THE CONVERSATION: Mariam Noland beats the drum on building a permanent legacy for the region.
FOCUS: On diversity, equity and inclusion, companies try to do the work. PAGE 8
PAGE 22
CRAINSDETROIT.COM I MAY 3, 2021
‘Bullwhip’ hits supply chains Why missing links — or stuck ships — reverberate for months in the flow of goods Pandemic bruises
Trevor Murray, a cheesemonger at Zingerman’s Delicatessen in Ann Arbor, which has suffered cheese supply shocks.
ZINGERMAN’S
BY DUSTIN WALSH
Tronchón is a cheese — a mix of cow, goat and sheep’s milk and aged a minimum of three months — commonly made in the Sistema Ibérico mountain range in the northeast of Spain. It’s a centuries-old recipe, as evidenced by its mention in Miguel de Cervantes’ novel, “Don Quixote,” in 1615. But like Quixote, the melting cheese often used in sandwiches is increasingly rare to find, especially in the U.S. At Ann Arbor’s Zingerman’s Delicatessen, which imports roughly $500,000 in cheese annually, Tronchón is out of stock. The cheese is just another casualty to the ongoing supply chain shock of the COVID-19 pandemic. From lumber to cheese to bath bombs to auto parts, shortages abound as the world’s producers, distributors and retailers can’t accurately match supply to demand. The result is empty shelves and skyrocketing prices ... with no end in sight.
The fundamental issue behind each of these disruptions stems from the immediate impact of the pandemic. As stay-home orders landed across the globe and factories shut down, orders dried up in anticipation of a drawn-out recession. But it didn’t play out like that. For instance, demand shifted from restaurants to grocery stores — remember the great toilet paper shortage of 2020? — and government stimulus buoyed, and sometimes boosted, consumer spending. The auto industry’s ongoing semiconductor conundrum is a blueprint on how improperly assessing future demand can reverberate through the supply chain. Starting in late January 2020, automotive companies began pulling back production as COVID-19 ravaged China, stopping semiconductor orders in anticipation of auto sales dropping off a cliff. Auto sales See SUPPLY CHAIN on Page 21
Riverfront complex one of many where receivership looms Landlords lose the keys to lenders, others in legal process BY KIRK PINHO
The iconic Jeffersonian Houze apartment tower on the Detroit River is facing possible receivership after Fannie Mae spelled out in federal court last week why it be-
lieves owners Joe Barbat and Arie Leibovitz can no longer be trusted to care for and maintain the 30-story building. (See related story, Page 12.) If the U.S. District Court of Eastern Michigan grants Fannie Mae’s
NEWSPAPER
VOL. 37, NO. 17 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
request to appoint B. Riley Advisory Services as receiver, it would be the latest high-profile property to fall under someone else’s control due to financial or other issues. See RECEIVERSHIP on Page 20
Fannie Mae is seeking a receivership for the Jeffersonian Houze apartment complex owned by Joe Barbat and Arie Liebovitz. | COSTAR GROUP
BANK DEAL
HERMÈS DEBUT
Why Flagstar Bank made a tempting target for acquisition.
French luxury retailer Hermès takes up first metro Detroit location. PAGE 14
PAGE 3
NEED TO KNOW
MEDIA
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` WHITMER OUTLINES VACCINE BENCHMARKS THE NEWS: Gov. Gretchen Whitmer on Thursday announced a plan to tie the lifting of coronavirus pandemic restrictions to Michigan’s vaccination rate, meaning in-office work restrictions are likely to ease before the end of May. Under the “MI Vacc to Normal” plan, all workers can go to their office two weeks after at least 55 percent of the 16-plus population has one shot — a rate state officials expect to reach by the end of this week, meaning this first step could be reached before the end of May. After a 70 percent vaccination rate, or approximately 5.67 million adults, the state health department’s broad gatherings and face mask order will be lifted unless unanticipated circumstances arise, such as vaccine-resistant variants. WHY IT MATTERS: The benchmarks offer tangible goals and certainty to business and other sectors. As of late last week, that means 844,000 more shots were needed to lift restaurant and bar curfews, and 1.65 million more for mask mandates to end.
