan Austin, a board member for Preservation Detroit who runs the HistoricDetroit.org website that tracks Detroit buildings and architecture, said in a statement: “After decades of neglect, saving what remains of the Packard Plant would be a Herculean task for any developer. There have been victories to save portions of the complex, with several tenants now housed in some of the better-preserved buildings, and cleanup work has brightened the outlook for others.” Michael Boettcher, an urban planner and tour guide for Pure Detroit who led tours around the Packard Plant in recent years, said he anticipated more news about the future of the plant following Ford Motor Co.’s 2018 announcement on the redevelopment of Michigan Central Station. “By that point, people were not seeing much activity on it and nothing looked like it changed,” he said, noting that Building No. 10, the first reinforced-concrete building in the plant, was built a century ago this year. “People started
Earlier this month, Crain’s reported that Palazuelo is behind nearly $774,000 in property taxes and other bills and was sued for over $6,000 in unpaid rent. He said three weeks ago that he would pay his tax bill by the end of the year. Data provided by the Wayne County Treasurer’s Office last week shows he is delinquent on $555,513 in property taxes and he has an overall delinquency on taxes and Detroit Water and Sewerage Department bills totaling $773,724, meaning that $218,010 is owed to DWSD. He risks losing dozens of parcels next year to the same tax-foreclosure auction process by which he bought the dilapidated plant in 2013, according to city and county spokespeople. In addition, a $74,573 lien by Priority Waste was filed against his Arte Express Detroit LLC in early March for unpaid work. Property tax foreclosures are suspended this year due to the COVID-19 pandemic, although Palazuelo risks foreclosure next year on 39 parcels for $357,037 due and 45 parcels on $242,004 due, Mario Morrow, a spokesman for Wayne County Treasurer Eric Sabree, said last month. Another $174,682 is owed on 45 parcels and would be subject to foreclosure in 2022, Morrow said. Palazuelo’s redevelopment effort has been slow to materialize so far, although he has previously spoken about the Packard Plant project as one that would take 10 to 15 years and cost hundreds of millions of dollars. In January 2016, he told Crain’s that an undisclosed Peruvian private equity firm backed out of an agreement to provide $80 million in financing for the project. The $23 million redevelopment of the former administration building — the first phase — began officially with a groundbreaking ceremony 16 months later in May 2017, but it has been slowed by a host of factors, most recently the COVID-19 pandemic. It received a 12-year tax abatement valued at $3 million, according to a Detroit Economic Growth Corp. document. About a year after the groundbreaking, there was a shake-up in the redevelopment project’s leadership in July 2018. Packard Plant development director Kari Smith resigned, saying that construction predevelopment on the 121,000-square-foot had finished and more than 1,400 yards of contaminated debris had been removed. Six months after that, in January 2019, the iconic Packard Plant bridge over East Grand Boulevard collapsed and had to be torn down. In June 2019, a Palazuelo-owned Grand Trunk Warehouse & Cold Storage facility at 1921 E. Ferry St. hit the market for $4.94 million to raise funds for the Packard Plant effort. That building is also being marketed for sale or lease by Newmark, Emmons said.
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From Page 3 HCAM represents the majority of the 440 nursing homes and rehabilitation centers in the state with more than 40,000 residents. Reflecting the increase in community spread of coronavirus, Michigan’s COVID-19 hospitalization rate has increased 27 percent the past week to a seven-day average of 1,348 on Oct. 28. New positive cases have doubled to a seven-day average of 2,365. Deaths also have increased from a seven-day average of six in late July to 24 on Oct. 28. Infectious disease experts are predicting COVID-19 positive cases and deaths will continue to rise through the winter in communities without mask mandates until a coronavirus vaccine is approved next year. While Samuel said positive COVID-19 cases are increasing across Michigan, death rates in nursing homes are much lower than earlier in the pandemic. “We have more testing” and that helps reduce coronavirus spread, Samuel said. “Everybody has a better handle on this — the nursing homes to the hospitals.” Bob Wheaton, an MDHHS spokesman, said the state is very concerned about how rising COVID-19 cases are impacting seniors in nursing homes. Wheaton said the state expects to meet a Nov. 15 deadline to update nursing home safety regulations based on input from the state’s task force recommendations and from a bill sponsored by Sen. Pete Lucido, R-Shelby Township, and signed last week by Gov. Gretchen Whitmer. “We have made significant process on many of the recommendations, including establishing care and recovery centers, supporting virtual and in-person visitation in an effort to addressing resident isolation, sustaining testing efforts and reimbursement to facilities for such efforts, and reducing the reporting burden on facilities while continuing to collect the data that is key to informing the state’s response,” Wheaton said. Raj Patel, CEO of Novi-based Optalis Healthcare, which operates 12 longterm care facilities in Southeast Michigan, said community spread of coronavirus is challenging nursing homes. He said weekly testing of residents and screening of staff and visitors is vitally important in keeping numbers of COVID-19 cases down in facilities. “More testing leads to a faster conclusion so we can start moving that person to a dedicated unit or hub” where COVID-19 patients are isolated, Patel said. Marianne Vesterfelt, corporate di-
rector of clinical initiatives, said Optalis didn’t have any positive cases in any of its main nursing homes or assisted living facilities as of Oct. 28. Patel said Optalis has one open 34bed dedicated COVID-19 facility, ShorePointe in St. Clair Shores, after the company was the first state operator to open what are now called certified recovery centers. When cases were dropping during the summer, Optalis closed 44-bed Evergreen CRC in Southfield, he said. “The demand is very high for our CRC. We are getting requests every day from other facilities and we have a 20to 30-person waiting list,” Patel said. Optalis turned away 17 transfer requests one day, Vesterfelt said. “We will see our demand go up further after the hospitals” become overloaded with COVID-19, she said. “Nursing homes are seeing more COVID-19 cases in areas where hospitals have higher numbers of COVID-19 cases.” COVID-19 positive cases are increasing because there is more indoor contact and too many people are not wearing masks and practicing social distancing, Vesterfelt said. “(Increasing positive cases at nursing homes is) probably the improper use of PPE and screening of staff and visitors,” she said. Andrea Acevedo, president of SEIU Healthcare Michigan, one of the state’s largest unions, said significant spikes in COVID-19 have occurred since the state Supreme Court ruled Oct. 2 that Whitmer’s coronavirus-directed executive orders are unconstitutional. “From our nursing homes to our hospitals, health care workers once again have borne the brunt of the crisis,” Acevedo said in a statement.
Surging nationally Coronavirus has been rapidly increasing at nursing homes in 38 states, including Michigan, since early September, according to the American Health Care Association. Of the nation’s 260,000 positive long-term care facility cases, Michigan has recorded 142.3 cases per 100,000 population, or 34th nationally. Mississippi and Alabama are highest at more than 370 per 100,000, said the Centers for Medicare and Medicaid Services. Mark Parkinson, AHCA’s president, said nursing homes were able to drive down the numbers of COVID-19 during the summer, dropping from some 10,000 positive cases to about 6,000. “We have elderly, frail people in nursing homes and the mortality rate is quite high anyway. We are trying to get the message to the public to wear masks,” Parkinson said. Parkinson said nursing home residents have a 10 to 20 percent chance of
dying if they contract COVID-19, much higher than the 5 percent in the general population. Another problem made worse by coronavirus is turnover of nursing home employees. Versterfelt said staff turnover is higher than normal because of COVID-19, especially among the certified nursing assistants, many of whom are newer and younger employees. Samuel said staff shortages are a big problem. “We need more workers. The federal state of emergency has been extended through the end of January, but the state of Michigan has to extend that for us. It is set to expire on Nov. 1,” Samuel said. “If that does not happen for us, we will not be able to have these temporary aides in our buildings any longer. And providers have hired hundreds of them.” Samuel said some CNAs have left because the work was too hard. “We have lost some good employees because of COVID,” she said.
Unevenly impacted A review of MDHSS data on nursing home COVID-19 cases and deaths of residents and staff members shows a range of outbreaks, depending the city and region. Some nursing homes had few cases or none, while others had 100 to 200, as of Oct. 21. Julie Beckert, a spokesperson for ProMedica Senior Care, which operates nine nursing homes in metro Detroit, said positive COVID-19 cases in ProMedica homes haven’t increased as fast as other operators. Six residents and 18 employees have tested positive in the last round of tests, Beckert said. Most employees are asymptomatic and are at home in isolation, she said. “The rest of the state includes seven centers and they are in good shape except for our Upper Peninsula center,” said Beckert in an email to Crain’s. “That community has been heavily impacted by COVID-19 recently, which in turn impacted our center with 50 patients and 11 employees (quarantine) testing positive.”
More funding needed Parkinson said AHCA is lobbying Congress with hospitals and other provider groups to pass the second COVID-19 stimulus package. The first, approved in April, provided $175 billion to providers, but most of that has been distributed, he said. Without more financial assistance, he said more COVID-19 cases could strike homes. “The U.S. will repeat the same mistakes made during the initial outbreak last spring and the major spike over the summer,” Parkinson said.
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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 October 27th; listen to the entire episode, and archived episodes, at yourchildrensfoundation.org/caring-for-kids.
Ann Kalass, CEO, Starfish Family Services
Larry Burns: Please give us an update on Starfish. Ann Kalass: We are excited about the educational work that’s happening on the Marygrove campus and to be the early childhood provider for that. The second program I’d like to update you on is our Nurse-Family Partnership, a home visitation program that partners nurses with first-time pregnant mothers to help ensure great birth outcomes. We’re helping both parent and child thrive. Burns: How has COVID-19 impacted Starfish? Kalass: I remember, very gratefully, a phone call I received in March from The Children’s Foundation, asking what we needed. Soon after that call we had additional resources and all the flexibility needed in our partnership to do the right thing for children at that moment. Philanthropy has played a huge role in supporting Starfish families. What the pandemic has looked like is a lot of stress and anxiety, both for Starfish families and for our employees. We work in communities that have been disproportionately impacted by the virus. In mid-March, we reinvented ourselves as a remote operation. We reopened as a telehealth agency, so that meant getting technology, equipment and data plans to families and finding new ways to connect with families. Children have lost so many of the connections
that they had in their lives: their routines, positive relationships with teachers at schools, their therapists and counselors. They’re completely disconnected and isolated. Burns: What excites you about the Marygrove initiative? Kalass: In my 13 years at Starfish, this is the first time I’ve seen an economic redevelopment plan put children at the center. We are working on a first of its kind, sometimes called a P-20 or a cradle-to-career educational campus. The early childhood center will open September 2021. Burns: What has The Children’s Foundation helped you with? Kalass: You’ve helped us with advocacy. The Children’s Foundation has been core to Starfish’s ability to innovate and to meet some of the often-forgotten needs of children. We’re really proud of our integrated model of care that recognizes that children often face multiple challenges. Sometimes children can fall through the cracks of public funding systems. You were a core investor in an innovative center in Dearborn that we operate called the Partnering with Parents Center that brings a multidisciplinary approach to mothers and fathers and children, birth to six. We find that a lot of the children that we’re working with have early speech delays or need occupational therapy. There’s really no public funding stream to go to for some of those children but you’ve allowed us to do that work. You’ve also allowed us to innovate for children who have either disabilities or delays in their physical or intellectual development and meet the needs of children that just don’t fit into the public system.
Tom Lewand, CEO, Marygrove Conservancy
Larry Burns: What is the campus going to evolve into? Tom Lewand: About three years ago, Kresge got involved in working with the IHM Sisters who had started Marygrove in the early part of the 20th century. Amazing work was done by the team at Kresge, Starfish, Marygrove and Michigan to start a ninth grade class. The tenth grade class started this year. We’ll add a class every year—11th grade next year, then a 12th grade—until we have the full high school complement. We also have the opening of the early childhood learning center next year so we’ll have both ends of the spectrum on campus. As we fill that out, we’ll have a full complement of over 1,000 kids on campus The P-20 cradle-to-career education center is focused on two primary things. The first is social justice, it’s the foundation in every class. Design thinking is the other principle; being able to problem solve. Burns: Tell us about the curriculum development. Lewand: What Elizabeth Moje and the University of Michigan School of Education have envisioned for this campus, with the support of Detroit Public Schools Community District, is transformational. They’re looking at not only how to teach kids, but how we teach teachers to teach kids. This creates what is really the first teacher residency program. An example of what the
combination of design thinking and social justice can mean practically is the kids in the ninth grade were involved in designing the new school. They were participating in that process as junior architects working with our architectural team. You’re showing kids different career opportunities, different pathways that may not have naturally come their way in a typical curriculum. Burns: Tell us about the Kresge involvement and how others are helping. Lewand: Kresge Foundation has made one of the largest commitments in their history in the form of their involvement with this program. We have other great organizations involved as well. The one most people immediately identify with is the Detroit Youth Choir because of their great success on America’s Got Talent. In our Incubator, we have all five organizations in one spot on campus, so they can share ideas and services. We have an executive in residence that can help with their business and fundraising plans. The Detroit Phoenix Center helps kids who are challenged with food or housing insecurity. The Detroit City Lions Youth Club takes care of hundreds of kids, providing services to help kids with their homework, supplemental tutoring, and help with food insecurity. Another group is JOURNi, whose mission is to teach kids about opportunities for professional development and technology, help them with coding and finding a career in tech. Those kinds of opportunities are not as plentiful in neighborhoods around Marygrove as they are in the suburbs. We’re creating an environment for kids after school that is as healthy or healthier than what they get in school.
Shannon Wilson, Director of Medicaid Outreach and Quality, Priority Health
Larry Burns: In addition your role at Priority Health, you’re an adjunct assistant professor at Michigan State University. Can you tell us a little bit about your background and current role? Shannon Wilson: I have worked for the last 15 years at the intersection between race and health while caring for some of our most vulnerable populations. I’ve been at Priority Health just under two years and am able every day to live out my passion. By working with the Medicaid population, we make sure some of our most vulnerable members have access to high quality healthcare. We are one of the highest rated plans in the state. Burns: What are some of your goals and objectives? Wilson: We are extremely excited to welcome Total Health Care and their team and your members to the Priority Health family. When we first began our conversations with Total Health, nearly a year ago, we discovered that there were just so many synergies between the two organizations. We knew this partnership between two of the longest-standing Medicaid health plans in the state made sense. There’s a lot of best practice sharing that we’ll be able to do to allow us to better serve the members of our great state. With this combined relationship came the formation of the Total Health Care Foundation. This investment we are making in the Detroit area makes sure that we are addressing some
of the most critical needs of our members in Detroit, like social determinants of health, including housing and food insecurity. These are things that can significantly deter a person from achieving their best life. Burns: We’re excited about The Children’s Foundation’s partnership assisting the Total Health Care Foundation. Wilson: I want to thank you for your partnership. It will allow us to do our work much more efficiently; because of our partnership, we know we don’t have to invest in building up the operation side of a foundation and we’re really able to invest in carrying out the mission of the work we’re trying to do. Burns: Can you tell us a bit about the grant process? We want to focus on organizations that have a proven track record, organizations we’ve worked with in the past that we know are doing great work in the community. We are granting awardees on a quarterly basis and we’re always looking for exciting opportunities. Burns: Is there anything else you want to share about Priority Health? Wilson: There are many initiatives that we’re working on, both at Priority Health and at Total Health, that will benefit richly those living in the Detroit area. One of the things that we’re excited about is investing in physician or provider capture of essential data and information, which will help us find what is needed to make impactful changes with the work that we’re doing with the foundation. We are the first health plan in the state that is actually providing a financial incentive for that background information. We need to know where to best make our investments and how to best use our dollars.
