THE CONVERSATION Studio M Detroit LLC president and CEO Melinda Anderson.
Book Cadillac nears foreclosure PAGE 4
PAGE 22 CRAINSDETROIT.COM I MARCH 22, 2021
COPING WITH COVID-19 Top left: Oakland County vaccine supply coordinator Irene Highfield prepares a cooler to transport Pfizer COVID-19 vaccines at North Oakland Health Center in Pontiac, then at right unloads her cargo of vaccines and supplies at the Karl Richter Community Center in Holly.
MICHIGAN’S VACCINE ROLLOUT ROLLS ON Bottom left: Oakland County Health Department R.N. Ruth Pinto prepares a dose of the vaccine at the Karl Richter Community Center in Holly on March 18. Right, masked citizens wait for their shots in socially distanced lines. NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
Showtime! Metro Detroit venues set the stage for tentative return of live shows BY KURT NAGL
Masks will be required for entry when Harpos Concert Theatre reopens this spring — and not the freakish kind Slipknot’s lead singer might wear when he takes the stage there June 11. Corey Taylor’s concert, announced Wednesday, will be the first at the iconic Detroit venue since mid-November 2019, a few
months before COVID-19 engulfed the nation and halted in-person gatherings. Taylor’s CMFTour is scheduled to be among the first national acts coming to metro Detroit. Scores of other performers who have kept tentative holds on spring and summer dates in Michigan and elsewhere will be watching closely. See VENUES on Page 18
Harpos Concert Theatre plans to reopen June 11 for a socially distant show for the first time in more than a year. | KURT NAGL/CRAIN’S DETROIT BUSINESS
Before dawn and after dusk, a race to get shots in arms BY DUSTIN WALSH
Kate Guzman bounces down the halls of Oakland County’s health division building in Pontiac. It’s a struggle to keep up. Her pace is unrelenting as she describes the building’s former use — a tuberculosis sanitarium originally built with an open-air atrium to allow airflow and sunlight into the wards. Guzman, a registered nurse and chief of clinical services, leads the
county’s COVID-19 vaccine effort and checks her phone with the frequency of an Instagram influencer, making sure no issues have arisen at any of the 17 vaccine clinics running across the county last week. She moves fast because she has to. Vaccine rollout is gaining speed, like a ship that’s finally crested a towering swell and any resistance to its bearing fades. See VACCINE on Page 20
HEALTH CARE
Blues settlement could cost $125M, change insurer landscape in state NEWSPAPER
VOL. 37, NO. 11 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
BY JAY GREENE
Employers, individuals and other claimants insured by Blue Cross Blue Shield of Michigan over the last decade stand to split up to $125 million as part of a $2.67 billion proposed antitrust settlement agreement that the national Blue Cross association and its 36 member plans have signed off on. While admitting no wrongdoing,
the Blues were alleged in an 8-yearold antitrust lawsuit filed in Alabama by more than 1 million plaintiffs to have overcharged self-funded company plans, fully insured company plans and individuals based on national association membership licensing rules that prohibited plans from competing in others’ territories or states. The preliminary agreement, which was approved last October by U.S.
District Judge David Proctor in Birmingham, is the first step to settle claims the Blues allegedly suppressed competition in the insurance market as a way to fix prices and drive up premiums. Blues companies provide health insurance to more than 100 million people, including 6 million members covered by the Michigan Blues. See BLUES on Page 18
NEED TO KNOW
PLAY BALL
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT HOSPITALITY WORKERS GET $793 RELIEF CHECKS
capabilities,” CEO Milind Pant said in a written statement Thursday.
THE NEWS: The Michigan Department of Treasury on Wednesday started mailing $793 checks to hospitality industry workers whose hours were cut or jobs were eliminated in late 2020 during a state-mandated shutdown of restaurants, casinos and entertainment venues. More than 55,900 workers will receive an employee assistance grant as part of a $45 million bipartisan appropriation the Legislature approved in December, Gov. Gretchen Whitmer’s office said.
WHY IT MATTERS: Amway, based in Ada Township, near Grand Rapids, had sales of $8.5 billion in 2020, and is the second-largest family-owned business in Michigan.
WHY IT MATTERS: The aid was intended to help workers in hospitality and recreation businesses that were shuttered or saw reduced customer traffic as a result of the fall surge in COVID-19 infections and the Michigan Department of Health and Human Services’ shutdown orders in mid-November.
TENS OF THOUSANDS QUEUE FOR FORD FIELD VACCINES
AMWAY TO CUT 900 JOBS, MOSTLY IN WEST MICHIGAN THE NEWS: Amway, the global direct sales giant, said it’s cutting 900 jobs, most of them at its headquarters in West Michigan. The company said it hopes to accomplish the move by offering buyouts and other incentives. The 900 jobs are equal to 6 percent of Amway’s global workforce. “We are investing even more in our wellness portfolio — in science, innovation, manufacturing — while also improving our digital
THE NEWS: More than 65,000 people have signed up to receive a COVID-19 vaccine at Ford Field, enough to pack the downtown Detroit stadium to capacity for a Lions game. Meijer, which is running the registration process, said it began sending appointment confirmations for Ford Field last Thursday morning. WHY IT MATTERS: With doses set to be administered starting March 24, the Federal Emergency Management Agency site will be the largest inoculation operation in the state.
JUDGE SAYS SNYDER CHARGES CAN PROCEED THE NEWS: A judge on Thursday reject-
ed a request to dismiss misdemeanor charges against a former Michigan governor in the Flint water scandal. Lawyers for Rick Snyder said he worked in Ingham County, not Genesee County, so the indictment was returned in the wrong place. But Judge William Crawford II said prosecutors have flexibility about where to pursue a case. Snyder’s attorneys plan to appeal. WHY IT MATTERS: It’s the first of what will be many aggressive challenges to an unprecedented case against a sitting or former Michigan governor for alleged acts while in office.
EV COMPANY TOUTS 45,000 VAN PRE-ORDERS
Tigers can host 8,200 fans on Opening Day April 1 Comerica Park will be able to host up to 8,200 Tigers fans at the baseball team’s home opener on April 1 under a revised public health order for outdoor stadium capacities issued Friday by the state health department. The Michigan Department of Health and Human Services Director Elizabeth Hertel’s revised public health order for cases sets outdoor stadium capacity at 20 percent. For the 41,083-seat Comerica Park, that amounts to 8,200 seats that could be available for Tigers fans to fill on Opening Day against the Cleveland Indians. Under previous orders from health officials, just 1,000 fans would have been allowed inside. Fans will be required to take a “Gameday Wellness” survey within 24 hours of entering the gate, the Tigers said in a news release. Face masks will be required at all times except when eating or drinking in assigned seats.
THE NEWS: Electric Last Mile Inc., the plug-in delivery van startup that’s in the process of merging with blank check company Forum Merger III Corp., said it has 45,000 pre-orders and will start production at a former Hummer plant in Indiana in the third quarter. The Troy-based company is trying to get a jump on competitors who plan to sell electric vans into the booming market for e-commerce. WHY IT MATTERS: A growing number of startups and established automakers are racing to sell plug-in delivery vehicles to the likes of Fedex Corp., Amazon.com Inc. and the U.S. Postal Service, who need more trucks but want to reduce their carbon emissions.
The field at Comerica Park | ED MAUER FOR CRAIN’S DETROIT BUSINESS
INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS Recognize them in Crain’s
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COMMERCE
Metro Detroit Black Business Alliance launches with $1M from TCF BY ANNALISE FRANK
A new collective amplifying the voices of Black business owners is forming in metro Detroit, backed with $1 million from TCF Bank. Former city of Detroit executive Charity Dean leads the nonprofit Metro Detroit Black Business Alliance as president and CEO. The chamber of commerce-style organization launched with a media event Friday at Cutter’s Bar & Grill in Eastern Market. The restaurant’s owner, Chuck Nolen, is the alliance’s board chair. Conversations about coming together formally have been going on between founding members of the
Charity Dean (middle), president and CEO of the Metro Detroit Black Business Alliance, speaks at the organization’s launch event Friday at Cutter’s in Eastern Market. Kai Bowman (left) joins her as chief operating officer. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS
alliance for years, Dean said. But the group began meeting regularly on Tuesday nights last summer. Dean estimates 50-60 businesses have participated so far, though memberships didn’t open up publicly until Friday. “It really came from identifying a need for Black businesses — you know, this country has been built on systemic and structural racism and unfortunately we see the effects of it in everyday life,” Dean said. “From how our institutions engage with people of color to businesses of color. I saw it especially during the pandemic.” Dean, whose mission in Mayor Mike Duggan’s administration
during the coronavirus crisis was to help keep businesses afloat, left her position March 12 as director of the Department of Civil Rights, Inclusion and Opportunity for the alliance. Kimberly Rustem, chief policy adviser for Duggan, was selected to succeed Dean. TCF Bank, which has created loan funds during the pandemic for small businesses, committed its donation to the MDBBA over five years of operation. “Charity is, I believe, going to be the catalyst for this tremendous growth,” TCF Chairman Gary Torgow said during Friday’s announcement. See ALLIANCE on Page 17
FINANCE
REAL ESTATE
App platform Plain Sight launches crowdfunding campaign Part of $2 million raise BY NICK MANES
Meryl Ethridge (left) and Will Kelly pose outside of their home in the LaSalle Gardens neighborhood in Detroit. The couple closed on their home on Feb. 1 and moved in shortly after. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
ON THE MARKET, GET SET, GO Homebuyers compete to score in residential real estate frenzy BY KAREN DYBIS | SPECIAL TO CRAIN’S DETROIT BUSINESS
Metro Detroit’s spring residential real estate market is coming in like a lion, setting a blistering pace for already frantic homebuyers who are willing to wave extra cash at any available house, a scenario where agents and brokers are working long hours to find new listings before rising interest rates serve a splash of reality in the months to come. Paul Mruk of RE/MAX Classic in Novi has dozens of examples where homes sell over the asking price in just about any Metro Detroit community. In February, a three-bedroom, 3,000-square-foot Farmington Hills home listed for $475,000 had 94
showings its opening weekend and received 22 offers to purchase it. Mruk’s buyer offered $515,000 in cash, and it was accepted. “Buyers are hardened,” Mruk said. “The challenge right now is if you don’t waive the appraisal, if you don’t give an inspection clause and if you don’t give free occupancy, then you’re not going to get these houses.” Home tours are hopping with 15-minute showings to accommodate the huge number of shoppers in hot cities like Royal Oak, Novi, Dearborn and Livonia. Homes that appeal to first-time buyers between $150,000 to $400,000 have kitchen islands stacked with dozens of business cards from agents passing
through. Brokers are advising their clients to come with their best offer on the first try or be passed by someone willing to offer more than the asking price on what typically is an entry-level home. Many real estate agents said they believe their workloads will continue at hyper speed in the next six to nine months, a shift from the start of 2020 when a global health crisis due to coronavirus led to mandated real estate pauses. In spring 2020, Gov. Gretchen Whitmer had deemed real estate as “nonessential” from March 23 through May 7, which resulted in less-than-optimal Zoom showings and limited sales. See RESIDENTIAL on Page 17
Paul Mruk of RE/MAX Classic in Novi
Social networking app Plain Sight seeks to leverage its own community of close stakeholders as it looks to its next stage of growth. The Detroit-based mobile platform, which was recently named “App of the Day” in Apple’s App Store, began as a social networking platform, but last year pivoted Chapman to focus more on helping small businesses gain brand recognition during the pandemic. Now as the company looks to the future, it’s seeking to raise a $2 million seed round, about $250,000 of which is set to come from a recently launched equity crowdfunding campaign. About $500,000 has already been committed by venture capital and angel investors, said James Chapman, the company’s founder and CEO. Federal legislation enacted in 2012 cleared the way for equity crowdfunding, essentially allowing startups to source investment from anyone, rather than just high net worth accredited investors, as well as venture capital and other monied sources. The company markets that it “levels the playing field by allowing you to be intentional about who you connect with.” Given Plain Sight’s business model, a crowdfunding campaign only makes sense, said Chapman. “More and more, this is becoming a legit way for founders to be able to raise,” Chapman said of equity crowdfunding, which allows anyone to invest as little as $100. See PLAIN SIGHT on Page 21 MARCH 22, 2021 | CRAIN’S DETROIT BUSINESS | 3
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The owner of the Westin Book Cadillac hotel in downtown Detroit said his lender is foreclosing on the property after months of missed payments. | CoStar Group Inc.
Westin Book Cadillac owner says his hotel is heading into foreclosure The owner of one of the landmark redevelopment projects in the city this century says his property is headed into foreclosure after months Kirk of missed loan PINHO payments. John Ferchill, who owns the Westin Book Cadillac hotel in downtown Detroit, said in an email that although the property hasn’t been foreclosed upon yet, his lender has told him it will. Ferchill has $77 million in commercial mortgage-backed securities debt through Citi Real Estate Funding Inc. that has been delinquent since May. Presuming it comes to pass, and as far as I can tell, it would be the first major commercial real estate CMBS foreclosure in this region that can directly be tied to the COVID-19 pandemic. There’s a number of ways a CMBS foreclosure could play out, including appointment of a receiver and eventual new ownership, I’m told. Ferchill, the head of Cleveland-based Ferchill Group that redeveloped the iconic 453-room, 33-story tower in 2008 for $180 million, said the foreclosure “process is 100 percent out of my control.” He said “a once-in-a-lifetime event” shattered hotel revenue
across the country and forced owners and operators to seek loan workout agreements with their lenders. “We are not unique,” Ferchill said. “We have tried everything to work with a lender who won’t work with us, which quite frankly is a testament to how good of a property we created. They would rather take it for themselves than work it out with the borrower. We have not received one concession.” Ferchill additionally blamed what he called the state’s “draconian COVID rules” for his property’s revenue and occupancy plunges. “As much as I’m upset about my ownership situation, I’m more upset that 400 great and loyal associates don’t have jobs.” Through a spokesperson, CWC Capital Asset Management LLC, which is the special servicer on the debt, declined comment last week. A special servicer tries to come up with a debt resolution. In December, Crain’s reported that the hotel’s appraised value plummeted from $136 million at the end of 2019 to $74.6 million in September, slightly less than the outstanding balance on the pair of CMBS loans Ferchill took out in early 2020 right around the time the COVID-19 pandemic was ripping its way through the U.S. — one for $45 million and another for $32 million. The two loans were originated in
January with Citi, according to Trepp LLC, a New York City-based firm that tracks CMBS debt. The last time Ferchill made a payment on the debt was in May 2020. Trepp says between January and April last year, revenue was $19.76 million while expenses were $21.78 million, creating a more than $2 million shortfall in just those months alone. More recent financial data for the hotel was not available. But net operating income in the three previous years was $9.85 million (2019), $10.63 million (2018) and $11.11 million (2017), according to Trepp data. Trepp says that the loans were underwritten with a 78 percent occupancy at the Westin Book Cadillac but it was only 43 percent occupied during the first four months of last year. The building opened in 1924 as the Book-Cadillac Hotel and had been vacant and in disrepair for more than two decades before the redevelopment, one of several high-profile projects that helped kick off a building rehab wave in the downtown core. It’s one of the best known hotels in the Detroit region, but it closed for much of the spring during the pandemic, which has crushed the hospitality industry. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
CRAIN’S AWARDS
Deadline extended for Excellence in HR Awards You have more time to nominate an outstanding HR team for Crain's 2021 Excellence in HR Awards. The deadline has been extended to March 24. Human resources teams have been the pivot point for so many businesses in the last year as a glob-
al pandemic has upended working life as we know it. Help us share their stories and nominate a candidate here. Awards will be given in five categories: Overall Excellence/HR Team of the Year; Managing Change; Employee Experience; Diversity and In-
clusion; and Finding and Growing Talent. Winners will be recognized in a special section in the June 21 issue of Crain's. Questions? Contact Special Projects Editor Amy Bragg: abragg@ crain.com.