` GORDON TOLD ‘TIME TO GO IN A NEW DIRECTION’ THE NEWS: Michigan’s former health director said Thursday that he resigned in January after Gov. Gretchen Whitmer told him it was “time to go
WWJ stalwart to run Duggan communications
shortages crimping vehicle production. The Van Buren Township-based automotive cockpit electronics supplier said in a quarterly filing Thursday that semiconductor suppliers have at times been unable to deliver sufficient chips. Some automaker customers have blamed those reductions on suppliers like Visteon, the company said. Gordon
in a new direction.” Robert Gordon told a legislative committee that he joined a video conference call on Jan. 22 with the governor and members of her staff. “The governor said to me, ‘Robert, grateful for your service. I think it’s time to go in a new direction,’” he said. Whitmer left the call. Her chief legal counsel Mark Totten offered him an opportunity to resign, “and I did,” Gordon said. WHY IT MATTERS: Robert Gordon’s statement to a legislative committee confirmed what the governor’s office had refused to say publicly despite his $155,000 severance deal: that he was ousted after two years on the job.
` VISTEON: AUTOMAKERS MAY TRY TO SHARE MICROCHIP PAIN THE NEWS: Visteon Corp., an auto supplier whose top customer is Ford Motor Co., flagged to investors that unidentified carmakers may seek compensation for computer chip
` Longtime WWJ Newsradio 950 reporter Vickie Thomas is retiring after 30 years at the radio station and taking on a new job as the city of Detroit's new communications director. Thomas' last day on air at the Southfield-based CBS radio station was Thursday. She'll start in her new role with the city early next month. "I'm looking forward to the challenge and making a difference for residents," she said in a tweet. The most recent person who had the communications director title was Graham Davis, who died last year of colon cancer at 33. Alexis Wiley, who was chief of staff for Mayor Mike Duggan until recently, also handled communications director duties. Wiley exited the Duggan
WHY IT MATTERS: Automakers are working to limit and share the damage from the microchip shortage, which has idled numerous assembly plants. Ford warned that the shortage could cut its second-quarter production by 50 percent.
` CONTRACTOR FERGUSON’S PRISON RELEASE ORDERED THE NEWS: Bobby Ferguson, the Detroit contractor tied to former Detroit Mayor Kwame Kilpatrick’s corruption scandal, was ordered to be released from prison nearly a decade before the end of his sentence. The order was made by Judge Nancy Edmunds of the U.S. District Court for the Eastern District of Michigan under the compassionate release provision. It comes about four months after then-President Donald Trump commuted Kilpatrick’s sentence. WHY IT MATTERS: Ferguson’s family and supporters had been rallying for his release, arguing Ferguson shouldn’t face a harsher punishment than his
Thomas
administration late last year to run the mayor's re-election campaign and start a public relations business. Thomas, a 58-year-old Wayne State University graduate, has outlasted several administrations while covering the city of Detroit. In 2020, Thomas received a lifetime achievement award from the Detroit chapter of the Society of Professional Journalists.
good friend Kilpatrick, who they say orchestrated the crimes.
search and registration requirements will be back online by the end of May.
` WORK SEARCH RULE FOR UNEMPLOYMENT TO RETURN
WHY IT MATTERS: Some businesses have complained of trouble hiring because unemploymentLEpays more B 21 than usual rightA now I L Awith ,extra 20monV T ey from the A federal government. The 1S ST state has beenUoperating during the last year byG not requiring claimants AU to search for work to receive benefits.
THE NEWS: With business groups clamoring for the change amid a search for more workers, Michigan’s Unemployment Insurance Agency on Tuesday told a House panel work
FULL BUILDING
OPPORTUNITY WITHIN THE PRESTIGIOUS FARMINGTON HILLS CORPORATE CAMPUS
36455 CORPORATE DRIVE | FARMINGTON HILLS, MI
155,000 SF WITH OPPORTUNITY TO EXPAND IN THE SISTER BUILDING IMMEDIATELY ADJACENT
BUILDING & MONUMENT SIGNAGE AVAILABLE
FOR MORE INFORMATION DENNIS KATEFF 248-644-7600 DKATEFF@KOJAIAN.COM
FURNITURE AND ALL EQUIPMENT AVAILABLE* CLASS A, STATE OF THE ART MODERN BUILDING FULL SERVICE CAFETERIA
2 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
*MOST FURNITURE IS INCLUDED WITH EXCLUSIONS TO PRIOR TENANT LEASE
SMALL BUSINESS
REAL ESTATE
Few options to protect investment in pandemic Most not covered for COVID closures, losses BY JAY DAVIS
Plante Moran’s new expanded office is about 192,600 square feet in the 3000 Town Center building after it closed its Victor Center office on Northwestern Highway and merged it into the 32-story tower. | COSTAR GROUP INC.
