THE CONVERSATION Dave Bing looks back on the many roles he’s had
Hunting businesses get a boost PAGE 3
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CRAINSDETROIT.COM I NOVEMBER 16, 2020
THE LAME-DUCK AGENDA
A SESSION LIKE NO OTHER
DALE YOUNG FOR CRAIN’S DETROIT BUSINESS
SPECIAL REPORT | PAGES 13-18
The Michigan Legislature’s biennial session in December is always a frenetic three weeks of lawmaking before a third of the state House members leave office due to term limits. This year’s lame-duck session is clouded by a once-in-a-lifetime global pandemic that’s worsening as COVID-19 infections, positivity rates and hospitalizations soar. In Crain’s Forum this month, we take a look at issues that may bubble up in the Legislature’s year-end session and how the fragile relationships among leaders in Lansing could shape state government’s COVID-19 response in the coming winter months. LAW
Law schools hope to stem enrollment slide Pandemic could help reverse a decade-long decline BY KURT NAGL
The U.S. legal industry took a beating during the Great Recession of 2008-09 from which it never fully recovered. And while the COVID-19 pandemic has caused
another economic downturn, industry observers are not predicting the same doom and gloom as a decade ago. In some cases, bad times are good for business. Law firms in Michigan are report-
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ing a rebound in work as industries tentatively reboot. Predictably, demand for employment and cybersecurity attorneys is surging as companies untangle a mess of issues related to layoffs, workplace safety and the work-from-home shift. At the same time, the public health crisis and national spotlight on social justice issues is spurring new interest in the legal field. That’s cause for cautious optimism from law schools in Michigan and around the country, many of which are a fraction of their former size. For others, however, the downsizing likely isn’t done. See LAW SCHOOL on Page 20
MORE ON THE ISSUES OF THE LAME-DUCK Infrastructure: Roads not on the agenda. PAGE 16 PACE: Metro Detroit elder care under scrutiny. PAGE 16 Unemployment: Benefit relief is set to expire. PAGE 17 Tax Relief: Should small businesses get a break? PAGE 18 CRAINSDETROIT.COM/CRAINSFORUM
FINANCE
To house growth, United Wholesale buys an arena BY KIRK PINHO
Pontiac-based United Wholesale Mortgage is buying the Ultimate Soccer Arenas property near its headquarters for yet another expansion of its corporate campus in the Oakland County seat. The company, formerly known as United Shore Financial Services LLC, said Thursday that an affiliate is paying $23.3 million for the 378,400-square-foot building at 867 South Blvd., part of which will be turned into office space for its growing staff and the remainder of which will be kept as indoor soccer fields. It’s another big real estate move for UWM, which said in September
that it intends to go public in a deal expected to be worth about $16 billion, not long after crosstown rival Rocket Companies Inc. (NYSE: RKT) announced its IPO. UWM said it has added nearly 3,000 employees in 2020 alone, bringing its current workforce in Pontiac to more than 7,000. An estimated 2,000 people would work in the western portion of the soccer building; construction is expected to begin soon and be complete by March. That space is about 180,000 to 200,000 square feet, said Mat Ishbia, UWM’s founder and CEO. See SOCCER on Page 19
NEED TO KNOW
ENVIRONMENT
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT WHITMER HINTS AT NEW CORONAVIRUS RESTRICTIONS
former U.S. attorney in Detroit; and Melanca Clark, president and CEO of the Detroit-based Hudson-Webber Foundation.
THE NEWS: Gov. Gretchen Whitmer said Thursday she won’t wait for action by the Legislature to address a “dire” escalation of COVID-19 infections and hospitalizations, making her strongest suggestion yet that new limits on social gatherings may be on the horizon to tame the virus. WHY IT MATTERS: Whitmer began making a public push for a new “strategy” for gatherings on Thanksgiving and other fast-approaching holidays as the state reported a single-day record number of new cases of COVID-19 — 6,940 — and as hospital executives warned their facilities and staff are getting overwhelmed by a surge in coronavirus patients.
NO DOWNTOWN DETROIT MARKETS THIS HOLIDAY SEASON THE NEWS: Downtown Detroit Markets, the collection of holiday shops that have set up in glass huts around Campus Martius the past three years, is a no-go this season. The open-air marketplace did not seem like a good idea given the global pandemic, said Bedrock LLC, which organizes the markets. WHY IT MATTERS: The pandemic has hammered downtown Detroit economically as workers stay home and away from the central business dis-
WHY IT MATTERS: Biden’s transition team announced an all-volunteer army of transition advisers on Tuesday, even as President Donald Trump and his administration have challenged the results of the Nov. 3 elections.
BUSINESSES RECEIVE $100 MILLION IN AID trict. Billionaire Dan Gilbert’s real estate company is still renting out popup retail space through early January. Bedrock and Gilbert philanthropic arm Rocket Community Fund are also giving $5,000 grants to vendors who participated in past Downtown Detroit Markets seasons.
MICHIGAN LEADERS JOIN BIDEN TRANSITION TEAM THE NEWS: A handful of Obama administration veterans in Michigan leadership roles are volunteering to help President-elect Joe Biden’s transition team review the current state of affairs in federal agencies. They include Robert Gordon, director of the Michigan Department of Health and Human Services, who will lead a team that will review the operations of the U.S. Department of Health and Human Services; Barb McQuade, a
Whitmer seeks shutdown of Line 5 oil pipeline Michigan Gov. Gretchen Whitmer took legal action Friday to shut down a pipeline that carries oil beneath a channel that links two of the Great Lakes. Whitmer’s office notified Canadian company Enbridge that it was revoking an easement granted in 1953 to extend a roughly 4-mile section of the pipeline through the Straits of Mackinac. The revocation will take effect within 180 days, at which point the flow of oil must stop. Whitmer’s legal counsel said in a letter to Enbridge that the revocation resulted from “a violation of the public trust doctrine” and “a longstanding, persistent pattern of noncompliance with easement conditions and the standard of due care.”
THE NEWS: More than 14,000 small businesses have been awarded $95.6 million from the Michigan Small Business Restart Grant Program since it was approved in July by the Michigan Strategic Fund. WHY IT MATTERS: The program allocated $100 million of federal CARES Act funding to help Michigan small businesses and nonprofits reopen and recover from loss of income due to the coronavirus pandemic.
HURON-CLINTON METROPARKS COMING TO DETROIT THE NEWS: The Detroit Riverfront Conservancy and Huron-Clinton Metroparks have forged a multiyear agreement that will give the regional park system a presence in Detroit. WHY IT MATTERS: Under the agreement,
The Straits of Mackinac. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS
the regional parks system will contribute $6 million over seven years to the Detroit Riverfront Conservancy for expanded programs and operations at the future Ralph C. Wilson Jr. Centennial Park on Detroit’s west riverfront, scheduled to open in 2023.
Correction A Q&A with Ron Weiser on Page 24 of the Nov. 9 edition should have said that Weiser was treated for prostate cancer. The original version misstated the type of cancer.
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RECREATION
Into the woods: Pandemic fuels rising interest in hunting BY DUSTIN WALSH
On Sunday, as many as 76,000 new hunters were set to disperse across Michigan’s leaf-covered meadows and oak forests with hopes of bagging their first whitetail deer. The COVID-19 pandemic forced many across the state, and the U.S., to abandon some preferred pastimes — such as keeping a scoresheet from the stands of Comerica Park or clinking glasses with friends at the corner bar — and take on more primitive pursuits. Hunting is one of many outdoor activities fueled by the pandemic. U.S. bicycle sales from April to July
Isenhoff
Becker
climbed 81 percent over 2019 with total sales through July of $3.4 billion, according to a September report by market research firm The NPD Group. New boat sales — from JetSkis to yachts — in May were the highest in a decade, according to the
National Marine Manufacturers Association. But with cold weather approaching and the deer rut — the breeding season when bucks move around more — peaking, COVID-19 has paused a decades-long decline in hunting across Michigan. The state has seen a 1 percent to 3 percent annual decline in hunting license sales since 1996, said Dustin Isenhoff, marketing and outreach division specialist for the Michigan Department of Natural Resources. “Previous barriers to hunting, according to surveys, has always been lack of access and time,” Isenhoff said. “Because of COVID, whether that’s
commuting or some other hobby, whatever was competing with that time has been eliminated, so we’re seeing more interest in hunting.” This year, total unique customer hunting license sales were 498,752 through Oct. 31, a nearly 13 percent increase over 2019. Deer hunting license sales are up 15 percent. New hunting license customers — those who haven’t acquired a hunting license in at least five years — are up 89 percent year over year, according to data provided by the DNR. Nonresident hunters are up nearly 22 percent this year — which may cause concern as more than 19,000 out-of-state hunters descend on
Michigan as COVID-19 has hit overdrive this fall. The rise in hunting licenses is causing a positive downwind economic benefit, but not everyone in the industry is hitting their bag limit. Russ Becker, store manager for the Troy location of Utah-based outdoor sporting goods retailer Sportsman’s Warehouse, said sales are up across all the store’s segments, though hunting equipment isn’t as hot as some other outdoor gear. “Our hunting equipment is up, but so is our whole total sales and it’s not like other areas,” Becker said. See HUNTING on Page 20
HEALTH CARE
ARTS AND CULTURE
Health care cyberattacks: Is Michigan prepared? Hospitals on high alert after attacks elsewhere BY JAY GREENE
The A. Paul and Carol C. Schaap Center for the Performing Arts is planned for the corner of Alter Road and Jefferson Avenue. | RAYMOND CEKAUSKAS ARCHITECTURE LLC/SMITH GROUP
‘A POTENTIAL GEM’
$25M performing, visual arts center planned for Grosse Pointe Park-Detroit border BY SHERRI WELCH
A philanthropy-led effort to erect a $25 million visual and performing arts center on the border of Grosse Pointe Park and Detroit is set to break ground next summer. With its plan to welcome residents, arts groups and artists from Detroit as well as from the Pointes, the project is a stark departure from the Kercheval Avenue barriers that created tension between the two communities for years. When it opens in the fall of 2022, the “Schaap Center” at the corner of Alter Road and Jefferson Avenue will be home to the A. Paul and Carol C. Schaap Center for the Performing Arts and the Richard and Jane Manoogian Art Gallery and an
additional community art gallery. The Schaaps, who spurred the project with a property purchase in 2012, pledged a total of $15 million, and the Manoogians committed an additional $5.5 million. With other gifts that have come in, the nonprofit has raised $22.8 million of its $35 million campaign goal to cover capital costs and create a $10 million permanent endowment. As envisioned, the nonprofit center will provide a home for the Grosse Pointe Theatre and the Grosse Pointe Symphony Orchestra and host rotating exhibits of works from private art collections around the region in its museum-quality art gallery. In addition to that, there will be community exhibit space for local and visiting artists and student
artists, Jaime Rae Turnbull, interim executive director of the Schaap Center, said. But the new center is not something that is just for the Pointes, said Lumigen Inc. founder A. Paul Schaap, who is chairing the nonprofit leading the project. Other performing arts groups and artists from Detroit and the region will also be invited, he said. Organizers are also talking with several groups about performing at the center, including: Grosse Pointe Community Chorus, Mosaic Youth Theatre, Detroit Medical Orchestra, Detroit Concert Choir, Detroit Public Television and Michigan Opera Theatre. See CENTER on Page 19
A. Paul and Carol C. Schaap envision people coming from around the region to see performances at the new center and spend time in the Manoogian Art Gallery.
Michigan hospitals appear prepared for a health care cyberattack, but at least one health system in the Upper Peninsula near Wisconsin and 59 systems nationally involving more than 550 hospitals have been targeted this year. After the FBI and two federal agencies alerted health care organizations of potential ransomware attacks on the U.S. health Peters care system, several hospitals in other states announced they had already been targeted in ransomware attacks. Hospital systems included Dickinson County Healthcare System in Iron Mountain, St. Lawrence Health Systems in New York, the Sky Lakes Medical Center in Oregon and the University of Vermont Health Network. Cybersecurity experts say ransomware attacks could cause patients to experience prolonged wait time to receive critical care as hospitals use backup systems to recover data or transfer patients to unaffected competitors. The so-called ransomware “phishing” attacks can lock up health care information systems and lead to theft of confidential patient data and disruption of health care services. Ransomware scrambles data into gibberish that can only be unlocked with software keys provided once targets pay a fee, which can be $1 million or more, but is usually based on a company’s revenue. Brian Peters, CEO of the Michigan Health and Hospital Association, and Mike Nowak, chief information security officer with the MHA, said hospitals take cyberthreats very seriously. See ATTACKS on Page 21 NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 3
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Stroh seeks to unload more east Detroit riverfront property The Stroh River Place office building and several nearby properties on the east Detroit riverfront are up for sale as John Stroh seeks to cash out of a sizKirk able chunk of his PINHO family’s real estate holdings in the city. A 4.32-acre swath of east riverfront land the Strohs own also hit the market this summer, and coupled together, I can’t think of a more substantial Detroit portfolio up for grabs in recent memory. But what will the market say? That’s TBD. There is no listing price for any of the properties, but we can extrapolate a bit and get a general idea on some of them. The listing by the Southfield office of Los Angeles-based CBRE Inc. comes four months after a trust tied to the Stroh family listed the vacant land at 2680 E. Atwater St. and 127 Jos. Campau Ave. over the summer. In addition to those two properties, the Strohs also recently listed: The nearly 500,000-square-foot Stroh River Place at 300 River Place, which is only about 46.4 percent occupied. It’s generally considered a Class A office building but sometimes struggles with attracting tenants because of its distance from the downtown core. A 735-space parking deck at 2925 Wight St., which the Stroh family would maintain a 50-percent ownership stake in, according to a listing by CBRE on its website A development parcel totaling 0.95 acres at 2743 Wight and 2748 Franklin St. A development parcel totaling 3.4 acres at 2615 and 2655 East Atwater St. That puts the development area at 8.67 acres. Anne Galbraith-Kohn, senior vice president for CBRE, has the listing on
the sale of both sets of properties. She declined comment. We have a couple of recent Detroit office sales to look at when getting a feel for the market. First, the 420,000-square-foot UAW-GM Center for Human Resources sold last month for $34 million. That building is less than a halfmile from Stroh River Place but is substantially different, in that it’s laid out for one user and is now vacant following its sale. A better indicator might be the multitenant high-rise at 211 W. Fort St., which also sold last month but is a full two miles away. I don’t have a hard number on the purchase price, but I was told in 2018 that the previous ownership wanted about $55 million for it, or $125 per square foot. However, Stroh River Place has an occupancy about 30 percentage points lower than the 211 W. Fort St. building, which is being rebranded as 211 Tower. That would certainly dampen a trading cost, as would the squishy office market in general. In addition, the land isn’t too far from the 2.75 acres that Dan Gilbert purchased in November 2018 from Detroit bankruptcy creditor Syncora Guarantee Inc. for $5 million, or $1.82 million per acre, or the 3.1 acres that Detroit-based City Growth Partners LLC (see below) has development rights to for $5.61 million per acre, or $1.81 million per acre. At that rate, 8.67 acres would be hovering around $15.8 million. However, a global pandemic and economic uncertainty would likely soften any sale price on the land, as well. Let’s see how all this shakes out.