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FINANCE
A year into coronavirus, Michigan banks on solid ground Bank profits plummeted in 2020, but lenders largely putting cash back into play in 2021 BY NICK MANES
2020 was hardly the banner year many bank executives were hoping for going into the year. But flash forward to present day and financial executives broadly agree things are heading in the right direction. Bank profitability took a nose dive last year — declining $147.9 billion, or 36.5 percent — from 2019, according to a report by the Federal Deposit Insurance Corp. That decline, according to the report, can primarily be attributed to lenders stashing away cash for possible loan losses in the early part of 2020 as the coronavirus pandemic took hold and the economy seemed in free fall. In a far more optimistic sign, however, the early 2021 FDIC report notes that those provisions for credit losses had decreased by 76.5 percent from a year ago, to $3.5 billion, the lowest level in almost 30 years. That means rather than hoarding cash to cover losses, banks would be looking to put capital to work. Indeed, it looks like banks are heading toward a solid 2021. A Wall Street Journal report earlier this month, citing data from FactSet, noted that four of the country’s largest lenders, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, were on track to earn a collective $77 billion this year, up from $61 billion in 2020. Bigger picture indicators — the rollout of coronavirus vaccines, trillions in government stimulus, actions by the U.S. Federal Reserve — leaves a feeling of being “cautiously optimistic” for Tim Marshall. “When you combine (all the stimulus) with everything the Fed is doing, it puts a much more positive light for the prospects for this not being as deep or disastrous as maybe we were thinking it could have been last year,” said Marshall, the president and CEO of Arbor Bancorp. Inc., the parent company of
Michigan bank earnings How the five largest banks headquartered in Michigan performed year-over-year. $566.2 million
Flagstar Bancorp. Inc.
$241.1 million $242.3 million
TCF Financial Corp.
$359.7 million
Independent Bank Corp.
$57.1 million $48 million
Mercantile Bank Corp.
$49.6 million $55.6 million
Macatawa Bank Corp.
2020 2019
$31.3 million $34.4 million 0 $100 Earnings, in millions
$200
SOURCE: FDIC
community lender Bank of Ann Arbor. Despite the overall trend of bank profitability declining substantially last year, an analysis by Crain’s of three metro Detroit lenders of varying sizes shows that all were reporting or on the path to profitable years. “Net interest margins certainly were squeezed in 2020, but banks managed their bottom lines and remained strong and resilient here in Michigan,” said Rann Paynter, president and CEO of the Lansing-based Michigan Bankers Association trade group. While 2020 will surely be remembered as the year of a coronavirus-led economic crisis, connected to that are the massive government-backed bailout efforts, which included the Paycheck Protection Program. The forgivable loan program has been heavily dependent on bankers working with their client base to get relief dollars out quickly. As Crain’s reported, the early days of the PPP last April were nothing short of chaotic, as banks and business owners looking for money to stay afloat during
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shutdowns were learning the rules on the fly. Looking back to that time, Marshall said he’s pleasantly surprised with where things stand today. “It’s not what we wanted or expected in January (of last year), but it turned out much better than it could have with not knowing the impact a pandemic would have,” he said.
Along comes a rainy day To be sure, bank profitability is but one small indicator in an economy best defined currently as “K-shaped,” or marred by inequities, such as the 10 percent reduction in private sector jobs in the overall Southeast Michigan region last year, according to a report by the Detroit Regional Chamber. But to the extent that banks can help bolster regional economies, lenders leaning toward profitability are better than not. Marshall’s bank in Ann Arbor — with eight offices and assets totaling $2.2 billion — reported earnings of just
less than $22.9 million last year, down from $31 million in 2019. He said the bank’s loan quality has performed better than expected due to the stimulus funds from Congress, the Federal Reserve and other sources. “Our earnings were down approximately 26 percent ... versus an industry average of down 37 percent and 2020 proved to be the third highest earnings level in the history of Bank of Ann Arbor,” Marshall told Crain’s in an email. Moving uphill in terms of bank size and scale, executives at Troy-based Flagstar Bancorp. — with 159 offices and $31 billion in assets — are also feeling positive about the overall economic trajectory. “Overall, 2020 was one for the record books,” Alessandro DiNello, president and CEO of Flagstar, said in a January news release announcing the bank’s earnings for the final quarter of last year. “It was yet another outstanding quarter, capping off an exceptionally successful year for Flagstar.” Flagstar for the full year 2020 reported total profits of $538 million, an increase of 147 percent over the previous year. Speaking specifically about earnings for the final quarter of last year, DiNello attributed boosted profits, in part, to the bank’s mortgage lending business, but noted that each business segment contributed. Flagstar makes for a good example of how banks early last year began putting cash away, but have since reversed course are again putting money to work. The Troy-based lender ended the first quarter of 2020 with $14 million set aside for credit losses, but by the end of the second quarter it had increased that to $102 million, according to its balance sheet. By early fall, that number had fallen to $32 million, and Flagstar ended 2020 with just $2 million set aside for credit losses.
“We continue to believe the economic recovery will be challenged by the COVID-19 pandemic for an extended period of time and significant uncertainty remains related to distribution of the vaccines and government stimulus, especially as it affects consumer loan forbearance and the commercial real estate sector,” the bank said in its January news release. Lastly, Detroit-based TCF Financial Corp., the largest bank headquartered in Michigan, also highlights the general trend of how banks experienced a tumultuous year. The bank is set to complete a merger later this year with Columbus-based Huntington Bancshares Inc. that will create a new bank with about $168 billion in assets, among the 20 largest in the country. All told, TCF ended 2020 with about $222.8 million in earnings, a 25 percent decline from 2019. In an October earnings call with analysts, David Provost, then the bank’s executive vice chairman and now CEO, said that the pandemic created economic challenges “and the environment around us has left us shy of our target revenues,” and that “certain non-interest income categories have seen revenue pressures.” Paynter, with the Michigan Bankers Association, said that all told, a sense of fiscal conservatism on the part of lenders in recent years helped propel them through the crisis year of 2020. “I think that banks had been very prudent in their credit and lending policies since the Great Recession,” he said. “And as (the pandemic) began, having communication with their borrowers from the beginning and staying in close communication with them as things transpired to meet their needs, (that) made a big difference.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes
WORKFORCE
Moroun family’s Universal Logistics hiring 400 in Detroit Expanded east side warehouse to process parts for Stellantis’ new Jeep assembly plant BY CHAD LIVENGOOD
Universal Logistics Holdings Inc. is hiring 400 employees at an east side Detroit warehouse that the Moroun family company recently doubled in size to process the majority of parts destined for Stellantis’ new Jeep Grand Cherokee plant on Mack Avenue. The Warren-based logistics and supply chain management company (NASDAQ: ULH) is seeking warehouse workers, forklift drivers, Class A CDL drivers, mechanics, office clerks and supervisors to raise its headcount to more than 1,000 workers, said Denny Roland, vice president of operations for Universal Logistics. All but the management positions are union jobs represented by Teamsters Local 299, Roland said. Universal Logistics completed an expansion of the facility in late 2020 to handle sub-assembly of parts for the new Mack Avenue plant after previously using the built-to-suit warehouse for just-in-time deliveries to General Mo6 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
The Moroun family’s Crown Enterprises LLC nearly doubled the size of a 500,000-squarefoot logistics and sub-assembly facility to manage and supply parts for Stellantis’ new Jeep plant on Mack Avenue on Detroit’s east side. | UNIVERSAL LOGISTICS HOLDINGS INC.
tors Co.’s Detroit-Hamtramck Assembly Plant (now called Factory Zero) before it was idled for retooling to build all-electric pickups and SUVs. The revamped 1 million-square-foot facility will handle the sequencing and sub-assembly of some 114 compo-
nents for Jeep Grand Cherokees being assembled at the Mack Avenue plant, Roland said. “With D-Ham closing down and FCA needing a new facility, we were able to expand the building from 535,000 square feet to 1 million square
feet,” Roland told Crain’s. When a subsidiary of Universal Logistics operated the facility for crossdock shipments of parts to the GM plant, it had 240 workers, Roland said. The company’s new contract with Stellantis — formerly Fiat Chrysler Automobiles — has required a rapid expansion of the workforce to 600 employees. Universal Logistics needs to fill another 400 positions in the coming months, Roland said. Detroit At Work, the city’s workforce development agency, is helping Universal Logistics recruit Detroiters to fill jobs at the Georgia Street facility in Detroit’s I-94 Industrial Park. Through a memorandum of understanding with Detroit At Work, Universal Logistics has pledged to prioritize Detroit residents in its hiring process. Crown Enterprises LLC, the real estate arm of the Moroun family of companies, oversaw the construction of a nearly 500,000-square-foot addition to the Georgia Street facility. The Georgia Street warehouse is one
of three auto parts logistics facilities that Crown Enterprises has built to suit for Stellantis, said Michael Samhat, president of Crown Enterprises. All three supply-chain facilities are tied to the Auburn Hills-based automaker’s $4.5 billion investment in Southeast Michigan plants. The second is a ground-up 450,000-square-foot facility at East 9 Mile and Hoover Road to support the Warren Truck Assembly Plant. That facility is being operated by Dutch third-party logistics provider syncreon Group B.V. On Freud Street in Detroit, Crown Enterprises is more than doubling the size of a parts warehouse that faces East Jefferson Avenue and will service Stellantis’ Jefferson North Assembly Plant. “These are big facilities, it’s a big initiative with one client and in close proximity,” Samhat told Crain’s. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
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COMMENTARY
Penobscot owner needs to sell to capable landlord
DANIEL SAAD FOR CRAIN’S DETROIT BUSINESS
I
EDITORIAL
Don’t lose sight of the damn roads T
he $1.9 trillion federal stimulus bill is spraying a firehose of money into state and local government coffers. It’s now up to elected officials to spend it responsibly — and prioritize future financial stability over political expediency. That means not throwing money at boondoggles or entertaining calls to cut every resident a check. It means treating the windfall like the unexpected gift it is — a chance to address immediate needs that will benefit all, while potentially freeing up funds to pay down debts and liabilities. The most immediate of needs? Infrastructure. Governments at all levels in Michigan are poised to receive $10 billion from the stimulus: $5.6 billion for the state and $4.4 billion for municipalities. Local governments LOCAL in Michigan should GOVERNMENT direct this money to the damn roads — OFFICIALS and overpasses, and SHOULD BE bridges, and every other piece of crumHAVING THESE bling concrete that’s DISCUSSIONS been driving business NOW — IN OPEN away from our state for too long. AND ACCESSIBLE Spring is the perfect time for prioritizing WAYS potholes. And using stimulus cash to invest in repairs now could save money in the long term, as infrastructure advocates have long pointed out. The stimulus bonanza alone won’t solve years of neglect. The cost of reconstructing a mile of highway in Michigan has nearly doubled in five years to $3.45 million, according to the state Senate Fiscal Agency. The annual price tag to fix the roads now stands at a
whopping $3.4 billion, driven in part by rising costs of labor, machinery and materials. Still, there’s enough federal money flowing to make a dent. One Michigan city manager called it an “almost sickening amount” — not a criticism, but rather a reflection of the responsibility involved in deciding how to spend it. Wayne County, for example could get a $339 million windfall, more than half of its annual general fund budget. Oakland County, the state’s wealthiest, stands to receive nearly $244 million. While the state funds the bulk of highway repair in Michigan, county and local governments have plenty of projects worthy of funding, from neighborhood street resurfacing to municipal water and sewer upgrades to dam repairs. There are some restrictions on the stimulus money. Cities and states cannot deposit the money in underfunded pension funds, and the state Legislature can’t use it to make state-level tax cuts. But the cash could be swapped for general fund revenue, freeing up that money to pay down debt — a win-win for both short- and long-term needs. It’s unclear exactly how the restrictions on the funding will play out, or whether there’s a way to indirectly shore up ailing pension funds that are hobbling many municipal budgets in Michigan. In the meantime, local government officials should be having these discussions now — in open and accessible ways. Spending decisions of this magnitude should involve an effort to include public input — a commodity that’s been in short supply during the pandemic. This is not an emergency. It’s a chance to make thoughtful decisions about an enormous amount of money that stands to benefit Michigan far into the future. It’s important to decide wisely.