ROOM TO MOVE
Plante Moran nearly quadruples space in Southfield, one of biggest office deals in pandemic BY KIRK PINHO
Plante Moran is consolidating its two Southfield offices in one of the most substantial office transactions during the COVID-19 pandemic. The accounting, tax advisory, real estate and wealth management firm says it has shuttered its owned 125,000-square-foot office at 27400 Northwestern Highway in the Victor Center building, put it up for sale for an undisclosed price and is leasing an additional eight floors in the Southfield Town Center in addition to the four it already takes. “Our Northwestern Highway location was a wonderful property that served us well but we outgrew it with the success of the firm,” Teresa Pol-
lack, group managing partner who oversees Plante Moran’s offices, said in a statement emailed to Crain’s on Friday. “The move to Town Center satisfies two objectives: uniting what had turned into two separate offices, and creating a modern space that will be great for our team members and clients for years to come.” That move puts the firm on the first through 12th floors of the 32-story 3000 Town Center tower. Previously the firm had about 50,200 square feet; the new floors add about 142,400 square feet, bringing its footprint to about 192,600 square feet, according to a spokesman for Plante Moran. The 3000 Town Center high-rise is 584,000 square feet, according to Co-
Star Group Inc., a Washington, D.C.based real estate information service. Data in CoStar shows that the expanded Plante Moran office will be the building’s largest user. The office combination marks one of the largest office deals during the COVID-19 pandemic. Others include Volkswagen of America renewing its lease for nearly 360,000 square feet in Auburn Hills after seriously exploring a move to Southfield, as well as a corporate headquarters relocation for Marelli North America Inc. into the 188,000 square feet of the former Federal-Mogul Corp. building at 26555 Northwestern Highway in Southfield. See PLANTE MORAN on Page 18
“THE MOVE TO TOWN CENTER SATISFIES TWO OBJECTIVES: UNITING WHAT HAD TURNED INTO TWO SEPARATE OFFICES, AND CREATING A MODERN SPACE THAT WILL BE GREAT FOR OUR TEAM MEMBERS AND CLIENTS FOR YEARS TO COME.” — Teresa Pollack, group managing partner who oversees Plante Moran’s offices
Small business owners still don’t have many options to protect themselves from losses caused by the pandemic — or another one. Business interruption insurance does not cover revenue lost as a result of the COVID-19 crisis — much to the surprise of many business owners. The coverage, offered by most major insurance companies, typically covers losses from natural disasters, theft or fire. Businesses with interruption insurance included in their policy, which costs $500-$1,500 annually, can be compensated for revenue lost due to a loss of inventory, but not from forced closure. According to an Insurance Business America report, a little more than a third of U.S. small businesses add business interruption insurance to their commercial property policy. That means the vast majority of small businesses had no access to interruption coverage at the outset of the pandemic, and those that did struggled to make claims because of coverage exclusions for virus and pandemic risks, according to the report. During the yearlong pandemic, Gov. Gretchen Whitmer and the state health department instituted orders that forced thousands of businesses in Michigan to close from mid-March to early June and again for weeks later in 2020 and early this year. Many businesses are still working to recover. Cathy Koch, president of Ferndale-based K-Tec Systems, said she was floored upon learning her business interruption insurance would not cover losses incurred during the pandemic. Koch’s business, a global engineering company and distributor of advanced control and automation technology, was forced to close for more than three months. K-Tec’s sales fell by close to 50 percent early in the pandemic. See PROTECT on Page 19
FINANCE
Flagstar acquisition by NY bank builds muscle outside of fickle mortgage sector BY NICK MANES
Lots of money and increased diversification in business portfolios. That’s the hope for the $2.6 billion acquisition of Flagstar Bancorp. in Troy by New York Community Bancorp. in the New York City metro area. Flagstar Bank and its well-renowned residential mortgage lending business will serve as the vehicle to allow New York Community Bank to transform from a traditional savings and loan to a “dynamic commercial banking organization,” according to Tom Cangemi, president and CEO of New York Community Bank, head-
“SO BY COMBINING THESE COMPANIES, YOU NOW TAKE THAT VOLATILITY IN THE MORTGAGE BUSINESS, YOU SMOOTH IT OUT BECAUSE IT BECOMES MUCH LESS OF THE TOTAL.” — Sandro DiNello
quartered in Westbury, N.Y. The all-stock deal was announced early last week. Combined, the two banks will have assets of about $87 billion, and
the deal vastly expands the book of business for NYCB beyond its core focus of lending for rent-regulated apartments in New York City. Cangemi told industry analysts