COMMENTARY
Independent Dispute Resolution levels playing field on billing
COMMENTARY
As COVID-19 surges, businesses need to lead Confirmed coronavirus cases are surging, hospitalizations are rising and deaths are inching upward in Michigan. Some states — and countries — are worse. To quote the late athlete/philosopher Yogi Berra, it’s déjà vu all over again. Besides the obvious pain and impact on virus victims and their families, this surge may delay employers’ plans to encourage a return to the office. Even prior to the surge, some big employers had announced it would be mid2021 before they would ask workers return. Maybe new and bipartisan laws protecting employers from COVID-related lawsuits will help open offices — downtown and in the suburbs. In late October, Gov. Gretchen Whitmer signed into law those protections for employers who follow health and safety guidelines from lawsuits from customers or employees with a positive COVID test from charging negligence. It’s unlikely any major employer would issue a draconian back-to-work order. Many people are juggling a lot of stress: parents caring for school-age children at home, people with an underlying health condition that puts them at risk, people caring for a parent or family member with health issues. All good reasons to make the case on an individual basis to stay home. Chad Livengood reported last week that the Downtown Detroit Partnership estimates that between 15 and 20 percent of the 125,000 people in the pre-pandemic workforce for “greater downtown” are going to work each day. The area covered includes Midtown and New Center. (A recent and credible survey by the Partnership for New York City also estimated just 15 percent of workers were back.) But it’s not white-collar workers who can work remotely I worry about. It’s the people and businesses who rely on the daily habits
Mary
KRAMER
Group Publisher and commuting patterns of thousands of workers in cities and suburbs: Restaurants, convenience stores, dry cleaners, independent retailers, child-care centers, fitness centers. Many of their workers fall into the category of ALICE — Asset Limited, Income Constrained, Employed. In lay parlance, they could be one or two paychecks away from financial disaster. What are the long-term effects of a prolonged and now, in many respects, voluntary lockdown? Until late October, Michigan was logging week after week of 15,000 new jobless claims. Some workers are eligible for benefits under the federal Families First Coronavirus Response Act, which spells out which employees are eligible for compensation. But those entitlements are good only through Dec. 31, notes Gilda Jacobs, CEO of the Michigan League for Public Policy. And so far, Congress has not extended them. “Nonprofits and the foundation world can’t pick up all the pieces,” Jacobs said, noting that even before the pandemic, 40 percent of Michigan’s adult population was at the “ALICE” level and more than half of the children in the state qualified for free or reduced-price lunches. “Those numbers are staggering,” she said. So how do we mitigate risk and keep people healthy — financially and otherwise? Because the pandemic has become a hot political issue, it will take business leadership to find the way.
Surprise, surprise. Washington politics, politicians and big insurance companies are picking our pockets. By “us” I mean patients, doctors, and others on the front lines of health care. Even worse, they’re using the cover of Rami Khoury, COVID-19 to do it. M.D., is vice The issue at hand is president of called surprise medical operations for billing — the practice IEP-PC, and past president of where millions of Amerithe Michigan cans receive unexpected College of medical bills — typically Emergency related to health emerPhysicians. gencies and involving in-network and out-ofnetwork insurance wrinkles. These bills can be devastating. Surprise medical billing also hurts doctors and frontline health professionals and facilities, who don’t receive fair reimbursement pay for their medical services as a result. For more than a year, politicians in Washington and Lansing have been looking at proposals to end surprise medical billing. Insurance companies back proposals allowing them to set their own rates of out-of-network reimbursement pay to doctors. This would give them even more power and profit than the status quo does. Doctors and health professionals have been supporting Independent Dispute Resolution to resolve surprise medical billing. Independent Dispute Resolution establishes a mediation process between providers and insurers via third party mediators. Patients are removed from the billing dispute and no longer receive surprise medical bills. Ongoing talks over another round of emergency COVID funding have been ongoing between the White House, Senate, and Congress. The current administration and the insurance companies want to include their rate-setting proposal in a larger deal on COVID funding. If they do, the surprise will be on us.
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 | NOVEMBER 2, 2020
The American Medical Association, the American Hospital Association, and others are opposed to rate-setting and either want any deal to include IDR — or to remove this issue from any coronavirus-related spending package. Louisiana Sen. Bill Cassidy, M.D., already has a proposal called the Stop Surprise Medical Bills Act. The bill has over 30 bipartisan co-sponsors in the Senate and has all the right provisions, including language that guarantees an interim reimbursement payment while provider-insurer negotiations are ongoing. IDR has been working at the state level, like in Texas and New York where it has allowed for both doctors and providers to reach a fair agreement on reimbursement rates, while always keeping patients out of the middle. In a time where COVID-19 is ongoing and many doctors are facing a financial crisis, rate-setting will only compound the issues facing the medical community. It SURPRISE must be opposed in any form, and I MEDICAL BILLING hope Sen. Gary Pe- EXISTED LONG ters and the rest of Michigan’s con- BEFORE COVID-19 gressional delega- AND IT HAS tion appreciate CONTINUED TO this. Surprise medical PERSIST DURING billing existed long before COVID-19 THE PANDEMIC. and it has continued to persist during the pandemic. Millions have lost their health insurance, or are at risk of losing it. They simply cannot afford unforeseen, high-cost medical bills. We cannot allow the desire to end surprise medical billing to result in a rate-setting system that would make the problem worse than it is today — and we cannot allow this to get lost in the larger cover of emergency federal COVID spending. Independent Dispute Resolution levels the playing field between doctors and insurers while protecting patients from surprise bills. The independent arbitration process is the only way to truly solve billing disputes without harming the consumer.
GETTY IMAGES/ISTOCKPHOTO
DANIEL SAAD
BY RAMI KHOURY
Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.
OTHER VOICES
Trick or treat — tax abatement edition BY STEVEN PHILLIP SIEGEL
Tax abatements have garnered controversy the past few years as commercial real estate values (and rents) have risen substantially in Detroit, particuSteven Phillip larly in the “7.2.” Siegel is vice These public inpresident, Lutz centive tools, Real Estate like the ComInvestments. mercial Redevelopment Act (PA 255) or Neighborhood Enterprise Zone, freeze taxable values for 10-15 years in exchange for substantial private investment into obsolescent properties. To answer the question of whether tax abatements are a trick for investors or a treat needed to attract private investment into the city, I have to ask another, far simpler question: Where would you catch the most fish — the Detroit River or a stocked pond in the suburbs? Today, investors have a wide variety of options for deploying capital: equities, bonds, alternatives (like real estate), and more. This choice is often predicated on the risk associated with the investment and the yield pledged in return. Returning to our question, the riskier the investment, the more fish you need to catch. All things being equal, real estate investors want the highest yield for lowest risk. For example, let’s say we have the opportunity to build a five-story apartment building in Royal Oak or rehabilitate a historic five-story building in Midtown. After construction, each property would have 100 units and generate $1 million in cash flow. While the building in Royal Oak would cost $10 million to build from the ground up, the property in Detroit would cost $15 million to rehabilitate due to Detroit’s limited labor supply and altitude altering construction costs. In this instance, an investor can generate a 10 percent return on investment in the suburbs versus a 6.50 percent investment on the exact same size project in the city of Detroit. Given a choice, if private capital can get a 10 percent return in the suburbs versus a 6.50 percent return in the city, private capital will choose the suburbs nine times out of 10. The opportunity cost of capital allocation is too strong an incentive to attract investment dollars into the city. However, tax abatements help eliminate this problem of opportunity costs by freezing property tax values. Returning to our example, if the Midtown apartment building received a tax abatement, it would significantly lower the property’s tax expense. As a result of this lower tax expense, the property would generate $1.5 million of cash flow versus $1 million previously. While the construction costs stay the same, the $500,000 in additional cash flow allows investors to generate the same 10 percent return they would have received in the suburbs. By freezing taxable values, and thus generating more cash flow at the property, our example tax
abatement substantially increased the yield available to investors, making the project financially feasible in comparison to the suburban development. Tax abatements are an incredibly important incentive program for the city, investors and community. Without tax abatement programs, projects like our example historic Midtown building would never generate any additional tax revenue for the city because they are too cost prohibitive and risky for private capital to pursue. The popular misconception is that tax abatements put a “brake” on what owners are already paying in property
ate new investment dollars, new jobs and new income taxes (there’s no abatement on those for the residents); develTHE POPULAR MISCONCEPTION IS THAT TAX opers win because their ABATEMENTS PUT A “BRAKE” ON WHAT projects are able to generOWNERS ARE ALREADY PAYING IN ate market rePROPERTY TAXES. IN FACT, TAX turns for equiABATEMENTS SIMPLY OFFER A REDUCTION ty investors who otherwise IN HOW MUCH OWNERS PAY THE CITY FOR A would prefer to put dollars SPECIFIC PERIOD OF TIME. elsewhere; and period of time. With tax abate- residents win because new housing ments, the city wins because proj- is created, new commercial spaces ects that receive abatements gener- become available, and once-vacant taxes. In fact, tax abatements simply offer a reduction in how much owners pay the city for a specific
eyesores are given new life in their neighborhood. Due to strong leadership in the government, civic and business communities, Detroit is in a far superior fiscal position than at the Great Recession’s nadir. Even with our drastic improvement, numerous macro-risks still exist. Until inputs like construction costs, and uneven wage and population growth improve, tax abatements can continue to attract much-needed investment dollars into the city, ensuring there’s plenty of fish to catch for investors that the Invisible Hand would otherwise move north of Eight Mile.
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NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 9
WOMEN IN LEADERSHIP
INVESTING IN INNOVATION How Jan Garfinkle persevered, pioneered as a Michigan venture capitalist BY RACHELLE DAMICO | SPECIAL TO CRAIN’S DETROIT BUSINESS
When Jan Garfinkle couldn’t get a job at a Michigan venture capital firm, she started her own. Garfinkle, who grew up in San Francisco, had more than a decade of experience working with startups before moving to Michigan in the early 1990s. But the venture capital community in the state was exceedingly small at that time, and none of
them were hiring. “I thought, this is crazy,” Garfinkle said. “I’m going to start my own venture fund.” Garfinkle’s goal was to change health care by starting a venture capital firm that could help with rising health care costs, which were 12 percent of the GDP at that point. With that mission in mind, Garfinkle founded Arboretum Ventures with Timothy Petersen in 2002 to focus on emerging health
care companies in the Midwest. “I felt that through innovation, we should be able to provide better health care at a lower cost point,” Garfinkle said. “The founding principle of Arboretum is investing in companies that will drive costs out of our health care system but still provide great clinical care.” Today, Ann Arbor-based Arboretum Ventures has 15 employees and manages $700 million in five funds. The venture capital firm has
“I TRIED TO GET A JOB AT BOTH OF THE VENTURE FUNDS THAT WERE HERE AT THE TIME, BUT NEITHER OF THEM WERE HIRING.”
` How did health care become a focus for you? I wanted to be a pediatrician when I was growing up, but careers are winding paths. I went to school at Berkeley in the College of Engineering. I studied bioengineering because it’s a combination of engineering and pre-med. When I started my career, I was trying to get a job in bioengineering, but it was hard back then. It had just become a new major and there were few jobs. My first job was in manufacturing working for Procter & Gamble making Pampers diapers. I did that for three years and then wanted to get into medical devices. For some reason, I just happened to love them. I have no idea why. My parents are not in the health field. I decided to go to business school at Wharton and had an incredible internship as a marketing analyst at Eli Lilly (an American pharmaceutical company headquartered in Indianapolis, Ind.). They were trying to acquire medical device companies at that time. I worked with a physician who started Advanced Cardiovascular Systems, a venturebacked angioplasty company. Back in the early 1980s, if a patient was having a heart attack, you’d either give them a nitroglycerin pill to relax their arteries and treat their blockage, or they’d have to have a bypass procedure, which is a huge surgical procedure. With the advent of angioplasty, an image could be taken of the coronary arteries to see the blockage. Then, a tiny balloon is inserted across the blockage through a small hole in one of your arteries. It’s noninvasive — an easy way to stop a patient’s heart attack. Patients only had to stay in the hospital for a day and then were able to go home. It changed the world of cardiology and health care for cardiac patients. ` What was your experience like when you first worked with a startup? After I received my MBA, I got a job at ACS working in marketing and sales. I had a great experience launching 20 different medical technologies while I was there. The physician who started ACS asked me if I would write the business plan for his second company, Devices for Vascular Intervention. I wrote the plan and then joined that company. At DVI, I was director of Marketing and director of Clinical Research, where I led the big FDA trial to get FDA approval for an atherectomy catheter, and then launched it worldwide to all the physicians that were doing angioplasties. I had incredible operating experiences in both of those companies. I fell in love with the entrepreneurial spirit of these new medical technologies that were changing the world for patients and making a much better life for them.
10 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
invested in 55 portfolio companies, which employ 4,000 people. Arboretum Ventures has been incredibly successful. Last year, the firm raised the largest VC fund in state history, closing Arboretum Ventures V LP at $250 million. “I was an odd duck coming to Michigan, and to be able to have done what we did is such a blessing for me,” Garfinkle said. “I’m so proud of the Arboretum team and what we’ve accomplished.”