f the surviving children of the Penobscot Building’s late owner Andreas Apostolopoulos truly cared about Detroit, they would sell the iconic building and never buy real estate here again. For at least the second time in 14 months, the Detroit Fire Department was dispatched to the building last week as a result of a suspected building fire in the basement that turned out to be an overheated boiler that damaged electrical equipment, creating a burning smell. This comes after an actual fire in January 2020 sent its workers streaming down to Griswold Street, after more people were trapped in elevators suspended hundreds of feet above the ground Wednesday, after the news last month of human excrement accumulating in nonworking toilets, after people shivered in the building this winter for several days without heat, after debris and waste accumulated, after more threats by the city’s building and law departments to take the ownership to court over myriad maintenance and upkeep failures. All that’s to say: It’s abundantly clear that they lack the desire or capability, or some combination of both, to care in any meaningful way for the skyscraper, which they paid just $5 million or so in cash for when the commercial real estate market had bottomed out. Or, for that matter, any other building they’ve bought here in the last 12 years. Let’s not forget that they were going to tear down the former State Savings Bank Building before selling it to Dan Gilbert. The Pontiac Silverdome rotted under their stewardship, compelling a city lawsuit that ultimately forced Triple Properties to pay to raze the stadium (which took two implosions, if you’ll recall). So in no uncertain terms, let me say: Cash out. Take your money. Leave. Never come back. The problem is, they won’t accept anything less than $100 million for the building, which easily needs tens of millions of dollars in improvements to bring it into the modern
PINHO
era with reliable elevators and HVAC systems and other costly improvements. Fat chance of them spending that. In 2015, when the orb atop the building burned out, it was only until Green Light Detroit offered to fix it — for free — that it was repaired. It’s only been when the city threatened a nuisance abatement lawsuit that Triple Properties did anything whatsoever to improve the building’s conditions. Yet still, the threat remains just that: a threat, not an action. “The Penobscot has been cited for numerous code violations and has demonstrated persistent difficulty getting the building into compliance,” Lawrence Garcia, the city’s corporation counsel, said in a statement last week. “The city has the right to sue to correct those problems. However, the building’s representatives have indicated significant progress has been made, and the city is in the process of verifying that.” Still, it’s not enough. When and if Triple Properties fixes those issues, it’s only a matter of time with a nearly century-old building that more serious repairs will be needed. Buildings, like people, decay with age. And you’ll have to forgive me if I have precious little confidence that the company will fix them without legally being compelled to do so. Short of every tenant backing out of their leases and moving elsewhere, strangling the building’s cash flow, there’s not much that can be done on the private-sector side of things to compel a sale, I’m told. The building has no known mortgage, so a tenant can’t request a receivership in court, I’m told. See PENOBSCOT on Page 9
The Penobscot Building downtown is in need of new ownership. |LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
Kirk
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
Short-term rent moratoriums will put people in street in long term BY MATTHEW I. PALETZ
An underreported fallout from seemingly interminable government COVID rent moratoriums and rental assistance programs is the impact that more than a year Matthew I. of “bad” rental Paletz is the debt is going to CEO of Troyhave down the based Paletz road for both Law. landlords AND tenants. Ironically, contrary to what has been reported, rent moratoriums do not erase the contractual obligation of people to pay their rent. Neither does it erase the obligation landlords have to pay their mortgages. There is no magical black hole for the debt that has accumulated during this period of government sanctioned rent suspension. To be frank, it’s going to affect us all. My biggest question is this: if the government continues to send out checks for rental assistance, why do we need a rent moratorium? Eviction is a natural part of a tenancy contract and if the landlord cannot legally hold their tenants to these contracts, there is no incentive for renters to negotiate payment if they can live there for free. This is not unlike the recession of 10 years ago, when homeowners who couldn’t pay their mortgages, sat in their homes for sometimes years rentfree, before the banks finally foreclosed on them. Fast forward to now, and let’s discuss for a moment what this will mean for tenants in 2021 and beyond. Eventually, those who can’t pay their current or back rent are going to find themselves evicted and looking for another place to live. It’s in this scenario, that they’re going to be faced with a devastating form of renter double jeopardy. Specifically, not only are landlords going to be forced to raise
PENOBSCOT
From Page 8
All this means that someone with deep pockets and deeper concern for the historic building’s legacy and workers needs to step forward and make a reasonable offer to get it out of the Toronto-based family’s hands. Until that happens, workers will remain fearful. “That place is a death trap,” Barbara Dmoch, who works in a law office in the building, wrote me in an email last month. She is the wife of my former editor at an Oakland County weekly newspaper where I worked for five years in my 20s. “I’m not exaggerating. I’ve been dropped multiple floors in elevators to the point where I instinctively cram into a back corner and brace myself whenever I get in one. Had to go down 42 flights of unsafe stairs for a fire, water constantly not working, intermittent heat/air, vermin, mold, etc. It’s such a shame because it’s a beautiful building. I hope the family sells it, or at least puts some money into it.” Steve Apostolopoulos, managing partner of Triple Properties, did not respond to a message seeking comment. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
rents to make up for COVID-related fect, on a continuing basis, the people shortfalls, pricing many renters out of they were meant to help. For example, a random government the market, but they’re also going to tighten the process of financial preap- agency like the Centers for Disease Control and Preprovals, a bar vention, should many renters will CONTRARY TO WHAT HAS have never been not be able to in the housing meet. BEEN REPORTED, RENT business to begin Of course, govwith. Even now, ernment “solu- MORATORIUMS DO NOT despite its authortions” like rent ERASE THE CONTRACTUAL ity being struck abatement and assistance pro- OBLIGATION OF PEOPLE TO down in federal courts in Texas grams are almost PAY THEIR RENT. and Ohio, it is still always shortterm, knee-jerk fixes to much bigger expected to extend the current March problems. In this case, these programs 31 deadline on eviction moratoriums. are obviously going to adversely af- This moratorium will affect a renter’s
credit rating, reputation and financial status. So landlords, even when they do legally get their properties back, may have a lot of hesitation in renting to an applicant with more than a year of bad debt. The result is going to be that an awful lot of people needing a place to live will have very few options due to the government’s short-sighted policies. The next logical domino to fall is municipalities, which are going to find themselves cash-strapped due to a lack of revenue, and will in turn undoubtedly raise taxes and add more red tape to their housing oversight, costing everyone additional money in fees and big brother regulation. Again,
a foreseeable consequence that will negatively affect renters. Anyone who follows these types of programs could see from a mile away how this governmental overreach, which I find unconstitutional, would disrupt the delicate balance between landlords and tenants. As a result, this bad rental debt will not only keep families from finding affordable housing in the future, but financially will leave landlords holding the bag if these tenants file for bankruptcy protection. The bottom line is this governmental interference is unsustainable, and the negative effects will be with us all for years to come.
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FAMILY OWNED BUSINESSES
LIVING THE LEGACY
Women find success taking the helm at companies started by their parents, grandparents BY ALLISON TORRES BURTKA | SPECIAL TO CRAIN'S DETROIT BUSINESS
In this section
Taking over a business is always momentous, but the stakes are even higher when it’s a business that a parent or family member started from scratch and nurtured for years. All the women in this section are running businesses that a parent created. Some of them always intended to carry on the family business, but others got involved only after careers in other fields and other places. Around the world, most family businesses are run by men, according to the 2020 KPMG/STEP Project report The Power of Women in Family Business. Only 18 percent of family business leaders are women. The women covered here run businesses that span different sectors: a florist shop, a law firm, and a construction company. But they have run into some similar challenges since they took the reins, including how to fill their parents’ shoes, how to evolve the business and still keep it true to its roots, and how to keep their work going during the pandemic.
` Sisters carry on a construction company that their father and grandfather built. PAGE 11
10 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
` Keeping a Black-owned florist shop in Detroit alive. PAGE 12 ` A second-generation female CEO guides a business that her mother started. PAGE 12
“I KNEW MY FATHER LOVED THE CITY AND LOVED THE COMMUNITY. OUR CITY WAS THE HEART OF US. ” — Alice Brazelton-Pittman
Alison Orlans became president and CEO of companies her mother started, and now they work as a mother-daughter team. Along the way, they had to figure out how to work with different communication styles and balance work and family. “Through these challenges, my mom and I have developed a deeper relationship and a better appreciation for each other’s strengths, perspective, and what each of us brings to the table,” Orlans said. “People have said to me, ‘Oh, you have big shoes to fill.’ And it took a while for me to be confident enough in my own skills and abilities that I could say, ‘I’m not filling her shoes but completely different ones.’” Sisters Michelle Aristeo Barton and Anne Aristeo Martinelli now work with each other and with other family members in a company that they took over from their father, who founded it with their grandfather. So it is a family business through and through. “We watched our father put
his heart and soul into this business and build it up from essentially nothing,” Aristeo Barton said. When Alice Brazelton-Pittman decided to take over the flower shop her father opened 80 years ago, she came out of retirement in her 70s to keep it going. Her brother and her sister had also run the business for many years. She decided she wanted to keep Brazelton’s Floral alive not just for the family but also because of its significance as a longtime Black-owned florist in Detroit. “I knew my father loved the city and loved the community. Our city was the heart of us,” she said. “I’m pleased and honored to be here at this time of restructuring of Midtown.” Brazelton-Pittman said she’s pleased when her children and grandchildren, as well as young entrepreneurs she’s met, have told her that her story has encouraged them. See FAMILY on Page 12
FOCUS | FAMILY OWNED BUSINESSES
Michelle Aristeo Barton (left) and Anne Aristeo Martinelli (right) with their father Joseph Aristeo. | CRAIN’S DETROIT BUSINESS
Sisters carry on a construction company built by their father and grandfather Pair also mentors other women-owned businesses BY ALLISON TORRES BURTKA SPECIAL TO CRAIN'S DETROIT BUSINESS
Michelle Aristeo Barton has worked in the family business, Aristeo Construction, for her entire career, starting when she helped answer phones on the weekends at 7 years old. “I’m pretty confident my dad had people call in on Saturdays just to give me something to do,” she said. Now, after serving in numerous roles across the company and earning her MBA, she is president of the company, one of the nation’s top 10 general contractors in manufacturing. Her sister, Anne Aristeo Martinelli, spent 16 years outside of Michigan in leadership roles at strategy consulting firms and as a retail executive, and she decided to return when her father told her in 2017 that he was planning to retire. It was time to change gears and move her family to the Detroit area. Their father, Joseph Aristeo, and grandfather, Agostino Aristeo, founded the company in 1977. “They had a $10,000 loan and a truck, and three months into it, our grandfather passed away,” said Aristeo Martinelli. So their father, his brother and brother-in-law, and a close friend were the founding team that grew the company. Like their grandfather, who immi-
“WE’RE AT A VERY UNIQUE SCALE AND VANTAGE POINT, AND WE REALLY WANT TO WELCOME MORE WOMEN INTO THE FIELD.” — Anne Aristeo Martinelli
grated to the U.S. from Italy, and their father, the sisters share an aggressive spirit, Aristeo Martinelli said. “And we’re trying to build on our family’s legacy,” she said. “But family is a pretty expanded definition” that includes all the dedicated teammates who have helped move the company forward, she said. When Aristeo Martinelli joined the company, working with family was new to her, so she had to adjust as she figured out how to compartmentalize. “Do we not talk about it at family dinners? Where do work and life meet?” she remembered thinking. The company’s projects range from major manufacturing projects, including the recent Stellantis Detroit Assembly Plant, to renewable energy projects and work for higher education institutions. Aristeo Barton said she likes being part of a team that figures out how to do something that seems impossible. “We just finished up some work with a wind tunnel that was the first in the world of its kind,” she said. “Con-
struction in general is really fast paced, really dynamic, and very demanding. And I think that attracts a certain breed of people.” Aristeo is the largest Women’s Business Enterprise National Council-certified general contractor in the nation. The company is one of the top 200 general contractors in the nation, and it has won numerous awards, including the 2019 Toyota Excellent Supplier Award for Construction, Machine, & Equipment, and the 2020 Stellantis North America Indirect Diversity Supplier of the Year Award. “We’re at a very unique scale and vantage point, and we really want to welcome more women into the field,” said Aristeo Martinelli. To do that, the Aristeo sisters have been mentoring other women-owned businesses, including several in the construction field, through the Great Lakes Women’s Business Council. “To hear some of the success stories that have come out of the women business owners, it really inspires you,” said Aristeo Martinelli. “There’s so much perseverance that they have, and so much grit, particularly if they’ve been challenged by the pandemic.” The company’s success has been a team effort, Aristeo Barton said. “There’s a deep purpose and connection that we all have in trying to move this business forward and perpetuate it. Our goal has always been to leave it better than we received it.”
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FOCUS | FAMILY OWNED BUSINESSES
Keeping a Black-owned florist shop in Detroit alive
Started by her father in the 1940s, business woman keeps legacy going despite challenges BY ALLISON TORRES BURTKA SPECIAL TO CRAIN'S DETROIT BUSINESS
Brazelton’s Floral has had its doors open for more than 75 years. When Alice Brazelton-Pittman’s father, Edgar Brazelton, opened the shop in the 1940s, it was one of the first Blackowned florist shops in Detroit. As a girl, Brazelton-Pittman worked in the shop alongside her father, brother and sisters. Her responsibility was sweeping the floor, setting up the card arrangements, greeting customers, and watering the plants. She gravitated toward the business aspects, while her siblings were gifted in floral design. “I was proud to participate in the family’s business,” she said. “I knew my father’s love for the community and the city,” Brazelton-Pittman said. He helped develop programs that supported the Black community, and he mentored many young, Black entrepreneurs, she said. When Brazelton-Pittman’s father died, her sister ran the business, and then her brother took over. When her sister and brother died within a few months of each other in 2018, Brazelton-Pittman was at a crossroads. She and her husband worked in the ministry for decades, and she had been away from the business for 50 years. She had to decide whether to shutter the shop or keep it going. Brazelton-Pittman spoke with her
Alice Brazelton-Pittman
“MY DAD ALWAYS USED TO SAY, ‘REMEMBER THAT YOUR CLIENT IS YOUR BREAD AND BUTTER. IF YOU DON’T TAKE CARE OF YOUR CLIENT, IF YOU DON’T TAKE CARE OF YOUR BUSINESS, YOUR BUSINESS CAN’T TAKE CARE OF YOU.’” — Alice Brazelton-Pittman
younger sister, who lives in a local nursing home, and she encouraged Brazelton-Pittman to keep the legacy going. So she stepped in. “Running the business efficiently has definitely been a learning curve in this 21st century,” Brazelton-Pittman said. In spite of challenges she has faced, “it has been the words of my younger sister, my family, and my husband, and prayer that have kept me encouraged.” Brazelton-Pittman has considered closing the shop, but every time she thought about it, someone from the community would come in and ask her to keep it open. “I always tell people, ‘If the lights are on and the door’s still open, I want you to know it’s a miracle,’ and that’s why I call it the miracle on West Grand Boulevard,” she said. Brazelton-Pittman appreciates the support and encouragement she’s received from her family, loyal intergenerational customers, and neighbors in the community, including the James Cole funeral home, the Motown Museum, Henry Ford Hospital and the West Grand Boulevard Collaborative. Brazelton-Pittman runs the business on what she calls the five Rs: reverence, respect, refrain, resilience and reward. Reverence: “My reverence and faith in God give me the wisdom and the strength to continue the legacy,” she said.