that the deal allows NYCB to move beyond its long-held status as a “thrift” institution, that primarily focused on the traditional savings-andloan model. “This is a transformational change in culture,” said Cangemi. “That’s been my desire, that’s been my goal ... We are not going to be running a thrift. This will get us there. This is a major step in changing who we are and where we’re going.” For Flagstar, the deal allows the bank to diversify away from its large presence in the mortgage industry, in which it was the 18th-largest lender last year, closing over $48 billion in residential home loans, according to
figures from Inside Mortgage Finance. Flagstar President and CEO Alessandro DiNello said a common criticism of the bank he’s led since 2013 is that too much of its revenue is derived from mortgages, which are heavily cyclical with interest rate trends. That will cease to be the case after the deal is completed, he said. “So by combining these companies, you now take that volatility in the mortgage business, you smooth it out because it becomes much less of the total,” DiNello told analysts during a conference call last week. See FLAGSTAR on Page 19 MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 3
REAL ESTATE INSIDER
Innovative solutions for your business. Our Treasury Management services are designed with you in mind. With fraud protection to cash flow management solutions and more, let us provide the technology and equipment to help your business operate on a new level.
Katie Mattison
Treasury Management Sales Manager 517-423-7969
1449 W. Chicago Blvd., Tecumseh 517-423-7969 All credit services are subject to credit approval. YourPremierBank.com Member FDIC
YOU MADE NEWS IN CRAIN’S
Share your success with custom Reprints, E-prints and more! Contact Laura Picariello at lpicariello@crain.com
Former Michigan Attorney General
A fighter for Michigan, and now a fighter for you! Commercial & Business Litigation Administrative Law Employment Litigation 17430 Laurel Park Dr. North, Suite 120E, Livonia, MI 48152
Antitrust Regulatory Counseling Insurance Law
(734) 591-4002 | info@mikecoxlaw.com
Mike Cox • Donald Hutchinson • Melissa Raycraft • Jackie Cook
4 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
The Detroit office of Greenwood Commercial Real Estate Group has set up shop in the Boulevard West building in the city’s New Center area. | COSTAR GROUP INC.
Why a new Black-owned commercial real estate firm in Detroit is important The new Blackowned commercial real estate services firm Greenwood Commercial Real Estate Group has opened an office in Detroit run by Kirk longtime local PINHO broker Mark Talley. The company’s name is a tribute to the Greenwood District of Tulsa, Okla., commonly called Black Wall Street, at one time a thriving Black economic hub. We are coming up on the centennial of its destruction in a 24-hour span. Between May 31 and June 1, 1921, after the arrest of a young Black man for the purported “assault” of a 17-year-old white girl (what some have believed to be something like an accidental step on her foot), as many as 300 people may have been killed in a race massacre that also left more than 800 injured and 35 city blocks destroyed, according to the Tulsa Historical Society & Museum, PBS and the Oklahoma Historical Society. Talley comes to Greenwood CRE also as the head of Detroit-based Griswold Realty Advisors LLC, his brokerage firm that worked extensively with families who sold property to the Ilitch family for Little Caesars Arena over the last decade. Before forming Griswold Realty Advisors, his resume included more than a decade at JLL (formerly Jones Lang LaSalle) and a stint at Grubb & Ellis, a precursor of what is today known as Newmark Knight Frank. “Most of my work is with family offices, high net worth individuals, very opportunistic sort of work, and how we interplay with Greenwood is that it kind of allows me to open up my Rolodex, get some opportunities that I just couldn’t or wouldn’t be able to do and to handle as Griswold, things of more of a national scope,” Talley told me. “The Greenwood opportunity is just a fabulous opportunity and I think the timing is right for us all to work together to look for more corporate, more international deals and opportunities.” At Greenwood, “we’re all former corporate services guys that have worked with the big firms, and we’re bringing that sort of structure and ethos to the way we’re going to approach clients,” said James Pitts, head of the Atlanta office of Greenwood,
Talley
Pitts