Brush 8 Townhomes project kicks off About 2 1/2 years after it was announced, construction has kicked off on an eight-unit townhome development in the Brush Park neighborhood at 3119 Brush St.
Moddie Turay, founder and principal partner of Detroit-based City Growth Partners LLC, said construction on the condos should wrap up in 9-12 months on the $4.7 million project called Brush 8 Townhomes, which is being financed with a 50-50 loan from TCF Bank and Invest Detroit totaling $4 million and $700,000 in developer equity. A roughly $500,000 predevelopment loan also came from Invest Detroit, Turay told me following a groundbreaking ceremony last week. He said three of the eight units have been sold, ranging from $600,000 to $879,000. The remaining units are for sale for prices ranging from $639,000 to $679,000, according to the development website. It’s one of two projects Turay’s company, which he started after leaving his position as a Detroit Economic Growth Corp. executive, has in the pipeline in the neighborhood. The other is the roughly 176-unit Brush House apartment development, which Turay said should begin construction in the next seven months or so and cost about $60 million. The Brush 8 construction kickoff comes just a couple of weeks after American Community Developers announced the commencement of construction on its 310-unit, $65 million Brush + Watson development. All three projects were announced in June 2018, with a plan to bring 366 units of housing across $102 million in development to the neighborhood north of downtown. That’s $278,689 per unit. All in, the three projects now have $129.7 million and 494 units, or $262,551 per unit. City Growth Partners is also working on a 120-room, 360-unit hotel/ apartment development on the east Detroit riverfront totaling $136 million. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
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SOCIAL DETERMINANTS OF HEALTH AND COVID-19 Understanding the social determinants of health was a key topic during the Crain’s Detroit Business 2020 Health Care Leadership Summit, with a panel discussion and breakout session dedicated to the topic. The coronavirus pandemic has driven home the message on the social factors that form a crucial component of health and ways to address those disparities, panelists said. Panelists included Brandi Basket, M.D., Chief Medical Officer, Meridian; Marijata Daniel-Echols, PhD, program officer, W.K. Kellogg Foundation; Tom Lauzon, CEO, Wellopp; and Phil Levy, M.D., assistant vice president of translational science and clinical research innovation, Wayne State University; and chief innovation officer, Wayne Health. Those social determinants of health include income, race, place of residence and a host of other factors. They have been at the center of attention in conversations about the disproportionate effect the pandemic has had on Black people, panelists said. Watch a replay of the conversation, sponsored in part by Delta Dental of Michigan, at crainsdetroit. com/HCLS-panel-social.
COMMENTARY
Election shows Trump support is strong in Michigan KC
CRAIN
Publisher
GETTY IMAGES/ISTOCKPHOTO
G
neurs and business owners of movie theaters, retail stores and independent restaurants about Michigan’s lockdown experience. They chafed under the state-mandated lockdowns and myriad executive orders that crushed them financially, forcing layoffs, bankruptcies and closures. Even now, as cases surge in Michigan, they fear additional economic calamity if the economy shuts down again. COVID is part of our lives for now. Many of us are determining how comfortable we are with family gatherings through the holidays, with going out to dinner, with shopping in stores. I tested positive for COVID myself in early October. My symptoms were mild, and I self-quarantined to prevent the spread. Testing and self-quarantining seem a more logical approach to dealing with the virus than shutting an economy down. Just ask the NBA. Today, virus cases are up, but hospitalizations aren’t at the level they were in the spring. Let’s hope that means the virus’ effects are weakening. What isn’t weakening is the rancor between the president’s supporters and the “anybody but Trump” camp. I’m not sure just how and when that can heal.
COMMENTARY
A better way to bring Michigan through this crisis BY DOUG DEVOS
MORE ON WJR ` Listen to Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.
DANIEL SAAD
OP leadership and the Trump campaign have made good on promises of filing lawsuits in Michigan and other states where Donald Trump lost in official tallies, alleging faulty ballot processing and other issues. Crain’s Senior Editor Chad Livengood, who covers politics and policy, last week concluded that President Trump’s game plan for Michigan — which included baiting and criticizing Gov. Gretchen Whitmer, failed. (To be fair, the governor seemed to give as good as she got.) It seems clear that whatever strategy was in play, it ultimately didn’t work. But the outcome was so very close — a difference of some 145,000 votes out of about 5.5 million votes cast — that I come to a different conclusion: Support for the incumbent president was and is very strong in MichiAfter all, he got MANY BUSINESS gan. over 350,000 more OWNERS I KNOW votes in Michigan this in the election’s AND SPEAK WITH year high turnout than he OFTEN ARE did in 2016. Many business FIRMLY IN THE owners I know and speak with often are TRUMP CAMP. firmly in the Trump camp. Do they agree with everything Trump does or the way he says things? For sure not. But these entrepreneurs like the president’s stands on taxes, on trade, on getting allies to pay their fair share for defense, and in ending foreign wars and entanglements. They also fear Joe Biden’s presidency will be hijacked by the extreme left. If the Republican majority in the U.S. Senate holds, it will help keep that in check in a Biden presidency. Pundits suggest, both locally and nationally, that Trump’s response to the COVID-19 pandemic was the biggest reason for his loss. And certainly, many believe his response was not forceful enough. Again, talk to the entrepre-
I’ve never seen Michigan so divided. The challenges of 2020 have caused a lot conflict among our fellow citizens. The coronavirus pandemic. Racial injustice. The election. As we start looking to 2021 and Doug DeVos is a beyond, it’s time to ask: Is there any chance to reco-chairman of store a sense of unity? Ada-based Of course we can! Amway. He is a I’ve found renewed member of the optimism in a new book Stand Together — “Believe In People: philanthropic Bottom-Up Solutions for community. a Top-Down World.” Written by Charles Koch, one of America’s most successful entrepreneurs, and Brian Hooks, the head of the country’s most innovative philanthropic community, the book lays out the path for people of all backgrounds to come together to tackle the serious challenges that surround us. At a time when a lot of folks are blaming each other for society’s ills, the book points out that people aren’t problems. Just the opposite — people are the solution. Ultimately, the book has a call to action that needs to be heard: Let’s look for places to partner and make a positive difference on the issues that matter most. I think it’s a message for business leaders in particular. The book title gets to the heart of what we aren’t seeing in Michigan right now — a belief in people. You can see it in the political disagreements that have turned into brawls, the way that some friends and family and neighbors no longer trust each other. Rebuilding that trust and belief is key to restoring a sense of unity in our state. And a sense of unity is essential to solving the serious problems we face. As Michiganders, we all must take action to set the example. That starts by reaching out to someone, identifying areas of agreement, and building a solution from there. We all agree that something needs to be
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
done about poverty. At least 14 percent of Michiganders were living in poverty before the pandemic, and now it’s much worse. Business leaders can partner to tackle this issue, either by launching new projects or supporting existing ones. I’ve been inspired by the Family Independence Initiative, a national anti-poverty group that works in Detroit. Its community-based model helps people increase their income, and during the pandemic, it has helped more than 200,000 households. Businesses can come together to support these kinds of much-needed efforts. Similarly, we all agree that people who’ve lost jobs during the pandemic need support. So let’s work together to find creative ways to help them get back on their feet. Businesses nationwide have done just that through SkillUp, which is helping people who’ve been laid off find new and better work. About 1,000 people are signing up every day, and with more support, the program could do even more good. There are many other opportunities to collaborate on this cause, if we look for them. Finally, we all agree that everyone deserves the chance to succeed. Over the past decade, Michigan businesses united to support criminal justice reform at the state level, giving people who’ve run afoul of the law a second chance. A lot of us partnered to support similar criminal justice reforms at the federal level in 2018. Let’s look for more opportunities to cut through the partisan divide and find places to enact common-sense policies that empower people to thrive. There’s much we can do if we believe in people and unite to help them. We don’t need to look to city hall or the statehouse for answers — we can collaborate in our communities and as companies to move forward. We don’t just have the ability to act. We have the responsibility to take action — perhaps action similar to what I outlined above. Let’s look for areas of agreement and then get to work. Bringing people together is the best way to bring Michigan through this difficult year, and into the future.
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
Wiping slate clean for marijuana offenders opens doors BY MICHAEL ELIAS
As CEO of Common Citizen, one of Michigan’s largest cannabis producers, I can tell you firsthand the state’s new Clean Slate law is a game-changer that will benefit Michael Elias is families, commuCEO of Common nities and our Citizen. state’s economic resurgence. Signed by Gov. Gretchen Whitmer last month, the Clean Slate law expunges criminal records of those convicted of certain cannabis-related felonies and misdemeanors that are no longer considered crimes under Michigan’s adultuse cannabis law. The new law creates a system that automatically expunges eligible misdemeanors after seven years and eligible nonviolent felonies after 10 years. The Clean Slate law will help thousands of Michiganders lead more productive lives. With these past criminal offenses in the rearview mirror, these Michiganders will have access to better job opportunities and critical resources including housing, employment services, voter registration, and more. Even in this down economy, Michigan continues to have a worker shortage. Companies across the state struggle to fill tens of thousands of good-paying jobs, and this law will open up new opportunities for those with expunged offenses to enter these growing industries. The cannabis industry itself is constantly seeking new talent to fill cannabis cultivation, processing and retail positions. A recent Michigan State
University study projects Michigan’s for workers at our locations will only cannabis industry will contribute grow as we continue our statewide exmore than $3 billion to the state’s pansion. This law is good for all Michiganeconomy and create more than 13,500 ders, regardless of cannabis-related your views on jobs annually. THE CLEAN SLATE LAW cannabis. A reCommon Citizen, which pro- WILL HELP THOUSANDS OF cent University of Michigan study duces safe, found those who high-quality can- MICHIGANDERS LEAD receive expungenabis products MORE PRODUCTIVE LIVES. ments see a 23 for Michigan’s medical patients and adult-use cus- percent increase in income within a tomers, is constantly seeking workers year. That will give Michigan’s ecofor our retail locations in Flint, Detroit, nomic resurgence a major boost, and Battle Creek and soon Hazel Park and generate additional tax revenue to Lansing and at our state-of-the-art provide police, fire and other essential greenhouse in Marshall. That demand services in communities statewide.
Over the past several years, smalltime, nonviolent marijuana possession arrests have accounted for about 40 percent of all drug arrests nationwide, according to a report by the National Center for Drug Abuse Statistics. One report found around 2,000 people remain incarcerated in Michigan for cannabis-related offenses despite legalization of adult-use cannabis in our state. Minority communities across Michigan, including Detroit, Flint, Benton Harbor and Saginaw, have been disproportionately impacted by cannabis prohibition and enforcement. This has created significant hurdles for those residents to gain employment and improve their
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lives. It’s simply unfair for those with cannabis-related offenses on their records to continue paying the price for activities that are no longer illegal. These past offenses pop up every time a potential employer, apartment rental manager or loan officer conducts a criminal background check. The Clean Slate law rights this wrong. We’re at a tipping point in Michigan when it comes to cannabis. The expungement of past cannabis-related offenses is the next logical step in eliminating biases and misconceptions about the many benefits of cannabis that open doors to a better life for all Michiganders.
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FINANCE
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$3M in grants available for small businesses to outfit for winter BY NICK MANES
With the weather outside becoming frightful, many small businesses in Michigan are wondering how they’ll survive as COVID-19 spreads more easily in crowded, indoor places. The state of Michigan’s Department of Labor and Economic Opportunity has teamed up with the Small Business Association of Michigan to provide $3 million in grants to help with efforts to protect customers from the elements. Eligible businesses may apply to receive between $1,000 and $10,000 in funding for weatherized, temporary outdoor facilities, while eligible municipalities and local organizations may apply to receive up to $15,000, according to a news release. The funds come from the state’s share of funding from the federal CARES Act. Eligible businesses for the grants include restaurants and/or bars, banquet centers, retail stores, gyms, as well as local governments. Companies with 50 or fewer full-time equivalent employees are eligible for the funding. Applications for the grants will open next week at miwintergrants.org/submit.
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COVID SURPRISE
Intellectual property business surges for law firms during the pandemic BY DOUG HENZE | SPECIAL TO CRAIN'S DETROIT BUSINESS
When COVID-19 struck Michigan in March — causing the closure of everything from restaurants to office buildings — law firm Dickinson Wright, like many companies, went into crisis management mode. Company management froze hiring and put business travel on hold in anticipation of a firm-wide slowdown. But the firm’s intellectual property group, which relies on legal work from companies seeking to protect their research and development efforts from competitors, experienced a surprise boom, said IP Division Director Philip Rettig. Year-to-date attorney fees billed have risen 32 percent from 2019.