Guiding a business that her mother started Second-generation female CEO evolves company, keeps values
BY ALLISON TORRES BURTKA SPECIAL TO CRAIN'S DETROIT BUSINESS
When Alison Orlans was growing up, she remembers her mother, Linda Orlans, attending law school at night. “I could see how devoted she was, and I could just tell that her work was important,” she said. Now, they’re a mother-daughter team. Her mother founded the law firm Orlans PC and eTitle Agency more than 20 years ago, and Alison Orlans is now president and CEO of both companies, while her mother serves as founder and executive chair. The duo also runs three other related companies. When they first started working together, they hit some snags. “First, my mom and I had to evolve our relationship from parent-child to partner, and one of mutual respect. Then, we had to learn about each other in a new way,” Orlans said. “She is an entrepreneur with a capital ‘E,’ and I am more pragmatic. It took us time to figure out how to blend our different styles and turn it into an advantage and a strength.” When Orlans was in high school and college, she did filing work for Orlans PC, and then she moved away from Michigan for law school and for her first job as a lawyer. “I did hope that eventually I'd be able to come back and carry on her vision,” she said. When she returned, she spent the first few months rotating through different departments, learning more 12 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
Linda and Alison Orlans
“I’M PROUD TO HAVE DEVELOPED AN UNPARALLELED TEAM, EVOLVED OUR COMPANY CULTURE, OUR PROCESSES, OUR CLIENT BASE, AND OUR GEOGRAPHIC REACH, WHILE STILL HONORING THE VALUES AND THE STANDARDS THAT MY MOM ESTABLISHED.” — Alison Orlans
about each area. She became president and CEO of eTitle in 2006 and of Orlans PC in 2013. Part of her mother’s vision was “bringing innovative processes to an industry that had become stagnant,”
Orlans said. One example is remote closings. “We were among the first to implement remote closing technology, well before the pandemic,” she said. “Now, with the evolution of remote work, we have the opportunity
to further reinvent ourselves and provide an unmatched client experience.” Orlans PC grew rapidly, and Orlans helped guide it to the next level so that its growth would be sustainable. “I developed a culture of collaboration, serving each other and serving our clients,” which garnered the company several awards, Orlans said. “I’m proud to have developed an unparalleled team, evolved our company culture, our processes, our client base, and our geographic reach, while still honoring the values and the standards that my mom established.” Orlans PC is one of the largest Women’s Business Enterprise National Council-certified women-owned law firms in the country. Orlans’s mother “started this business almost 25 years ago as a single parent, in a very male-dominated field,” Orlans said. “It has not been easy; being a family-owned business and a women-owned business bring additional layers of difficulty. Today, we are an industry leader because we have worked hard to develop an incredible team with deep expertise, a core-values driven culture that puts people first, and we know we serve an important purpose.” Orlans said she’s honored to be able to work with her mom, who has been a mentor and a role model. “Working with her has allowed me to appreciate her in an entirely different context and build a deeper relationship with her.”
Respect: This includes respect for employees and clients. “My dad always used to say, ‘Remember that your client is your bread and butter. If you don’t take care of your client, if you don’t take care of your business, your business can’t take care of you.’” Refrain: It’s important to know when to pull back. “I can’t be a yes person to everything and everyone in every situation,” she said. Resilience: Entrepreneurs need to be resilient. “On a day of sunshine or storm, you have to have resilience, and you have to know how to encourage yourself to keep going.” Reward: “My reward is when customers call us back and say, ‘What a beautiful arrangement,’ especially for those that are in the season of mourning,” Brazelton said. “Many people say: Why send flowers to a funeral when they’re only going to throw them in the ground?” she said. But before they get to the ground, they are an expression of love for the deceased and support for the family, and they “give the family a little bit of joy,” she said. Brazelton-Pittman thinks about the family legacy when she sits at her father’s old desk. She was considering replacing it, “because it shows its age,” she said. “But it is now my honor and privilege to sit at a desk that my father, brother and sister once sat at.”
FAMILY
From Page 10
Although most family businesses are run by men, other women-owned businesses are no longer a rarity. In 2019, they accounted for 42 percent of all businesses in the U.S., according to the American Express 2019 State of Women-Owned Businesses Report. In 1972, they made up only 4.6 percent. And between 2014 and 2019, metro Detroit saw the largest increase in economic clout for women-owned businesses (which includes a combination of growth rates for the number of firms, employment and revenue). These four women serve as examples of what’s possible. To be an entrepreneur, “it has to be something that you love,” Brazelton-Pittman said. “It takes love, it takes hard work, and it takes faith in yourself.” All four credit the people they work with — those who are related to them and those who are not. One thing Orlans has learned is that “most business issues, in my experience, are not unique to your business,” she said. “Cultivate a support system and a network where you can get feedback, that helps you keep your confidence, builds you up and cheers you on.” For women running businesses or aspiring to, Orlans advised, “Protect your confidence. Work on prioritizing your inner champion over your inner critic.”
CRAIN'S LIST | MICHIGAN FAMILY-OWNED BUSINESSES Ranked by 2020 revenue YEAR FOUNDED FIRSTGENERATION OWNER
OTHER FAMILY MEMBERS IN MANAGEMENT WITH RELATION TO THE FIRST-GENERATION OWNER
PERCENT OF BUSINESS FAMILYOWNED
TYPE OF BUSINESS
COMPANY NAME LOCATION CONTACT INFO
REVENUE ($000,000) 2020/2019
MEIJER INC.
$20,091.0 1 1934 $18,100.0 2
Hendrik Meijer
Hank Meijer, executive chairman, grandson; Doug Meijer, director, grandson
NA
Supercenters and grocery stores
2
AMWAY
$8,500.0
1959 Jay Van Andel and Rich DeVos
Steve Van Andel, co-chair of the board, son of co-founder Jay Van Andel; Doug DeVos, co-chair of the board, son of co-founder Rich DeVos
100%
Direct selling business
3
ILITCH HOLDINGS INC.
$4,100.0 1
1959 Mike and Marian Ilitch
Christopher Ilitch, president and CEO, Ilitch Holdings Inc., son
100%
Food, sports and entertainment and real estate development industries
4
PLASTIPAK HOLDINGS INC.
$2,900.0
1967 William P. and Mary Young
William C. Young, president and CEO, son
91%
Manufacturer of rigid plastic containers and recycled plastic material for the consumer products industry
5
MOROUN FAMILY HOLDINGS 3 12225 Stephens Road, Warren 48089 586-939-7000
$2,746.1 1
1937 T.J. Moroun
Matthew Moroun, grandson, holds several executive positions
NA
Ambassador Bridge and various trucking and logistics companies
6
H.W. KAUFMAN GROUP INC./BURNS & WILCOX LTD.
$2,450.0
1969 Herbert W. Kaufman
Alan Jay Kaufman, chairman, president and CEO, son; Daniel Kaufman, executive vice president, COO, grandson; Jodie Kaufman Davis, corporate senior vice president, granddaughter
100%
Provides insurance services including distribution, brokerage, underwriting, reinsurance, real estate, financing, inspections, audits, risk management and third-party claims administration
7
THE SUBURBAN COLLECTION
$2,421.1
1948 Richard Fischer
David Fischer, chairman, son; David Fischer Jr., president and COO, grandson
100%
Automobile dealerships and related businesses
BARTON MALOW HOLDINGS LLC
$2,336.5
1924 Ben Maibach Jr. 4
Ryan Maibach, president, CEO, grandson; Doug Maibach, executive vice chairman, son; Ben Maibach III, vice chairman, chief community officer, son
74%
General contracting, construction management, design/build, engineer-procure-construct
SERRA AUTOMOTIVE INC.
$2,195.1
1973 Albert M. Serra
Joseph Serra, president, son
100%
Automobile dealership
10
WALBRIDGE
$1,912.3
1916 John Rakolta Sr. 5
John Rakolta III, president, and member of the board of directors, grandson; Lauren Rakolta, president of DFM Solutions and member of the board of directors, granddaughter
100%
Construction: general contracting, design build, construction management
11
HAWORTH INC.
$1,900.0 2
1948 G.W. Haworth
Dick Haworth, chairman emeritus, son; Matthew Haworth, chairman, grandson
100%
Furniture, interior architecture and technology solutions
12
SOAVE ENTERPRISES LLC
$1,688.3
1961 Anthony Soave
Angelique Soave, vice president, daughter; Andrea Soave Provenzano, vice president, daughter; Christopher Provenzano, project manager, son-in-law
100%
Diversified management holding company
13
ZEIGLER AUTO GROUP
$1,540.9
1975 Harold Zeigler
Aaron Zeigler, president, son
100%
Automotive dealer
GARBER MANAGEMENT GROUP INC.
$1,406.1
1907 Guy S. Garber
Richard Garber, president, grandson
80%
Auto dealerships and related companies
WOLVERINE PACKING CO.
$1,292.0
1937 Alfred Bonahoom
Jim Bonahoom, president, son; Roger Bonahoom, vice president, son; Jay Bonahoom, vice president, grandson
100%
Wholesale meat packer and processor; wholesale meat, poultry and seafood distributor
16
THE DIEZ GROUP
$1,265.0 1
1973 Gerald Diez
April Diez, vice chairman, daughter; Gerald Diez Jr., president, son; Sherry Diez, vice president, daughter; Mark Diez, vice president, son
100%
Aluminum and steel sales, processing, warehouse and logistics companies
17
LAFONTAINE AUTOMOTIVE GROUP
$1,241.0
1980 Michael T. LaFontaine
Ryan LaFontaine, CEO/dealer, son; Kelley LaFontaine, VP/dealer, daughter
100%
Automobile dealerships - sales, service, parts and body shop.
18
GENERAL RV CENTER INC.
$1,222.0
1964 Abe Baidas
Robert Baidas, CEO and chairman, son; Loren Baidas, president and chairman, grandson; Wade Stufft, vice president of operations, grandson-in-law
100%
Recreational vehicle dealership
ORLEANS INTERNATIONAL INC.
$773.5
1937 Max Tushman
Earl Tushman, president/CEO, grandson; Larry Tushman, vice president/secretary, grandson; Reed Tushman, vice president/ director of operations, great-grandson; Marc Tushman, vice president/director of logistics, great-grandson
100%
Meat importing and trading
KENWAL STEEL CORP.
$620.0
1947 Sol Eisenberg
Stephen Eisenberg, chairman and CEO, grandson
100%
Steel service center
21
PVS CHEMICALS INC.
$530.0
1945 Floyd Nicholson
James B. Nicholson, chairman, son; James M. Nicholson, chairman, grandson; David Nicholson, president, grandson; Tim Nicholson, COO, grandson; John Nicholson, vice president, grandson
100%
Manufacturer, marketer and distributor of industrial chemicals
22
FISHER DYNAMICS
$510.5 1
1947 Alfred J. Fisher Jr.
Alfred J. Fisher III, president and CEO, son; Michael Fisher, vice president, son; Alfred Fisher IV, vice president, grandson; Ashley Fisher, director of special projects, daughter; Judy Knudsen, shareholder, daughter; Tina Groh, shareholder, daughter
100%
Automotive seating systems and mechanisms
1
8 9
14 15
19 20
2929 Walker Ave. NW, Grand Rapids 49544 616-453-6711 www.meijer.com 7575 Fulton St. E., Ada 49355 616-787-1000 www.amwayglobal.com 2211 Woodward Ave., Detroit 48201 313-471-6600 www.ilitchcompanies.com 41605 Ann Arbor Road, Plymouth 48170 734-455-3600 www.plastipak.com
30833 Northwestern Highway, Farmington Hills 48334 248-932-9000 www.hwkaufman.com
1795 Maplelawn Drive, Troy 48084 877-471-7100 www.suburbancollection.com
26500 American Drive, Southfield 48034 248-436-5000 www.bartonmalow.com 102 W. Silver Lake Road, Fenton 48430 810-936-2730 www.serrausa.com
777 Woodward Ave., Suite 300, Detroit 48226 313-963-8000 www.walbridge.com 1 Haworth Center, Holland 49423 616-393-3000 www.haworth.com 3400 E. Lafayette, Detroit 48207 313-567-7000 www.soave.com 4201 Stadium Drive, Kalamazoo 49008 269-375-4500 www.zeigler.com 999 S. Washington Ave., Saginaw 48601 989-790-9090 www.garberauto.com 2535 Rivard, Detroit 48207 313-259-7500 www.wolverinepacking.com
8111 Tireman Ave., Dearborn 48126 (313) 491-1200 www.thediezgroup.com 4000 W. Highland Road, Highland Township 48357 248-887-4747 www.thefamilydeal.com 25000 Assembly Drive, Wixom 48393 248-349-0900 www.generalrv.com 30600 Northwestern Highway, Suite 300, Farmington Hills 48334 248-855-5556 www.orleansintl.com 8223 W. Warren Ave., Dearborn 48126 313-739-1000 www.kenwal.com 10900 Harper Ave., Detroit 48213 313-921-1200 www.pvschemicals.com 33300 Fisher Drive, St. Clair Shores 48082 586-746-2000 www.fisherco.com
$8,400.0
$3,900.0
$3,109.1
$2,867.5 1
$2,400.0
$2,730.8
$1,900.0
$2,039.9
$1,810.0
$2,250.0 6
$1,672.8
$1,278.7
$1,363.0
$1,324.0
$1,265.0 1
$1,156.6
$1,033.0
$566.0
$930.0
$605.0
$510.5
Researched by Sonya D. Hill: shill@crain.com | This list of family-owned businesses is an approximate compilation of the largest such businesses in Michigan. It is not a complete listing but the most comprehensive available. Crain's estimates
are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. For some companies, the founders were later bought out by another family. Carhartt Inc. which was No. 19 on last year's list declined to participate. NOTES: 1. Crain's estimate. 2. From Forbes. 3. Chairman, Manuel "Matty" Moroun died July 12 at the age of 93. 4. Founded in 1924 as C.O. Barton Co. by Carl Osborn Barton. The Maibach family acquired majority control in 1961. 5. George B. Walbridge and Albert H. Aldinger founded the company in 1916. John Rakolta Sr. bought the company in 1963 with business partner Robert Robillard. 6. From MiBiz.
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HEALTH CARE
Beaumont opens expanded pediatric neuroscience center $4.5 million center in Royal Oak named in honor of Florence and Richard McBrien BY JAY GREENE
An expanded pediatric neuroscience center at Beaumont Hospital in Royal Oak has opened after the four daughters of the late Florence and Richard McBrien donated $3 million in their honor. With an additional $1.5 million from Beaumont, the Florence and Richard McBrien Pediatric Neuroscience Center, which is now twice the size of its former space, is offering pediatric care for a wide array of neurological conditions. The 20,000-square-foot center — an increase from nine examination rooms to 20 — is on the third floor of the neuroscience building on the campus of Beaumont’s 1,131-bed flagship hospital at 13 Mile Road and Woodward Avenue. The McBrien sisters — Marcia, Melissa, Victoria and Dianne — made the gift because of their parents’ lifelong commitment to children. Two sisters are physicians: Dr. Melissa McBrien, chief of otolaryngology at Beaumont Royal Oak, and Dr. Dianne McBrien, a pediatrician specializing in children with disabilities. “Mom and Dad had a great heart for children — and a lot of empathy for parents, having raised five kids of their own. This center, which helps children and their families, is exactly the kind of work they would support consistent with their deep Catholic faith,” said Marcia McBrien in a statement. Florence McBrien, who died in 2018, was a retired teacher who lived in Grosse Pointe Shores. Her hus-
The expanded Florence and Richard McBrien Pediatric Neuroscience Center at Beaumont Hospital, Royal Oak. | BEAUMONT HEALTH
Richard and Florence McBrien | MCBRIEN FAMILY
band, Richard, who also was a teacher, died in 2011. Neurological conditions treated at the center include epilepsy, seizures, headaches and migraines, neuromuscular disorders, movement disorders and selected learning and behavioral disorders, sleep disorders and insomnia, neonatal neurology, neurodevelopmental disorders, neurogenetics, tuberous sclerosis, neurofibromatosis and developmental
BY CHAD LIVENGOOD
LISTEN TO WJR AM LIVE
MIKE SULLIVAN Founder and CEO Brand25 Media and Metro Detroit Golfers
Advocating for the health & wellness of children and families
SUZANNE MILLER ALLEN Senior Director of Community Responsibility and Social Mission Blue Cross Blue Shield of Michigan
BROUGHT TO YOU BY
14 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
HOST
PETER REMINGTON Founder and CEO The Remington Group
Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Whirlpool’s Noel temporarily takes reins at MEDC as CEO search continues
Tune in to WJR 760 AM for Caring for Kids, a monthly radio program highlighting issues and efforts locally, regionally and nationally, that impact the health and wellness of children.