which has 17 affiliates around the country. “Everyone will still do what they do in their local market, with sort of a Greenwood boost.” That “boost” includes national and international business connections derived from the office heads’ decades of experience with large corporations, Pitts said. Talley’s office is in the New Center area in the Boulevard West Building. It’s just him running the show right now, but he envisions building out a stable of brokers under the Greenwood flag over the next year or two. In part, that’s where we get into an important broader context. The commercial real estate industry is pretty homogeneous, populated largely by white men in the executive ranks, even in a city like Detroit, where the population is more than 80 percent Black. (Yes, I know some newsrooms, including my own, are also painfully homogeneous and we need to do far better at attracting, hiring, nurturing and retaining diverse talent across the board.) For example, Commercial Property Executive reported last year that 2017 research from the Bella Research Group and the John S. and James L. Knight Foundation shows that white men occupy more than three of every four senior commercial real estate posts in the U.S. Black men held just 1.3 percent; white women had 14.1 percent and nonwhite women had less than 1 percent. Last year, BisNow described the brokerage climate nationally this summer following the protests after George Floyd’s murder by police in Minneapolis as follows: “U.S. brokerage firms — the grease in the wheels of commercial real estate, employing hundreds of thousands of people and generating tens of billions in annual revenue — issued public statements of support for Black Lives Matter, committing to do more and better and increasing donations to diversity groups within the industry,” the publication wrote. “Many said little and committed to nothing. De-
spite these firms’ reach, considerable capital and massive employee rosters, the vast majority of their most powerful decision-makers are White men.” Pitts believes that Greenwood CRE will help Black people break into commercial real estate. “To be frank, it’s been hard to get business from big corporations because you have to work with the global firms,” he said. “So now, there seems to be a window of opportunity with companies being very intentional with who they work with, and that provides an opportunity for people who’ve been waiting for a long time to have a turn at that. We want to make sure that other people behind us have a turn at that, too.” Talley also thinks ahead at the generational implications. “What really struck me when I started having conversations with James, it’s a responsibility now. I’m looking at it as a responsibility,” he said. “These younger people are really looking up to us, No. 1 because we have been in the industry over 20 years and had success. We are raising our families, sending our kids to great schools and things of that nature. It’s a great career. It’s not easy, but if we can pave that road for some others, that’s what really attracted me.”
Comcast sued for unmoved equipment When you move, Comcast expects you to return its equipment. When Comcast moved from one local building, it allegedly left its equipment behind. Southfield-based brokerage house and landlord Farbman Group has sued Comcast Corp. for breach of contract after it allegedly failed to remove fitness center equipment and a conference room table upon vacating the building at 30700 Telegraph Road. The lawsuit also alleges that because Philadelphia-based Comcast “failed to surrender full possession of the premises” on or before the lease expiration of Aug. 31, it owes another month’s rent and common area maintenance fees for seven different suites, two of which were for storage. The total amount owed is $166,366.18 after Comcast paid $4,582.56, according to the complaint. A spokesperson said Comcast does not comment on pending litigation. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
SPONSORED CONTENT
CARING FOR KIDS Advocating for the mental health and wellness of Michigan children and their families
Advocating for the health & wellness of children and families
About this report: On this monthly radio program, The Children’s Foundation President and CEO Larry Burns talks to community, government and business leaders about issues related to children’s health and wellness. The hour-long show typically airs at 7 p.m. the fourth Tuesday of each month on WJR 760AM. Here’s a summary of the show that aired April 27; listen to the entire episode, and archived episodes, at yourchildrensfoundation.org/caring-for-kids.
Dr. Colleen Allen, President and CEO, Autism Alliance of Michigan
Dr. Steven Craig, CEO, Surgeons Choice Medical Center
Larry Burns: Tell us about the Alliance.
Larry Burns: Tell us about your clinical background.
Colleen Allen: We are a statewide professional organization. Our program staff members have master degrees and above in various autism fields. We provide our services at no cost to families. Our flagship program is our Navigator Program to identify critical gaps in services across the state. Our Community Outreach Program is about training first responders. We have been able to bring that training to over 25,000 police officers, EMS, fire and community workers. Our goal there is inclusivity, so families feel that their community supports them. We also have our Employment Program.
Steven Craig: I’ve been a clinical psychologist for about 25 years in Bloomfield Hills. We offer a solution-focused practice to help you solve what’s in the way today.