“COVID FORCED OUR CLIENTS TO TAKE A DEEPER DIVE INTO WHAT THEY HAD.” — Philip Rettig, IP Division Director, Dickinson Wright
“Typically, when there’s some kind of financial downturn or some kind of business event, we can expect R&D budgets to tighten up,” said Rettig, who is based in Dickinson Wright’s Ann Arbor office. “It’s been different in 2020 — at least for Dickinson Wright. A homerun in 2020 is a standstill. (Our) IP growth is surprising and well received.” Fees billed for “patent prosecution” — filing of the required government documents to protect new inventions — rose 21 percent, Rettig said. That work typically represents the bulk of the firm’s business. In the same period, IP litigation fees increased 103 percent, Rettig said.
And the pandemic caused the firm’s clients, many of which are high-tech companies, to evaluate their business portfolios more quickly than they might have otherwise, Rettig said. Faced with an uncertain business climate, they enlisted the law firm to help sort out which projects were strategic, rather than tying up cash in patent maintenance fees for IP that may never bring revenue. “COVID forced our clients to take a deeper dive into what they had,” said Rettig, adding that portfolio work was incremental for the firm in the past. See SURGE on Page 10
NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 9
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University of Michigan conducted $1.62 billion of research in fiscal 2020 COVID-19 disruption counterbalanced by pandemic projects BY KURT NAGL
The University of Michigan conducted $1.62 billion worth of research in fiscal year 2020 as the disruption of the COVID-19 crisis was counterbalanced by new projects tackling the pandemic. Both stalled and spurred by the pandemic, the university’s research volume for FY2020, ending June 30, was on par with the previous year, UM said in a Wednesday news release. That’s despite the university closing its three campuses in mid-March due to the coronavirus outbreak. UM, the largest research institution in the state, began to gradually reopen its Ann Arbor campus for research in mid-May. A resurgence in the coronavirus has led the school to tighten restrictions on campus heading into winter, including canceling undergraduate housing contracts. “When the pandemic hit, many of our researchers quickly transitioned their work to identify treatments for the virus, improve personal protective equipment and explore how COVID-19 has exacerbated health inequities within our communities,” Rebecca Cunningham, vice president for research at UM, said in the release. The largest funder of UM research
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10 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
From Page 9
“Decisions were made to reduce the overall size of portfolios. It’s opened up the budgets for monies to be used for new technologies. It gave the industry kind of a refresh.” Typically, businesses evaluate a patent’s worth in year 12 of the 20year protection cycle, because that year brings the largest fees, said Rettig, a patent lawyer for 32 years. This year, companies are looking at patents that are six to eight years old, he said, adding that part of the shift can be attributed to technology becoming obsolete more quickly in the modern era. IP litigation was on the rise preCOVID, but it intensified when the pandemic began, Rettig said. Economic slowdowns can spur businesses to be more aggressive in taking on perceived infringers in court. “When these things happen and the revenue stream is tightened up and companies are looking at their bottom line, one of the things IP attorneys are tasked with by CEOs is, ‘Let’s make sure no one is taking advantage of our patents,’” Rettig said. While such a battle can bring significant legal fees — a typical dispute lasting one to three years may cost a company $3 million — it also can result in a monetary award of three to five times that, Rettig said. Large companies also use infringement lawsuits to hinder competitors, forcing them to expend resources on R&D. “They also protect their product price,” he said. “It doesn’t just become a commodity they can buy from anyone.” Dickinson Wright’s IP litigation
The largest funder of research at the University of Michigan in fiscal year 2020 was the National Institutes of Health. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS
was the federal government, which sponsored $887 million in projects. Around $576 million of that came from the National Institutes of Health, which funded 2,497 active projects aimed at finding causes and cures of human disease. Its largest grant was $31 million for research on the “restoration of dental, oral and craniofacial tissues lost to disease, injury or congenital disorders,” the release said. Institutional investment in re-
search amounted to $548 million, while industry-sponsored research totaled $113 million. The result was the creation of a record 31 startups and 522 inventions. University research spurred $5.6 billion in vendor contracts and subcontracts across the nation, including $1.8 billion in Michigan, the university said.
team is at full capacity, with plans to bring additional attorneys on board, Rettig said.
got to make this investment.” Honigman, which works heavily with high-tech and life science clients, has been seeing typical annual growth Rast from those businesses, O’Brien said. “The last thing they want to do is get rid of intellectual property that is a significant revenue source — not just today, but in the future,” he said. “They may not be doing some of the periphery things.” Clients were doing more audits of their business portfolios midyear, to try to figure out where to concentrate resources, O’Brien said. “They were trying to figure out, ‘If we’re going to have to let go of 10 percent of the workforce, where are we going to continue to invest?’” he said. Ultimately, few companies in the life sciences or high-tech sectors did layoffs, O’Brien said. Claudia Rast, a shareholder and chairwoman of the IP, cybersecurity & emerging technologies group at Butzel Long, said her law firm also noticed a business pause in some areas earlier this year. But companies again have hit the “play” button. Patent renewals didn’t skip a beat — they’re flat from a year ago, she said. “What changed in the industry was those kind of discretionary issues,” she said, referring to things like new marketing ventures. “Companies just wanted to play a little wait-and-see. There was a little bit of hesitancy early on. In the last three months or so, folks realized the earth didn’t stop spinning. They have picked up and moved on and moved forward.”
Business continues IP groups at other local law firms have noticed a COVID impact as well. For Honigman, the pandemic brought a temporary slowdown to parts of the IP area, said Department Chairman Jonathan O’Brien, who is based in the Kalamazoo office. “Right when the pandemic hit, for the transactional and litigation side, people pulled back a little bit to see what was going on,” he said, adding that virus-driven court date reschedulings also played a role. “Now, we’re seeing these areas start to pick up. People are learning to work virtually.” Litigation was down by about one-third earlier this year, he estimated. It has increased enough that that end of the business is expected to be on par with 2019 by year’s end, he said. “You usually expect to see an uptick in IP litigation when you’re emerging (from a crisis),” O’Brien said. “(Clients) want to maximize the assets they have to move the company forward.” O’Brien said a fall-off in transactions — mergers and the purchase of IP assets — also has subsided. “A lot of those in Q2 just went away,” he said. “Now, we’re starting to see them come back.” Patent prosecution has remained strong for Honigman throughout the pandemic, O’Brien said. He estimated that sector of the business is up 20 percent from a year ago. “Companies realize investing in IP and maintaining IP is important,” he said. “I think they realize they’ve
Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
DEVELOPMENT
Ford parting with Corktown land as part of Detroit’s vision Automaker’s properties to be developed as part of new 750-unit, $180 million housing plan BY KIRK PINHO
Ford Motor Co. is being wrangled into the city of Detroit’s application for a $30 million federal grant for at least 750 new mixed-income housing units in and around the Corktown neighborhood. The Dearborn-based automaker — which did not respond to requests for comment — is gearing up to transfer some of the parcels an affiliate, 20th Street Properties LLC, owns in the neighborhood west of downtown to The Community Builders Inc., based in Boston, so the developer can build about 150 residential units on them, according to Detroit City Council briefing memorandums. A city spokesperson said 26 parcels were involved in the transfer for property west of Cochrane Street bounded by the I-75 service drive and Rosa Parks Boulevard, but they did not know the total acreage. Those 150 units would be part of a broader 750-unit, $180 million-plus vision across seven phases over several years for the area, said Julie Schneider, deputy director of Detroit’s Housing and Revitalization Department. And that’s part of an even broader framework plan for the neighborhood, which anticipates a mixed-income housing need of 1,100 new units in the next seven to 10 years. Ford’s 2018 purchase of Michigan Central Station for $90 million and its overall plan for a $740 million autonomous and electric vehicle campus has spurred concerns over rising housing costs in the neighborhood amid what’s expected to be an influx of perhaps 5,000 workers employed by Ford and others across about 1.2 million square feet. Schneider said 20 percent of those 750 or so units would be for those making 30 percent or less than the federal Area Median Income; 40 percent would be for those between 30 percent and 80 percent of AMI; another 20 percent would be for those making 80 percent to 120 percent of AMI; and the rest would be market-rate. “I think we had a shared belief that we needed to develop the neighborhood with affordable housing,” Schneider said. “It needed to be a part of the development, not in response to changing market conditions.” The AMI, which includes suburban Detroit, is $62,800 for a family of two and $78,500 for a four-person household, according to the state. But the inclusion of suburban Detroit for determining what housing is affordable in Detroit is often criticized because the suburban household incomes skew upward the city’s household income. As part of the Choice Neighborhoods program, the city is required to provide a 5 percent match ($1.5 million), which it anticipates coming from Community Development Block Grant or HOME funds, bringing the total leverage to $31.5 million, according to City Council documents. The city says $21 million of the grant and match money would be for housing development and other related fees, $4.5 million each for supportive services and critical community improvements, and $1.5 million for administration. Detroit must develop a so-called “transformation plan” involving resi-
An aerial view of the Corktown area in Detroit with visions for housing and other improvements. | CITY OF DETROIT
dents, nonprofits and developers. In this case, the Greater Corktown Neighborhood Framework Plan, which was the result of community meetings with the city and others that began last year, will serve as the springboard for the transformation plan, which is expected to be submitted to HUD by Dec. 16 as part of the city’s application. A determination on funding is expected in the spring. “We are utilizing elements of the framework plan to draft a transformation plan for the HUD application,” said Katy Trudeau, deputy director in the city’s Planning and Development Department. She said there was a trajectory between the Community Benefits Ordinance process that Ford went through for its AV/EV campus to what is being proposed with the Choice Neighborhoods grant application. “This really has taken a really important linear path that has been Ford’s announcement; the CBO process that was such a strong partnership between the city, the residents, NAC (Neighborhood Advisory Committee) and Ford; the planning process; and then out of the planning process comes this really phenomenal Choice application that’s going to address issues that were raised at every single NAC meeting during that CBO process years ago,” Trudeau said. Kevin Schronce, director of the Central Region for the city’s Planning and Development Department, said Tuesday that 25 in-person and 10 virtual meetings took place as part of the process. In addition to housing, other aspects of the plan include infrastructure improvements, Schronce said. “That is everything from a shared street on 15th Street to some traffic-calming measures on multiple streets throughout the neighborhood,” he said. “14th Street, I think, is
a big one that has an overwhelming consensus from the residents going to a two-way, and we’ve also partnered with MDOT to address that terrible five-legged intersection at 14th, Vernor and Michigan.” “Although the affordable housing piece is so significant and important, there’s a lot of public realm improvements,” Schronce said.
“I THINK WE HAD A SHARED BELIEF THAT WE NEEDED TO DEVELOP THE NEIGHBORHOOD WITH AFFORDABLE HOUSING.” — Julie Schneider, deputy director of Detroit’s Housing and Revitalization Department
Arthur Jemison, the city’s chief of services and infrastructure, said the plan helps residents in and around Corktown in a variety of ways. “It sort of creates the opportunity for a Corktown for everyone, so to speak. Not just in a narrow housing way, but in a way that also touches on public infrastructure and open space,” Jemison said. In addition to the Ford transfer, the city is requesting authorization from Detroit City Council to sell 147 parcels it owns to The Community Builders for $225,000 so it can build 250 units of housing on them.
Across multiple sites Multiple sites are involved in the Choice Neighborhoods effort for the Corktown area: ` 87 new units would serve as replacement units for Clement Kern Gardens, an existing affordable housing development on a 7.1-acre site at 1661 Bagley St. owned by Detroit-based Ameri-
can Community Developers. ` More mixed-income housing is envisioned on a site referred to as the “left field” of the former Tiger Stadium property. The site is at the Fisher Service Drive and Cochrane Street. Recently the city announced that the development received $1.2 million in 9 percent Low-Income Housing Tax Credits for the project, which is to have 60 units in the first phase, 48 of which are affordable at 30 percent to 80 percent of AMI. The project cost is $15 million. ` Single-family and multifamily units on about 19 acres. ` Affordable housing is also envisioned for Bagley west of Rosa Parks near Michigan Central Station. Earlier this year, amid the coronavirus pandemic, five groups applied to serve as the Housing Implementation Entity for the Choice Neighborhoods grant process. ` Gorman & Co. (lead); Detroit-based Southwest Solutions ` New Haven, Conn.-based Glendower Group (lead); White Plains, N.Y.based Censere Consulting LLC;, Paramount Consulting; Carter; Atlanta-based WrightNow Solutions; and Atlanta-based Ypiretis Asset Management ` Bingham Farms-based Slavik Enterprises LLC (lead); Bingham Farmsbased RAD Conversion Specialists LLC; Buffalo, N.Y.-based Norstar Development USA LLC; and Oakland Housing `North Hollywood, Calif.-based Clifford Beers Housing (lead); Detroit-based Ethos Development Partners; Los Angeles-based Lorcan O’Herlihy Architects; and Farmington-based KMG Prestige Inc. A representative for Ethos Development said this group was not among the finalists. ` The Community Builders (lead); and Detroit-based Hamilton Anderson Associates.
Ultimately, The Community Builders and Hamilton Anderson won.