— Jan Garfinkle
The Garfinkle File Current role: Founder and managing partner, Arboretum Ventures Education: Bachelor of Science in bioengineering, University of California, Berkeley. Master of Business Administration from the Wharton School at the University of Pennsylvania
Jan Garfinkle
` California is known for its venture capital ecosystem. Why did you move to Michigan? My husband moved from Chicago to California when we got married. We met in California, where he was in training as a cardiologist. However, after a couple years in California, he said, ‘I’m really not that happy here.’ He found a job in Michigan, and I was a reluctant trailing spouse at that point. We had three little girls around that time. It was just a really, really busy time. I couldn’t see how I could do everything, so I quit my job. However, Guidant (a spin-off company of Eli Lilly) called me and said, ‘Would you do some consulting for us?’ I said, ‘I’d love to do about 10 hours a week.’ That led me to start a consulting business, with Guidant as my main client. Around that time,
the state of Michigan created the Michigan Life Sciences Corridor, where they invested tobacco settlement dollars into startups in the health care space. Every six months or so I helped one new startup with their business plan. I also helped a few venture funds doing health care investing do some due diligence (on companies to invest in). Through those experiences, I thought I’d love working in venture. I tried to get a job at both of the venture funds that were here at the time, but neither of them were hiring. I was frustrated that I couldn’t get a job in either of them. So, I went on irs.gov, filed for a tax ID number and started Arboretum Ventures in 2002. See GARFINKLE on Page 11
Career ladder: After graduating from the University of California in 1979, Garfinkle worked for Procter & Gamble, a multinational consumer goods corporation headquartered in Cincinnati, Ohio. In her role, Garfinkle worked as a manufacturing manager and processing engineer in the corporation’s Modesto, Calif., office. She left that role in 1982 to attend Wharton to obtain her MBA. Upon graduation in 1984, she joined Advanced Cardiovascular Systems Inc., a California-based startup medical device company. In her role, Garfinkle worked as a marketing manager and a sales representative from 1984-1990. About a year after she joined, ACS was acquired by Eli Lilly & Co., an American pharmaceutical company headquartered in Indianapolis, Ind. She left her role to join Devices for Vascular Intervention Inc., a California-based startup medical device company where Garfinkle worked from 1990-1995. Garfinkle served as director of marketing and clinical research, where her responsibilities included leading the FDA trial for an atherectomy catheter and then launching the product worldwide. A few years after Garfinkle joined DVI, it was also acquired by Eli Lilly & Co. These two companies formed the foundation for its spin-off company, Guidant Corp., in 1994. Garfinkle moved to Michigan in the early 1990s and worked as a consultant for Guidant Corp. As a result, she founded Strategic Marketing Consultants, a health care consulting firm for venture funds and startups. Garfinkle spent about eight years advising companies primarily in the Midwest on how to commercialize life-science technology. In 2002, Garfinkle and Timothy Petersen founded Arboretum Ventures LLC. A mentor: Tom Porter, a Michigan venture pioneer
GARFINKLE
From Page 10
How did you get Arboretum Ventures off the ground? It’s really hard to start a venture fund. I was so naive honestly. I didn’t know what to do. Tom Porter (a Michigan venture pioneer) was a terrific mentor to me in my early days. He told me, ‘Jan, you have to get a partner. No investor is going to invest in a single person venture fund.’ I put out an ad in Venture Wire, which was an electronic newspaper in the early days of the internet. All these people from California that had Ph.D.s in biochemistry responded and said they knew how to run a venture fund, but they had no idea. Luckily, I met Tim Petersen, who ran the Wolverine Venture Fund at the University of Michigan. He heard I was looking for a partner and joined me about six months after I started Arboretum. We were these two very different people, but were able to come together. He knew how to run a venture fund, and I knew a lot about health care.
making sure our portfolio companies were going to be successful and survive. That was a pretty scary time for all of our portfolio companies, just like for every small business. In August, we started looking hard again at new potential companies for investment. It’s been remarkable to see how companies can cut costs and still advance a technology or a clinical trial. Entrepreneurial people tend to be very resilient and tend to persevere.
Have you seen any groundbreaking technologies in health care? Anything COVID-related? There’s some cool stuff happening in cancer detection and the new drugs that are being established for cancer. There’s a company in Michigan we’ve invested in called Strata Oncology. Strata can take a small biopsy of a cancerous tumor and determine what happened genetically to cause that tumor. It’s identifying the mutation, giving the patient the drug that kills that mutation, and killing the tumor. That’s going to greatly enhance the mortality and longevity of patients that get cancer. We just had a large exit with How did you raise your first fund? a company that was in Ann Arbor called Around this time, Mike Finney, who led NeuMoDx. It developed the fastest, the Michigan Economic Development most accurate PCR test for COVID. It’s Corporation, believed we needed more a robot that can basically take your venture funds in the state. He found sample and give you an accurate a little pool of money, $500,000, and testing result in 80 minutes. In early ran a request for proposal process. March they got FDA and EUA approval. We replied to the RFP process with It’s probably the our proposal to best PCR test on start Arboretum “WE’RE TRYING TO FIND the market, and Ventures. There they’re selling were 17 applicants THE BEST TECHNOLOGY IN millions of these and two winners. A BIG MARKET WITH AN tests all over the We were one of ABSOLUTELY FANTASTIC world. them. Each fund won $250,000. MANAGEMENT TEAM. WE How can a However, they LOOK AT ALL THEIR company that’s wouldn’t give us hoping to be the money up PATENTS, FDA AND backed by your front until we venture capital closed on our REIMBURSEMENT rm stand out? first $5 million. APPROVAL. WE ALSO LOOK fiWe’re trying to Tim and I drove all over the AT HOW THEY’RE GOING TO find the best in a upper Midwest MANUFACTURE AND MAKE technology big market with in order to raise an absolutely the money, MONEY AT IT. “ fantastic even sleeping — Jan Garfinkle management on the floor of team. We look at my brother’s all their patents, house. We got so FDA and reimbursement approval. many nos when we were fundraising. We also look at how they’re going We went to donors Tim knew, which to manufacture and make money at were large family offices and three it. There’s a lot of things we have to Michigan foundations. We also had two understand and evaluate. About 2,000 corporations, Guidant and a medical companies approach us every year. We device corporation. These were people invest in two or three. It’s a steep funnel that could vouch for and validate what to get through to the very end. Many we could do because they knew us well. times we’ll pass on a company but say, We were able to raise the $5 million ‘come back to us when you have your and got the $250,000. The first close first human clinical data,’ as an example. on Arboretum was $6 million. It was A company stands out by following up in small, but it got us in business. The first a timely manner and sharing data with fund actually ended up being a $25 us as it becomes available. It’s a red flag million fund. In the early days, it’s a ton if someone’s not transparent with us of sweat equity to make it work. I went about something. If they’re not that’s a without a salary for four years. We had quick no. We have to build trust. five employees, rent, insurance and legal bills. Our total operating budget was Do you have any advice for young around $400,000. But if you persevere, people considering a career in venyou can do it. Looking back at that fund ture capital? now, it is a top decile performing fund in It’s helpful to have a strong operating the world of all venture funds from the career to be successful in venture. That 2002 vintage year. means you’ve worked in a company and helped launch a product to market. How has the COVID-19 pandemic I encourage young people to work in affected venture funding? as many jobs as possible at a startup. The deal flow in the number It’s important to learn how to sell of companies coming to us is because you’re always having to sell phenomenal. Many companies are either yourself or your product. Finally, still fundraising and new ideas are learn to advocate for yourself. Stuff coming out. We have three companies happens all the time. Figure out how in term sheet right now. Luckily, we to overcome those speed bumps and met the CEOs and the management don’t take no for an answer. Being super team members before COVID started. resilient is one of the most important However, for the first 3-4 months of things anybody can learn. COVID we were totally focused on
The mission of the Michigan State Medical Society is to improve the lives of physicians so they may best care for the people they serve.
T
he Michigan State Medical Society (MSMS) is a professional society representing more than 15,000 physicians and medical students in Michigan. Incorporated on June 5, 1866, MSMS is a non-profit, membership organization of physicians, graduates completing residency programs, and medical school students. MSMS is the state affiliate of the American Medical Association
MSMS Core Values: Advocate on behalf of physicians and their patients Provide leadership Promote quality health care Demonstrate ethical behavior
When physicians join MSMS, they gain the resources, education, and clout they need to remain leaders of the health care team and advocates for their patients. Currently MSMS is at the forefront of a new passage in Michigan health care. Health care is at a crossroads— the status quo threatens everyone, including patients, payers and physicians. We know things need to change. We seek a more cohesive system down the road, and we are defining how to get there.
For more information visit msms.org.
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cohencpa.com/michigan NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 11
MOBILITY
Scooters parked in Detroit. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
THE RESILIENCE OF SCOOTERS
Ridership remains steady as workers are absent from Detroit during pandemic “WE HAD TO STEP OUT OF DOWNTOWN AND BRING Despite the hollowing out of workers in downtown Detroit during the COVID-19 pandemic, e-scooters have re- THE SCOOTERS WHERE THE PEOPLE ARE.” mained resilient. BY DUSTIN WALSH
Prior to the outbreak, the future of the rentable e-scooters that stormed cities across the U.S. in 2018 seemed wobbly. In January, San Francisco-based Lime laid off 100 employees and exited more than a dozen cities, including Detroit. Santa Monica, Calif.-based Bird has cut more than 450 employees since last year and followed suit by temporarily pulling scooters out of the city as a large portion of workers no longer commuted there for work during the pandemic. Neither company is profitable. Spin, based in San Francisco and owned and likely financially propped up by Ford Motor Co., was the benefactor to its competitors’ exits but it also changed its own strategy to address a near vacant downtown. The company moved 50 percent to 75 percent of its 400 rentable scooters outside downtown and into city neighborhoods. 12 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
— Rofeal Daniels, senior operations manager, Spin, Detroit
INSIDE Q&A with Trevor Pawl: Mobility’s new chief gets to work PAGE 13 “We had to step out of downtown and bring the scooters where the people are,” said Rofeal Daniels, senior operations manager for Spin in Detroit. “With more people working from home, we deployed in neighborhoods. We saw a lot of point A to point B riding. Sometimes it was to just get out of the house. But it’s something new to the neighborhoods and shows how they can be
effective long-term in the neighborhoods and not just a toy for downtown.” E-scooter rides in Detroit peaked at more than 138,000 in July, down only roughly 12,000 rides from the peak in July of last year, according to data provided by the city. Between June 1 and Aug. 31, total Spin scooter rides in the city of Detroit increased 42 percent over the same time period in 2019. The average ride was 2.7 miles, Spin said. From April to July, Spin also gave frontline workers free rides. Daniels said many of the free rides in Detroit were to and from DMC Sinai Grace Hospital in Northwest Detroit. The city requires scooter firms to maintain at least 25 percent of their limited 400 scooter per company fleets outside of Grand Boulevard to create more equitable transportation opportunities. Three rides per scooter per day is considered the ideal utilization for the city’s scooter program, while greater than three rides suggests demand exceeds supply, John Snowden, smart mobility strategist
for the city of Detroit, told Crain’s in an email. In July, the city averaged three rides per scooter per day, compared to a peak of 5.8 rides per scooter per day in October 2019. “In previous years, the demand for scooters has exceeded the supply,” Snowden said in the email. “This was the first year where the city’s scooter program realized close to the ideal utilization rate.” Nationally, Lime and Bird claim they too saw ridership increases as residents emerged from lockdowns over the summer looking for safer alternatives to public buses or trains. “Lime will be stronger post this crisis,” Joe Kraus, president of Lime, told Fortune. “People are rethinking their rides, rethinking how they want to get around cities.” Investors certainly remain confident. In May, Lime announced a $170 million funding round led by Uber and included existing investors Alphabet, Bain Capital Ventures, GV and others. See SCOOTERS on Page 14
FOCUS | MOBILITY
Q&A with Trevor Pawl: Mobility’s new chief gets to work
Six months into job, he’s focusing on larger goal of making Michigan the mobility epicenter What’s the strategy for success in this new role? We’re still in the process of setting up the office. We’ve now developed a strategy we’re going to implement, but we got an early win with the Detroit to Ann Arbor corridor project. The strategy is anchored in this idea that we have to win the next decade to position ourselves as the leader in mobility. It’s a simple idea, but with a lot of different dynamics. Look at the data. Software is expected to represent more than 50 percent of the value of a vehicle by 2030. Autonomous vehicles are predicted to be 50 percent of the market by 2030 as well. So we’ve got to be laser focused on this particular industry. It’s pretty direct. Our goal is to create safer, more equitable, environmentally sound transportation for Michigan residents through four aspects of government — economic development, grid, infrastructure and workforce. We’ll work on pushing the programming and policy side of the equation. PlanetM is the programming and the newly created Council on the Future of Mobility will work to develop smart policy.
BY DUSTIN WALSH
Trevor Pawl has spent nearly 10 years spearheading initiatives to bring more business to the state of Michigan. At the Detroit Regional Chamber he was the director of Connection Point, a program that created more than $200 million in bids for Michigan businesses across 24 industries. The Michigan Economic Development Corp. took the program in 2013 along with Pawl, forming the Pure Michigan Business Connect program. At the MEDC, Pawl led the PlanetM platform that focused on using and developing state assets around mobility when the term mobility was ill-defined. Pawl led more than $100 million in grants to startups and legacy players in the nascent mobility space. In July, Gov. Gretchen Whitmer named Pawl the state’s chief mobility officer, where he leads the Office of Future Mobility and Electrification. Pawl’s first foray is to work with the newly created Cavnue, a subsidiary of Google, to create an autonomous corridor between Detroit and Ann Arbor along Michigan Avenue. Roughly six months into the job, Pawl is now focusing the office to the larger goal of making Michigan the long-promised epicenter of mobility technologies. Crain’s chatted with Pawl about the role and his vision for the future.
Is there a danger for a state economy, and tax coffers, buoyed by selling cars to implement an aggressive strategy on what functionally amounts to doing less of that? Philosophically, the state that focuses on these frameworks of mobility now will have longer to hold onto leadership
Trevor Pawl
positions in other industries. The future is multimodal. That means we need to look at public transit as well; where we can create global first technologies and options. We need to do that. We need to foster the advancements on the mobility of goods to be competitive. Our border is an advantage. We could really make a splash. It really boils down to a systems level approach. The core elements of this era are autonomous, connected, shared and electric. While we here in Michigan think of those elements as vehicles, it’s more than that. It’s systems linked across industries. Michigan should be the state to do this and leverage our auto advantage to make our roads safer. You mentioned public transportation. So much of this work is focused on advanced technologies, but shouldn’t we fix our clearly broken public transit systems in the state? Of course. We have to look at ways to future-proof infrastructure and futureproof systems. Leveraging new tech to advance these existing systems is the way to make them successful. Our goal is to help someone get to work a little bit earlier or get a small business van get to their delivery earlier. Look at two projects that are distinctly unique to these times. There’s the May Mobility autonomous shuttle in Grand Rapids, which is the country’s longest autonomous shuttle route.