Burns: Tell us more about the Navigator Program. Allen: Helping families understand what is uniquely appropriate for their child is what we do best. When we were founded, the autism market was almost non-existent in terms of where to go for services. Getting families what they needed was challenging. It is even more difficult now because there are so many treatment approaches. We look holistically at the child and family and what they need in an unbiased approach. We’re not selling anything; I’m not trying to bring you in for therapies or support groups. The program is designed to get you, very specifically, what is needed. Burns: What have you seen in the last year? Allen: We have been busier than ever. We have seen far more complex cases and cases that are not easily solvable. Families are struggling with a child at home, a child who had a baseline behavior issue that over time has just escalated. We’re talking about a population with behavioral challenges now in a situation where routines are disrupted. That need for sameness and predictability has been blown up. We’re looking at a broken system where we can only navigate to what’s available. We’ve seen increases over the past year of people ending up in an Emergency Room due to a psychiatric crisis.
Burns: Your nonclinical experience is very diverse. Tell us about your business journey. Craig: Before I was a psychologist, I had a business degree. I’ve had a 25-year career of working with businesses to identify problems from a strategic point of view. I was the CEO of Belle Tire, and now I’m the CEO of Surgeons Choice Medical Center. It used to be called Oakland Regional Hospital, and it suffered financially. It needed someone to come in, identify the problem and restructure it. Whether it’s a person or a company, I am trained to identify the real problem, communicate it and build a path. Burns: Tell us about the services at Surgeons Choice. Craig: It is a private 74-bed surgical hospital in Southfield that is owned by surgeons. What’s special about it is that, because of its size and that it is private, it’s a very personal experience that is easy and accessible. It is not like going to a large facility where you need a map to get through and you park six parking lots away, where the staff is always different and the doctors are just a number. Burns: What are some of the things Children’s Foundation can do to help with mental health?
Burns: Tell us about the need for continued treatment.
Craig: If someone has a life-threatening condition, they go to the hospital. They’re there for days upon days, and they are treated in all number of factors. Then a whole program is built afterward in terms of nutrition and ongoing physical therapy. It is a two- to three-week process to get you back to health from your major medical crisis.
Allen: Let’s look at the spectrum of supports that are needed when somebody is in crisis. First there is a prevention component, or stabilization — getting ahead of it long before those behaviors escalate. Then, there’s the middle: either this is a child who has now landed with law enforcement or in an emergency department. Finally, there’s what happens after. It’s the “after” piece that is critical for us to address, because with quick fixes, those kids will be coming right back again. What we do in terms of connecting to community supports and effective approaches, so the family doesn’t end up in that crisis again, is really critical.
But in mental health, and especially kids, it doesn’t work like that. Instead, it’s crisis management. If someone is a 10 on a suicidal scale of one to 10, our system puts them in the hospital until they’re down to nine or eight and then moves them on. We’re not providing a complete program like we would for other life-threatening situations. We need programs that actually will address all of the problems and provide weeks of treatment rather than 24 or 48 hours. That doesn’t mean there shouldn’t be a 24-hour or 40-hour stabilization unit, but we can’t end there.
Burns: What can philanthropic organizations do to help this issue? Allen: From the philanthropic community we are looking for funding on a model that eventually can be brought to scale. We’re a statewide organization, so we’re always interested in what works locally, but also what we can replicate for other health systems. We would love to be part of the solution. We also need to work on the prevention piece, seeing the red flags before these crises escalate. It’s an expensive and, in some cases, inhumane endeavor for a child to have to go through a psychiatric crisis.
From The Children’s Foundation and others, we need help building a system and funding a system that allows us to provide that level of treatment rather than just put a band-aid on it. Burns: I heard a statistic that on any given day in Michigan, there are 120 kids in ERs in mental health crises and only 20 percent get placed somewhere. Craig: It’s a tragedy. The system is not built to treat this. They’re all stacking up in the Emergency Room, which is a terrible way to treat people who already feel disenfranchised.