Second bite at the apple In 2016, the city was rejected for a Choice Neighborhoods Implementation Grant when it pursued funding for developing a 25-acre swath of the Brush Park and Eastern Market neighborhoods. Selected as finalists for the implementation grant funding were Boston; Camden, N.J.; Denver; Louisville, Ky.; and St. Louis. Detroit was one of 29 applicants not selected for funding that fiscal year. At the time, an entity called Choice Detroit LLC was selected as the Housing Implementation Entity. Choice Detroit was comprised of Dan Gilbert’s Bedrock LLC, Novibased Ginosko Development Co., Columbia, Md.-based Enterprise Community Partners and KBK Enterprises, which has offices in Columbus, Ohio, and Pittsburgh. The joint venture had planned a $416.6 million, 1,037-unit mixed-income development on the former site of the Brewster-Douglass housing projects, a site at 3480 Russell St. in Eastern Market, the open-air Shed 4 and a property at 124 Alfred St. in Brush Park. Gilbert is still pursuing a redevelopment of the 22-acre Brewster-Douglass site, this time after paying $23 million to the Detroit Housing Commission for it. Most recently, the plan called for a $300 million development with 913 residential units that was unveiled in July 2018. — Crain’s Detroit Business reporter Annalise Frank contributed to this report. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 11
HEALTH CARE
Detroit Medical Center laying off staff, selling urgent cares Tenet Healthcare selling MedPost centers as COVID-19 pandemic cuts patient volume BY JAY GREENE
The Detroit Medical Center is going through another round of layoffs as parent company Tenet Healthcare Corp. of Dallas also begins the process to close or sell its remaining four MedPost urgent care centers in Southeast Michigan. Four knowledgeable DMC sources tell Crain’s that several hundred employees have been laid off with more expected by the end of the year, including managers in multiple departments,
Over the past six years, the Detroit Medical Center has laid off or furloughed more than 2,000 employees, or about 17 percent of its workforce of 12,000. | CRAIN’S DETROIT BUSINESS
nearly 100 newly hired nurses at Children’s Hospital of Michigan and physicians at Tenet Physician Resources. DMC officials confirmed there have been layoffs, but they declined to provide numbers or affected departments. A Tenet official confirmed Tenet will close by Dec. 1 or sell four MedPost urgent cares in metro Detroit. Five of the nine were sold or had their leases taken over earlier this year, said Tenet spokesperson Lesley Bogdanow. There is an agreement to sell three more to Dearborn-based First Choice Urgent Care.
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Sources say other employees laid off include physical therapy assistants at DMC Rehabilitation Institute, administrative assistants for physicians and nursing departments at multiple hospitals, nursing coordinators for labor and delivery, nursing educators and at least one intravenous team. Employees at the management level also have been terminated, including the director of patient care services at DMC’s downtown hospitals and those working on rapid response teams. Other ancillary clinical staff have been asked to take time off every pay period until the end of the year, whether they have paid time off or not, sources said. “Employees are on edge,” said a nursing supervisor. “There has been some informal insinuation that increased scrutiny would be given to employees who contracted COVID-19. (Those who did not) use PPE appropriately ... would be fired.” In a statement, DMC said: “Like many health systems locally and nationally, we continually evaluate and review our staffing needs, which have decreased due to reduced patient demand during the pandemic. Our goal is to ensure we are strongly positioned to provide the highest quality and safest care to our patients while making the best use of our resources.” In 2019, DMC generated $101.7 million in net income on net patient revenue of $1.72 billion, a 3 percent decline from $1.78 billion in 2018, according to Medicare cost reports provided by Louisville-based American Hospital Directory. Over the past six years, DMC has laid off or furloughed more than 2,000 employees, or about 17 percent of its workforce of 12,000. Earlier this year, Dallas-based Tenet said it planned to cut nearly $450 million in expenses and in August officials said it had trimmed overall expenses by 11 percent during the second quarter that ended June 30. The Dallas-based hospital chain has been among health systems across the country hit hard financially by the COVID-19 pandemic, which has claimed more than 238,000 lives in the U.S.
MedPost closures, sale Tenet’s four remaining MedPost urgent care centers are in Bloomfield Township, Southfield, Livonia and Rochester Hills. In April, five urgent cares were closed or sold as Tenet dealt with problems related to the COVID-19 pandemic, Bogdanow said. A knowledgeable health care real estate source, who asked for confidentiality because he is involved in urgent care development, said Tenet also decided to get out of the urgent care business in Southeast Michigan because of lower-than-expected profitability and competition with eight-hospital Beaumont Health. Beaumont, which is in the process of opening 30 urgent care centers, acquired two MedPost leases in Dearborn and Southgate, a Beaumont official said. “Tenet is losing money on the urgent cares,” said a second source who is knowledgeable about the DMC urgent care strategy. “(Urgent care) doesn’t drive business back to hospitals.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
MORE
THE LAME-DUCK AGENDA
Infrastructure: Roads not on the agenda. PAGE 16 PACE: Metro Detroit elder care under scrutiny. PAGE 16 Unemployment: Benefit relief is set to expire. PAGE 17 Tax Relief: Should small businesses get a break? PAGE 18
MICHIGAN LEGISLATURE’S LAME-DUCK SESSION
A TEST OF EVERYTHING
Sparrow Hospital drive-thru COVID-19 testing in an old Sears automotive garage at Frandor Mall in Lansing. | DALE YOUNG FOR CRAIN’S DETROIT BUSINESS
As the busy post-election lawmaking session gears up, leaders at odds over biggest issue BY CHAD LIVENGOOD | By the time the state lawmakers
get back to Lansing for their lame-duck session on Dec. 1, the state’s hospitals may be treating more patients battling the deadly coronavirus than any time during the pandemic. While there are any number of bills lawmakers may consider over the frenetic three weeks of December, no one issue looms larger than the surge of COVID-19 cases, hospitalizations and deaths that Michigan is currently enduring. It’s also the defining issue of governance in 2020 as Democratic Gov. Gretchen Whitmer continued issuing executive orders governing economic and human activity after April 30 when the Republican-controlled Legislature’s authorization of a state of emergency expired.
”Our big challenge is encouraging mass adoption of these practices,” Whitmer said regarding mask use throughout the state. | MICHIGAN GOVERNORS OFFICE
The political standoff got decided in the courts when the Michigan Supreme Court struck down the emergency powers law that Whitmer hung her pandemic orders on. The 75-yearold law Whitmer used unconstitutionally assigned unchecked legislative powers to the executive branch, the high court ruled. Since that Oct. 2 ruling, there has been an explosion of cases of COVID-19 — a six-fold increase in the seven-day average of new infections — and an election that did not alter the makeup of the GOP-run Legislature. The political stalemate over how to proceed in the pandemic remains just that. The Whitmer administration has used different regulatory powers to reimpose a mask-wearing mandate and restrict
capacities on service sector businesses, but none seem to be taming the virus. Whitmer would need the Legislature’s approval for a new 28-day state of emergency. “I don’t think we’re there yet,” said Senate Floor Leader Peter MacGregor, R-Rockford. “But, boy, we just want to be included and not told and excluded. We’re the voice of the people — listen to us.” Whitmer has said she wants the Legislature to pass a statewide mask law to put more legal weight behind her health department director’s regulatory order requiring facial coverings to help block the virus from spreading from microscopic droplets from the mouth and nose. See LAME DUCK on Page 16
NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 13
THE LAME-DUCK AGENDA KEEPING PEOPLE SAFE
PRO
Pass water shutoff moratorium in lame duck
T
A 2017 STUDY BY THE HENRY FORD GLOBAL HEALTH INITIATIVE FOUND THAT ON BLOCKS WITH WATER SHUTOFFS, RESIDENTS HAD A HIGHER INCIDENCE OF ILLNESSES COMPARED WITH BLOCKS WITHOUT WATER SHUTOFFS.
BY STEPHANIE CHANG
Our small businesses, our families’ financial security and our overall economy are not going to get better unless we get the COVID-19 pandemic under control. However, we won’t be able to even make our way out of the third surge unless we enState Sen. sure people have water to Stephanie Chang, wash their hands — one D-Detroit, of the most basic steps represents the 1st people can take to reSenate District in duce the chance they beWayne County. come infected and to slow the spread of the virus. The fact of the matter is, many Michigan families — in the Upper Peninsula, in the suburbs of Detroit, on the west side of the state, and everywhere in between — are struggling, and according to state data, around 85,000 Michigan households have already demonstrated a need for addressing water access. With access to basic water services, vulnerable Michiganders can gain improved health and well-being, averted health care costs, and greater financial security. If you can wash your hands and clothes, you are less likely to get COVID-19, which means less costs for you, fewer missed work days, and less of an impact on your employer. Good management of water resources brings more certainty, efficiency, and productivity across economic sectors and contributes to the health of the overall community. Ensuring access to water for households who are struggling financially can lead to immediate and long-term economic and social benefits that can truly make a difference in the lives of millions of Michiganders, which is why colleagues from both sides of the aisle and I have been advocating for a substitute version of Senate Bill 241. This legislation would codify Gov. Gretchen Whitmer’s Executive Order 2020-144, which created a moratorium on water shutoffs, required public water suppliers to restore water
ELENA GUROVA/ISTOCK
to residents, and required reporting of data to the state. It’s critical, especially when the coronavirus has already claimed the lives of more than 7,600 Michigan residents, that we ensure access to water by continuing this policy. For many Michiganders, not having enough in the bank account is what continues to stand between them and safe water and sanitation in their home for their family. A 2017 study by the Henry Ford Global
Health Initiative found that on blocks with water shutoffs, residents had a higher incidence of illnesses compared with blocks without water shutoffs. Now in 2020, we can already see the connection between issues of water access and COVID-19. During the middle of the worst pandemic this country has seen in more than a century, the struggle to maintain access to clean water for washing hands — one of the recommendations by the
U.S. Centers for Disease Control to help stop the spread of COVID-19 — should not be an added stressor. Let me be clear: This is a statewide issue. Detroit has already been a leader by instituting a local policy to keep the moratorium on shutoffs going until the pandemic is over, but there are more than 30,000 Michigan households outside Detroit who are at risk. I believe every single Michigander deserves access to water to stay safe during this pandemic, which is why I am advocating for a statewide solution that benefits Michiganders primarily outside my own district. We should continue to help the more than 750 households in Jackson, more than 80 households in Gladwin, more than 160 households in New Baltimore, more than 120 in Midland, and more than 100 in Iron River who were behind on their water bills this summer. Around 85,000 Michigan households were identified this summer for state assistance with arrearages of over $20.1 million. That was months ago, and we know many people’s financial struggles haven’t gone away. Water is a universal economic and public health issue that crosses party and county lines; without healthy residents, we cannot ensure a strong comeback for our economy. To protect the people of Michigan, the Legislature should act immediately and pass SB241. This must be made a priority during the lame duck session, especially when so many Michiganders stand to benefit. It’s simply past time that legislators worked together to address this critical concern so that we can have meaningful legislation signed into law as soon as possible — and save lives while doing so.
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HELPING BUSINESS
CON
5 ways lawmakers can help Michigan’s economy
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BY BRAD WILLIAMS
When the new Michigan House of Representatives is seated in January, our elected state leadership will face its most daunting challenge since the Great Depression, if not ever. And given how hard the Great Recession hit Brad Williams is Michigan, that’s saying vice president of something. government The overarching goal relations for the for Lansing’s lame-duck Detroit Regional session is clear. Michigan Chamber. must put partisan politics aside and unite around efforts to accelerate its economy as it navigates COVID-19. The lame-duck session needs to be a balance of addressing immediate challenges created by the pandemic, while continuing the long-term work needed to fundamentally prepare Michigan to better compete in the 21st century economy. This is achieved through better educational outcomes, bolstering our highly skilled workforce, fostering a more competitive business environment, and supporting the state’s leadership in mobility. 14 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
Much of that work will need to be advanced by the next Legislature, but substantive steps must occur before the end of the year. There are five steps the Legislature can take in lame duck to better position Michigan for economic recovery in the year ahead.
Support Launch Michigan’s school funding equity plan: Equitable funding is key to fixing Michigan’s talent pipeline and developing the workforce needed to attract investment and create jobs. Equal funding does not translate to equal education, because different students have differ-
Pass the PPE tax relief package: This legislation protects businesses by exempting PPE purchases from sales and use taxes and providing a refundable income tax credit to employers who maintain COVID-19 safety plans. Employers are taking the steps needed to protect employers and customers, but doing so comes at great expense and many more will be forced to close due to the undue burden created by the pandemic. This package provides much-needed relief by making PPE more affordable.
THE LAME-DUCK SESSION NEEDS TO BE A BALANCE OF ADDRESSING IMMEDIATE CHALLENGES CREATED BY THE PANDEMIC, WHILE CONTINUING THE LONG-TERM WORK NEEDED TO FUNDAMENTALLY PREPARE MICHIGAN TO BETTER COMPETE IN THE 21ST CENTURY ECONOMY.
Reauthorize Good Jobs for Michigan program: The Good Jobs for Michigan rewards employers for creating better-paying jobs that meet or exceed the average wage of a region. The Legislature needs to reauthorize this program to help employers create good-paying jobs, which will strengthen our economy. As the state recovers from these calamitous public health and economic crises, the Michigan Economic Development Corp. needs every possible tool at its disposal, including this program.
ent needs and we should be funding them accordingly. The key is providing equitable funding as supported by Launch Michigan. This will not happen overnight, but a good first step is to adequately fund the K-12 Best Practices Center. Then, in 2021, we can strive toward spending equity in education by adding funding multipliers based on factors such as poverty rates and geographic isolation.
Advance infrastructure spending conversations through local option fuel taxes: The health and economic crises may have shifted the conversation away from Michigan’s major infrastructure needs, but that need has not lessened, and neither has the price tag. Allowing local counties to levy fuel taxes or registration fees to fund repairs of local roads as suggested by Rep. Jack O’Malley is one manageable step that can be taken now. Local option fuel taxes would give counties the ability to pursue local improvements and invest in roads and bridges community by community. Incentivize statewide broadband access: One of the lessons of the pandemic is that we need to equip Michiganders to work or learn anywhere in the state, and that requires access to reliable broadband internet statewide. Achieving this will require incentives for the private sector to invest in infrastructure in areas, particularly rural ones, that currently do not make business sense. There is not going to be one solution, party, or idea that allows Michigan to recover from COVID-19. It’s going to require a unified effort among elected leadership to take strategic steps where possible to accelerate the economy. That effort cannot wait for the new legislative session. It must start in lame duck.