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receive bonus dollars from Medicare, which we reinvest in additional benefits for HAP seniors. Health equity issues and social determinants of health are important concerns for HAP and HFHS. “Our health care provider/insurance partnership has helped deliver amazing results in HAP’s Star ratings and reflects our commitment to deliver on the highest quality of care to our community of seniors,” said Wright Lassiter, HFHS CEO and President. Star bonus dollars will allow HAP to expand future benefits and address obstacles that keep seniors from living their healthiest lives including out-of-pocket charges, food insecurity, and transportation challenges. HAP plans offer benefits aimed at reducing out-of-pocket drug costs, and we cover things like hearing aids, dental visits, fitness programs, and over the counter medical items. We are actively targeting the changing needs of our senior members and empowering them to improve their health and wellbeing. The COVID 19 pandemic profoundly exposed the growing health disparities in our communities and emphasized the important role insurers can play in eliminating barriers to care. Thank you to every HAP team member dedicated to serving our members. Thank you to every HAP health care provider. Your commitment to providing the highest quality of care now allows HAP to deliver even more vital services to our senior members. We are committed to working together to achieve the first 5 Star rating awarded to a Michigan-based insurer.
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PEOPLE
Detroit’s workforce chief to take over economic development Former state treasurer Khouri announces retirement, plans to leave city role after year on job BY ANNALISE FRANK AND CHAD LIVENGOOD
Nicole Sherard-Freeman, head of Detroit’s workforce and job training initiatives, will take on the added role of economic development chief as Nick Khouri plans to retire after less than a year in the job. Sherard-Freeman will start Jan. 1 as group executive for jobs, economy and Detroit at Work, according to a city news release, effectively combining two executive roles into one. Mayor Mike Duggan is promoting the executive credited with the rise of Detroit at Work, a city program that aims to connect Detroiters with jobs and training and has taken on a pivotal role in funneling prospective employees to big companies including FCA US LLC. Khouri’s appointment to succeed retiring Tom Lewand Sr. was announced Dec. 13. He started Jan. 1 as Duggan’s group executive for jobs and the economy, after spending a year in retirement. Khouri, 63, is the
PAWL
From Page 13
That went into an area that doesn’t always get the newest solutions. Then we have the Detroit to Ann Arbor corridor. Which the state isn’t funding. Phase one is coming from Cavnue. That will be designed to integrate into those existing options you mentioned. Ideally, as we improve the infrastructure, you’re going to see advancements in public transit. Not just a lane for autonomous vehicle users. It’s going to be a public transit solution first. ` How so? We have to look at what’s available with fleets. The goal is not to immediately equip all city buses to be autonomous or electric. But you can begin to install new dynamic routes here first. We can work with the private sector fleet operators to advance their services. One of the goals in this first phase of the project is to determine how this corridor and its routes fit into the overall Regional Transit Authority narrative. We must make sure each community sees benefit and that means remembering public transit. ` The COVID-19 pandemic has blown a hole in state coffers. How can you accomplish these goals with what’s expected to be funding gaps? That’s why being really strategic and intentional about public private partnerships is the way of the future. Especially for infrastructure. Reducing range anxiety (the negative impressions of how far an electric vehicle can travel) is critical. These are different things we can do where we don’t have to go to the trough. What I’ve always done is go to companies with reason and a demonstrated benefit. I understand there are a lot of different funding priorities and it may take longer to come online with our plan. But mobility isn’t just a new area of tech. It can be a crucial means to recovery. Mobility is why the virus spread
Sherard-Freeman
Khouri
former state treasurer under Republican Gov. Rick Snyder. The 54-year-old Sherard-Freeman has been the city’s executive director of workforce development since August 2019. She previously served as president and CEO of the Detroit Employment Solutions Corp., the city’s workforce development arm. Sherard-Freeman is credited with helping oversee the transformation of Detroit at Work into a full-service employment agency that oversees training in areas including skilled trades, health care, IT, logistics and hospitality. Detroit at Work’s efforts to pre-
qualify Detroiters for roles at FCA has received criticism because it does not mandate FCA hire a certain number of Detroiters, but just puts their resumes in front of the automaker before it considers non-Detroit residents. Sherard-Freeman has argued that Detroiters are such an “asset” that they don’t need guarantees. Fiat Chrysler has hired 4,100 residents so far for production operator jobs at its expanded plants on the east side. “The incredible success of Detroit at Work under Nicole’s leadership has become our most effective selling point from an economic development standpoint,” Duggan said in the release. “Major corporations are looking at Detroit now as a great place to locate based on the strength of our workforce and our ability to produce a list of outstanding job candidates.” Sherard-Freeman said she will use her new combined role to lace together the city’s business attraction and workforce development strategies.
“Because we understand the profile of Detroit’s workforce (from Detroit at Work), it helps us be smarter about the kinds of companies we attract and recruit to establish themselves in Detroit,” she said. And, “I could make a much more compelling pitch to an employer based on the depth of knowledge we have on our workforce.” Sherard-Freeman said she will be delegating much of the Detroit at Work-specific strategy work she did to her team as she takes on the new role. She added that there were no issues or disagreements with Khouri that led to the change. Khouri served as Snyder’s third state treasurer from March 2015 through the end of 2018. He was previously senior vice president of corporate affairs at DTE Energy Co., overseeing the Detroit-based utility’s governmental, regulatory and community affairs. In a phone interview Monday morning, Khouri said he informed the mayor at the beginning of Sep-
tember of his plans to leave by year’s end after the city finished a deal with Amazon.com Inc. and developers to build a distribution center at the former Michigan State Fairgrounds at Woodward Avenue and Eight Mile Road. “Amazon’s got more money than you can imagine, but what they really needed was speed — so they wanted to get the deal done,” Khouri told Crain’s. “It wasn’t easy. The process of (going through) City Council is just different than the state Legislature.” The project will be a “catalyst” for redevelopment in that part of the city, Khouri said. Khouri said he took the job out of loyalty to Duggan. “After spending a year up close, I’m even more convinced he’s the best mayor in America,” he said. “But it’s time for me to retire one last time.” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
“IDEALLY, AS WE IMPROVE THE INFRASTRUCTURE, YOU’RE GOING TO SEE ADVANCEMENTS IN PUBLIC TRANSIT. NOT JUST A LANE FOR AUTONOMOUS VEHICLE USERS. IT’S GOING TO BE A PUBLIC TRANSIT SOLUTION FIRST.” — Trevor Pawl
all over the world. But it can also be what lets us distribute the cure quicker. We’ve already seen UV lights installed in car shares to disinfect and new bus designs to mitigate the spread. This industry is at the heart of everything. That’s why it is important to resource up — to make sure we can recover from what’s been a crazy year. ` What meaningful things can you accomplish this year, given the pandemic? We’re assigning story lines. We’re currently working on creating a policy initiative or a grant program that could really impact a community. We’ve launched an autonomous shuttle in Brush Park for senior citizens. Working with Airspace Link to begin to establish traffic laws for the sky. For aerial drones, the laws change when you pass over different communities. We’re making an automated parking garage in Detroit. We’re really focused on tech activation and identifying problems and solutions so we can begin to establish policy levers. We’ve also started an autonomous maritime project in the (Upper Peninsula), working with Michigan Tech on grants for underwater drones and autonomous subs. There is opportunity in every part of the state. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
14 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
“I think in the long term, we’ll live in a world where there is a subscription model where you can take an e-rickshaw or an autonomous vehicle or a scooter or a bike,” Trevor Pawl, the chief mobility officer for the state of Michigan, said. | CRAIN’S DETROIT BUSINESS
SCOOTERS
From Page 12
But all the optimism can’t deny the ongoing impact of COVID-19. Only 15 percent to 20 percent of workers in downtown Detroit and Midtown are back in the office full time, according to the Downtown Detroit Partnership. The neighborhoods surrounding downtown may be enough to satiate Spin, but can they also buoy Bird, Lime and any others? A mobility insider, who asked for anonymity due to past work with the scooter firms, says no. “When you look at the world of venture capital, you see how much stupid money gets thrown around and that’s what’s happening here,” the insider said. “(The scooter companies) are all literally the same. There’s no difference between any of
them. There’s no long-term business model there.” Consolidation among the players in the industry has long been rumored, but any deals among the major players remains elusive. The insider believes the companies will eventually find their way to becoming suppliers to city-run and tax-supported transit offerings. “Look, I still think scooters have a place, but you either get to the point where there’s two companies in the world or it just becomes something that gets subsidized by a transit agency. That’s probably the only way for this to make money; providing a service to people.” Trevor Pawl, the chief mobility officer for the state of Michigan, said the firms suffer from too many disparate options with too many mobile apps to support them, crippling the success of mobility options like scooters.
“I think in the long term, we’ll live in a world where there is a subscription model where you can take an e-rickshaw or an autonomous vehicle or a scooter or a bike,” Pawl said. “Those choices are important, but it’s equally as important to having these solutions accessible. We’ll have to integrate these software needs into city transportation systems.” But the odds of a city spending valuable tax revenue on integrating mobility options is unlikely, given the ongoing impact to coffers during the pandemic. The city of Detroit projects tax revenue to drop nearly 12 percent during this fiscal year. “Scooter firms are out there on their own for a while,” the insider said. “Most cities right now have 900 other things to worry about at this point.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
FOOD AND DRINK
HopCat owner sells assets in $17.5 million deal
Stalking horse bid wins after June bankruptcy filing; new CEO looks toward growth in Michigan “I THOUGHT THIS WAS A COMPANY WORTH SAVING,” LIDVALL TOLD CRAIN’S. “IN MY OPINION, (HOPCAT) IS A STRONG, RELEVANT BRAND. ...WE’LL GROW IT AGAIN, AND WE’LL START IN MICHIGAN.”
BY KURT NAGL
The Grand Rapids-based parent company of HopCat has sold its assets through a Chapter 11 bankruptcy to a previous lender in a $17.5 million deal. A pair of Texas-based private equity firms — Congruent Investment Partners and Main Street Capital — won with its stalking horse bid to buy the assets of BarFly Ventures LLC after it filed for bankruptcy protection in early June. The new owners, operating as Project BarFly, say they intend to keep the nine craft beer and burger locations open, as well as Stella’s Lounge and Grand Rapids Brewing Co., both in Grand Rapids. They tapped veteran restaurant consultant Ned Lidvall, of Georgia, to be CEO of the revamped company. “I thought this was a company worth saving,” Lidvall told Crain’s. “In my opinion, (HopCat) is a strong, relevant brand. ...We’ll grow it again, and we’ll start in Michigan.” Congruent Investment Partners and Main Street Capital had been HopCat’s primary lenders for the past five years and had board observation rights. In December, they saw the red flags on the balance sheets and asked Lidvall if he could help provide direction. By March, following mandatory shutdowns from
— Ned Lidvall, Project BarFly CEO
HopCat announced in the spring that it would permanently close its Royal Oak location after a lease disagreement with its landlord. | KURT NAGL/CRAIN’S DETROIT BUSINESS
COVID-19, a potential bankruptcy was on the table. “The company basically committed some of the mistakes many companies do,” Lidvall said. “They grew unsuccessfully to some markets and borrowed too much money to do it.” HopCat had been troubled by loads of debt taken on amid rapid expansion in Michigan and other markets such as Florida and Missouri. COVID-19 proved to be the death
knell for its previous operator. “We were crushed under a mountain of debt and uncertainty about the future due to COVID,” Mark Sellers, founder of BarFly Ventures, told Crain’s in June. “It shut us down to the point where our revenues declined 100 percent overnight.” Sellers could not immediately be reached for comment. Sellers, who founded HopCat in 2008, no longer has involvement in
the chain, Stella’s or Grand Rapids Brewing Co. Lidvall, who will remain in Georgia with frequent trips to west Michigan, said the company will stay based in Grand Rapids. Its administrative office there has about 20 employees, down from about 50 the same time last year. Across all locations, there are about 500 employees remaining, less than half what there used to be. In tandem with the bankruptcy process, the company permanently closed locations in Minneapolis, Madison, St. Louis, Kansas City, Louisville, Lexington and Port St. Lucie. Its only remaining locations out of state are in Lincoln and Indianapolis. “The company is in pretty good financial shape,” Lidvall said. “We think we are right-sized for the new footprint of the company.” HopCat also closed its flagship location in Royal Oak days before announcing the bankruptcy filing. Lidvall said it will not reopen at that address, but hopefully elsewhere in Royal Oak.
“We’ll be able to grow and hopefully do it better this time,” he said. “We barely cracked the surface in eastern Michigan.” Lidvall said the primary goal now is making it through the pandemic. That will involve a focus on off-premise sales until restaurants can reopen at full capacity. “We know the business extremely well from our experiences over the last five years,” Travis Baldwin, founder of Congruent Investment Partners, said in a news release. “We strongly believe in each restaurant concept and intend to return the company’s focus to providing a unique, best-in-class customer experience. Our goal is to focus efforts around the company’s key markets and ensure HopCat, Stella’s and Grand Rapids Brewing Company remain a thriving part of these communities.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
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NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 15
NONPROFITS
DEALS&DETAILS
Total Health Care Foundation contracts with Children’s Foundation for grants
CONTRACTS
BY SHERRI WELCH
The Total Health Care Foundation, a limited-life funder created late last year as part of the Total Health-Priority Health merger, has contracted with The Children’s Foundation to accelerate its grant-making. The Total Health Care Foundation launched with a $25 million promise to demonstrate Grand Rapids-based Priority Health’s commitment to the health and well-being of the residents of metro Detroit around such things as food and housing security, said Executive Director Randy Narowitz, who is senior vice president of Priority Health and former CEO of Total Heath Care. Nearly a year later, the foundation is preparing to disburse its first round of funding, a little more than $1 million in grants, in the next few weeks.