Host Larry Burns, President and CEO, The Children’s Foundation
Gigi Colombini, Founder and Psychotherapist, Institute for Hope and Human Flourishing Larry Burns: Can you give us an overview of your clinical practice? Gigi Colombini: When I opened up a clinic, the intent was to bring treating suicidality into the outpatient setting, because very few people actually get any training on suicide. In our clinic, we’re trained. Almost all of our clinicians have extensive background in working in suicide prevention. Not only are we addressing anxiety, depression, trauma and grief, but sometimes those things get a person to feel so hopeless that they want to die. We understand that when someone’s at that level, we have to work on reducing the pain enough so we can address the underlying things like every other clinician does, but we don’t have to send them away. Burns: Tell us about the importance of word choices in discussing suicide. Colombini: The word “committed” implies something wrong was done — like committed a sin or committed a crime — when suicide is about somebody in so much pain, they don’t know what else to do to make the pain go away. They may believe the only thing left for them to do is die. It’s not about doing something bad and wrong. When we can take “committed” out, particularly for grieving families, that can help. There’s some idea that their loved one isn’t being viewed as somebody who did something horrible and wrong. It’s better to simply say things like, “died by suicide.” Burns: What have you seen in regards to the pandemic and suicide? Colombini: Our clinic is so busy. It’s a deeply sad thing, the amount of anxiety, the unresolved anxiety, it’s actually more than depression. We are seeing more of the feeling of ”I don’t ever know when I’m going to feel better,” and that’s linked to suicidality. Burns: What are some of the signs that a young person is thinking about suicide, and what does a loved one do if they think something might be wrong? Colombini: It’s really preemptive because we are often confused by the signs we might see with young people, particularly adolescents. There’s the upset and the angst that goes with being an adolescent, but in terms of suicidality, there are specific things. The only way that we can actually know if somebody is suicidal is to ask. When you initiate the conversation, use the word “suicide” because when we avoid using the word, kids get the message that we don’t really want to talk about this. But this one is life and death: we need to talk about it. The best thing we can do is have conversations about emotional wellbeing and acknowledge that depression and anxiety happen. Worry and sadness are normal. If they go on for too long or they’re acute, like thoughts of suicide, then we go and get help just like we would if you were having a medical issue in your body. Burns: What things do you see on a daily basis that need improvement? Colombini: Part of the problem with mental health is the disconnect. We’re an ecosystem: we keep things in balance, particularly the youth. When we’re working together, we can actually be much more effective.
MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 5
COMMENTARY
Don’t erase $1B in savings for Michigan drivers BY ERIN MCDONOUGH
DANIEL SAAD FOR CRAIN’S DETROIT BUSINESS
L
EDITORIAL
Finally, a back-to-work benchmark is set I
t’s about time. More than a year into the coronavirus pandemic, Michigan businesses and residents finally have specific benchmarks for return to “normal” life. Gov. Gretchen Whitmer on Thursday announced a plan to tie the lifting of COVID restrictions to the state’s vaccination rate. That means in-office work could resume before the end of May — months before they were set to expire Oct. 14. It doesn’t mean the virus will disappear overnight, or that some restrictions still won’t be necessary. We know now that the insidious nature of the pandemic means our public health response must remain cautious and flexible. What it does mean is that businesses can plan. And it provides them more incentive than ever to encourage employees to get vaccinated. Whitmer outlined “VACCINES ARE four specific benchTHE PATH marks, ending months FORWARD TO DO of ignoring pleas from businesses WHAT YOU WANT Michigan for that kind of certainty. They stress that the TO DO.” more people get vacci— Dr. Joneigh Khaldun, nated, the sooner the Michigan’s chief state can relax indoor medical executive capacity limits and other restrictions. “Vaccines are the path forward to do what you want to do,” noted Dr. Joneigh Khaldun, the state’s chief medical executive. Under the plan, in-person office work can resume two weeks after at least 55 percent of the 16-plus population has one shot — a rate state officials expect to reach by the end of next week. Two weeks after 60 percent are vaccinated, indoor capacity at sports stadiums, conference centers, banquet halls and funeral homes
will rise to 25 percent. Gyms will rise to 50 percent capacity, and a curfew on bars and restaurants will be lifted. At a 65 percent vaccination rate, the state will lift all indoor capacity limits and require social distancing only. At 70 percent — or 5.67 million adults — we can ditch the face masks. The phased-in plan does reflect the reality that some steps may be delayed if cases rise. The fact that the order is based on rates after one vaccination, not two, does seem to send an inconsistent message, given that health officials have long stressed that people are not considered fully vaccinated until two weeks after their second shot. But studies also have shown that at least one vaccine still provides significant protection against the virus. The governor is clearly dangling a carrot to get the vaccine-hesitant off the fence — which can only benefit the whole state now that demand for shots is slowing. Businesses can do their part by offering employees time off to get vaccines and recover from them. They can also offer creative incentives — cash, gift cards, vacation days. A small investment now will pay dividends later in the form of majority-vaccinated workforce. Getting back to work, reopening restaurants and businesses without restrictions, and returning to a face-mask-free life will only happen with the cooperation of all. The plan outlined by the governor provides a path to get there. Now it’s up to us to make it happen.