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THE LAME-DUCK AGENDA PROTECTING FRONT-LINE WORKERS
Try again on immunity protections for health workers BY MICHAEL MACDONALD
I was elected to the Michigan Senate in 2018, the first time I ever ran for political office. This makes me somewhat of an outlier in the Senate, where most of my colleagues are seasoned veterans of elections and public service and where State Sen. Michael I will soon experience my MacDonald, first lame duck legislative R-Macomb session. Township, My knowledge of represents the 10th lame-duck session mostSenate District, which includes ly comes down to clichés Sterling Heights, and stereotypes. In that Macomb Township way, I am a lot like my and most of constituents, who view Clinton Township. government with a healthy dose of skepticism and frustration. The public’s skepticism and frustration with government are fueled by instances where government actions make little sense to the average person. Government often seems focused on complicating issues rather than offering practical solutions to real problems. From the start of the COVID-19 pandemic, Michigan’s governor seemed intent on combating it with confusing and oppressive mandates. By contrast, the Legislature worked to propose practical solutions to fixable solutions — only to be ignored by the executive branch. In April, I introduced Senate Bill 899 to provide immunity protections for front-line workers. The men and women caring for patients with COVID-19 risk their lives in order to save others. I sponsored this legislation because I believe it is critical that we work to remove all barriers for doctors and nurses working to provide effective treatments to those suffering from this virus. Senate Bill 899 received bipartisan support in the legislature only to be vetoed by Gov. Gretchen Whitmer on Aug. 10. I’m sure the gov-
THE PUBLIC’S SKEPTICISM AND FRUSTRATION WITH GOVERNMENT ARE FUELED BY INSTANCES WHERE GOVERNMENT ACTIONS MAKE LITTLE SENSE TO THE AVERAGE PERSON. GOVERNMENT OFTEN SEEMS FOCUSED ON COMPLICATING ISSUES RATHER THAN OFFERING PRACTICAL SOLUTIONS TO REAL PROBLEMS.
The recently vetoed Senate Bill 899 was designed to provide immunity protections for front-line workers like those at this Sparrow Hospital drive-thru covid testing site at Frandor Mall in Lansing. | DALE G. YOUNG FOR CRAIN’S
ernor had her reasons for vetoing my legislation, but I struggle to make sense of an action that denied support to our health care professionals at a time when they deserve it the most. This is an example of the type of action that contributes to the frustration people feel with government. The governor’s veto has not stopped me from continuing to support common-sense legislation that solves problems. Most recently, I supported bills to ensure unemployment benefits for out-of-work Michiganders. I voted in favor of legislation that will ensure safer workplaces by encouraging employers to follow recommended health and safety guidelines in exchange for liability protection, and I supported a bill to protect our most vulnerable population, the residents of nursing homes, from COVID outbreaks. As I prepare for my first lame-duck session in the Michigan Senate, my priority will continue to be to support legislation that helps solve fixable problems. As COVID-19 cases rise, I’m focused on passing common-sense laws and policies that help my constituents better navigate life in the presence of the virus. Demonstrating a little legislative common sense will go a long way toward helping to eliminate the skepticism felt by so many citizens.
CONTAINING A CRISIS
Prioritize mental health as pandemic rages on BY CAROL ZUNIGA
As Michigan wraps up an important election, lawmakers in Lansing are already choosing caucus leaders, forming oversight committees and considering top funding priorities for the fiscal year 2022. During the previous Carol Zuniga is eight months of executive director COVID-19, I have been of Hegira Health grateful to have had the Inc., a not-forear of Michigan’s compasprofit Livoniasionate state and federal based provider of lawmakers, heads of state mental health and departments and local substance abuse and county elected offitreatment cials to hear our grassprograms. roots, play-by-play updates about COVID-19’s impact on the emotional lives of our community’s consumers of care and caregivers, like those employed by Hegira Health. The behavioral health community urges the state legislature to recognize that the public health impact of COVID-19 is just beginning. It is critical to focus additional efforts and resources to support its citizens’ mental health and well-being.
The inadequacy of state funds to provide needed care to our most vulnerable populations has been a devolving health care crisis in our state that existed long before this pandemic and—if left unaddressed—will have a long-lasting impact on hundreds of thousands of Michiganders. It is more critical now, under COVID-19 than ever before, that the funds are secured to serve children with serious emotional disorders and their families, adults with mental illness and or substance use disorders and people of all ages with developmental disabilities. Those who understand the negative impact of inadequate mental health services know the consequences of ignoring this statewide health crisis. Lack of support will threaten not only the stability of Michigan’s mental health system but will undoubtedly impact opportunities in employment, education, incarceration rates, family stability and community structure for staggering numbers of Michigan’s citizens. While Gov. Gretchen Whitmer and leaders from both sides of the aisle have stated that mental health services are an essential part of the government’s response to COVID-19, community mental health programs charged with the responsibility of service delivery require increased financial support to address the pandemic-related, predictably long-term, mental health consequences in our communities.
The isolation that has been the solution to minimizing the virus’s spread has wrought havoc on our people. National studies project an increase in Michigan’s deaths — we’ve witnessed a 35 percent increase in opioid-related emergency room visits, liquor sales have climbed, and domestic violence is on the rise. We are only beginning to connect the impact of COVID-19 on the decreased physical and cognitive functioning of our elderly, not due to contracting the virus but due to isolation, inactivity and fear. Our children who depend on so-
THOSE WHO UNDERSTAND THE NEGATIVE IMPACT OF INADEQUATE MENTAL HEALTH SERVICES KNOW THE CONSEQUENCES OF IGNORING THIS STATEWIDE HEALTH CRISIS. cial workers and psychologists to identify their needs and secure their safety and well-being have been living in isolation with the people from whom they need protection. We need our state’s help to stabilize the provider network and prevent the closure of any additional programs. Community health organizations need financial assistance to hire quality staff and remain fiscally stable in an increasingly competitive wage environment.
We need the Michigan Department of Health and Human Services to remove regulatory rules and barriers that prevent on-the-ground providers from effectively performing their jobs. While the demand for mental health services has grown dramatically over the past several years, the funding for the public mental health system responsible for meeting those needs has not. COVID-19 has stressed our already stretched system to its breaking point. Before COVID-19, Michigan’s mental health system was underfunded, understaffed, and overwhelmed. Given the impact on our front-line health care workers, those impacted by COVID-19 directly and everyone experiencing the trauma of this pandemic, we need to find ways to strengthen the behavioral health network. We encourage our state’s leadership to shift its focus to address the current and future mental health of Michiganders, young and old. For 50 years, Hegira Health has been on the front line of protecting our community’s health and safety. For many, the state’s stressed mental health network is the primary health care source for individuals with mental illnesses and substance use disorders. Michigan’s leadership needs to step up to the plate and do more, especially in the face of the pandemic, to strengthen systemic support mechanisms and create a Michigan that prioritizes its mental health. Our future depends on it. NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 15
THE LAME-DUCK AGENDA INFRASTRUCTURE
Fixing roads is not on the agenda, but sourcing road materials is
A bill in the Senate would eliminate the ability of rural townships to block state-permitted gravel mining. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS
BY CHAD LIVENGOOD
Unlike past lame-duck sessions, Michigan lawmakers appear unlikely to take another stab at overhauling how the state funds roads and infrastructure. But they could end up in a heated not-in-mybackyard debate over where the aggregate materials needed to replace crumbling transportation infrastructure should come from. A bill pending in the Senate would break one of the long-standing road blocks to mining for new sources of gravel, sand and limestone needed to build roads: Local municipalities. Senate Bill 431 would eliminate the ability of rural townships to block state-permitted mining of aggregates, so long as the mining compa-
ny adhered to certain state and federal environmental regulations. The Senate Transportation and Infrastructure Committee advanced the bill to the Senate floor in late September, teeing it up for action in the December lame duck session. The gravel bill, as it’s known in Lansing, has been hotly fought by a group of property owners in Metamora Township who oppose proposals from a subsidiary of the Dearborn-based Edw. C. Levy Co. to mine for aggregate materials on a former Boy Scouts ranch. Southern Lapeer and northern Oakland county have geological formations that the aggregates industry has said are vital to providing the materials needed to build roads, bridges and structures. The Metamora Land Preservation Alliance has been fighting proposed gravel mines since
at least 2005 in the bucolic township in southern Lapeer County. The legislation brewing in Lansing would eliminate the practice of “one community that’s more affluent pushing these things into another community that’s less affluent,” said state Sen. Adam Hollier, a Detroit Democrat sponsoring the bill. Hollier represents the 2nd Senate District that includes parts of Detroit, Highland Park, Hamtramck and the Grosse Pointes. He notes Highland Park has the Great Lakes Aggregates LLC aggregate recycling plant on Oakland Avenue “within two miles from my house.” “I’m a firm believer that what’s good in Detroit really should be good in other places,” Hollier said. “... We should have one set of standards statewide.”
HEALTH CARE
Denver firm seeks to break ‘monopoly’ for in-home senior care in metro Detroit BY CHAD LIVENGOOD
The Michigan Legislature’s biennial lameduck session is a time when little-known issues pop up and sometimes sail to the governor’s desk with little debate. That was the case in 2018 when lawmakers put new restrictions on health and human services companies getting into the business of serving the in-home care needs of low-income seniors who are eligible for both Medicare and Medicaid. The Legislature tightened the rules for a new company to enter the market for PACE (Program of All-Inclusive Care for the Elderly), an alternative for seniors to stay in their homes instead of moving into a skilled nursing facility. Two years later, a Denver-based company is trying to convince lawmakers to open up just the metro Detroit market for the PACE program, creating first-of-its-kind direct competition for PACE of Southeast Michigan, which is run by Presbyterian Villages of Michigan and Henry Ford Health System. InnovAge, a for-profit company, is lobbying for passage of Senate Bill 810 to allow it to petition the Michigan Department of Health and Human Services to offer its services in Southeast Michigan; the bill applies only to the metro Detroit market. “We don’t think that a monopoly improves quality,” said Beverley Dahan, vice president of government and legislative affairs at InnovAge. InnovAge operates PACE in-home care pro16 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
grams and senior service centers in Colorado, California, New Mexico, Pennsylvania and Virginia and is expanding into Kentucky and Florida, company CEO Maureen Hewitt said. The state and federal government pay PACE providers about $3,000 per month for Medicaid-eligible services that keep a senior out of a costlier nursing home. In addition, Medicare pays PACE providers between $2,000 and $2,500 per month for managed health care services for individuals in the PACE program instead of a fee-for-service, Dahan said. The proposed legislation would require InnovAge or another provider to prove there’s unmet need in the market. House Bill 5664 is an identical House version of SB810. Based on the income criteria of seniors living on less than $25,000 a year in their homes, InnovAge company officials estimate there are some 25,000 dual-eligible senior citizens in metro Detroit and just 3,000 being currently served by PACE of Southeast Michigan. “There’s plenty of room for two providers for PACE in that market,” Hewitt told Crain’s. As part of its lobbying pitch, InnovAge company leaders are promising to invest $30 million into the construction of two health and wellness centers in Wayne and Oakland counties, where Medicare-Medicaid dual-eligible seniors could see doctors, get physical therapy, exercise, socialize and be transported from their homes. The PACE Association of Michigan, which represents the sole providers in 13 regional
markets across the state, is lobbying to stop the lame-duck legislation from proceeding. “What these bills would do is allow the outof-state corporation to basically change the rules midgame and basically get to the front of the line,” said Stephanie Winslow, executive director of the PACE Association of Michigan. The 2018 law contains a “pathway” for entering the PACE business, Winslow said, but gives existing providers right of first refusal to submit a plan for expanding services to fulfill unmet need. “If InnoVage wants to enter the market, they have a pathway to do it,” Winslow said. “But they don’t want to do that.” InnovAge’s legislative effort to “leapfrog” in front of Presbyterian Villages of Michigan and Henry Ford Health doesn’t account for spending restrictions MDHHS has put on growth in the program to curtail rising Medicaid costs during the coronavirus pandemic, Winslow said. “They’re claiming that there’s unmet need in Southeast Michigan that we’re not meeting,” Winslow said. “We can’t grow any faster and serve more participants than the state will allow us.” InnovAge company officials are trying to appeal to lawmakers that expanding in-home services for seniors is a better alternative to filling up nursing homes, which have been fraught with COVID-19 outbreaks and deaths throughout the coronavirus pandemic. “With COVID, this is a great program because we have a lot of flexibility to give services in the home as opposed to institutional care,” Hewitt said.