Narowitz
Its agreement with The Children’s Foundation for grants administration will help it ensure the full amount of the grants are spent down in Southeast Michigan by the end of
2023, he said. “We know we have a limited life and they are substantially bigger than us and have a lot of expertise,” Narowitz said. Engaging The Children’s Foundation will also give The Total Health Care Foundation opportunities to leverage its grants, Narowitz said. For example, its first pool of grantees includes Brilliant Detroit, a nonprofit focused on kindergarten readi-
ness, early literacy and family stability in Detroit. The Children’s Foundation has been funding the nonprofit for the last few years. The two foundations started talking about working together in February. But the pandemic slowed down those talks, said Larry Burns, president and CEO of The Children’s Foundation. “One of the things that makes this new partnership so important to our strategic plan is we have been striving over the last few years to work with more health providers on helping them engage with community organizations to help children, young adults and families stay out of the hospitals and stay healthy,” Burns said. “To me, this is a wonderful opportunity of doing that.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
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16 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
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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
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
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office in Detroit “I’m impacting lives now. management I know undergoing renovations in mid-2018 • Office 6,000-squarethe effect food insecurity 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 Jer-
UBS to open downtown Detroit office management 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 in the 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 ato new 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 others and will meetings nor events 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 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: theless 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 a price.” saidnext year, depending Bush is based outothers, of the he Birmingham out 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 to the 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, the office has the capacity really felt likeLLC we wanted tobut have a physThe company plans to start its buildtraditional, moreto“urban” than the outmeetings the city.” 60,000 across 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, said along those lines,” Bush said. early next year, depending hold another six to eight new he staff memical presence downtown reinforce others, said. New office York-based architecUBS toWealth — 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 onin when tureasfirm Verderameto Cale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and organizations, 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 City. “We contracts have yet tocas, be finalized. M a n a g e m e n t Troy, have a and less other The Detroit locationtowill 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 and Dearborn. erate 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 on the buildings the on based in metro Detroit. will will aimdesign to showcase Detroit’s history are 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. THE CONVERSATION Hills, Plymouth “Some of the organizations that op- billion in the third quarter of 2017 — a John Bush and Dearborn. erate and provide services in the city 7 percent increase over last year.
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. 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. 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.
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. 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
Blue Sprig Pediatrics Inc., Houston, Texas, a center and home-based provider of therapy services for children with autism, acquired the assets of Momentum Autism Therapy Services, Plymouth, a provider of services to children with autism. Terms of the transaction were not disclosed. Website: bluesprigautism. com, momentum-therapy.com
Circle Power, Royal Oak, a renewable energy company has been awarded a 5-year land ,lease agreement with the Michigan Department of Natural Resources to develop large-scale solar arrays on two former mine sites: the Groveland Mine in Dickinson County, a former 347-acre iron mine tailings site given to the state, and 7 Mile Pit in Crawford County, a 169-acre property previously use for sand and gravel mining the state acquired through tax reversion. Website: circlepowerco.com
ChoiceOne Financial Services Inc., (Nasdaq: COFS), Sparta, the parent company of ChoiceOne Bank, completed the acquisition of Community Shores Bank Corp., Muskegon. Community Shores Bank is now renamed ChoiceOne Bank. The combined organization is the 12th largest bank holding company in Michigan based on asset size, with approximately $1.7 billion in assets and 33 offices across Michigan. Website: choiceone.com
Advanced Planning Educational Group Inc., Sterling Heights, providr of educational resources, financial planning tools and community resources to support financial professionals, and RightCapital Inc., Shelton, Conn., a financial planning software platform, formed a partnership to offer financial professionals planning tools and educational resources. Website: success.rightcapital.com/APEG
Tweddle Group, Clinton Township, provider of information and communication services, launched IDEx, its Integrated Diagnostic Explorer software to enable faster, more accurate diagnostics for a wide range of industries. Website: tweddle.com
Nuspire, Commerce Township, a managed security services provider, has a partnership with Recorded Future, Somerville, Mass., a security intelligence provider, to deliver actionable threat intelligence data to clients. Websites: nuspire.com, recordedfuture.com EventsPass, Tacoma, Wash., has signed a multi-year agreement to be the ticketing partner for ShowSpan Inc., Grand Rapids, a consumer show organizer. EventsPass will provide contactless visitor ticketing and registration services to all ShowSpan events, as well as offering LeadGen, a lead data capture tool, to exhibitors at select expos. Websites: showspan.com, eventspass. info
MERGERS & ACQUISITIONS Forum Health LLC, Flint, a health care services provider, acquired Wellness by Design, Greenville, S.C., a holistic medical clinic. Websites: forumhealth.com
40 40
Dandridge Floyd, 37
Farbman Group, Southfield, a real estate company, is investing in DTE Energy’s MIGreenPower program, a voluntary renewable energy program that helps DTE electric customers reduce their carbon footprint and support the development of additional wind and solar energy projects in Michigan. Websites: farbman.com, dteenergy.com
NEW PRODUCTS
XO Network, Sylvan Lake, a professional network for entrepreneurs, released its XO Network mobile app to provide a virtual connection to entrepreneurs, allowing them to share and post information. Website: xonetwork.org Otava LLC, Ann Arbor, a web hosting company, released the third generation of Otava Cloud, built on VMware Cloud Director, to enable secure, efficient self-serve cloud resources. Website: otava.com Swift Biosciences Inc., Ann Arbor, a biotechnology company, introduced the Swift 2S Sonic DNA Library Kit to the next-generation sequencing industry, offering accelerated access to new discoveries and data. Website: swiftbiosci. com Traxen, Plymouth, a technology company for the trucking industry, launched iQ-Cruise, a cruise control system for traditional and electric commercial vehicles that uses artificial intelligence, advanced algorithms and sensors to reduce fuel consumption by an average of 10 percent and improve safety. Website: traxen.com
Bedrock LLC
Telemus, a Southfieldbased firm providing wealth advisory, investment management and asset management solutions for high net worth and ultra-high net worth individuals and institutional investors, is pleased to welcome Alex Simmons as Manager, Private Investments. Alex will focus on non-traditional investment opportunities in areas like real estate, private equity and hedge funds. He holds an MBA from the University of Michigan’s Ross School of Business and a BA degree in economics from U-M.
Why not?
Primary Care Internal Medicine and the Center for Family Care, Livonia, medical practices of Infinity Primary Care PC, merged with Integrated Health Associates Inc., Ann Arbor, a medical practice. Website: ihacares.com.
Bedrock LLC
Telemus
PROMOTE.
Bedrock LLC
INSURANCE/FINANCIAL SERVICES
PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S
FINANCIAL SERVICES
Nexsys Technologies, Detroit, a fintech company specializing in mortgage origination and closing and a subsidiary of Rocket Companies, has begun working with Farmers Insurance to use Clear HOI technology to digitize the verification of homeowners insurance. Websites: nexsystech.com, Farmers.com
gage lender Quicken Loans and real estate firm Bedrock. Websites: rbequity.com, quartile.com
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
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
Laura Picariello
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Rockbridge Growth Equity LLC, Detroit, a private equity firm, invested in Quartile Digital, New York, N.Y., a platform helping online sellers optimize digital advertising campaigns. The investment will be used to recapitalize the business and support development of direct sales and marketing efforts, product enhancements and further international expansion. Quartile will join Rockbridge and the Rock family of companies, which includes mort-
STARTUPS Michigan Advanced Psychiatry, a mental health clinic providing advanced treatments for mental health disorders, opened at 320 North Main St., Suite 300, Ann Arbor. The clinic will offer BrainsWay’s Deep Transcranial Magnetic Stimulation for major depressive disorder and obsessive-compulsive disorder. Phone: (734) 436-4886. Website: michiganadvancedpsychiatry.com
SHYFT
From Page 1
Shyft now produces walk-in van and truck bodies used in e-commerce, last mile and grocery delivery and upfits infrastructure utility vehicles and luxury Class A diesel motor home chassis. Sales more than doubled between 2015 and 2019 to $756.5 billion and the company expects to approach $1 billion in 2020. Shyft’s profit margins hit 20 percent in the first half of this year alone. The company has now found itself squarely positioned itself as the leader in walk-in vans production as COVID-19 spurs more and more home deliveries. Amazon ordered more than 2,200 Utilimaster branded delivery trucks from Shyft last year, according to Reuters. Shyft is contractually prohibited from discussing its work with Amazon. “Our strategic plan set the company up for success,” Adams said. “The growth in e-commerce was already moving upward. What COVID did to that growth trajectory was sent it upward but we were already set on that trajectory.” That plan involved setting up production facilities across the U.S. to capture as much of the national delivery van market as possible, Adams said. With plants in 10 states, Shyft
COVID
From Page 1
“This is serious,” said Darryl Elmouchi, M.D., president of Spectrum Health West Michigan, in a video message to employees. Elmouchi discouraged carpooling and implored the hospital system’s employees to limit their interactions with people outside of their households. “It’s been shown over the last two weeks across the country that most spread is occurring in small gatherings outside of households — it’s just spending a few hours with friends that seems to innocuous,” Elmouchi said. “I know this is getting long and this is getting tired ... (but) the next few weeks are going to be a test for all of us.” In a recent all-employee virtual meeting on Microsoft Teams, Poppe implored Consumers’ 8,000 employees to steer clear of large crowds and social settings that are driving the majority of new outbreaks. “I definitely have been sending that message to my co-workers because the cases we do have were not contracted at work,” Poppe said in an interview with Crain’s. “I’ve been sending a strong message — I call it my mom voice at work — ‘C’mon guys, there’s no reason for us to be a contributor to the spread of this.’” Poppe’s counterpart at DTE Energy Co. is closely watching the worsening COVID-19 crisis unfolding in Europe and Wisconsin — where the seven-day average is 3,100 new daily cases and 27 percent positivity rate — and thinking Michigan could be headed in the same dire direction. “If we don’t, at scale in this state, pull in our behaviors, that’s simply the reality,” said Gerry Anderson, executive chairman of DTE Energy. “And we need to do that or we’re going to follow the path we did back in April and March.” The challenge with the second wave of infections is how to replicate the success Michigan had in driving down cases in the spring during Gov. Gretchen Whitmer’s 10-week-long
operations are within 300 miles of 82 percent of the U.S. population. “It’s a company that’s hard to match,” said Michael Shlisky, senior equity research analyst for New Yorkbased investment bank Colliers Securities LLC. “They do it from coast to coast. Other competitors are smaller. A national customer like Amazon, they want a large national supplier. Shyft is one of the few that can actually do it.” Amazon reported a massive spike in revenue during the third quarter — $96.15 billion, a 37.4 percent increase from the $69.98 billion it generated in the same period last year — largely in part to increased consumer spending online during the COVID-19 pandemic. Goldman Sachs predicted in July that e-commerce will represent 22 percent of all retail sales by 2023, up from a previous estimate of 16 percent. And Shyft isn’t just producing vehicles for Amazon. In 2017, it was awarded a $214 million contract from the United States Postal Service for more than 2,000 cargo fleet vehicles. Its customers also include UPS and FedEx. “They not only improved their manufacturing footprint, but they improved their sales and salesmanship capabilities,” Shlisky said. “There’s been absolute growth in that market, but they still had to go out
and win that business. It takes skill to go to Amazon and learn their price points and walk away with a contract.” The gains in sales and manufacturing skills were achieved by the longplanned headquarters move from Charlotte to Novi, said Adams. The company officially moved the headquarters in June. “They moved into the middle of the conversation here,” said Glenn Stevens, executive director of MichAuto, the automotive marketing arm for the state’s automotive industry. “The move, to be in the middle of this ecosystem, which is pretty diverse, really put them over the top. When you look at the logistics companies, the defense and the auto industry intersecting with tech and mobility, a company like Shyft can be in the middle of these players and really accelerate growth.” For Adams, the move really was to be able to access the region’s automotive talent base, as picking off automotive industry executives where they live is an easier task than convincing them to move to Charlotte. “When I came in we just didn’t have a lot of modern production practices in place,” said Adams. “I felt that we needed to take a hard look and the business and I took time to analyze it. Once I knew and understood it, I wanted to start hiring auto-
stay-at-home order for non-essential workers and schoolchildren. When Whitmer lifted her stay-athome order June 2 and retailers and restaurants were allowed to reopen at limited capacities, Michigan was averaging 375 new cases each day with a 3.2 percent positivity rate, a Crain’s analysis of state data shows. This time around, the Democratic governor lacks the power to order a lockdown without approval from the Republican-controlled Legislature following the Michigan Supreme Court’s Oct. 2 ruling striking down the law Whitmer used to keep a state of emergency in place for nearly seven months. Whitmer’s Department of Health and Human Services director, Robert Gordon, has essentially re-issued her executive orders on mask-wearing and restaurant capacities. Last week, in anticipation of annual indoor social gatherings for Halloween and the University of Michigan-Michigan State University football game, Gordon issued a new public health order barring gatherings of more than 10 in private homes. He also ordered restaurants to begin recording the names, phone numbers, entry and exit times for every patron for COVID-19 contact-tracing purposes. Gordon has issued these orders under the state’s century-old public health code. He did not rule out the possibility of using that law to order local, regional or even statewide lockdowns to bend the infection curve in the same way Whitmer did with her “stay home, stay safe” order in the spring. “If you look at the history not only here but around the country, public health departments take action to fight epidemics, including around quarantine and isolation,” he said. “This is what public health departments do during epidemics.” Gordon and Joneigh Khaldun, M.D., the state’s chief medical executive, urged Michigan residents to scale back their Thanksgiving family gatherings or reconsider gathering with anyone outside of their families. At Consumers Energy, the chief ex-
ecutive officer has already called off her family’s annual holiday reunion. “We can’t gather and think that we’ll be immune from this hazard,” Poppe said. “We’re making choices in our family and I’m encouraging my co-workers to do the same — use good judgment. The pandemic is not over. You can’t wish it over.” Gordon emphasized that his orders seeking to rein in social behaviors are meant to be more “targeted” than the broad across-the-board measures used in the spring to slow community spread of the virus. “We know so much more now than we did in March,” Gordon said. The state’s tracking of coronavirus outbreak settings also has played a role in what kind of rules and regulations are put in place through public health “epidemic” orders. In the state’s most recent Oct. 22 report on outbreaks by settings, workplaces accounted for 35 of the 144 COVID-19 outbreaks in the previous weeks, or 24 percent. The majority of those were 14 outbreaks associated with manufacturing and construction workplaces, according to MDHHS. “It’s generally not happening in workplaces,” said Anderson, who cochairs the Michigan Economic Recovery Council that closely tracks COVID case trends. Knowing a COVID-19 vaccination may not be widely available until the spring of next year, some major Michigan employers have already told their white-collar workers to plan on working from home for the first half of 2021. DTE Energy has told its downtown Detroit workforce to work from home until at least spring of next year, Anderson said. In September, General Motors Co. told its salaried workers to continue working from home through June 2021. Last month, Ford Motor Co. and Consumers Energy followed suit. “Part of what drove that decision is our ability to contribute to slowing the spread,” Poppe said. “We can all see this fall and heading into the winter that case rates are up. We all have to do our part.”
motive executives with automotive DNA. People who understood the speed, lean and execution of that sector. I felt that we needed to change our the typical specialty vehicle mindset. We needed a way to disrupt the industry itself and I think the amount of business we’re winning for our delivery customers demonstrates that the decisions we’ve made worked.” Adams, a former executive at Lear Corp. and CEO at Midway Products Group, hired several auto executives to round out his team, including: Todd Heavin, former president of American Axle’s casting division, as COO; John Douyard, former CFO at Fluke Corp., as CFO; and Steve Guillaume, former vice president at Navistar, as president of the company’s specialty vehicles division. Under Adams, the company has also been acquisitive with the addition of five companies and the aforementioned sale of its emergency response vehicle division to Milwaukee-based Rev Group Inc. for $55 million. Shyft also inked contracts with two customers in August to supply electric walk-in cargo vans. The vehicles are built on Shyft’s traditional walk-in van chassis platform and converted to use an all-electric powertrain. Production of the electric delivery vehicles is expected to begin in 2021 with
a dedicated assembly line in Charlotte that can produce up to 5,000 units per year. Shlisky said Shyft is ahead of its competitors in electric delivery vehicle production. “There are a lot of EV startups and some are very promising but they don’t have a factory in place to produce them,” Shlisky said. “Shyft can serve as contract manufacturer and help a startup with their facility. They plan to be a player in EV whether it’s their vehicle or someone else’s and that’s a strong position to be in.” In 2016, Shyft built an 85,000-square-feet addition to its manufacturing capabilities in Charlotte and contract manufacturers commercial fleet vehicles for Isuzu under its Builtmore Contract Manufacturing subsidiary. Adams said the company is projected to doubles sales to near $2 billion in the next five years and its cash flow is putting the company in line to seek out a major acquisition. “With the amount of cash we’re generating, we’re paying down debt, we’re prepared to make a larger acquisition,” Adams said. “Anything that has wheels on it is in our swim lane. We’re really looking for a third leg (of the business) but we just haven’t found it yet. Two deals we were engaged in got too expensive and we walked away.”