SPECIAL GUESTS
gan’s largest health care systems with eight hospitals with 3,429 beds, 145 outpatient sites, nearly 5,000 physicians, 38,000 employees and 3,500 volunteers. It’s at the top of the Crain’s Detroit Business list of biggest Michigan hospital companies, with total revenue of $4.9 billion in 2019.
PEOPLE
GET A HEALTHIER OUTLOOK ON CHILDHOOD Tuesday, March 23 at 7pm
disorders and delay. “Our new pediatric neuroscience center is a leading-edge, multidisciplinary center offering innovative and collaborative approaches for the treatment of complex pediatric neurological conditions, including our highly touted Level 4 pediatric epilepsy program,” said Dr. Daniel Arndt, chief of pediatric neurology, at Beaumont Royal Oak, in a statement. Beaumont Health is one of Michi-
LARRY BURNS President and CEO The Children’s Foundation
For more information and to listen to past shows visit:
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A veteran Whirlpool Corp. executive has voluntarily taken the reins as interim CEO of the Michigan Economic Development Corp. while the quasi-governmental agency’s governing board deliberates over hiring a new chief executive. Jeff Noel, corporate vice president of communications and public affairs for Whirlpool, has taken on the role of serving as the legally required CEO of the MEDC. Noel, vice chairman of the MEDC’s executive committee, will make dayto-day decisions for the economic development agency in concurrence with Awenate Cobbina, chairman of the executive committee, according to an MEDC news release. The MEDC’s executive committee temporarily installed Noel as the official CEO of the organization following the departure of interim CEO Mark Burton, who joined the Honigman LLP law firm as a partner and co-leader of its economic development incentives group. Burton’s last day on the job was March 12. “We want all stakeholders working with the MEDC to know we remain
Noel
Cobbina
fully open for business and that the priorities of our state will continue to be met with a seamless leadership transition that has the full Executive Committee and staff attention until the new leader is named,” Cobbina said in a statement. Meanwhile, the MEDC executive committee’s search for a new CEO continues. Korn Ferry, a Los Angeles-based management consulting firm, has been conducting a national search for a new MEDC CEO since late summer. Cobbina said Korn Ferry’s search turned up 150 “diverse and highly respected” candidates from 26 states and Puerto Rico. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood
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NONPROFITS
Michigan Science Center affiliates with Smithsonian Will gain access to exhibitions, IMAX films, expertise and enhanced grants, memberships BY SHERRI WELCH
Southeast Michigan has another Smithsonian Institution affiliate: the Michigan Science Center. The designation will enable the Detroit-based science center to tap into the largest museum system in the world. It brings access to Smithsonian exhibitions, IMAX films and programs, expertise, professional development opportunities and special grant-funded projects with the Washington, D.C., museum. It also connects the science center to other affiliates, near and far, providing new opportunities for collaboration and jointly funded programs. All of those things will help lift the center’s quality and stature, President and CEO Christian Greer said. “We want to do more things like IMAX, but we need more content. And that is where Smithsonian comes in.” The science center already has a “television,” of sorts, through its IMAX theater, planetarium, Toyota 4D Engineering Theater and other spaces, Greer said. “Smithsonian is kind of like a Roku.” It will allow the science center to become more of a portal for off-site programs in science, technology, engineering and math, enabling it to take visitors to other places. With the affiliation, the science center also gains access to Smithsonian exhibitions and possibly, priceless historic artifacts. Before the Michigan Science Center, Greer helped the St. Louis Science Center, where he served as chief officer of science, education and experience for five years, to secure affiliate status with the Smithsonian. “In St. Louis, we became an affiliate and we immediately … gained access to the Smithsonian Apollo 11 capsule exhibition called ‘Destina-
As it looks at ways to work more closely with the Smithsonian Institution, the Michigan Science Center is already developing plans to expand its hands-on Spark! Lab, an invention and innovation curriculum. | MICHIGAN SCIENCE CENTER
tion Moon,’” Greer said. “That’s an example of what is possible.” Greer said he’s already received a call from the Smithsonian’s traveling exhibition service to start the conversation about the Michigan Science Center hosting an exhibit. “Of course, I’m going to ask them for the moon, literally,” Greer said. “In St. Louis, I asked for a space suit. They said, ‘Hell no,’ but it ended up being we got the biggest, hottest exhibit ever.”
New revenue opportunities The science center will pay an annual affiliation fee of $3,000 to ensure it has access to a dedicated, science center specialist at the national museum. Greer said he donated the membership cost for the first year because
of his strong personal belief in the value of the affiliation. Among other things, the affiliation strengthens the science center’s ability to attract grant funding, Greer said. “Think about the grants we apply for: Now we can say we are partnering with Smithsonian ... or any other organization in the network.” “It’s like a built-in way we can collaborate and have our funds and support being tied across different networks,” he said. As an affiliate, the science center can offer its members a co-membership to the Smithsonian, which comes with the Smithsonian magazine and access/ discounts to other online resources and lectures produced by the national museum. That’s something the science center could tie to a higher level of membership, Greer said, sharing revenue with Smithsonian. At the same time, the affiliation will
bring new Smithsonian resources to Detroit residents, Greer said, noting the science center and Detroit Public Library teamed up to distribute 5,000 copies of a seasonal education guide from the Smithsonian. “Smithsonian wants to do more thing in Detroit … when they think about where we’re positioned, with the need being so great.” Throughout the rigorous application process to affiliate with Smithsonian, “It was clear that MiSci had thoughtfully considered the many ways in which our organizations could collaborate to enrich the Detroit community with educational programming and exhibition,” Myriam Springuel, director of the Smithsonian Institution Traveling Exhibition Service and Smithsonian Affiliations, said in an emailed statement. “We pay attention to many factors during the review process, including the organization’s capacity and interest
to work with the Smithsonian and if there are other affiliates in that community.” Another aspect Smithsonian looks at is how the affiliation might create a mutually beneficial relationship, she said. “Discovery and learning are at the core of both MiSci and the Smithsonian’s missions, and exploring the ways in which we can collaborate to have critical conversations around science is something both our organizations are looking forward to.” With the affiliation, the science center has gained an instant rapport with other affiliates, something that opens the door to new types of collaborations, Greer said. In Michigan, other Smithsonian affiliates include: the Arab American National Museum in Dearborn, Yankee Air Museum in Belleville, Michigan State University Museum in East Lansing and Air Zoo in Portage. The science center could, for example, team up with the Arab American National Museum on a lecture series on algebra, which had roots in the Middle East, or on a planetarium program about the stars, many of which were first studied and named by ancient Arabic civilizations, Greer said. Those are examples of things that combine science and cultural context, he said. “We’ll be having those conversations this year.” As it looks at ways to work more closely with Smithsonian, the science center is already developing plans to expand its hands-on, minds-on Spark! Lab, an invention and innovation curriculum that already had ties to the national museum. The exhibit allows for hands-on tinkering to build things and offers lessons on taking something from an idea to market, with support from DTE Energy Co., Lear Corp. and Penske Corp. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch
REAL ESTATE
Detroit developer plans 250-unit project north of DIA Project would cost $40 million to $45 million, with construction starting next year BY KIRK PINHO
A $40 million to $45 million residential development is envisioned for a chunk of land a few blocks north of the Detroit Institute of Arts. The 250-unit development by Detroit-based American Community Developers sits, in part, on pieces of property currently owned by the Detroit Land Bank Authority totaling about 2 acres, according to a Detroit City Council briefing memo. That land, along with other adjacent land ACD already owns, would house the development, which would be mixed-income with either apartments or condominiums, the document says. Mike Essian, vice president of ACD, said Tuesday that the project’s design is contingent on entitlement and zoning work, which is expected to take several months. Construction is anticipated to begin next year. “We want to do a project that’s cohesive and more meaningful for that 16 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
This site at John R and Palmer Street north of the Detroit Institute of Arts is targeted for a 250-unit mixed-income residential development by Detroit-based American Community Developers. It would cost between $40 million and $50 million. | KIRK PINHO/ CRAIN’S DETROIT BUSINESS
intersection because it’s kind of the gateway to Midtown from I-94,” he said, adding that conversations have taken place between ACD and Midtown Detroit Inc., Wayne State University and the College for Creative Studies about the development effort. The land bank properties would be sold for approximately $1.71 million, contingent upon things like securing project financing and obtaining the necessary planning and zoning approvals, the city council document says. The properties are at 214 Hendrie St.; 206 Hendrie; 247 E. Palmer St.; 227 E. Palmer St.; 237 E. Palmer St.; 5726 John R; 5710 John R; 104 Hendrie; 112 Hendrie; 118 Hendrie; 100 Hendrie; 5751 John R; 5757 John R; and 5745 John R. ACD is a mixed-income developer with active projects in, among other areas, the Brush Park area, where it is building what is expected to become the neighborhood’s tallest building, and Corktown, where it is working
with the city and others to secure federal funding for a large-scale mixed-income development with hundreds of apartment units across multiple sites. “The goal here would be to bring about a mixed-income development similar to other projects in the city we are doing right now with a strong mix of market rate of mixed-income and affordable housing,” Essian said. The area has been targeted for investment in both real estate as well as other amenities recently. Late last year, the Cultural Center Planning Initiative received a $500,000 grant from the John S. and James L. Knight Foundation, with additional support from the Ralph C. Wilson Jr. Foundation, Crain’s reported at the time. The funding is being used to provide free internet access to the area around the museum district. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
ALLIANCE
From Page 3
“... We are fully committed to the opportunity to do everything we possibly can as an institution to do what banks are supposed to do, which is to support businesses like what’s going to happen here ...,” he said. The alliance also plans to do programming with the NAACP’s Detroit chapter and work with the Detroit Pistons later this year on grant-giving. It will host events and educational programming unique to Black businesses, Dean said. The group will also push for public policy changes, priorities for which will be set once members join. A business resource center with meeting and work space, printers and more for members is expected to open in downtown Detroit, though no lease is signed yet. The alliance also plans an online “Buy Black” directory. “After George Floyd died, a number of corporations and businesses were trying to figure out how to support Black business owners, and while that was encouraging, a lot of times what happens is a moment passes and then people forget,” Dean said.
RESIDENTIAL
From Page 3
Buyers who held off last spring got into the market during the fall and winter only to come up against a tougher-than-usual sellers’ market. As a result, there are more people hungry for a home who are still searching, agents said, coming up against a market with a shrinking inventory of available homes. “The minute (Michigan’s) restrictions were lifted, things went crazy and stayed that way,” said Karen Kage, CEO of Farmington-based Realcomp LTD, the largest multiple listing service in the state. Realcomp said in its February report that days on market — or how long a home goes from listing to sold — dropped 34 percent to 44 days on average compared to 67 days during the same period in 2020. Showings per individual home also doubled from 8.5 to 15.3, its report showed. The same is true in Detroit. Austin Black II, head of Detroit-based brokerage City Living Detroit, lives in Sherwood Forest, where there isn’t a single house for sale out of about 435 homes. University District, south of his home, has about 1,400 homes with just two on the market. “I’ve never seen that in these neighborhoods,” Black said. “Usually, in a winter market, you’ll see fewer listings but nothing like we’re seeing now.” Those homes Black has on the market are selling quickly. A three-bedroom, 1,839-square-foot Colonial Victorian Park house near Detroit’s Jefferson Chalmers neighborhood Black listed for $250,000 was on the market for five days and sold for $265,000 with a January closing. Black said one reason for the buying spree is many white-collar workers never lost their jobs because of the coronavirus-related economic slowdown. They’ve also padded their savings from staying in and not eating out as much. Plus, with major companies such as Ford Motor Co. keeping many employees at home to work, Metro Detroiters are thinking differently about how and where they want to live, Black said. That was true for William Kelly and Meryl Ethridge, both 30. The couple wanted more space with Kelly work-
Metro Detroit Black Business Alliance Following are the staff and founding members of the new organization:
Brian McKinney: CEO and founder, Gayanga Co.