LAME DUCK
From Page 13
“Our big challenge is encouraging mass adoption of these practices,” Whitmer said Nov. 5 during a Zoom video conference call with Crain’s Forum members. “It’s complicated by fatigue, of course. It is complicated by flu season. It’s complicated by the temperature dropping and us all going inside. “And, of course, the holidays that are coming up,” the governor added. The other complicating factor is personality clashes between the governor and Senate Majority Leader Mike Shirkey and outgoing House Speaker Lee Chatfield. Shirkey and Whitmer have had limited communication in person for months. Chatfield is on his way out the door, leaving office at year’s end due to term-limits. Both Republican leaders, who have given limited media interviews since the Nov. 3 election, are considered in political circles as potential challengers to Whitmer in 2022 — further complicating matters. MacGregor, who is leaving office at year’s end after being elected Kent County treasurer, acknowledged “personality conflicts and egos” have “damaged” relationships after months of public spats and legal battles with the governor. “I wish we could get beyond that, but it’s going to be tough because the track record is not good,” MacGregor said. “I just don’t see giving (the governor) power unless there’s some sort of negotiated agreement
”I THINK ALL OF MY COLLEAGUES WOULD AGREE WITH ME THAT WE NEED TO FLATTEN THIS CURVE — THIS DISEASE IS NOT GOING AWAY.” — Senate Floor Leader Peter MacGregor, R-Rockford
on how we make decisions for the people of the state of Michigan.” The virus is now claiming nearly 50 lives per day. By Christmas, public health experts project that to double. By the end of this month, hospitals project the number of COVID patients will top the roughly 4,000 patients they had in mid-April. The exponential spread of the virus in recent weeks has hit some members of the Legislature. Six members have publicly disclosed they tested positive for the virus, and Rep. Isaac Robinson, D-Detroit, died in March of a suspected case of the virus. In recent weeks, Senate Democratic Leader Jim Ananich of Flint and Rep. Scott VanSingel, a Newaygo County Republican, have both contracted the virus. “I think all of my colleagues would agree with me that we need to flatten this curve — this disease is not going away,” MacGregor said. But there’s widespread disagreement among Republican lawmakers on how to do that. Shirkey and incoming House Speaker Jason Wentworth, R-Clare, have resisted a specific mask law. Some Republicans still don’t accept the outcome of Whitmer’s 10-week-long stayat-home order for non-essential workers: The average number of new daily cases fell from 1,632 on April 7 to under 200 by the second week in June. “We crushed our curve,” Whitmer said Nov. 5. Last week, the seven-day average topped 5,000 new cases per day. The record-setting 6,473 new cases recorded on Nov. 10 was the exact same total number of cases Michigan recorded in the entire month of June. Rep. Matt Hall, R-Marshall, said he believes new restrictions to curb spread of the virus could be “narrowly tailored” without repeating Whitmer’s spring lockdown. “I do believe we need to be engaging in dis-
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THE LAME-DUCK AGENDA UNEMPLOYMENT
Extension set to expire unless lame-duck Legislature acts
mass said call mpliated emde. are
Whitmer pushing to make it permanent BY CHAD LIVENGOOD
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Senate Majority Leader Mike Shirkey has clashed with Gov. Whitmer on how to handle the pandemic. PATTRICK YOCKEY/MICHIGAN SENATE
cussions with the governor on how to handle that,” Hall said. “... I think some of those (Whitmer) policies were overbroad, they should be narrowly tailored to best deal with where the outbreaks are, what the challenges we’re facing are.” Sen. Curtis Hertel II, D-East Lansing, said he’s “holding out hope” the Republican majority will come around to working with Whitmer on new actions to curtail the virus.
“My colleagues have said they want to be part of the process, they sued to be part of the process, they collected signatures to be part of the process,” Hertel said. “I guess, at this point, what I’m asking them to do is to be part of the process.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
Less than four weeks ago, Gov. Gretchen Whitmer signed into law an extension of unemployment benefits for jobless Michigan workers from 20 to 26 weeks. But the additional unemployment aid during the ongoing coronavirus pandemic could be short-lived. The bill the Republican-controlled Legislature sent the Democratic governor last month was a temporary extension that expires Dec. 31. That will put this issue back on the front burner in the Legislature’s lame-duck session that begins Dec. 1. Whitmer is pushing for making the extension to 26 weeks permanent, arguing it is necessary for state benefits to be coupled with federally funded extensions of up to 59 weeks for the long-term unemployed. When the pandemic hit in March, Whitmer unilaterally extended unemployment insurance benefits from 20 weeks to 26 weeks through executive order. Whitmer’s order also changed the eligibility criteria by allowing the state Unemployment Insurance Agency to review only a claimant’s most recent employer separation.
The Legislature restored a requirement that the UIA look back at every job a worker has left in the past 18 months to determine whether they’re eligible for unemployment assistance. Michigan’s maximum unemployment benefit is $362 per week. That executive order was invalidated by the Michigan Supreme Court’s Oct. 2 ruling that the emergency powers law the Democratic governor used to issue broad executive orders was unconstitutional. Republicans who control both houses of the Legislature have not said whether they would support making the 26 weeks permanent. Doing so would be a reversal of changes the Legislature made to unemployment insurance under former Republican Gov. Rick Snyder, who signed a law paring back weeks of eligibility for assistance from 26 to 20 weeks. The renewed debate over the length of unemployment benefits comes after Unemployment Insurance Agency Director Steve Gray abruptly resigned last week. The unemployment agency has faced months of troubles after being hampered in the spring with record jobless claims and fraudulent claims for benefits during the governor’s stay-at-home lockdown.
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THE LAME-DUCK AGENDA TAX RELIEF
The government shut them down; should they get a break? BY CHAD LIVENGOOD
At Merri-Bowl Lanes in Livonia, the nearly $50,000 in annual property tax bills that owner Rich Glumb gets have kept coming this year. But the customers haven’t. For 174 days between March 16 and Sept. 8, Glomb’s 40-lane bowling alley on Five Mile Road was shut down by order of Gov. Gretchen Whitmer as a broad measure to mitigate spread of the coronavirus. Bowling centers, arcades, movie theaters, gyms, sports stadiums and music venues were among the last businesses to reopen in Michigan. Even after Whitmer’s executive orders were invalidated by the Michigan Supreme Court on Oct. 2, some of these businesses never reopened after new public health restrictions were put in place on event venues, such as the ban on fans in the seats at Lions football games at Ford Field. As winter approaches and a second wave of COVID-19 infections starts to put a crimp on indoor activities, some businesses owners in these industries want lawmakers to lighten their property tax bills to at least partially compensate for their prolonged economic pain. “Since the government us shut down — it was not our choice — there should be a reprieve on the taxes all around,” Glomb said. “No doubt.” But getting Whitmer and municipalities to agree to a tax break could prove difficult in the Republican-controlled Legislature’s lame-duck
S H A R E
Rich Glomb of Merri-Bowl Lanes in Livonia is looking for the government to give him a reprieve on his property taxes. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS
session next month. In July, Whitmer vetoed legislation that would have let businesses delay paying sales, use and income taxes. In her veto letter, the Democratic governor contended such a mea-
Y O U R
sure would “push many local budgets over the precipice into fiscal crisis.” Sen. Peter MacGregor, R-Rockford, said he’d like to extend tax relief on penalties and interests for businesses that never reopened, such
C O M P A N Y ’ S
Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
J O U R N E Y
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18 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
as professional sports stadiums and music venues that have stayed closed because of the coronavirus. “A lot of these places just need more time” to pay tax bills, MacGregor said. “When your property tax is (one of your) largest bills, especially these big, huge venues, you’re talking about millions and millions of dollars. It’s probably not a huge amount of money when you’re talking about penalties and interest on these things.” MacGregor, who was elected Kent County treasurer in the Nov. 3 election and is leaving the Senate at year’s end, said there’s interest within the Senate Republican caucus to revisit small-business tax relief with the governor next month. Merri-Bowl reopened after Labor Day, but has been restricted to 25 percent capacity under public health orders from the state and Wayne County, Glomb said. Those capacity restrictions as well as ongoing fears about the virus and patrons who don’t want to wear masks have contributed to depressed sales this fall, Glomb said. “We’re turning business away,” Glomb said. “Once you start breaking the buying habits of guests, they’ll find something else to do. “If this goes on much longer and we’re not allowed to operate at even 50 percent of fire marshal capacity, there’s going to be a lot of (bowling) centers that are going to go away.”
CENTER
From Page 3
Schaap said he and his wife love the theater and symphony and have supported various groups, including the Hilberry and Bonstelle theaters at Wayne State University where they both worked. The Grosse Pointe Theatre has been performing over last several years at local high schools and moving from place to place, he said. “That’s not very good for a group of that quality; they’re going to have a wonderful home at the Schaap Center.” They see the new center “as a potential gem” for the broader Grosse Pointe-Detroit community, he said. Schaap envisions people coming not only from the Pointes but also from Detroit and around the region to see performances at the new center and spend time in the Manoogian Art Gallery. “One of the things we’re thinking about is dinner theater involving St. Ambrose,” which is within walking distance of the new center, he said. But there are also small restaurants not far away on Kercheval Avenue and East Jefferson Avenue. “I think we’re going to see a real blossoming of those types of businesses,” Schaap said. “I’m really looking forward to seeing this East Jefferson area take off.” In 2012, the Schaaps, longtime supporters of the theater and symphony, bought a piece of property at the corner of Maryland Street and East Jefferson Avenue from the city of Grosse Pointe Park to protect it from development and
Turnbull
Gargaro
preserve it for a future arts center. The couple formed the Royal Oakbased Urban Renewal Initiative Foundation the following year and through the nonprofit purchased additional properties near the first plot, giving it November 16, 2020 a total of 2.4 acres. The purchases totaled about $2 million, said A. Paul Schaap, who sold the company he founded, Southfield-based Lumigen, for more than $250 million in 2006. Lumigen produces a compound that produces luminescence used in medical diagnostics. The Manoogians, neighbors and friends of the Schaaps, were co-supporters of the performing arts center, and “with their wonderful art collection, frankly, (they) were looking for a good home for some of that art,” Schaap said. While the Manoogians will certainly show artwork from their private collection at the gallery from time to time, “everyone’s hope is that others will use that area to share some of their collecting as well,” said Gene Gargaro, president of the Richard and Jane Manoogian Foundation. “The hope is it will be a community resource and widely used by different performance arts groups and other
community groups” and artists, he said. The Schaaps and Manoogians live in Grosse Pointe, but they are Detroiters, Gargaro said. Carol and Paul Schaap have been big supporters on the Wayne State University campus, and they were among the first donors to the “Grand Bargain” that preserved the Detroit Institute of Arts’ collection by shoring up the city’s pension plans during the Detroit bankruptcy. The Manoogians have also supported much in the community, including the DIA for decades, Gargaro said, noting they were also generous supporters of the Grand Bargain. “The performing arts theater is just the latest example where two very philanthropic families have come together to support a project that will benefit so many,” Gargaro said.
‘A Broadway-style theater’ Urban Renewal brought the plan for the project before the Grosse Pointe Park Planning Commission in August, after years of assembling property and discussion with the city about the project and the Schaaps’ and Manoogians’ financial commitments to it. An earlier idea to shift overflow parking to the surrounding neighborhood was abandoned following resident pushback, Turnbull said. The project gained city approval in August, and Urban Renewal launched the silent phase of a capital campaign to cover the rest of the costs. CBRE Inc. is serving as the owner’s representative on the project, managing the design and construction pro-
operate the center: the Grosse Pointe Park Council for the Arts. “Everything is being outsourced until there is a team permanently in place,” Turnbull said, noting the goal is to have the management team in place by the fall of 2022 when the center opens. Plante Moran Trust is managing donations made to the campaign, and The Nonprofit Spot is developing an operating plan and budget, which is expected to be about $831,000 its first year, Turnbull said. The center has a long-term lease agreement with the Grosse Pointe Theatre and is developing fee-based agreements for performance space usage with other arts groups, she said. Its proximity to the city of Detroit “is pretty critical” in ensuring it has regional benefit and is accessible, Turnbull said. “This will be an incredible regional asset for visual and performing arts. ... We think this is going to draw great interest from Southeast Michigan to have an intimate venue of this level with quality, community programming” at accessible ticket prices, she said. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
Advertising Section
CLASSIFIEDS To place your listing, contact Suzanne Janik at 313-446-0455 or email sjanik@crian.com www.crainsdetroit.com/classifieds
SOCCER
From Page 1
“When I saw that it was for sale, it was intriguing to me and I started thinking about connecting with UWM,” he said Thursday afternoon. George Derderian, managing partner and owner of Ultimate Soccer Arenas, is selling the building but will continue as the facility’s operator through a lease agreement with the purchasing entity, Ishbia said. “George has done a great job operating it,” Ishbia said. “I’m not a soccer or a football operator, he is.”
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Sales Manager, PA Solutions, Inc., Warren, MI.
Promote & sell engineering & manufacturing solutions & services to manufacturers across targeted industry segments. Req. Bach’s deg, or foreign equiv deg, in Sales, Marketing, Bus Admin or rel. & 5 yrs post-bach, progrssve, work exp. selling manufacturing products or serv. Up to 80% travel req. Please apply by emailing resumes to Michael.Pelkey@pa-ats. com with reference job code MI0003.
Growing campus In June 2017, United Shore Financial Services — as it was then known — said it was moving to Pontiac in the 600,000-square-foot former Hewlett Packard Enterprise Building at 585 South Blvd. It paid $40 million for the property and 60 acres, and spent $60 million renovating it. It had owned and occupied the 275,000-square-foot building at 1414 E. Maple Road in Troy. Then just two years later, the company said it was buying the 900,000-square-foot building on the other side of South Boulevard and connecting the two with a bridge/ skyway. That sale closed earlier this year, Ishbia said Thursday. That brought its campus to 1.5 million square feet and 150 acres, and the deal announced Thursday puts its footprint at nearly 1.9 million square feet and 200 acres. The second phase of the headquarters expansion was $50 million for acquisition and $105 million for build-out and construction of the bridge/skyway, putting those two phases at $255 million. The build-out cost for Ultimate Soccer Arenas has not yet been determined, Ishbia said Thursday. The bridge is expected to be com-
cess for Urban Renewal. Raymond Cekauskas Architecture LLC is design architect, and Smith Group is architect of record. Together, they came up with plans for the center that include a 424-seat theater with an orchestra pit on a hydraulic platform to lower it out of audience view of the stage or expand the stage area, a basement to accommodate a trap door and state-of-the-art lighting and acoustics. The Schaaps “wanted to make sure there were all the amenities of a Broadway-style theater,” Turnbull said. The Manoogian Art Gallery will include the very best in climate control CRAIN’S DETROIT BUSINESS technology, providing space to display art work collected by the Manoogian family and others, as well as works from local and student artists. There will also be a pre-function gathering area with a wine bar and concession area in the 49,000-squarefoot center. The design also includes energy efficiency elements, green stormwater infrastructure and 160 parking spaces. A joint venture formed by Oak Park-based PCI One Source Contracting and The Dailey Co. in Lake Orion is serving as construction manager of the project. As construction plans are finalized, Schaap is forming a new nonprofit to
Senior Engineer, 1 Position; Job Code: SE-HCS-M-08; Novi, MI:
The Ultimate Soccer Arenas property in Pontiac is being sold to an affilate of Pontiac-based United Wholesale Mortgage. | COSTAR GROUP INC.
plete next month. “It’s a really interesting play to create a Google-esque campus, a multi-building campus around this South Boulevard location,” said Eric Banks, principal and executive director of brokerage services for Bingham Farms-based Dominion Real Estate Advisors. He and Sean Jamian, assistant vice president, were the brokers on the sale. The property is set to be renamed the UWM Sports Complex.