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Creative Design Specialist The Creative Design Specialist will report to the Director, Events & Marketing and will play a pivotal role in the production of videos for marketing initiatives across the organization. In addition, this creative specialist will be skilled in design work in print and digital media. Responsible for working in collaboration with other members of the marketing and events team across six publications to conceptualize and execute design projects to support marketing and the promotional process of products and events.
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Digital Specialist Crain’s Global Polymer Group is seeking a Digital Specialist who will own digital campaigns, webpage development, coordinating and producing virtual events, and provide metrics and analytics to the team. Reporting to the Director, Events & Marketing, and working closely on a with the Sales Directors, in support of the sales, marketing and events teams for the Group’s six brands: Plastics News, Rubber & Plastics News, Tire Business, European Rubber Journal, Urethanes Technology, Sustainable Plastics. This position will be in the Detroit office, although the organization is currently working remotely. Visit crain.com/careers/ for more information and available positions.
VISIT OUR WEBSITE: www.crainsdetroit.com/classifieds NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 17
BAKERY
From Page 3
The nonprofit, which operates on a $3.4 million budget, did not disclose the exact purchase price. But Shemtov said it’s investing a total of $600,000 on the purchase and Shemtov renovations. Friendship Circle has kept the bakery’s 11 longtime employees on and plans to add a second shift within a month, along with a training program for adults with special needs to teach them life skills including time management, organization and customer service, with the goal of trainees becoming employees in the future. The goal is to train 10-20 young adults with special needs within the next six months and then hire them to work two to three days each week, Shemtov said. Making bread is a lot more repetitious than making avocado toast or coffee at the cafe, Shemtov said. “The variance of the customers coming in was a lot more overwhelming for these adults than the baking of the bread.” Adults with developmental disabilities like autism do really well with the same actions again and again, she said. “As soon as they are trained in that one area, they can be better, faster, more efficient than you or I.”
Providing jobs Launched in 1995, Friendship Circle provides recreational, social, educational and vocational programs to 3,000 individuals with special needs and their families and support to individuals and families struggling with isolation, addiction and other crises. Early on, it paired children with special needs with neurotypical teenagers to create inclusion and guard against loneliness. But its founders soon realized those children grew up
From left, Ara Gallagher-White of Waterford, Sue Rodriguez of Madison Heights, bakery manager Dave Balla, Sam Morris of West Bloomfield, Vicky Akins of Troy and Heather McBride of Waterford prepare baked goods at Dakota Bread Company in West Bloomfield. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
and felt isolated. So around 2015, it launched pilot programs to provide job opportunities for those young adults: the Soul Studio Art Program to pair neurotypical artists with special needs adults to teach them new art forms and help them create and sell their works to corporations and collectors, and the bakery training program. After the successful pilot, Friendship Circle opened the Soul Studio and Soul Café and training program in a strip mall at Drake and Walnut roads in West Bloomfield. But many trainees who participated in the bakery pilot program didn’t transition to the Soul Café program because it required different skill sets. Ron Hodess, chair of the Friendship Circle Board and parent of two adult children with special needs, set a longterm goal for Friendship Circle to start a bakery, Shemtov said.
This summer, he mentioned the idea of opening a bakery to fellow board member Howard Schwartz, owner of Howard Schwartz Commercial Real Estate LLC. Schwartz immediately thought of Dakota Bread. “It had a kosher recipe and a magnificent following within the Jewish community and city and a great location, a very viable, commercial location,” he said. “I called them and it was perfect timing,” Schwartz said, given that the owners were looking to retire. “Best idea ever,” Bassie Shemtov said, since the acquisition meant Friendship Circle didn’t have to start a bakery from scratch. Under Friendship Circle’s ownership, Dakota Bread will follow the recipe for the challah it’s known for, but it’s transitioned to a kosher menu. People with autism are great at numbers and often can tell how much
BALLOTS
From Page 3
Plus, she signed on as consultants former elections director Daniel Baxter and retired Michigan election director Chris Thomas. Despite assurances that Detroit is ready to go, concerns linger. The Thursday media event came eight days after the city clerk and American Civil Liberties Union of Michigan made an agreement settling a court dispute over sluggish absentee ballot delivery. The ACLU sued Winfrey, alleging based on Secretary of State data that the clerk’s office had received 70,000 ballot applications as of Sept. 23 that still hadn’t been processed nearly three weeks later. “... despite the statutory mandate to issue ballots within 24 hours upon receipt, it appears that Defendant has left thousands of ballot applications unprocessed for weeks,” the Oct. 16 lawsuit said. Winfrey denied the allegations, saying she has followed state law. But she agreed to clear up the backlog of applications and get all future ballots sent out within a day.
Inside the counting room The TCF exhibition hall where Winfrey spoke Thursday is lined with equipment aimed at keeping the
Daniel Baxter, a former Detroit elections official who is assisting City Clerk Janice Winfrey in preparing for the Nov. 3 election, demonstrates the machines during a Thursday press tour of the TCF Center hall where absentee ballot counting will take place. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS
counting process running smoothly. There are 134 counting board tables where workers will sit to review absentee ballots, enter data, confirm stub numbers match and put them into a tray. From there the ballots go to one of 25 high-speed ICC tabulators that process them and store the data. There also are 13 adjudication stations where workers — both a Democrat and a Republican must be present
18 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
— use large screens to interpret if marks are valid or not, Baxter said. All absentee ballot-counting workers got hands-on training at TCF Center. The city also trained 1,800 people to use an electronic poll book to look up voter registration information instead of flipping through physical pages. “We’ve had discussions with the state of Michigan as well as the county clerk as to our plans to utilize the
each piece of dough will weigh by sight, Shemtov said. “They are super-focused. If they have to slice 900 challahs per day, they aren’t going to get tired of that” the way other employees might, she said. “They just don’t complain. They are happy to be productive.”
Increasing opportunities The deal makes Friendship Circle at least the third Southeast Michigan to add job training and job opportunities for adults with developmental disabilities within the past year. Cass Community Social Services this year launched a clean-out business for senior citizens who were downsizing and companies moving out of their offices to create jobs for developmentally disabled adults. And last fall, Dutton Farm in Rochester spun off a job-training program e-poll book here,” Winfrey said. “... The e-poll book will make processing the absentee ballots more efficient and accurate.” Much of the election technology in the hall comes from one of Michigan’s three approved suppliers for the purpose, Denver- and Toronto-based Dominion Voting Systems Inc., said George Azzouz, Detroit’s elections director. He did not have an estimate of the total cost. Contractor choice was a county-level decision, he said. Asked about potential cybersecurity threats by a reporter, Winfrey said she did security training twice with the U.S. Election Assistance Commission. Baxter added that the previous week, the Detroit Health Department walked through the site and made recommendations on safety, and that he also planned to walk through again with the Detroit Police Department and U.S. Department of Homeland Security. Detroit is also using the concourse at Ford Field downtown and the Henry Ford Detroit Pistons Performance Center in New Center as receiving board locations, where ballot containers from each precinct are collected before being shipped to the county.
Handling turnout Baxter said the city expects around 50 percent turnout for Detroit’s more than 500,000 eligible voters, slightly
that pairs adults with special needs with neurotypical adults to make soap, candles and other personal care products and also to capture funding for that training. Like the other nonprofit-led businesses employing adults with special needs, the effort will create a handful of jobs at a time. But those microenterprises could provide guidance for more holistic, system-level change to spur broader employment of special needs populations, the Autism Alliance of Michigan said. While larger efforts and systemic change are needed to get the state to the Autism Alliance of Michigan’s goal of creating 101,000 jobs for the developmentally disabled within a decade, the smaller programs definitely offer learnings about what is needed to support people with disabilities in jobs, said Colleen Allen, president and CEO of the alliance. Through programs launched by those nonprofits, “others across the system better understand the level of support needed to successfully employ and integrate this segment into communities,” she said. A range of work options have to be available to provide a good workplace fit for those with disabilities, Allen said. “Just like those without disabilities, the microenterprise model offers an option that may be more naturally accommodating to those with disabilities versus competitive placement in a large corporation, for example.” The Autism Alliance has placed finance and information technology employees and engineers at Ford Motor Co., she said, and what works to support those employees looks different than what employees at Cass, Dutton Farms and Friendship Circle require. “We need to study these diverse programs and replicate (them) on a system level to maximize the number and spectrum of (people with disabilities) to approach anywhere near 101,000 (jobs),” Allen said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch higher than the 48.6 percent turnout in November 2016. Of those, they anticipate 165,000 absentee and 85,000 people going to the polls. With a new law allowing clerks in larger cities to process, but not actually count, ballots starting Monday morning, Winfrey said poll workers will work 8 a.m.-8 p.m. the day before Election Day, with processing to start at 10 a.m. Those ballots get stored so they can be tabulated the next morning. The actual counting of votes starts Tuesday at 7 a.m., though workers will show up starting at 6 a.m. Winfrey, calling the fall 2020 election more of an “election week” than a single day, said workers will return Wednesday 6-9 a.m. “if necessary.” For those following the numbers Tuesday night, absentee ballot results will be reported every hour starting at 8 p.m. Officials made it clear they’re not as concerned with speed as with accuracy. “What we’ll do is we’ll execute this process incrementally to make sure that every step is being executed in accordance to Michigan election law,” he said. “We have two goals for this election. And that’s to get this job done accurately and efficiently. Time is not a real concern of ours.” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
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SPECIAL REPORT | SECTOR BY SECTOR: WHAT THE VOTE MIGHT MEAN
HEALTH CARE
MANUFACTURING & SUPPLY
FINANCE & TECHNOLOGY
REAL ESTATE
Health care could see big changes
Manufacturers bracing for election outcome
PPP loans, oversight at stake for banks
Commercial real estate’s future tied to pandemic
If President Donald Trump is re-elected to a second term, don’t expect much to change on the health care policy side. However, with a willing Congress, he could move to address surprise medical billing, prescription drug prices, rising health care costs and the increasing numbers of uninsured. But Trump has talked little about reforming health care in his campaign, other than his hope that appointing a sixth conservative justice on the U.S. Supreme Court, Amy Coney Barrett, will help fulfill his dream of eliminating the Affordable Care Act of 2010, or Obamacare. Trump, like most Republicans, believes in the free market and private enterprise to address health care needs of the population, dubbed the “Patients over Paperwork” approach. Trump said if Obamacare is ruled unconstitutional, he will replace it with “something great” and make sure people with pre-existing conditions are protected. Trump and Republicans have presented no replacement plan for Obamacare in the past three years except for regulatory action such as expanding short-term, limited coverage health insurance and proposing association health plans. Their American Health Care Act failed to pass the Senate in 2017. On the other hand, Democrat Joe Biden has a full slate of ideas to improve health care using the levers and purchasing power of government to further reduce the uninsured, which has crept up to 29 million the past four years and 9.2 percent. Under President Barack Obama, the uninsured rate dropped to 8.6 percent from 15.5 percent in 2010, the Census Bureau said. Biden wants to strengthen Obamacare by adding a public option, allowing people to buy into Medicare, and eliminating Medicaid work rules. He promised to continue allowing young adults to stay on their parents’ plan to age 26 and encouraging more states to expand their Medicaid programs. With Democratic control over the Senate, Biden could move much quicker. Experts expect a President Biden to continue expanding value-based care options, which encourages higher quality instead of higher-cost services. The biggest change would be how Biden deals with the ongoing COVID-19 pandemic. Biden said he would turn Anthony Fauci, M.D., loose and give him complete authority to speak to the American public about the importance of wearing masks and the reality of a winter surge. Biden said he will create a Pandemic Testing Board to administer a nationwide testing campaign, use federal purchasing power to negotiate and deploy additional personal protective equipment to states, safely develop a vaccine and have the government pay for health insurance for people who lose their jobs during the pandemic. — Jay Greene
There’s likely little solace in the outcome of the Nov. 3 presidential election for Michigan manufacturers. Industry executives know what to expect under a second term for President Donald Trump: damaging tariffs and further uncertainty around trade. Policy direction via Twitter remains a hard pill for Michigan’s automotive industry in particular to swallow. The state’s domestic automakers couldn’t even begin ventilator production during the early days of the COVID-19 pandemic without facing the social media ire of the president. But Trump, and the Republican-led Senate, delivered the Tax Cuts and Jobs Act, which reduced the U.S. corporate tax rate to 21 percent, saving many manufacturers millions of dollars. However, the tax cuts didn’t lead to an influx of new manufacturing hiring as promised. Domestic manufacturing jobs rose during the first four years of the Trump administration, but only incrementally. Democratic presidential nominee Joe Biden calls for raising the corporate tax rate to 28 percent and a “minimum book tax” of 15 percent on companies with $100 million or more in net income that pay little to no federal income tax. The Biden plan also calls for a new 10 percent surtax on corporations that “offshore manufacturing and service jobs to foreign nations in order to sell goods or provide services back to the American market.” It’s unclear how the administration would define what qualifies as offshoring and the industry has long found workarounds. But, undoubtedly, taxes will be higher under a President Biden. Trump’s on-again, off-again tariffs on aluminum and steel have cost the manufacturing sector billions. Just last month, the administration imposed new tariffs on aluminum sheets imported from 18 countries. But it’s not clear whether Biden would back off from use of tariffs. “We would use tariffs when they’re needed, but backed by a strategy and a plan,” Tony Blinken, a former deputy secretary of state in the Obama White House and a top trade adviser to the Biden campaign, said during a video chat hosted by the U.S. Chamber of Commerce in September. Trump’s regulatory agencies slashed hundreds of environmental rules from the books, including weakening auto emissions standards, to the auto industry’s delight. Biden is likely to implement much stronger environmental standards. He wants to make America carbon neutral by 2050, and to get there, the manufacturing sector is likely to feel pain under the $2 trillion plan. Still, automakers are pushing electric vehicles and other gas-saving vehicles as an industry mandate already. A Biden win on that front could accelerate adoption, potentially, and may be viewed as less problematic. — Dustin Walsh