Charity Dean: MDBBA president and CEO, former director of civil rights, inclusion and opportunity for city of Detroit
Roderick Hardamon: CEO, URGE Development Group
Kai Bowman: MDBBA chief operating officer, former vice president of Detroit Means Business Chuck Nolen: MDBBA board chair, owner of Cutter's Bar & Grill in Eastern Market Kerry Buffington: partner and owner, Kapstone Employment Services Richard Hosey: developer, Hosey Development Regina Gaines: co-owner and co-founder, House of Pure Vin
Joe Bowman: owner, Humble Brothers LLC Tatiana Grant: entrepreneur and investor Harvey Hollins: founder, Hollins Consulting LaToya Henry: owner, LAH Strategies Danielle North: owner, Kidz Kingdom Kandiss Ecton: State Farm Insurance agency owner Joseph Hines: owner, TherapySpa SOURCES: CHARITY DEAN AND CHUCK NOLEN
Costs to join the organization are: $300 annually for Black-owned micro businesses, with one or zero employees; $600 annually for small businesses up to 49 employees; and $1,200 for businesses with 50 and more employees. There’s also a $50-a-year membership for members 21 years and
younger. Non-Black businesses can be ally members for $200, $400 or $800 a year depending on size. The alliance is bringing in young adults because engaging them is important to building generational wealth, Dean said, as a racial wealth gap stems from decades of racism and
ing from home in and March 22, 2021 sales Ethridge’s variable schedule as a surgery resident at Ascension St. John Hospital. Plus, a noisy neighbor at their Brush Park apartSchneider ment pushed their house hunt forward. They started looking in October and closed in February on a 2,100-square-foot, three-bedroom home in Detroit’s LaSalle Gardens neighborhood. Kelly and Ethridge saw a dozen houses in Corktown and other areas before finding their 1916 charmer with a large lot and tall windows. Drawn to its renovated interior, they put in a low offer and were rejected. After some back and forth on the original asking price of $339,000, they settled at a price only to have the appraisal come back lower. Further negotiations with the buyer resulted in a final sale at $308,000 with the seller making up the difference. “We were told inventory was low in our price range, which was a $200,000 to $400,000 starter home. We had friends looking in Grosse Pointe but they told us it was cutthroat. They’d go to put an offer in on a house and find out there were already five cash offers in. We wouldn’t have ended up buying if we were in that scenario,” Kelly said.
years since 2008. “Your first offer has to be your best offer,” Black said. “If we don’t see significant improvements in the number of homes listed, it’s likely this trend we’ve been seeing will continue for the rest of the year.” Another reason for the buying fever is that millennials are creating a more competitive market for entry-level homes, agents said. They witnessed the heartache of the 20082009 housing market for their parents or relatives, and they don’t want to overspend on housing as a result or they want to have a home payment that still allows them to travel or eat out as the world opens back up, Black said. In those years, the United States and Michigan experienced what is known as the housing bubble, a drop in home values and increase in foreclosure rates that some economists say resulted in the Great Recession, which lasted from December 2007 through June 2009 but took years longer for the nation to fully recover. “They’re willing to see lots of homes and wait until they find what they love,” Black said. Homebuyers need to be clear even before they step foot in an open house or a showing about what they need and what kinds of concessions they’re willing to make, said Jeanette Schneider, executive vice president for RE/MAX of Southeastern Michigan in Troy. “You’re going to have to make quick decisions, and most people are not comfortable doing that on a big financial decision. Be very clear about your budget and what you need versus what you want,” Schneider said. “When that perfect house comes along, you have to be prepared to act fast. You cannot afford to wait and think.” On the plus side, agents have less pressure in terms of finding creative ways to show homes and close on purchases. Last spring, Schneider said RE/MAX agents were doing Zoom showings for buyers who wanted to look despite quarantines or travel restrictions. Agents also were conducting curbside or parking lot closings where people signed paperwork while social distancing. “Last spring, there was a real spirit of cooperation and adaptability. We
Quick decisions Combine that with current homeowners focusing on renovations and holding onto their properties longer than before on average, and you have the combustible residential real estate market that has settled into Metro Detroit. Homebuyers are doing whatever they can to stand out from the competition, Black said, including waiving home inspections, bringing additional cash to offset lower appraisals and extending the time home sellers can stay after closing without charging rent. The median duration of homeownership in the United States as well as in Metro Detroit is 13 years, according to the most recent data available from the National Association of Realtors, increasing by three
discrimination. Black entrepreneurship has been on the rise, with the number of Blackowned businesses increasing 35 percent from 2007 to 2012, according to a 2020 report from the Congressional Black Caucus Foundation and Bank of America. And yet the COVID-19 pandemic disproportionately impacted Black businesses that were already seeing wealth and opportunity gaps with white-owned businesses, and were less likely to be granted access to traditional financing streams. As of 2019, fewer Black Americans held business equity than white Americans — 5 percent versus 15 percent, according to McKinsey & Co., a global management consulting firm. Pre-pandemic, 58 percent of Black-owned businesses reported financial distress compared with 27 percent of white-owned, McKinsey said. For Dean, her work with businesses during the pandemic underscored these gaps, but they weren’t new. She’s an entrepreneur herself, starting Dean Law Firm in 2018, and she comes from a line of them. Her mother owns a publishing company and is a Realtor. Her grandparents ran a travel agency, real estate agency and tax services business. The MDBBA will collaborate with
other organizations in similar lines of work: entrepreneur education nonprofits, for instance, and the overarching small business development coalition Detroit Means Business. It’s also talking with the Detroit Regional Chamber. Other local advocacy organizations include the Detroit chapter of the National Business League, which merged with the Michigan Black Chamber of Commerce in 2017, and the Detroit-based Michigan Minority Contractors Association. “We will work with Build Institute and we will work with TechTown and connect our members to those resources,” Dean said. “There’ll be some programs we will do, but we’re not going to pretend to be something that we’re not. We are an alliance. And so what we will do is advocate for our members. “In my mind, if even more organizations pop up to serve the Black business community, that means we’re doing a good job. We’re going to all work together to serve Black businesses. There’s not enough. We need more. We need help.”
had no choice: Things were changing on a daily Schneider CRAIN’basis,” S DETROIT BUSINESSsaid. “Now, we’re back to closings around tables again but we still need that level of communication and working with one another.”
homes are available for sale and how fast they’re going. The month’s supply of inventory in February dropped 54.2 percent from 2.4 months available to only 1.1; new listings also fell 20.8 percent from 10,570 to 8,374. While those numbers are certainly eye opening, especially for buyers, they don’t show the whole picture, Kage said. Homes that are listed and sold in the same month never get counted in these numbers. A more accurate reflection of what’s happening in the market is how many new listings come in — in that case, January was down 20 percent and December was down only 5 percent. “Yes, there’s less inventory but part of the reason is they’re selling so quickly,” Kage said.
Less inventory, high prices Strong sales in December and January — two traditionally slower months — have Realcomp’s Kage feeling as optimistic someone with more than 40 years of real estate experience can going into spring. Realcomp data for February shows the median sales price increased 11.1 percent from $175,000 last year to $194,350 in February 2020. The most telling numbers were in how many
Contact: afrank@crain.com; (313) 446-0416; @annalise_frank
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VENUES
From Page 1
Harpos normally packs in more than 2,000 people in the east-side Detroit venue, but it will likely be at limited capacity and lacking many of the hallmarks of a traditional heavy metal show. There won’t be any crowd surfing, stage storming or mosh pits — more like mosh pods and a psychosocially distant experience. “To be honest with you, I’m nervous,” said Ruzvelt Stevanovski, who bought Harpos five years ago but has been in the business 40 years. “I had the ball rollin’, man … 2019 was a successful year. Most of the shows were sold out. We had the momentum going until this happened. It’s like we’re starting all over again.” Many local venue operators have had the same feeling of being frozen in time for the past year, not knowing when they could reopen or if they could survive that long. DTE Energy Music Theatre, the 15,300-capacity amphitheater in Clarkston and symbol of summer, has sat empty for a year and a half, but its books remain full. James Taylor and Jackson Browne are scheduled to play there June 12, kicking off a season of big shows that includes Dave Matthews, Steely Dan, Steve Winwood, Santana, Ted Nugent, Kiss and Alanis Morissette, among others. Michigan Lottery Amphitheatre at Freedom Hill in Sterling Heights also has a full slate of shows scheduled. What’s likely to happen, industry observers say, is that some of the schedule will be pushed, like what happened in 2020. Shows on the sec-
BLUES
From Page 1
The next step, which began earlier this month, allows all claimants to register to receive a settlement notice. Once received, a notice will be mailed to eligible class members this spring to start the claims process. Proctor is expected to issue a final ruling this fall after hearing from claimants. Payments from the settlement are expected to go into effect early next year, when claimants could start to receive their payouts and the prohibitions against certain anticompetitive Blues practices begin. Self-funded employers with more than 5,000 workers could request a bid from a competing Blues plan with the effective date of benefits beginning most likely in the 2023 plan year. In this way, the settlement could bring more competition into Michigan from out-of-state Blues plans. As part of the settlement, the Michigan Blues could be responsible for claims by employers, individuals and other eligible parties of sums that range between $100 million to $125 million, according to an analysis conducted for Crain’s by Joe Aoun, a health care attorney with Aoun Advisors PLLC in Ann Arbor. Aoun said he estimated the possible payouts based on the settlement document, the share of the Michigan Blues’ premiums in relation to all the other Blue Cross plans as well as the $594 million that Indianapolis-based Anthem reported in its 2020 10-K annual report. Anthem is the Blues’ largest plan that operates in 14 states, including Indiana, Ohio, Kentucky, Wisconsin, Virginia and California. Based on the Michigan Blues 2020 financial statement, Aoun said Blue Cross has set aside $141 million for 18 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
Harpos Concert Theatre owner Ruzvelt Stevanovski said he’s a little nervous about reopening his east side Detroit live music venue after being closed for more than a year during the pandemic. | HARPOS VIA FACEBOOK
ond half of the calendar stand a better chance of going forward. “We are basically in a holding pattern,” said Scott Hammontree, co-owner of the Intersection in Grand Rapids who also represents Michigan members of the National Independent Venue Association. “Really a wait-and-see in terms of what the state will allow us to do and at what capacity we will be allowed to operate.” There was some good news for outdoor venues Friday, when the state health department updated its gatherings and mask epidemic order, allowing up to 20 percent capacity in outdoor stadiums and arenas. That means Comerica Park will be able to host up to 8,200 Detroit Tigers fan on the baseball team’s home opener on April 1. Under previous orders, just 1,000 fans
would have been allowed inside. “Tigers baseball is back, and we couldn’t be more excited to begin welcoming our great fans to Comerica Park again,” Chris Granger, group president of sports and entertainment at Ilitch Holdings Inc., said in a news release. “Safety is our top priority, and we have developed and invested in a plan that allows us to confidently provide fans a safe and entertaining experience.” Current state health orders limit indoor entertainment and recreational facilities to 50 percent capacity or no more than 300 people with proper social distancing. The Ilitch-Gores joint venture 313 Presents, which controls most major venues in metro Detroit including DTE, Comerica Park, the Fox Theatre, Meadow Brook Amphitheatre, Free-
2021 to pay for all “pending claims that can reasonably be estimated.” It’s unclear where the settlement money will come from, but Blues plans have substantial cash reserves and surpluses. In 2020, the Michigan Blues recorded a $6 billion surplus and $8 billion in cash and asset investments. Some Blues’ companies most likely will pass along those costs to their customers unless the final settlement prohibits them, Aoun said. Like other settlements, “these costs will be passed on to Blue Cross customers in the form of higher fees and premiums,” he said. “Blue Cross has been setting aside money for this in reserves for years and has built this cost in to premiums they charge every year.”
son Helen Stojic told Crain’s that the company, which controls more than 70 percent of the state’s health insurance market, declined comment on several questions related to the settlement. Over the past six years, Blue Cross of Michigan has paid out $743.5 million in legal fees and settlements, averaging about $123 million per year, according to the Crain’s analysis. The total payouts only include Blue Cross’ parent company and does not include settlements and defense costs incurred by Blue Care Network, the Accident Fund of America and other subsidiaries, Aoun said. “The cost of this litigation, as well as the other antitrust (most favored nation) litigation, has been nothing short of extraordinary over the years,” Aoun said. For example, the Michigan Blues has settled major antitrust lawsuits over the past six years that include “most favored nation provisions” in contracts where hospitals were required to charge competing health insurers higher rates than Blue Cross. Blue Cross also has settled a number of lawsuits filed by local governmental bodies and other self-funded clients over hidden access fees.
Blues response Experts who testified in the lawsuit said the lack of competition could have cost consumers tens of billions of dollars in inflated premiums when multiplied across the country over the last decade. A spokesman for the Blue Cross Blue Shield Association denied any wrongdoing. A Michigan Blues spokesperson declined comment. “We reject claims plaintiffs made in the lawsuit,” according to the national Blues statement. “However, to reach a settlement, we’ve agreed to make some operational changes and provide payment to members of the class involved in the case. “Settling now is the right action at the right time because it allows us to remain focused on the goal we’ve had for more than 90 years: improving access to quality health care for all Americans and the health of our local communities.” Blue Cross Michigan spokesper-
How do employers benefit? Elaine Coffman, Michigan market president for Kansas City-based Lockton Benefits, said employers and individuals stand to benefit in many ways from the settlement. “There is a big pot of money (for employers and individuals), but because it’s a national class action lawsuit that goes back to 2008, what amount of money is actually going to be due to any single party, we don’t know,” Coffman said.
For Ryan Carignan, talent buyer at the Magic Stick in Detroit, the event schedule is still uncertain, but it’s less of a bingo card than it was a few months ago. | KURT NAGL/CRAIN’S DETROIT BUSINESS
dom Hill and Little Caesars Arena, declined to discuss its reopening plans. The reboot of its local entertainment empire hinges on government orders and artists’ touring plans, which are still up in the air. The other big operator, Live Nation, which runs The Fillmore Detroit and St. Andrew’s Hall downtown, would not make a local representative available to interview, but CEO Michael Rapino has said publicly he thinks big
shows could return in the U.S. by July. “It’s encouraging to be closer to reconnecting artists and fans at concerts,” the company said in a statement emailed to Crain’s. “While events will require regular capacity to really function, we are grateful for the ongoing partnership of many of Detroit’s and the state’s elected officials and are looking forward to working together on a plan to get to shows with regular capacity as soon as we can.”
Proctor ordered in his preliminary approval that an appointed settlement administrator will determine how dollars will be divvied up among the defined classes. For each employer or claimant, the administrator will make a determination of an employer’s settlement amount, subject to appeal, the settlement document said. After nearly $800 million in lawyer fees and expenses, the net settlement fund is expected to be $1.9 billion. Even though large in terms of antitrust settlements, legal experts say it is a bargain for Blue Cross because more than $20 billion in damages were originally being sought by plaintiff attorneys, including famed lawyer David Bois of Boies, Schiller & Flexner LLP. Coffman said the biggest subclass of potential settlement claimants are self-funded Blues customers, but only 6.5 percent of the net settlement fund, or about $120 million, will be
paid to those groups. Coverage dates for those eligible employers are Sept. 1, 2015, and Oct. 16, 2020. “On the self-funded side, people are going to just get a fraction of their administrative fees back,” Coffman said. “They will benefit more in the long term” by Blue Cross plans dropping anti-competitive business actions that could lead to cost savings, she said. The bulk of the settlement, $1.8 billion, will be split among the members in the fully insured market, many small and medium-sized businesses that paid inflated premiums to the Blues. About 93.5 percent of the net settlement fund will be paid to fully insured groups, including employees and individual policyholders that had coverage with a Blues plan between Feb. 7, 2008, and Oct. 16, 2020. Michigan companies and other claimants have three choices once they receive a notice of the settlement: They can file a claim, object to the settlement or ask to be excluded from the settlement. “If you opt out of the settlement, obviously this means you won’t get any benefit, but you have a right to file your own lawsuit,” said Sheldon Klein, an antitrust attorney in Bloomfield Hills with Butzel Long. “It doesn’t make sense to do that if you are an individual or a small company,” Klein said. “Theoretically, if you are (big like) General Motors, you might think you have a better claim and do better on your own.” Next year, Coffman said larger employers with 5,000 or more workers will be able to go to bid with the Michigan Blues, a state-based insurer, or with another competing Blues plan. Those health benefit plans would go into effect in January 2023. “It’s going to be an interesting
“THERE IS A BIG POT OF MONEY, BUT BECAUSE IT’S A NATIONAL CLASS ACTION LAWSUIT THAT GOES BACK TO 2008, WHAT AMOUNT OF MONEY IS ACTUALLY GOING TO BE DUE TO ANY SINGLE PARTY, WE DON’T KNOW.” — Elaine Coffman, Michigan market president for Kansas City-based Lockton Benefits,
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For the Corey Taylor show at Harpos, “ticket pods” are being sold for $350, with one pod accommodating up to six people. Showgoers’ temperatures will be checked at the door. Masks are required by all except when eating or drinking at tables or in designated pods. Opening the venue for only 25 percent or 50 percent of the revenue of a typical show is normally not financially feasible because operating costs would be about the same as before the pandemic, Stevanovski said. In this case,
Taylor significantly cut his booking fee to make it work, though Stevanovski declined to say by how much. He said ticket sales would likely cover the cost of talent and overhead, leaving Harpos to make some money on drink sales. That’s plenty of reason to turn the lights back on after losing approximately $300,000 in sales from being closed, Stevanovski said. “He’s trying to help the venues out,” he said of Taylor. “Corey loves playing Harpos.” For Ryan Carignan, talent buyer at the Magic Stick in Detroit, the schedule is still uncertain, but it’s less of a bingo card than it was a few months ago. “Now it’s pretty much seeming like shows will be back in full force this fall,” Carignan said. “We don’t want to go as far as announcing them until that turns into more than intuition.”