Sports fields to remain active Derderian put the property on the market earlier this year for $28.4 million as he sought another operator or a buyer/developer to convert the property for warehouse or manufacturing space. “Our brokerage team explored several options as we looked for the right buyer for Ultimate Soccer Arenas,” he said in a news release. “One of those options was to sell my sports facility to a manufacturing or warehouse company that would not have been
able to keep the soccer fields open. For over 13 years we have welcomed more than 1.3 million people annually and I am grateful to have found a better fit with UWM, which is not only a progressive company and major employer in Pontiac, but they insisted that we keep our doors open to the public and continue to provide youth and community soccer and lacrosse to the area.” The property opened in 2007 and cost $28.5 million to build it as well as a new 7,000-square-foot building for Detroit Medical Center/Exos Training. Earlier this year, Banks said 1.2 million or 1.3 million people use the property each year for activities including soccer, lacrosse, volleyball and high school graduations. Derderian said in February that a substantial portion of the debt on the property has been paid off and he expects to clear a profit as well as pay back his investors with a return upon the sale. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
Job Duties: Design & Release Radio module on vehicles, pro Work Orders, Change Notice. Spec test proc Design Verification & Process Validation. Eval & approve DV and PV test res. DFMEA & DVP&R. Flash SW on modul using QNX & Android tools on Valid benches & Cust test fleet. Create SW pack for USB & (OTA) Updates. Collect logs System, CAN (Vehicle Spy) logs & recover Infot modul case of crit fail mode. I’face with vehicle p’form teams, assem plants, supp & various key S’holder to create strategies to imple changes in line with Launch & Build event. Req: Master’s deg (or Foreign equival) in Electri/ Electro/Instrumentation/CompSci or InfoTech or equal & 3 yrs IT exp. Alt; Bachelor’s deg (or foreign Equival) in Electri/Electro/Instrumentation/CompSci or InfoTech or equal & 5 yrs of IT exp. Exp: Exp in automotive domain, Dev DFMEA & DVP&R, Vehicle serial data comm CAN, LIN, common serial data test equipment’s - Neo VI Fire & CAN Diagnostic tools CANoe & CANalyzer. Apply: Send CV’s to Harman Connected Services, C/O Mahesh GM; (Job Code-SEHCS-M-08); to 2002 156 Ave NE Ste 200 Bellevue, WA 98007.
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.
Visit crain.com/careers/ for more information and available positions.
NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 19
Hun Ware
Outdoor industries including the hunting business have benefited from rising interest in outdoor activities, including deer hunting. | CARLOS OSORIO/ASSOCIATED PRESS
HUNTING
From Page 3
“We can’t keep kayaks in stock, but we haven’t seen that kind of enthusiasm for hunting gear. But from some of the new hunters we’ve seen, we’ve learned that Michigan is so deeply entrenched in the hunting heritage, (guns and equipment) is being passed down.” With nearly 550,000 Michiganders on some form of unemployment benefits, purchasing new gear may not rise to the top of economic needs, Isenhoff said. And new hunters, unencumbered by ads for the latest and greatest hunting gear, may be simply using non-specialized
LAW SCHOOL
From Page 1
“After the Great Recession, the legal market was really suffering … and law schools realized that their schools had just been too big for what the economy could handle,” Wayne State University Law School Dean Richard Bierschbach said. “So far, we haven’t seen anything like what we saw after the Great Recession.” Wayne Law, the smallest of Michigan’s five law schools by enrollment, saw student headcount drop by about 20 from last year to around 400 in 2020. That’s down about 30 percent from a peak of 570 students in 2011. Bierschbach said he does not foresee further decline, even with the pandemic. Application volume for the incoming fall 2021 class is up 40 percent compared to the same time last year, he said, though the priority application deadline is March 15 and it is still too early to draw any definitive conclusions. Michigan State University College of Law is seeing the same, as is the University of Detroit Mercy School of Law. Nationwide, law school applications are up 60 percent from the same time last year, according to the Law School Admission Council. “When people aren’t sure what they’re going to do or what their opportunities are, often they’ll go to law school,” Bierschbach said. At Thomas M. Cooley Law School — once the largest in the country and now barely the biggest in Michigan — the painful, decadelong slide appears far from over. Enrollment at the
clothing and gear they already own. The data may support the theories. Hunters aged zero to 9 years old were the fastest-growing age segment in 2020, pointing to fathers and mothers taking children to the tree stand and field blind with them as play dates remain precarious during the pandemic. In fact, younger hunters far outpaced growth in the sport in 2020, with hunters 44 years old and younger growing at 17.1 percent versus growth of 9.2 percent for those 45 and older. Women hunters represent a 24 percent increase this year as well. The younger generation’s entry into the sport has given rise to new technologies, such as the mobile Lansing-based school dwindled to 1,156 in 2019, less than half what it was in 2011. During that period, application volume dropped nearly 65 percent to 1,398. And now it’s dealing with an identity crisis. Western Michigan University’s board of trustees voted earlier this month to cut ties with Cooley Law by 2023, as the law school closes campuses in Grand Rapid and Auburn Hills. “It was the hope of both institutions that the affiliation would improve the quality of the educational experience for students at both institutions and would serve to enhance the reputation and standing of both institutions in the academic community,” the proposal to the board read. “Several years after implementation those hopes have not been realized.” WMU and Cooley Law declined to comment. The school would not provide updated information on enrollment and application numbers.
Pandemic learning Josh Robertson, a 30-year-old in his second year at Cooley who completed his undergraduate degree at Western, said he was disappointed the institutions chose to split, but he doesn’t think it will impact his education. “In talking with the professors and having some pretty honest conversations with the president over webinars, they’re all pretty open about it,” Robertson said. “They’re like, ‘You know, we’ve been around 50 years and we’re gonna be around for another 50 years, so that’s OK.’”
20 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
app HuntWise by Grand Rapids-based Sportsman Tracker Inc. The app provides mapping for hunters to discern topography as well as public and private lands, community log for record keeping and a hunting forecast that tracks weather variables for optimal hunting times. “COVID has helped create a reawakening of the outdoors, and it’s a beautiful thing,” said Jeff Courter, president and CEO of the 13-employee company. “But if you look at how young people are coming to hunting, COVID has nothing to do with it. Maybe it gets them out in the woods for the first time this year, but we’re seeing more and more hunters that didn’t learn from a parent or grandparent. They are transitioning
Robertson
Crocker
Robertson turned to law school after devoting the first part of his career to politics, working for seven years at Lansing-based lobbying firm Midwest Strategy Group. The devastating impact of the pandemic led him to change paths. A few months ago, he took a job at Kalamazoo-based Forensic Fluids Laboratories, which helps test, monitor and report data to first responders and health care professionals. He said he aims to eventually use his law degree, which the company is helping pay for, to land a general counsel role for the lab. “In that position I’d be able to work directly with hospitals, health systems, doctors’ offices and the state to continue the lab’s work but also to hopefully effectuate change in statute surrounding safe procedures and protocols,” he said. Similar to the other law schools in Michigan, classes at Cooley are being conducted remotely because of the pandemic. Robertson said he is pleased with how it’s going. “Cooley didn’t have the best reputation in the world, but I’m super impressed with what they’ve done,” he said. To be fair, Cooley is not alone in
from a camping or hiking lifestyle to a fly-fishing lifestyle or to a hunting and clean-eating perspective. The route to getting to hunting is different now. We’ve seen a huge influx of people who want a clean source of meat. Eating what they harvest, not just the pursuit. There’s strategy involved in that.” Courter provides that strategy in two versions of the popular app with 1 million active users. The app costs $60 per year for the basic version and $120 per year for an advanced version that provides year-round deer hunting strategies. Sportsman Tracker revenue is up three-fold in September and October than the same months a year ago, Courter said.
Twice as many people fish than hunt in Michigan — the Michigan DNR sold 1.2 million fishing licenses this year — but hunters spend twice as much money, about $2,400 annually, said Courter. HuntWise is in the process of adding a new version to its app that will also track the timing of the deer rut based on an algorithm created by longtime whitetail deer expert and founder of Munising-based Whitetail Habitat Solutions LLC. Courter said several of his administrative and developer staff are now learning to hunt. “It’s fun,” he said. “As we’ve really dove into the outdoor world, and hunting specifically as a company, some are now experiencing hunting
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suffering from a stagnant legal market and shrinking supply of aspiring law students. Even the prestigious University of Michigan has been impacted. Michigan Law had a total enrollment of 1,024 in 2019, down 11 percent from 2011. Its application volume in 2020 dipped 4 percent from the previous year to 5,417. Michigan Law declined to make anyone available to interview for this report. MSU Law has had a rougher go. Enrollment fell by 50 students year over year to 640 this year. That’s down 30 percent since 2011, when there were 915 students. Melanie Jacobs, interim dean at the college, said in an email that applications for 2021 are up 40 percent from the same time last year, emphasizing that it is still early in the application cycle. Jacobs said MSU Law made big investments in technology and training for online classes, and it has collaborated with other Big Ten law schools on webinars with scholars across the country. “Just as many law schools are conducting courses remotely, so, too, are many law firms, agencies and even courts,” Jacobs said. “As with other sectors, it is likely that post pandemic more lawyers may work from home or be able to engage in more flexible schedules.”
are up from last year there as well, according to administrators. Thank President Donald Trump for stabilizing enrollment at law schools, Detroit Mercy Law Dean Phyllis Crocker said, only half-jokingly. “Some people say it’s the ‘Trump bump’ that has been in existence for the last few years,” Crocker said. “People are very interested in going to law school as a way of fighting for justice and civil rights, and they saw those more under attack than they had previously and really saw the need for lawyers to be part of that fight.” In the litigation-laden decades preceding the Great Recession, law schools merely had to open doors to get students to enroll. In the past few years, however, there have been too many lawyers and too little work. “You’re finding functions that had historically been performed by lawyers and law firms that are now being performed by nonlawyers and as a result, the market for legal services is growing, but the slice of the pie that’s being performed by lawyers and law firms is at best static or is shrinking,” said John Hern, CEO of Detroit-based Clark Hill PLC. In a similar case of oversupply and lack of demand, law schools are facing more competition for a smaller number of students. “We are basically at the level of enrollment we all were in the 1970s with now maybe 45 new law schools, so that’s been a challenge for everybody,” Crocker said. “Nobody will ever get back to the levels we were at, and that’s fine.”
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‘Trump bump’ At Detroit Mercy School of Law, student headcount has been steady for the past four years, with a total of 587 students in 2020, down 12 percent from 2011. Applications for 2021
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ATTACKS
From Page 3
Hunters and sport shooters shopping the firearms and hunting section of Sportsman’s Warehouse in Troy on Nov. 13. | SPORTSMAN’S WAREHOUSE
for the first time. It helps us toward what we’re building.” The growth in hunting is even helping those connected to the sport in name only. The 97-year-old Huron River Hunting and Fishing Club in Farmington has no official ties to the world of hunting and fishing anymore, evolving to a social dining club in recent decades. But its new members are increasingly more interested in the club’s animal-mounted history of fly fishing on the Huron River and bear hunts in Northern Michigan, said Mark Snitchler, president of the 500-member club and partner at Plymouth-based law firm Hubbard Snitchler & Parzianello PLC.
“This year, more than the past, we’ve had prospects interested in hunting and fishing,” Snitchler said. “The club was founded by hunters and fishermen but evolved over time. Maybe it’s evolving again.” That’s the remaining question for all those involved in the hunting industry: Does the renewed interest signal the sport is evolving again? “We don’t know much right now,” Isenhoff said. “But it’s important to remember that 92 percent of our hunters were deer hunters last year. These new hunters are a smaller part of the puzzle, but we hope to keep them.”
The pandemic is also impacting the pipeline from law schools to law firms. Detroit-based Dickinson Wright PLLC was forced to cancel its summer recruitment program due to the pandemic. It gave the 20 or so law students who were accepted to the program an offer of employment after they graduate next year. “It was a huge shock to the system in so far as we had to cancel what is typically our principal method of organic growth,” said Pat Greene, a member of the firm who oversees recruiting. Clark Hill, one of the largest law firms in the state, instituted pay cuts, spending freezes and furloughs early on in the pandemic, but the firm is hiring again, Hern said. It has posted around 20 open positions, including for 10 attorneys. “Our M&A practice is as busy as it’s ever been, far in excess of what we had before the onset of the pandemic,” he said. “I don’t know if it’s being fueled by people wanting to get deals done before the regime change in Washington, or pent-up demand.” Justin Klimko, president and CEO of Detroit-based Butzel Long, said business has been down, but not as badly as expected. He said that across the industry, hiring graduates fresh out of law school used to be the norm, but now many firms are recruiting from each other. There’s no telling yet what lasting impact the pandemic will have on the industry, he said. “Obviously, the problem with this whole situation is that it’s still not really possible to see the end of the tunnel,” he said.