Banks in Michigan are bracing for the possibility of a Joe Biden victory wiping out President Donald Trump’s agenda of deregulation and corporate tax cuts. If Biden takes the presidency, policies favorable to big banks could be traded with those that bolster consumer protections, especially if Democrats win control of the Senate. But that’s getting ahead of things. The primary concern for banks right now is still loan forgiveness from the federal Paycheck Protection Program, said Mike Tierney, president and CEO at Community Bankers of Michigan. Banks in the state facilitated more than $16 billion in PPP loans to more than 128,000 businesses, according to data from the Small Business Administration. “Very few” have been repaid or forgiven, Tierney said, meaning that they stay on the banks’ books and prevent them from making new loans. “Banks are in a position right now where they don’t have a lot of dry powder,” he said. “Business owners and their CPAs are waiting for Congress to do something.” Amid the stops and starts of a second COVID-19 pandemic federal stimulus plan, the bankers and business owners have bemoaned the complex process of loan forgiveness. So far, the SBA has streamlined forgiveness applications only for borrowers of loans up to $50,000. Tierney said the industry is waiting for Congress to act on borrowers of up to $150,000, which comprise 80 percent of loans distributed in Michigan. It’s a bipartisan issue at the top of the wish list. “In the next stimulus package, they have got to pass an easy loan forgiveness program,” he said. In the long term, Democrat control could mean reverting to Obama era oversight of the financial sector. That would mean shoring up the Dodd-Frank Act, a monumental reform law passed in 2010 in response to the financial crisis two years before. Vowing to repeal the law upon election, Trump has worked diligently to at least eliminate portions of it. More than likely, Biden’s focus would be less on imposing arbitrary regulations and more on implementing consumer protections, said Erik Gordon, professor at University of Michigan’s Ross School of Business. For the tech world, a Democratic administration might be more aggressive in trying to push through antitrust laws to stem the power of big companies, Gordon said. This would have ripple effects outside of Silicon Valley — on the robust startup community in Ann Arbor, for example. “Overall, we’re a technology-loving country, and I don’t think that part is going to change,” Gordon said. “But are the (big tech) companies just too big and too powerful for American taste?” — Kurt Nagl
Between landlords and tenants, it may be a toss-up on who’s more nervous these days. The COVID-19 pandemic has made it challenging for many businesses to keep the lights on and for property owners to collect rent. The future of commercial real estate is tied to the long-term impacts of the pandemic and President Donald Trump and opponent Joe Biden have decidedly different strategies. Before the pandemic, the talk of the town was Detroit’s resurgence. The Dan Gilbert-led crusade to redevelop the city had taken hold with plans for new projects popping up what seemed like every day. Now some of the city’s largest employers, including the Gilbert-owned family of companies including Rocket Companies Inc. (formerly Quicken Loans), have most of their downtown staff working from home. Approximately less than 20 percent of the 125,000 people working in greater downtown Detroit before the pandemic have returned to their workplaces in the city, Eric Larson, CEO of the Downtown Detroit Partnership, told Crain’s. “Even if the buildings are reopened, the tenants aren’t coming back to work,” said Lynnette Boyle, principal of Detroit-based Beanstalk Real Estate Solutions who has worked in the local industry for more than 25 years. “We’re getting a lot of calls from people that want to sublease their space or are doing short-term rentals. Everyone’s afraid to commit. “On top of all of that and COVID-19, we have this election, and we don’t know how that’s going to affect the market.” Be it Biden or Trump in the top office, the real estate deals will keep coming, Boyle said. “I think we’re going to go to a Detroit where a lot of landlords that have been here forever know how to do,” she said. Ditto with residential real estate, said Frank Tarala, principal broker for Sterling Heights-based Sire Real Estate who’s been in the business 40 years. “Real estate is apolitical,” he said. Pandemic be damned, home sales in metro Detroit have been on a tear this spring and summer. There literally are not enough houses to sell, Tarala said, and there’s no reason to believe a new president would change that. The historically low federal interest rate — a lever neither party wants to touch, especially during a crisis — has kept the market humming. That’s not to say there isn’t hesitation. Sales have slowed significantly leading up to Election Day as potential buyers put big decisions on pause and watch the polls. “I always see the market picking up where it left off,” Tarala said. “I would think after this election, things would continue as they have.” — Kurt Nagl
Renewable energy could get a boost if Biden is elected president The energy industry has been slowly shifting over the past decade away from fossil fuels to generate electricity to more renewable energy sources such as solar and wind. Both of Michigan’s main electric utility companies, Consumers Energy Co. and DTE Energy Co., have set goals of being coal-free by 2040. Democratic nominee Joe Biden has called for eliminating carbon emissions from electric-generation by 2035. Patti Poppe, CEO of Consumers’ Jackson-based parent company, CMS Energy Corp. (NYSE: CMS), was asked about the prospect of a Biden presidency in a third-quarter earnings calls Thursday with investors. “If Joe Biden is elected and there is a stronger push 20 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
ENERGY for a clean energy transition, or a carbon-free electric sector, we have a plan that’s pretty aggressive already — we have a plan that gets to net zero carbon by 2040,” Poppe said. “Even when he says 2035 in campaign ads, the idea that it really be national by 2035 seems aggressive, but we could actually work to adapt.” Biden has said he would spend billions on renewable energy projects and encouraging the transition away
from fossil fuels to develop new technologies for the power and vehicle industries. Biden also has promised a 10-year, $1.7 trillion plan that includes adding 500 million solar panels, 8 million solar roofs and community solar energy systems and 60,000 wind turbines. He said the government seed money would help create a $5 trillion private renewable energy industry and put the U.S. back on top as a world renewable power. Experts don’t believe a second Trump term would slow trends, but the president appears not to be a big fan of electric vehicles or renewable energy. Poppe told Wall Street analysts last week that CMS is “pretty agnostic on the outcome of the election.”
But she acknowledged the energy company sees more certainty with Trump in the White House. “We know what to expect from Donald Trump and his administration,” Poppe said. “That’s been working fine for us.” Poppe said the Trump tax cuts resulted in a 5 percent reduction in rates for Consumers customers. “So you can imagine, if the corporate tax rate goes up, then that savings goes away,” Poppe said. “It shouldn’t change our clean energy transition, but it definitely will cost energy buyers that tax rate. So we really thought that tax reform was good for Michigan’s prosperity and our ability to pass that all directly — 100 percent — back to customers.” — Jay Greene and Chad Livengood
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SPECIAL REPORT | SECTOR BY SECTOR: WHAT THE VOTE MIGHT MEAN
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Higher education has a lot riding on vote
Additional aid vital for small businesses
Cities, looking for aid, keep close eye on outcome
Nervous nonprofits are watching results, census
Three major issues impacting educational institutions in Michigan and across the nation are federal funding, immigration and regulations, particularly Title IX. President Donald Trump and Secretary of Education Betsy DeVos departed from the Obama administration’s stance in almost every way. A Joe Biden presidency would mean a big swing back in the other direction and a new modus operandi at the Department of Education. “The Democratic platform is one of significant investment in financial aid and student loan forgiveness — a real strong orientation toward college affordability,” said Dan Hurley, CEO of the Michigan Association of State Universities. “Trump, to the extent that he has a platform, has proposed significant reductions in federal financial aid, among other cuts.” In each year of his presidency, Trump has called for deep budget cuts to education that have been consistently rejected by Congress. In February, he proposed a $5.6 billion reduction to the department. At the same time, he recommended a record $900 million increase in funding for career and technical education, supported by those who see a brighter future in vocational and trade schools than traditional learning models. Biden has advocated for more federal funding in higher education, relaxed rules for student loans and free college — a concept launched by the Obama administration that failed to take flight. Besides funding, another likely split between the two parties is Title IX, the civil rights law that protects individuals from discrimination based on sex, in programs or activities that receive federal funding. DeVos enacted new regulations that increase the burden of proof for sexual misconduct and offer more protection to those accused. Biden would almost certainly roll that back. Compliance can be costly and confusing. Michigan State University became a case study on the importance of Title IX procedures after the Department of Education issued a record $4.5 million fine last year for its failures in the Larry Nassar sexual assault case. Regardless of what the rules are, being forced to sporadically change procedures is a big administrative burden, said Robert LeFevre, president of Michigan Independent Colleges & Universities. “We got everything in place and learned how to deal with the new paradigm, then the Trump administration switched gears,” LeFevre said. “Getting whipsawed on the changes is problematic.” Administrators can expect big changes on immigration if Democrats take the White House. That matters because international students are a crucial revenue source for schools in Michigan, especially large universities. Trump’s hardline immigration policies created confusion and visa difficulties for foreign students. A more progressive policy under Biden would likely make it easier for them to study in the U.S. The main barrier to business in higher ed and beyond remains the COVID-19 pandemic. Most classes remain online for Michigan colleges and universities, which are still struggling to control outbreaks of the deadly respiratory virus. The first round of federal CARES Act funding helped to partially combat massive budget declines, but higher ed has joined the cries from other industries for more help. LeFevre said he is focused on securing more financial assistance for the smaller schools that need it, but he isn’t too worried about who signs the check. “Our focus is consumed by what we have in front of us,” he said. “… Every administration since (Jimmy) Carter has made us happy and miserable all at the same time.” — Kurt Nagl
Small businesses in need of additional financial aid during the coronavirus recession and facing labor shortages during the pandemic are anxiously awaiting Tuesday’s presidential election results. Officials believe the assistance is key no matter who wins. “Which outcome best gets you to that solution is a little bit of an unknown, frankly,” said Detroit Regional Chamber of Commerce President and CEO Sandy Baruah. “We know there’s been some discussion on aid for small businesses. The outcome of the U.S. Senate races could be impactful. If Trump does lose, what will his interest be in continuing to pursue legislation to help small businesses? Because at the end of the day, if the House and Senate agree to something, the president still has to sign it.” Small Business Association of Michigan President Brian Calley said the notion of returning to widespread business shutdowns seen earlier in the pandemic is weighing heavily on the minds of small business owners. “... especially given that workplaces have not proven to be significant sources of spread,” said Calley, who served as Michigan’s lieutenant governor 2011-18. “In fact, for many people, the workplace might be the safest place, where rules and protocols are followed. It would be our hope that pandemic responses be precise in how we control the pandemic.” Baruah, who previously served as administrator for the U.S. Small Business Administration, said there are three major issues facing small businesses that could be impacted by the election: Having cash on hand and assistance to push through the recession is the top issue, Baruah said. That’s followed by how COVID-19 is contained to the point it allows customer traffic to return to normal, as well as issues related to taxation and regulation. “If Trump wins, things could be quite unsettled. It could be a pretty unproductive time,” Baruah said. “But if the Democrats sweep — take the Senate and Biden takes the presidency — I think we could see a small business (stimulus) package fairly rapidly. If Trump wins and Republicans keep the Senate, then there might be reason to believe the package may not matter” to them. Calley noted research that shows there are thousands of jobs available but a severe shortage of workers. He said there remains a high degree of concern that a government response to the pandemic recession could exacerbate that shortage if stimulus payments and unemployment benefits exceed the pay of available jobs. SBAM is looking for policies that allow all businesses to remain open with proper safety protocols, Calley said. And when infections are on the rise, the response should be directed at specific activities and places most responsible or vulnerable, rather than across the entire economy. Baruah said the Detroit chamber has long advocated for a relief package that would extend and/or modify assistance programs that would aid small businesses, local and state governments and schools. Local and state governments should be able to provide essential services such as trash pickup, Baruah said, and schools should be able to open and operate safely “because in-class learning is better for educational outcomes.” “We’ve also advocated for smart, balanced efforts on virus mitigation,” he said. “We think it makes sense that the level of virus control directly relates to the economy. The better we control the virus, the better the economy will be.” — Jason Davis
Municipalities will be looking to the presidential race, as well as Senate campaigns like U.S. Senate Majority Leader Mitch McConnell’s, for an indication of if and when a new stimulus bill is coming — and what would be in it. Cities, whose budgets have been hit hard as a result of the coronavirus pandemic, are still facing uncertainty going into 2021. The 24 Michigan cities that collect income taxes, including Detroit, will see less revenue due to mass unemployment and more remote work. They’re looking for aid from the federal government in the next stimulus — not just to help with pandemic response spending, but also to backfill their steep revenue losses, which the previous CARES Act funding didn’t allow, said Chris Hackbarth, director of state and local affairs for the Michigan Municipal League. McConnell, who is being challenged for his Kentucky seat by Democrat Amy McGrath, has backed away from state and local government aid, as well as funding to make up for lost revenue, Hackbarth said. Looking at Democratic presidential candidate Joe Biden and President Donald Trump, Hackbarth said he’s confident either would push for a stimulus package — though it’s not coming before the election. However, he did express concern over “mixed messages” and some “damaging” rhetoric from the Trump administration. “They have put dollars on the table that would go for state and local aid, but then we hear from the president he doesn’t want to bail out poorly run Democratic communities,” Hackbarth said. “We represent everyone from the western U.P. to Monroe … it runs the gamut of the political spectrum.” Cities will also be looking to the economic climate created by a possible change in administration next year for impacts on debt servicing — including Detroit, which is considering a new $250 million bond initiative. National tax policies affect demand and pricing for municipal bonds, because investors often look to them as a form of income that’s tax exempt, according to an Oct. 1 report by New York-based asset management firm Alliance Bernstein LP. With a Trump win, there likely wouldn’t be big tax changes, meaning no large impacts on the municipal bond market, Alliance Bernstein says in the report. Though municipal bonds have rebounded after their COVID-19 collapse, the future is still a question mark with the length of the pandemic still an unknown. Tax increases under a Biden administration would hike demand for municipal bonds. The next president could also sway policy on affordable housing, an issue that’s worsening in Detroit and got administration attention recently through a $75 million, public-private injection into an affordable housing fund. Commercial real estate publication GlobeSt.com says neither Trump nor Biden have zeroed in on affordable housing in their campaigns. “Biden says he would raise taxes on corporations and large financial institutions to pay for his $640 billion investment in affordable housing, while Trump has said he would like to keep the tax rates for corporations at the level they are now as a result of the Tax Cuts and Jobs Act,” GlobeSt. com reported. — Annalise Frank