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evaluation process because the networks (Michigan Blues and the competing Blues plan) are going to be the same,” Coffman said. “(Employers) will evaluate the care management, the administration of the plan and the fees. If employers can bring the Blue Cross network to their employees (with an out-state Blues plan) at a lower administrative cost, they will.” Smaller employers, Coffman said, will be focused on the settlement and the amount of dollars that can be recouped. “If employers are taking the default method, it should be fairly straightforward process,” she said. “If they are not, they’re going to have to do all that work themselves.”” Joel Clark, president of J.S. Clark Agency in Southfield, said he already has advised his fully insured Blues clients how to file a claim. “We sent them the website on how to register to participate, but you take my 50-life group at $10,000 a year per member, nine years in the settlement ... (and the claim) you are looking at is $4,500,” Clark said.
Blues vs. Blues in Michigan requirement Besides the more immediate financial payouts, Blue Cross plans also have pledged to make significant changes in how they conduct business to address anti-competi-
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tive allegations. For example, the settlement requires competing Blues plans — such as Anthem, Pittsburgh-based Highmark or Chicago-based Health Services Corp. — to be allowed to bid for self-funded business with companies that have 5,000 or more employees in Michigan and other states where they currently do not do business. Dominick Pallone, executive director of the Michigan Association of Health Plans, said the Blues antitrust decision should increase competition, reduce consumer costs, reduce anticompetitive practices and allow for more plans to compete against the Michigan Blues. MAHP represents 12 non-Blues health plans. “We think (the settlement is) a positive development, definitely,” Pallone said. “Any time there’s an action here to break up some of the anti-competitive actions and to stop some of the things that have been going on, it is a good thing.” Pallone said he hopes employers and individuals will pay more attention on the quality of the network and benefit design instead of just defaulting to Blue Cross year after year. “We do hope this helps to create a more competitive environment in Michigan, but I don’t think this is going to be the game changer and all of a sudden we have a level playing
For the 750-capacity venue, booking shows for a reduced crowd is a bit trickier. Theoretically, to make up for fewer tickets being sold, prices need to be increased. But only certain acts can command more than a typical $15 or $20 cover fee, and they cost more to book. Most artists are still holding dates at the end of summer and early fall, but they are hesitant to lock in anything for the spring, Carignan said. Local acts and one-offs are a lot easier to execute than navigating a tour around states where circumstances differ widely. “Someone in the city could wing it for a show,” Carignan said. “There’s not that surety with national promoters and tours that they can do that in every city.” It’s not an ideal situation for venue operators, but it’s not dire like it was a short while ago. The owner of the Ma-
field,” Pallone said. “We are so far behind in being a competitive market.” Pallone cited the recent rankings of competitive health insurance markets conducted every few years by the American Medical Association. In a 2020 report, the AMA ranked Michigan third least competitive in the nation behind Alabama and Hawaii. “For small employers, we’ve got the ninth-highest health insurance premiums,” Pallone said. Scott Lyon, senior vice president of the Small Business Association of Michigan, said it is too early to know what effect the settlement might have on small business premiums or payouts to companies on settlement claims. “We haven’t told (member companies) anything at this point,” Lyon said. “It’s my understanding that this is still a proposal that the antitrust attorneys need to accept. So it’s not a done deal. We are waiting on that.” SBAM does business with the Michigan Blues through an association health plan contract members can access through a newly formed company called TranscendAHP, a partnership with the Michigan Business and Professional Association. Even with the potential claims, Lyon said he doesn’t believe payouts will be that significant for small businesses. “You do the math and look at the average company that’s enrolled in our sponsor, Blue Cross, and you are talking about $200. It’s not a windfall,” Lyon said. “It’s really small dollars when you get down right down to it.” But Lyon said SBAM supports a free market and welcomes more competition in Michigan. “There is an impact that competi-
jestic Theatre, which houses the Magic Stick, put the complex up for sale in September, pointing to the COVID-19 pandemic as a major reason. Carignan said he’s been told that selling the business is a last resort and more unlikely as the public health situation improves. The emergency has also calmed a bit at the Magic Bag in Ferndale. Owner Carey Denha told Crain’s in October that he was ready to let the popular club go under after losing all his business — and nearly his life — to COVID-19. Now he said it’s a “matter of time” before it reopens. “Vaccinations are rolling out and that’s what is really molding a potential opening time table,” Denha said in an email. “My estimation is sometime this fall, but it may move faster. It’s a constant reevaluation.” After bemoaning a lack of financial help from the government and the inability to qualify for Paycheck Protection Program funding, venue operators scored a major win with the passage of the federal Save Our Stage Act. More than 75 small- and medium-sized venues throughout Michigan are expecting a piece of the $15 billion bailout, although it is still not clear how the fund will be distributed.
Shots the price of entry? Ticketmaster caused an industry storm in November when it said it was considering a range of screening strategies, including checking the vaccination status of ticketholders. Ticketmaster quickly clarified that it was only a consideration and not requiring vaccinations to attend events. Still, the idea is being explored by entertainment behemoths and small local venues.
tion has on quality and costs, the old supply and demand equations,” he said. “We also know that health care and health insurance are strange markets that don’t always follow normal economics. So, additional competition doesn’t necessarily result in lower prices, or better quality. We are always looking to take costs out of the equation.” In terms of antitrust settlement proposals, Klein, who has tried many antitrust lawsuits, including the most favored nation litigation against Blue Cross that began in the early 2010s, said nearly $2 billion is a significant settlement amount. “I’m old-fashioned, but I find it hard to say $2 billion is not a lot of money no matter how you split it,” he said. Klein said there is no downside to submitting a claim if an employer or individual qualifies. “You are simply walking away from money to not submit a claim unless the cost of claim submission is greater than your potential recovery,” Klein said. “It’s going to take you a month and a half to assemble the data that you need to submit a claim. However, the actual data is largely in the hands of the administrator and Blue Cross.” While some Michigan Blues practices, such as most favored nation provisions, already have been disallowed by state law several years ago, experts say the Michigan Blues will need to take drastic steps to reduce administrative fees to become more competitive with competing Blues plans and other health insurers. General Motors Co., one of the Michigan Blues’ largest self-funded customers, has threatened for years to take their business elsewhere because of the Blues’ high administrative costs. In 2018, for example, GM
“We’re kind of planning contingency measures just in case we need to use them,” Carignan said. “Are we going to need to only allow people who are vaccinated in? What measures did we put in place for COVID that we will keep moving forward?” Drew Drialo, talent buyer at El Club in Detroit, said he’s ready to transition the club back into an entertainment venue after it became a temporary neighborhood COVID-19 testing site. As tough as the past year has been on the business and mental health, Drialo said it’s taught him to think about El Club as a community resource and more than just a place for music. “Maybe it’s just a restart, you know … gives us time to re-hone in on our vision and what we want to be,” he said. Drialo said he hopes things will get back to normal by late summer, though many acts have already postponed until 2022. He said he expects people to eventually come back in droves after going without live music and social interaction for so long. Even with pentup demand, it will take a while to recover financially from a lost year. “I don’t necessarily think it will make up for it, but I do think we can make the most of it,” he said. Carignan has his eyes set on the end of July, when the first big act at the Magic Stick is confirmed on the back end. Whether it will actually happen, and how many people will be allowed to watch, is to be announced. “The dream is that all of this was just a bad dream and all the shows are at full capacity and there’s no problem,” he said. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
signed a direct health benefit contract with Henry Ford Health System. GM declined comment for this story, but sources tell Crain’s that GM is one self-funded company that will most likely be taking third-party administration bids from competing Blues plans in Michigan. Mike Cox, the former Michigan attorney general from 2003 to 2011, said the Michigan Blues were protected from competition as the “insurer of last resort” since 1939 until they became a mutual in 2014. “We will soon find out whether they are well run or not with other Blues plans coming here. They were more a political machine than an efficient business,” said Cox, who now heads the Mike Cox Law Firm PLLC in Livonia. “The low hanging fruit (to cut costs) is administrative costs. They have to be more transparent than they have been with local municipalities suing over hidden costs,” Cox said. “As other market players come in, they will explain all the hidden costs and product deficiencies to GM and Ford. It will open up competition.” Cox said the court’s requirement that Blues plans stop anticompetitive conduct is even more important than the monetary damages to companies and individuals. “The $2.7 billion settlement catches the eye, but to me, the money damages are not as much important as the injunctive relief,” Cox said. “The most important remedy is to ensure plans don’t do this again. It will be up to the judge to make sure there is compliance and monitoring of the agreement so they don’t carve out regions for the various associations.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene MARCH 22, 2021 | CRAIN’S DETROIT BUSINESS | 19
VACCINE
From Page 1
“Public health is so used to vaccinating,” Guzman says as she swipes a security badge, opening a door to reveal a refrigerator holding vials of measles, shingles, hepatitis and other vaccines. “The scope is new. We’ve never experienced a scale like this before.” Guzman asks onlookers to avert their eyes as she fetches a hidden key to open an “ultra-cold” freezer playfully named Rona — there are nine other Ronas throughout the county in undisclosed locations — with the capacity of holding 140,000 doses. When the frozen water vapor clouding its contents subsides, several thousand second doses of the Pfizer-BioNTech vaccine packed neatly inside cartons the size of a cedar cigar box are revealed. The federal government allocated 17,710 doses of the Pfizer, Moderna and Johnson & Johnson vaccines to the county last week, the most it’s seen yet. Guzman said the capacity strained the county’s vaccine apparatus. She puts its max output at 20,000 doses per week. Oakland County’s herculean effort is going to be supplemented by a federal mass vaccination site at Ford Field opening this week and at dozens of pharmacies receiving doses as the entire vaccine infrastructure winds up to make July 4 celebrations a reality as President Joe Biden promised. The “Great Ramp Up” of vaccine distribution is critical to public health. Michigan, and the nation, is racing the clock against a new, more contagious strain of the virus — the B.1.1.7, known as the U.K. variant — that is spreading and quickly. The U.K. variant is suspected of being at least twice as contagious as the strain originating from Wuhan, China. Michigan already has the second most cases of the U.K. variant in the U.S. at 616, behind only Florida, as of March 16, according to data from the U.S. Centers for Disease Control and Prevention. “Time is of the essence,” Gov. Gretchen Whitmer said March 18 on WDET-101.9 FM’s “Detroit Today” program. “We’re trying to vaccinate as many people as quickly as possible before too many variants take hold here in Michigan.” Michigan had the country’s fifth-highest rate of new COVID-19 cases in the last week and is among 14 states where infections rose over the past two weeks, partially linked to the rise of new variants. But health experts hope the speed of vaccinations help stymie further spread. Hospitalizations for patients with confirmed cases of COVID-19 (1,106) are up 55 percent since hitting a low point of 714 COVID patients in Michigan hospital just three weeks ago on Feb. 26. As of St. Patrick’s Day, 25.6 percent of Michigan’s adult population aged 16 years and older, nearly 2.1 million people, have been fully vaccinated. Roughly 3.2 million Michiganders had received at least one dose. The Pfizer and Moderna vaccines require two doses for full effectiveness. “We’ve only been restrained by supply,” said Kerry Ebersole Singh, director of the Protect Michigan Commission that’s been organized by Whitmer to lead Michigan’s vaccination effort. “Now the Biden admin is removing that barrier for us, and we’re able to speed up the amount of doses and increasing the amount of access points.” 20 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
Vaccine supply coordinator Irene Highfield places a temperature data logger in a cooler to transport Pfizer COVID-19 vaccines at North Oakland Health Center in Pontiac.
Vaccine supply coordinator Irene Highfield grabs a cooling pack to prepare a cooler to transport vaccines. Highfield prepares vaccines the day before and then transports them every morning she works.
Open the gates On March 11, Biden directed states, tribes and territories to make all adults eligible for the COVID-19 vaccine no later than May 1. Only days earlier, Michigan announced adults 50 years and older with certain medical conditions would be eligible for the vaccine on March 22. Prior to that, the state was focused on those 65 years and older and hadn’t anticipated reaching healthy adults 50 and up until the summer. Then a sea change happened. Whitmer announced the Federal Emergency Management Agency would operate a mass vaccination site at Ford Field in Detroit, opening March 24 and allowing all adults 16 years and older to become eligible for the vaccine on April 5. Ebersole Singh said the state expects its weekly allotment of doses from the feds to reach as many as 800,000 in the coming weeks. Michigan received 467,000 doses last week. “This is a game changer,” Ebersole Singh said. “We’re going to see more and more doses come into the state, and we’re prepared to get those doses out and bring an end to the pandemic as soon as we can.” More than 40,000 people signed up for the Ford Field vaccination site in the first 24 hours after registration opened last week. That number ballooned to about 65,000 by Thursday morning, Meijer President and CEO Rick Keyes told media at a press event at the stadium. Ebersole Singh said the federal site will vaccinate 5,000 a day and another 1,000 a day via mobile units that will travel into low-income neighborhoods in the city. Pharmacies have also begun administering vaccines across the state, including at Rite-Aid, Walmart, Mei-
jer, Walgreens and now CVS. More than 655,000 doses had been administered by pharmacies across the state as of March 17, according to state data. Meijer alone had administered more than 225,000 doses of the state’s pharmacy totals in its stores in Michigan, Keyes told reporters Thursday. CVS opened up registration last week at its pharmacies in Detroit, Fraser, Holt, Jackson and Lansing. It had previously focused its efforts on vaccinating at Michigan’s long-term care facilities. The pharmacy giant has vaccinated 67,234 at skilled nursing facilities and 65,425 at assisted living centers in the state, completing 94 percent and 65 percent of its visits, respectively.