Luring students
Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
If uncertain job prospects weren’t enough to scare off students, the price tag often does. The average cost of the three-year law degree is $49,500, according to U.S. News & World Report. At Michigan Law, students pay nearly $64,000 per year. To stay competitive, some schools, including Wayne Law, instituted tuition freezes and boosted scholarships. Cooley cut tuition by 21 percent this fall for an average yearly cost of about $40,000. In response to market changes, Wayne Law is debuting next semester a master’s degree for nonlawyers in human resources. The program, which could be completed in one year full time at a third of the price of a law degree, is an answer to the swelling demand for nonattorney legal services. Around 25 students are enrolled in the program, which has been under development since 2017. Rolling it out during the pandemic and upheaval of traditional business practices turned out to be a coincidence of perfect timing, Bierschbach said. “Companies are finding it much more efficient cost-wise and otherwise, publicity-wise, you name it, to have a workforce that’s trained to anticipate and handle issues early on,” he said. “So if you have an HR professional who has exposure to some of the legal issues that can come up … they’re gonna nip a lot of issues in the bud.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
“The good news is, our Michigan hospitals are as prepared as they possibly can be, as prepared as any state in the country,” Peters said. “The bad news is regardless of all of the vigilance that we can provide, it seems that these cybercriminals (are getting) incredibly effective, both within health care and outside of health care.” On Oct. 17, Dickinson County Healthcare was targeted in a ransomware attack that temporarily crippled its IT systems, forcing staff to shift to backup paper records to continue patient care. The nonprofit health system said it did not discover any patient data stolen, according to an Oct. 30 hospital press release. Crain’s reached out to Dickinson County CEO Chuck Nelson for an interview. “We are treating this matter with the highest priority and are responding by using industry best practices while implementing aggressive protection measures,” Nelson said in a statement. “While we investigate, our top priority is maintaining our high standards for patient care throughout our system.” The FBI said cybercriminals have been launching the attacks using a strain of ransomware known as Ryuk. So far, 59 U.S. health care providers or systems have been impacted by ransomware this year, disrupting patient care at up to 510 facilities, the FBI said. In 2017, the WannaCry ransomware attack, believed to originate from North Korea, affected more than 300,000 people in more than 150 countries and caused widespread problems with the United Kingdom’s National Health Service. Several Michigan businesses and local governments have been victims of cyberattacks, according to a Crain’s special report. For example, Brookside ENT and Hearing Center, a small physician practice in Battle Creek, was hacked in a ransomware attack in 2019. The practice’s computers were locked down, patient data and appointments frozen. The two doctor partners, including state Sen. John Bizon, M.D., refused to pay and closed their office. Nowak said most cyberattacks come through emails where the ransomware is attached and can enter when a user clicks on a link. “It looks like it’s supposed to come from any (legitimate company such as Federal Express or Microsoft) and they come all the time in different ways,” Nowak said. “If users don’t pay specific attention to what those what’s in those emails, when they click on those infected links, it will enter their network ID and password, and then the hacker will have that information.” Once into a health care employee’s computer, Nowak said the virus “will try to map the system’s network, steal other passwords and infect the network very quickly.” Nowak said the recent FBI warning was the first such alert where health care organizations were specifically targeted. “Patient records are so much more valuable to the hackers than some of the other information” such as stealing someone’s credit card that can be canceled, he said. Peters said hospitals have done a good job in recent years to harden
their IT security infrastructure. He said alerts have gone out to employees to regularly change passwords and use multi-factor authentication. In statements from Michigan Medicine, Henry Ford Health System and in an internal memo from Blue Cross Blue Shield of Michigan, cybersecurity officials say they have found no evidence of intrusions to their secure information systems. “Our teams remain vigilant against any potential threats and will continue to follow best practices and work with our partners in law enforcement and other cybersecurity groups to keep our systems safe and secure,” according to Michigan Medicine, which is the health care entity of the University of Michigan. Most hospitals and health insurers have issued alerts to employees and vendors to be careful about clicking suspicious emails. “We are confident in the security of our information systems and have taken additional steps in the wake of this warning to protect patient confidentiality and prevent a breach,” said John Gillespie, Henry Ford’s director of news content and media relations in an email. “We encourage everyone, especially our team members, to be vigilant against phishing attacks, that have the potential to give cybercriminals access to their computer and potentially result in identity theft, financial loss and even ransomware,” Gillespie said. Since Oct. 1, health care data breaches have impacted more than
“PATIENT RECORDS ARE SO MUCH MORE VALUABLE TO THE HACKERS THAN SOME OF THE OTHER INFORMATION” SUCH AS STEALING SOMEONE’S CREDIT CARD THAT CAN BE CANCELED — Mike Nowak, chief information security officer, Michigan Health and Hospital Association
54 hospitals, including McLaren Oakland and Michigan Medicine, said the U.S. Department of Health and Human Services. McLaren and Michigan Medicine breaches were unauthorized access and disclosure and under investigation, said the U.S. Office of Civil Rights. Like many other hospitals in Michigan, Henry Ford has been subject to lost patient data. Since 2010, Henry Ford has reported four possible data breaches. Like others in health care, Henry Ford is required by federal privacy laws to report breaches and notify patients their personal information may be used inappropriately. Officials from Henry Ford have told Crain’s they have learned and improved from each incident, all of which have been caused by human error. One of the first changes the Detroit-based system made was to encrypt all its employee laptops and limit the use of flash drives, which are also encrypted in case they are stolen or lost. For example, a Henry Ford employee opened an email in December 2017 and clicked on a link without realizing the e-mail was part of a phishing attack. Because of Henry Ford’s security safeguards, the malware was contained and prevented from infecting the wider network.
Nowak said hospitals regularly conduct drills within their systems to look for vulnerabilities and also test their employees using fake ransomware. What kind of damage can hospitals incur from a ransomware attack? “The biggest loss would be the patient care if they have to close down the entire network and go back to paper,” Nowak said. “I am not even sure if they would be able to tell who has an appointment.” In late October, three federal agencies advised health care organizations to have a contingency plan to transfer patients to another facility, one that might be outside of their market, to make sure the referring hospital is clear of problems. “The FBI recommends against hospitals or anyone else for that matter of paying the ransom request,” Peters said. “The rationale for that is number one, there’s no guarantee that your payment of that ransom is going to fix the problem. Number two, certainly that would encourage more bad behavior down the road, if we continue to pay these ransom requests.” Peters said there’s a financial impact anytime a hospital has to shut down because of a ransomware breach. Nowak said backup systems can help immensely if the main IT system is locked. “If they are connected to the cloud, they’ll have a point that they can restore back there,” Nowak said. “Systems (restored) back to where they were before that happened without any of the ransomware on there, they’ll also most likely have to have cybersecurity experts come in and help them find how it got in where it was.” Nowak said the average downtime after a ransomware attack is 15 days. What steps are hospitals taking? Peters said hospitals are identifying critical assets, like patient databases and medical records. They are creating backups of those systems and then implementing network segmentation to avoid a virus going from one area to another. “From what we are hearing from our hospital leaders, they’re doing those things,” Peters said. “What gives us a little bit of confidence that we’re as well prepared as we can be ...is ourown health care cybersecurity operations.” To help health care organizations prevent attacks, the MHA helped create in 2018 the Michigan Healthcare Security Operations Center. The Plymouth-based Mi-HSOC is a cybersecurity membership group that shares best practices to prevent, detect, analyze and respond to cybersecurity events. Members include Michigan Medicine in Ann Arbor, Beaumont Health in Southfield and Munson Healthcare in Traverse City. “We have daily meetings to go over the threats,” Nowak said. “We have some tasks that are automated, and we all share and collaborate on everything that we’re seeing across all of our environments.” Nowak said the health systems don’t share IT or software systems. “We’re all better together,” said Nowak, adding that none of the hospitals have been targeted the past two years. “It’s always good for us to help each other when we can.” Contact: jgreene@crain.com; 313-446-0325; @jaybgreene
NOVEMBER 16, 2020 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Dave Bing on tough decisions, need for Black mentors, leaders Former Detroit Mayor Dave Bing co-wrote an autobiography that spins the yarn of his multifaceted career in sports, politics and mentorship. The former Detroit Pistons star is also a former automotive supplier and founder of the Bing Youth Institute that offers young Black men academic and social support. The Washington, D.C. native and Franklin resident spoke with Crain’s about the book, ‘Attacking the Rim: My Journey from NBA Legend to Business Leader to Big-City Mayor to Mentor.’ | BY ANNALISE FRANK ` What inspired the timing of this book? Bob Warfield (Bing’s manager), who has been with me for the last eight to nine years ... basically said, “You know, you’ve got a story to tell. You’ve done a whole bunch of things in your life and outside of Detroit, probably a lot of people might not know.” ` Is it strange to have a book written about you, an autobiography, coming out? Very strange, no doubt about it. I had a lot of heartaches and headaches and everything else trying to remember, you know, so much that has gone on in my life. ` In the book you talk about your auto supply company, The Bing Group, how during the Great Recession you were losing money and you knew if you held on to the business you would continue to lose, but you were also worried about what would happen to employees if you sold. How does that dynamic you went through compare with what businesses are facing now? I think the difference would be I knew I was going to get out of the business and that was my decision. What’s going now for entrepreneurs and business owners, a lot of the things that are happening they have absolutely no control over. And, you know, they could wake up one day and their business is done. In my case, at least I had a little bit of time to figure out what I wanted to do, when I wanted to do it and who was going to be most impacted from it. ... For me to make a decision to sell or close the business down was very, very difficult. I lost more money than I probably should have lost by holding on. ` Detroit’s had to deal with a $410 million shortfall from the pandemic this fiscal year and last. I’m wondering if that brought you back to the decisions you were making when you became mayor in 2009? Absolutely. When you’re responsible for keeping people safe and providing them
with the services a city is supposed to provide and you don’t have the income to be able to do that efficiently, it’s a gut-wrenching decision. What’s going on right now, the businesses are shut down in a lot of cases so the revenue you had put into your budget the prior year, you had no idea something like this was going to happen. It was different. We didn’t have the money, but at the same token, you have some kind of idea about timing. Here you just, you don’t know, you’re shooting in the dark. You have no idea if this pandemic is going to slow down ... I’ve gotta say as a businessperson or an elected politician, this has got to be one of the worst times that they’ve had to go through. ` There’s been a lot of discussion this spring and summer about systemic racism and biases in policing and industries. You’ve spoken before about Black businesses, Black executives being sort of on the outside looking in on Detroit’s recent redevelopment. What do you think is the current state of that? Well, I think most recently, at least it’s being talked about. Not necessarily anybody’s doing a lot about it, because everybody is in survival mode. But as part of the survival mode, with a city’s that’s almost 80 percent African American, you’ve got to start looking at those businesses that are here in the city providing a service. You’ve got to figure out, how do you maintain those businesses? But with everybody in survival mode, that’s not high on anybody’s agenda, and that’s unfortunate. ` What do you think of Mayor Mike Duggan’s administration’s efforts around Black-owned businesses and around inequities more generally? There’s a realistic understanding of the negative impact on small, minorityowned companies. But once again, from a historical perspective, we’ve not done anything but give lip service. And until such time, as I look at when I was in business, because of the automotive
industry and some of their programs, it allowed a lot of Black-owned suppliers to do well ... You’ve really got to be very much focused on (small businesses) and what they’re up against. The banking industry has historically been very tough on small and minority-owned businesses because you didn’t have the equity that was necessary ... so there’s no easy answers, in my opinion. ` What kind of leadership do you think Detroit needs in the next couple of years? You know, I’m not anti-the administration that’s in place because I know how hard a job Mike Duggan has. But once again, as I’m around the country when I travel there are a lot of people who are not from this area who will ask the question, “You’ve got a city that’s 80 percent African American. How in the world do you have a white mayor?” You know. “You don’t have Black people with the capability to move into a position like that?” But then people look back and say there was a long period of time when you did have Black leadership. ... But once again, because of an industry that was on its knees, up and down, the automotive industry, which is a dominant industry in this area, you don’t get the consistency that you need to build a business. It’s hard to say. I can’t think right off the top of my head of anybody that I could be very supportive for mayor right now. I asked that question, “Who’s out there?” And nobody comes up with a good answer. So is it going to be Duggan on an ongoing basis? Don’t know. Is there somebody else in the system that will be able to raise their hand and say they’re ready for this? We’re in a tough time in terms of leadership.
` You said in the book and I’ve read in interviews before that you feel it’s important your mayoral administration get the credit it deserves for starting some financial rebuilding processes in Detroit. Were there any specific narratives you were looking to set the record straight on in this book? I think one of the things that was pretty much misunderstood ... was (the idea) that you had a lot of people in city government that looked at their positions as just a job and didn’t look at it serious enough as a career. You know, I got in there and very short term I understood that was a total misconception. The vast majority ... respected their jobs, their community and neighborhood ... There was a fondness from my vantage point and a great deal of respect that I gained from the people that stayed and worked so hard in a terrible situation. Dave Bing Founder of the Bing Youth Institute and former mayor of Detroit
Nexletol
present, turbulent times and a post-pandemic world. “We’ve always viewed (COVID-19) as temporary,” Mayleben told Crain’s in an interview Thursday, noting that news earlier
22 | CRAIN’S DETROIT BUSINESS | NOVEMBER 16, 2020
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COVID-19 pandemic takes toll on launch of Esperion drugs
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in the week that vaccine trials by Pfizer and others signals eventual improvement. “We just didn’t know how long temporary would be,” he said. The company’s two drugs — Nexletol and Nexlizet — exist for the approximately 18 million Americans who are unable to take Lipitor and other statin cholesterol-lowering drugs. Nexletol became available in late March and Nexlizet in June. An October study by the American Medical Association found that in the second quarter of 2020 primary care visits decreased 21.4 per-
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CALL IT A CASE of bad timing. Ann Arbor-based Esperion Therapeutics Inc. released its niche cholesterol-lowering drugs in early April, right at the height of the early COVID-19 pandemic. That period largely resulted in doctor’s offices being closed and a drop-off in prescriptions for those types of drugs. As a result, the pharmaceutical company had a very “challenging” start getting its drugs prescribed, said Tim Mayleben, Esperion’s president and CEO. On Tuesday the company announced a $250 million debt financing offering that can serve as a bridge between the
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cent compared with the same quarters the previous two years. That resulted in a significant drop-off in patients having cholesterol and blood pressure checked. The market for cholesterol drugs has contracted about 30 percent this year, Mayleben said. Esperion reported a net loss of about $85.4 million for the third quarter. Its stock (Nasdaq: ESPR) has fallen 53 percent this year as of Thursday. As a COVID-19 vaccine appears likely to become available, Mayleben said he expects to see a recovery by the middle of next year.
Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except the last week in December, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2020 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.
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