Nonprofit leaders are watching the national elections closely, given the impact they could have on demand for their services and the money needed to pay for them. The policy issue that will likely have the biggest impact on the sector is how either administration will handle the U.S. Census data, said Kyle Caldwell, president and CEO of the Council of Michigan Foundations. This summer, President Donald Trump said he intended to break with the past and present to Congress census data that did not include undocumented immigrants, The Washington Post reported. Then, the Supreme Court on Oct. 13 allowed the administration to end the 2020 Census count ahead of an Oct. 31 deadline, despite fears of an undercount, especially among minority groups. For Detroit that’s going to be significant, said Caldwell. “If it’s rushed through as they take in the data and analyze it and have to publish it back to the state, that could be really dangerous for communities that already were struggling to get an accurate count.” For each resident counted, Michigan gets an estimated $1,800 in federal funding per year, according to the state. Lower counts translate to lost federal allocations, which puts more burden on the nonprofit sector. They could also mean Michigan loses congressional seats, which could also translate to lost funding and advocacy on the sector’s behalf. A third of all funding to the nonprofit sector comes from government, Caldwell said. “If we lose representation in Washington, that could be harder on nonprofits.” Political discord in Washington and disagreements on a second stimulus package have held up its passage, something nonprofit leaders say is badly needed. “We’re hoping that once the election is over, legislators will get back to work for nonprofits and pass another relief bill,” said Donna Murray-Brown, president and CEO of the Michigan Nonprofit Association and chair of the Washington, D.C.based National Council of Nonprofits. Nonprofits have been on the front lines during the pandemic providing essential services like food, housing assistance and senior programs to vulnerable communities, she said. As the second wave of the coronavirus looms, the need for those services will be even greater. “Relief right now is critical for helping Michigan nonprofits sustain their operations,” Murray-Brown said. As nonprofits struggle to recover from the loss of revenue tied to pandemic closures, the next president is also expected to impact charitable giving levels. During its first four years, the Trump administration’s tax reform provided increased tax benefits to the wealthy and corporations while eliminating charitable tax incentives. Giving in the U.S. rose during Trump’s first term. Last year, giving from individuals, foundations and corporations rose 4.2 percent to an estimated $449.64 billion according to “Giving USA 2020: The Annual Report on Philanthropy for the Year 2019.” That made it the second highest level on record, just behind record giving in 2017. Much has changed, however, with onset of the pandemic and its impact on the economy. There’s nothing in Trump’s current tax plan that restores the charitable deductions, “so you are still at a disadvantage if you are thinking about incentivizing giving,” Caldwell said. Regardless of who is elected the country’s next president, nonprofits will increasingly be thrust into the role of knitting the country together. — Sherri Welch NOVEMBER 2, 2020 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Steering middle market businesses through economic uncertainty JPMorgan Chase & Co.: As the new Michigan region manager for middle market banking for Michigan’s largest lender, Terrah Opferman, 39, enters the role during a period of economic uncertainty as the coronavirus pandemic shows no signs of relenting. While acknowledging that smaller businesses continue to suffer, most middle market businesses with which she works have adapted well and are becoming much more efficient in their operations, Opferman said. In her new role, Opferman succeeds John Carter, a 40-year veteran of the bank, who will retire next year. | BY NICK MANES ` What’s it been like taking over middle-market banking in Michigan during a time when companies increasingly depend on lending institutions to get by? Yes, so definitely an interesting time, for sure. I’ve been incredibly impressed by how quickly our clients adapted to the changing environment. I think it’s important to note that, you know, small businesses have been really challenged during this time. But in the middle market space, our clients have quickly pivoted to figure out how to operate successfully and safely in this current environment. I would say initially, the top concern was liquidity and making sure that they had enough liquidity in reserves to continue to operate. And then I think the other important factor that they’ve all been considering is, you know, how to continue to keep their employees safe, while also continuing to serve their own customers. ` What are clients needing from their lender at this moment? They’re leaning on us heavily for our technology, and how to be able to send payments electronically. And so a lot of what we’re having conversations about with our clients is how to operate efficiently without the use of paper, or a minimal use of paper. So, from a real world perspective, all of our clients are very focused on how to make their payments to their vendors, electronically and efficiently. We are doing a lot of work in kind of helping clients review their business processes, and how to make tweaks along the way to make them more efficient, and to be able to get their payments out quicker, and manage their liquidity as well. The other side of the coin is how to accept those payments. So how are you going to virtually accept those payments from your customers, as more and more businesses are moving off of checks to ACH (Automated Clearing House)? How do they kind of electrify
that whole process and again, a lot of companies are investing heavily in new ERP (Enterprise Resource Planning) systems, so how can we as their banking partner really help to optimize the use of those ERP systems? ` Are banking clients you talk with paying attention to the fight in Washington, D.C., over another stimulus package? If so, are they feeling like it’s needed, or are they figuring out how to get by? You know, I think it truly depends on the industry, and how they’ve been impacted. What we’re trying to do as much as we can, our team has been working tirelessly to help our clients get through this time period. Whether it be from a liquidity perspective, or, again, to optimize operations. I think all of our clients are very focused on the overall general economic landscape and sort of how the election will drive a lot of those changes. So a lot of it is trying to plan for the future with a certain degree of uncertainty of how all of this sort of progresses. ` Would you say the political uncertainty is creating challenges for both Chase Bank and for clients? I would say it’s presenting ... businesses to take pause, and think through all of the various avenues to which they can, you know, optimize and be agile. And I think clients are very focused on the supplier dynamic. You know, we did a mid-year business leaders outlook survey and there was a pretty good degree of optimism within their business locally and throughout the United States. I think as the clients were looking more outside of the U.S., globally, that level of certainty was quite a bit different than what the optimism was based on the kind of local dynamics. And I think clients are also thinking through their (capital expenditure)
needs, and when is the right time to make those investments, and sort of trying to really not necessarily completely reinvent themselves, but how to operate as efficiently as possible. And a lot of our clients, impressively, have really taken this time to kind of reconfigure a lot of their business and are very happy with a lot of the changes that they’ve had to make, and it’s making them a lot more efficient than maybe they would have been in the past. ` So basically you’re saying that while March, April and May may have been chaos, businesses you’re working with are now figuring out how to operate in this period? I would say for our clients in the middle markets, yes. I think those impacted in the service industry are very challenged. And as I mentioned previously, in the small business space, but our middle market manufacturing clients have adjusted — and impeccably well — to the current climate. As far as our team goes, I’m incredibly proud of how quickly the firm and our team have adjusted to this new kind of virtual environment. And we’re meeting very regularly with our clients, albeit over Zoom, but still as effective, just very different than being ... face to face. ` What made you
want to get into the banking world, and eventually into this leadership position for a large bank in Michigan? I went to undergrad at Albion College, and had the benefit of having a couple different internships to explore different opportunities. And, you know, as a kid, ironically, I was always very interested in entrepreneurship — whether it was like making crafts and selling lemonade on the side of the street — but I was always super interested in the business world. I received an offer from Bank One, but when I started, we were now JP Morgan. So it was certainly an interesting Terrah Opferman, Michigan region manager for middle market banking, JPMorgan Chase
RUMBLINGS
Get $15,000 to move to Michigan and work remotely
This house on Michigan Avenue in St. Joseph is priced at $209,900. | ZILLOW
coastline. The southernmost ZIP code it covers, 49106 in Bridgman, is 86 miles from downtown Chicago. While farther from Chicago than, say, New Buffalo (71 miles from downtown Chicago), these towns have restaurant districts and nice beaches, including the spectacular sand dunes at Warren Dunes State Park near Bridgman and Silver
22 | CRAIN’S DETROIT BUSINESS | NOVEMBER 2, 2020
Beach County Park in St. Joseph. The $15,000 grant is forgivable at the rate of $5,000 per year — which means for each full year the recipient stays in Michigan, the debt goes down by $5,000, until it’s gone after three years. The money comes with some stipulations: It’s available only to people not already living in Michigan, who get a Michigan driver’s license and become permanent Michigan residents, and certify that they work for a company outside southwest Michigan. “We have thousands of people who come over here from Chicago on weekends. Why not come over and live in a beautiful place?” said Rob Cleveland, president and CEO of Cornerstone Alliance. Cleveland said that while his
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time, but I had the awesome experience of working with incredibly talented people across metro Detroit, and spent quite a bit of time in our health care business, and was traveling all over the place and really enjoyed that business. But there was this opportunity to be more local, and work with local businesses that are in the community in which I live. And I was super excited because I’m very passionate about the community and really excited to work with business leaders that are, you know, right in our backyard.
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CAPITALIZING ON 2020’S EXPLOSION in work-from-home arrangements, a Michigan economic development group is rolling out a package of incentives — including $15,000 cash, driving range memberships and free passes on commuter rail — for Chicagoans who move to its slice of southwest Michigan. The Move to Michigan offer includes a grant of up to $15,000 to people who buy a home for $200,000 or more in selected ZIP codes that cover Bridgman, St. Joseph, Berrien Springs and a few other towns. Amid the pandemic, buyers have been flocking to the lakefront crescent in southwest Michigan and northwest Indiana often called Harbor Country. The Move to Michigan deal offers incentives to look slightly farther north up the Lake Michigan
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group ordinarily recruits businesses to locate in the region, the remote-working phenomenon pointed toward a different approach: “If you can’t recruit Google, go recruit a Google engineer,” he said. Along with the cash, the Move to Michigan incentive package includes a menu of other offers, from which buyers choose options worth $5,000. They include use of a discount program for Whirlpool appliances, a one-year free pass on the South Shore Line that runs from Chicago to South Bend, Ind., a free membership in a Benton Harbor fitness facility, free use of the driving range at Harbor Shores in Benton Harbor and car service to local airports for a year. Those incentives are designed to “make moving here easier,” Cleveland said.
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Six Personal Considerations Before Selling a Business PRESENTED BY: DAVID GIRODAT, Regional President, Eastern Michigan
B
usiness decisions are often intertwined with the impact they’ll have on the family, and business owners must understand the dynamics and value drivers of both—as well as how they overlap. It’s a strategic benefit to have a team of professionals who understand the valuation aspect of selling a business, in addition to having wealth expertise, during all stages of your business sale. This is especially true if you can find a team that can tailor its recommendations based on your goals and needs. There are several personal and professional questions you may consider prior to selling your business, including:
1. What do you need from the sale? Many business owners intend to fund retirement from the sale of their business, and they’re accustomed to cash flow from their day-to-day business activities. It may, therefore, be important to think about what aftertax proceeds are necessary to support your future needs. A key variable for this analysis is understanding what your business is worth. An M&A advisor who understands the market and your industry may be best suited to help understand your valuation along with helping to evaluate strategic alternatives for the business. A thirdparty valuation specialist (many accounting firms have these groups) may also provide a market valuation, and these types of reports are often used for wealth planning purposes ahead of a formal sale process.
2. How does the sale fit into your estate plan? Tax and estate planning can be important topics to think through, and wealth transfer strategies may provide opportunities to save on both income and estate taxes. Transferring ownership interest to family members, trusts or other entities before the sale may help you take advantage of allowable valuation discounts and can reduce transfer taxes later. Transfers such as these are commonly weighed against future needs
and often considered nine to twelve months before any sale of the business, if not two to three years prior. “In my experience, the most successful transitions occur when the planning starts, long before the owner has any serious intention of leaving the business,” says Troy Farmer, Regional Director, Wealth Planning at Fifth Third Bank. “Early strategic planning that coordinates both income tax planning as well as estate transfer tax planning can increase the eventual value of a business while minimizing tax impacts. It can help ensure that the owner can sell to their preferred buyers. And it can help them achieve their financial goals after the sale.”
3. What are your charitable intentions? If you have charitable intent, strategic charitable giving can provide additional opportunities for tax savings. For instance, a charitable tax deduction in the same year that you sell your business may help offset the gains you incur. Depending on the type of business entity and the individual’s tax and cash flow circumstances, business owners might consider donating shares of the business to a charity, donating cash from the sales of the business, establishing a charitable trust that provides a lifetime income stream, or creating a donor advised fund or a private foundation that can be used to distribute charitable contributions in the future.
4. What does the sale mean for you and your family? As a business owner, you may have devoted your life to the business—growing it into a successful organization. Are you ready for what will be a major change? Have you determined what the sale will mean for children who may have been involved or planned to be involved in the business? Will an increase in wealth affect the family’s values and governance? How does the business owner educate their descendants on handling wealth? You may consider how your dynamic may change and grow from the event.
5. Is your business handling any of your personal affairs?
Owners may have business expenses that were handled through the business, but that serve both business and personal purposes. Consider, for instance, a vehicle purchase. Once you sell the business, those expenses will fall to you again and the personal assistance will end—and these factors should be a part of the financial modeling for the sale. “Evaluating desired cash flow post-sale will provide an estimate of the assets the business owner will need to achieve his or her goals and the amount of proceeds needed from the sale,” says Farmer. “That cash flow should account for personal expenses previously paid by the business as well as future expenses such as travel, a vacation home, to account for the owner’s desired lifestyle in retirement.” Some business write-offs will become personal expenses. If your wealth is significant, you may want to consider a family office or other assistance with financial affairs.
6. Will you start another business? What will your life look like after the dust has settled from this business sale? Are you headed into retirement, or will you put the proceeds into your next venture? What will you do with your time? Some options include devoting your time to travel, or becoming an angel investor to help the future generation of entrepreneurs start their own enterprises. Creating an action plan can help you mentally make the transition from your current endeavor to the next stage. As you’re considering these essential points, it’s important to have the right professionals in the early stages. That may include investment bankers, lawyers and accountants. To assemble your core team, consider looking for financial institutions that can serve as a strategic fit and bring to the table a variety of professionals who can help you determine what’s best for you, your family and your business from both a business operation and a wealth planning standpoint. Now is a great time to evaluate your options for your business and your wealth planning needs. Fifth Third Bank can assist you with the future planning for your business and beyond by putting you in contact with team members qualified to support your specific needs.
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