Sanitarians and sprints Meanwhile, back in Oakland County, Guzman checks her phone again. She’s steely but nervous as a team of “sanitarians” are out in the field for the first time inspecting and verifying the capabilities of 13 potential providers that expressed interest in becoming vaccination sites. The providers, selected from a list of hundreds, are large doctors’ offices,
“I THINK HAVING (THE VACCINE) HERE IN THE PLANT, IT REALLY MADE THE TEAM MORE EAGER TO RECEIVE IT.” — Pamela Nolen, director of human resources at Faurecia Interior Systems’ Detroit plant
Linda Lawrence of Ortonville waits in the observation area after receiving her first dose of the Pfizer COVID-19 vaccine at the Karl Richter Community Center in Holly last Thursday. | PHOTOGRAPHS BY NIC ANTAYAFOR CRAIN’S DETROIT BUSINESS
health centers and clinics with staff and capabilities to administer the vaccine separate from the county’s sites. Adding to the offensive against the spread. “We’re now entering Phase 2 of the vaccine rollout,” Guzman says. “In Phase 1, we managed everything and launched our own sites and mapped out potential providers. We’ve now identified 70 providers who say they are ready.” The sanitarians are health department officials who will clear the providers if they have the ability to efficiently and safely administer doses. Safety was also part of why the initial vaccine rollout was slow and cumbersome, creating problems beyond just supply. Sites had to be large to effectively move people through while also maintaining social distancing during the 15-minute to 30-minute observation period after receiving a dose. Observation is required by the CDC due to a very minute risk of an adverse reaction to the shot. Between Dec. 14–23, 2020, 21 cases of anaphylaxis occurred among nearly 1.9 million doses of the Pfizer vaccine, or about one-thousandth of a percent of doses. Dealing with the state’s older populations also slowed down the speed of doses. Each Oakland County vaccine specialist can administer six doses per 15 minutes on average for people over 65. That sped up to eight doses per 15 minutes with the teacher population, Guzman said. That means a provider
can administer shots to 96 more younger people over a 12-hour shift, meaning good news as the state moves on to younger populations. “Everything moved slower with older adults,” Guzman said. “They take their coats off slower, they move slower. Getting to them early was good and now as we receive more allotment, we can now start to sprint.” Guzman expects a new record allotment delivered from the state on Monday. On Tuesday through Thursday, the health department staff will begin packing vaccine vials into insulated coolers and packing them into their own cars and driving them to that week’s dedicated sites throughout the county. On Wednesday, Ford Field will begin vaccinations and the state will hit a new pace.
Vaccinating vocation After April 5, the state is expected to make a more broad announcement on vaccine availability to employers with more than 250 employees on site, Ebersole Singh confirmed. The Detroit Health Department is already on site at several manufacturing plants in the city. On March 14, the department administered 186 doses at Detroit Manufacturing Systems, an auto supplier joint venture between BTM Co. LLC in Marysville and Auburn Hills-based Faurecia Interior Systems. DMS was eager to get workers vaccinated after an outbreak in October, said Pamela Nolen, director of human resources at its Detroit plant.
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“I think having (the vaccine) here in the plant, it really made the team more eager to receive it,” Nolen said. “We weren’t sure how popular it was going to be, but when we announced employees and their families could sign up, there was definitely some excitement on the plant floor.” Nolen said even workers who hadn’t signed up initially began getting in line after seeing colleagues join in. “Sometimes that’s what it takes, to see one person get in line to convince you,” Nolen said. “We were very happy with the turnout.”DMS employs
1,200 in Michigan and Ohio. About 400 work during the day shift, Nolen said. The city health department ran another clinic on site at DMS on Friday and more dates are expected to be scheduled in the future, Nolen said. The city also administered 1,779 doses at Detroit Diesel and 251 at Flex-N-Gate last week. A unspecified amount of doses were administered at General Motors’ Detroit-Hamtramck and Factory Zero plants, Marathon Oil, My Locker and to Ambassador Bridge staff. “We have been talking to Michigan
manufacturers, Business Leaders for Michigan and the Detroit Regional Chamber about this and there is definitely an interest in large employers partnering with local health departments to do on-site clinics,” Ebersole Singh said. The employer is the last piece of the puzzle in getting Michigan close to 70 percent of the adult population vaccinated, the projected minimum percentage of the population to reach herd immunity and collectively eradicate COVID-19. “May, to me, is the feasible time frame when everyone that wants a vaccine is able to get one,” Guzman said. “As soon a we hit that point, that’s when the real challenge starts. A lot people think they are immortal and don’t want the vaccine. We have to convince them and we will not stop clinics until we get as far into this as we can.” Guzman checks her phone and needs to leave for another meeting, one more important than this one. She smiles — you can tell by the way the eyes tighten and the skin wrinkles above her mask — and departs down the sanitarium halls. She’s worked seven days a week since April 2020 at the health department, in hospitals and at clinics. Guzman, who got inoculated months ago, has seen her own staff decline the vaccine. She’s not confident the state will even reach its 70 percent goal. Yet she’s undeterred. “When a shot’s available, take it,” she says, quickly disappearing down the halls of that old sanitarium. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
the platform is just going to be that much better. Because of the type of community-driven platFrom Page 3 form that we are, it works to our “We’re going to reserve part of advantage.” While still fairly new to the marthis raise for our community, for our following, for our friends,” ketplace, equity crowdfunding Chapman told Crain’s in an inter- has been steadily gaining steam. In 2020, 1,035 companies in the view on Monday. “Let them invest and help us grow this business United States raised a total of even more, or (at least) the same $214.9 million, according to data from Crowdwise. The way that some of these accredited investors and Plain Sight’s former figure represents growth of 91 percent venture capitalists are founders from the previous year, going to help us grow while the latter is 105 our business with the percent higher than in investment that they’re 2019. making.” Plain Sight has alChapman said that his inspiration, at least ready raised $1 million in part, for launching a in a pre-seed round, crowdfunding camwhich included money from billionaire Dan paign, came from Arlan Gilbert. In its offering Hamilton, the founder and managing partner Chief Product Officer the company says it has about $80,000 in reveof Backstage Capital. Alex Matteson The Los Angeles-based nue presently, and seeks venture capital firm has to be at about $1 million a crowdfunding camby 2022. Of the broader $2 milpaign underway that has lion raise the company so far raised upwards of is working on, Chapman $2.2 million, or 2,265 said plans call to focus percent of the minimum on growing the app’s goal when the fund was user base and more launched on Feb. 1 of business owners listing this year. “Before we partnered CEO James Chapman their business on the platform. with Republic and made While the COVID-19 this (crowdfunding pandemic forced the campaign) something company to pivot away public, all of that profit from in-person netwas just going to a few people, meaning myself working and more toand my team, the partward trying to serve as a driver for small business ners at Backstage and a sustainability, Chapman few other select rich insaid the “hybrid” world vestors,” Hamilton told that’s likely to be in online news publication COO Alex Johnston place for the foreseeable The Verge at the time future will benefit the the campaign was launched. “Now, that windfall platform, he said. The company will “plan to grow goes back to the crowd. Anyone who signs up for as little as $100 our market by offering remote networking opportunities that are will see some of that profit.” Plain Sight’s crowdfunding more flexible and COVID-friend-
“THE MORE ENGAGED OUR INVESTORS ARE — WHO ARE ALSO USERS OF OUR APP — THE BETTER THE APP IS GOING TO BE. WE WOULD ACTUALLY PREFER THOSE GUYS SPEAK UP, TELL US WHAT FEATURES THEY WANT.” — James Chapman, Plain Sight CEO
campaign officially launched March 12 and as of Monday afternoon had attracted over $12,000 from more than 40 investors. The campaign runs through May 1, and Chapman said that the interest so far suggests the company is on pace to meet its goal of $250,000. Asked about having potentially thousands of small investors and headaches that could potentially arise from that, Chapman said it’s actually fundamental to the company’s business plan. “The more engaged our investors are — who are also users of our app — the better the app is going to be,” he said. “We would actually prefer those guys speak up, tell us what features they want. Tell us what types of things they want to see from the platform, more than not. If they’re invested and doing that, that means
ly, and offering networking in less obvious spaces such as airports, arenas, and cafes,” according to its offering documents. “People have been at home for the last year, and they have changed their priorities,” said Chapman. “So if they are going to get out and do some in-person stuff, it’s got to have some meat behind it, and people have to know they’re leaving their house for a reason,” he said. “Allowing people to be more intentional when they do get out is going to be a huge benefit for Plain Sight. So the saying goes: ‘Don’t waste a good crisis.’ We definitely didn’t plan on all of this, but now that it’s here, we’re going to try to provide as much value as we possibly can.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes
MARCH 22, 2021 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Melinda Anderson on placemaking, art installations and roller skating STUDIO M DETROIT LLC: In part, a love of Legos led Detroit native and Cass Technical High School and University of Michigan graduate Melinda Anderson into architecture and design. These days, after a stint in Berlin following her undergraduate years in 1998, she is president and event producer for Studio M Detroit LLC after working with Design Core Detroit for nearly nine years. Downtown walkers will also notice Anderson’s art installation in Parker’s Alley behind the Shinola Hotel, which will get a Detroit Tigers Opening Day theme shortly. Anderson was named a Crain’s Notable Woman in Design last year. When not working in design and event production (she is involved in the production of the Movement electronic music festival, for example), Anderson figure skates and is contemplating roller skating, dabbles on TikTok and, most importantly, serves as caregiver for her father, who has multiple sclerosis. | BY KIRK PINHO ` Tell us a little bit about your Parker’s Alley installation that’s going on right now. During these times, people need joy and something that will uplift their spirits, you know, in such a crazy and dark time. And so (Bedrock and I) had the idea of an installation and we launched it on Valentine’s Day, but I picked the concept of letting them change the insert of the installation but keeping the structure the same. The first installation is essentially a big heart that has 313 on it and it glows and it’s very symbolic, a very simple piece. Now for St. Patty’s Day, it’s a rainbow and I incorporated buckets into the installation because with art and design, I like to take commonplace items and make people look twice. ` What else is on the horizon for that? The last iteration will be for Opening Day. There was some talk that possibly this could get extended. This was a product of Bedrock’s Decked Out Detroit campaign, which was a winter thing. ` Something like that, I think, leads to a broader discussion on placemaking in the city. Placemaking and programming are tied together as one because if you really want to get ahold of a place, it’s not just about building a physical space, it’s about how you feel in those spaces. So using art and design as a driver for not only placemaking, but also for economic development, that’s a lot of the work that I did design for. When I talked about ephemeral design, events are ephemeral, and so what I was charged with when I started working with Bedrock, they were talking about, “Well, how can we really make our placemaking feel more authentic and more engaging to the residents of Detroit?” And so we have some really great conversations where we talked about making that work. I think that they’re really on the right path to have
in Parker’s Alley is a rainbow made out of flowers. So someone today went and smelled it, and someone said, “Oh my gosh, please don’t do that, how many people have done that!” So it made me think, “OK, I have to continue to design but in a different way,” because even after COVID, people will still be leery.
Melinda Anderson’s concept art for the baseball-themed art installation planned for Parker’s Alley. | MELINDA ANDERSON
these conversations, and you know they have the courage to say, “Hey, we are doing this internally but let’s get an outside perspective,” and that’s where I came in, because of my history in Detroit and expertise. That’s been kind of cool because we’re able to really start to turn the corner a little bit. I think that is moving in a direction where I can say to them, just very frankly, “Here are some things I would do,” and be a consultant there. ` In some ways, placemaking in Detroit has come with things that aren’t very conducive to a pandemic — “touchy-feely” public pianos, other instruments, Jenga, urban beaches, etc. How has the pandemic affected all this? Placemaking is not really going to go back to what it was. And so, I really feel like there’s an opportunity to not be as “touchy-feely,” but get more soul to the soul of the person and really use the person as the design element. To me, that’s the way I like installations, where you don’t touch, but the person becomes a part of the design. I always do want my installations to be interactive, but they’re interactive in a different way. And you notice the recent installation
Melinda Anderson president and event producer Studio M Detroit LLC
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` What keeps you busy when you’re not at your day job? Being a caregiver. I’ve been caregiver for my father, who has had multiple sclerosis, for 25 years. That was a big part of me being in Detroit, because after I came back from Berlin, I was in love with someone. The plan was for me to stay here for a year, make money, go back and go to graduate school. Things did not work out with me and that person, in part because of my choices to stay here. I did want to be here to assist my father. Being a caregiver and a full-time entrepreneur, you know, it’s been a masterpiece, because it’s the project that I’ve worked on the longest in my life. I’m not trying to distill it down to just a project, but I’ve never had to be so committed as I had and me having to keep dual schedules. So that keeps me very busy. But then also, figure skating. I love to figure skate. I’m actually thinking about getting roller skates. Go down to the Dequindre Cut. I think it’s a great form of exercise and roller skating has become quite popular. I love travel, but obviously can’t do a lot of that. I also am really into TikTok. I’m so embarrassed, but TikTok has been amazing for small businesses. I had this idea of deconstructing old televisions. So I’ve been deconstructing these old televisions and I’m doing these set designs within these old televisions.
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` Kind of like dioramas? Exactly.
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RUMBLINGS
Former real estate executive Gjonaj pleads guilty to wire fraud A FORMER COMMERCIAL REAL ESTATE executive entered a guilty plea in federal court Wednesday to a wire fraud charge as part of a plea agreement in a $26.4 million fraud case. Viktor Gjonaj, who admitted to his role in a complex scheme that defrauded investors of millions so he could play the Daily 3 and Daily 4 Michigan Lottery games, faces up to 97 months, or about 8 years, in federal prison. That’s less than the 20-year maximum because he has accepted responsibility for his actions, according
to terms of the plea agreement. The fine and restitution have not yet been determined, the plea agreement says. That is to be determined at sentencing Gjonaj June 15. Gjonaj has agreed to a forfeiture of approximately $19 million, which is the amount he personally gained after paying investors from his lot-
22 | CRAIN’S DETROIT BUSINESS | MARCH 22, 2021
tery winnings. That amount can be recouped by things like sales of his assets. Gjonaj, bearded and wearing a suit with a red tie in a 30-minute virtual court proceeding led by Eastern District of Michigan federal Judge Linda Parker, admitted that he became addicted to gambling at some point in 2016 and by 2017, he began losing a large amount of money. He then conceded that he devised a scheme to obtain money to gamble by seeking investments in sham real estate deals.
“His case shows that a gambling addiction is every bit as dangerous as other addictions, in large part because winning does nothing more than keep the addict gambling until he loses everything,” Gjonaj’s attorney, Steve Fishman, said in a statement. Federal prosecutors say Gjonaj, 43, bilked no fewer than two dozen investors of $26.4 million between 2016 and 2019. At times, Crain’s reported in March 2020, Gjonaj was spending $1 million per week on the Daily 3 and Daily 4 games.
Crain Communications Inc. Chairman Keith E. Crain Vice Chairman Mary Kay Crain CEO 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 no issues on 1/4/21 nor 12/27/21, combined issues on 5/24/21 and 5/31/21, 8/30/21 and 9/6/21, 11/15/21 and 11/22/21, 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 2021 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.
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