egislation introduced in the Michigan House and Senate peddled as a “technical fix” to Michigan’s new auto no-fault law would begin to erase $1 billion in savings for Michigan drivers by unErin McDonough doing historic reforms to a once-broken, outdated is the executive auto no-fault system. director of the Bipartisan reforms to Insurance Michigan’s auto no-fault Alliance of system are working. Michigan, a We’re seeing people Lansing-based obtain auto insurance for trade group for the first time because auto insurance they can afford it, people carriers. who are saving thousands of dollars per year on their policies and people who are excited to be able to have choice in their level of protection for the first time. We should let these reforms work and not turn back the clock. As a result of these reforms, nearly 30 new auto insurance companies are poised to enter the Michigan market, bringing with them good-paying jobs. This new influx of companies writing auto insurance policies in the state will increase competition, which will further drive down rates. Leading the charge to reverse these reforms are the long-term care providers and certain medical providers who have built their businesses on overcharging for procedures. Quality care is important, especially providing quality care to those who have been in life-changing accidents. Those who were severely injured prior to reform will continue to receive unlimited, lifetime medical benefits. That will not change. What is changing is medical providers will no longer be able to overcharge and gouge for their services, which does nothing to help those critically injured and does everything to drive up the costs of auto insurance for every single Michigander. Thanks to the Legislature and Gov. Gretchen Whitmer, this dramatic overcharging will come to an end on July 2 when a medical fee
MORE ON WJR ` Crain’s Executive Editor Kelley Root and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
schedule finally takes effect. This fee schedule will set realistic costs for services and finally rein in this egregious practice. In fact, much of the savings drivers are seeing now are a result of the expected savings from the medical fee schedule. Auto insurance companies were required to build the anticipated savings into their premiums. The Michigan Catastrophic Claims Association also included the expected savings in its yearly, per-vehicle assessment. For the second year in a row, the MCCA lowered its per-vehicle fee for drivers because of the expected savings from the medical fee schedule. Beginning this summer, the per-vehicle fee for drivers choosing unlimited, lifetime medical benefits will be $86 — down from $220 in 2019. Drivers who choose other levels of coverage will continue to pay $0. The decrease, the second in two years, marks a 60 percent drop since reforms took effect. The rates people are seeing today reflect implementing the medical fee schedule as it was passed by the Legislature. If long-term care providers have their way and unravel the medical fee schedule before it even has a chance to take effect, it will force the MCCA to reverse course on its fee reductions and ultimately make car insurance more expensive for everyone. If the fee schedule changes, auto insurance rates will go up. What’s worse is the proposed legislation would allow employees at two long-term care provider facilities to create the fee schedule and make modifications in the future with no further legislative oversight. Not only would these providers be able to continue their price-gouging, but they might even be able to charge more for their services than they did before. We urge lawmakers in both parties to let these reforms work and push back on those who want to turn the clock back on these historic reforms. Undoing the medical fee schedule now, before it’s even had a chance to take effect, would increase auto insurance rates and create more economic uncertainty for millions of Michiganders at a time when they can least afford it.
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
I want you to see color – it’s the only way to diversity, inclusion BY VINCENT KIRKWOOD
Everyone’s hot on Diversity, Equity and Inclusion (DEI) right now. So hot, it’s become a buzzword, and everyone wants in on the action. That’s great because to Vincent achieve true di Kirkwood is versity, equity senior director and inclusion, we of diversity and need all hands on inclusion for deck. Madison Since our naHeights-based tion was built on MRA and a sports marketing systemic racism and gender bias, professor at that’s where the Cleary DEI conversation University. must begin. America was built on a notion that free labor from the transatlantic slave trade and economic prosperity were more important than humanity. That perspective echoes today. DEI work means understanding our history and valuing our neighbors. Everyday people have a role to play here. The late Simon Wiesenthal, a Jewish Austrian Holocaust survivor and Nazi hunter, taught about the Holocaust, and he also spoke out in favor of civil rights, against genocide in Rwanda, and how different cultures must come together to eradicate hate. It doesn’t matter who is being hated; all hate must stop because hate leads to dehumanization, and eventually to murder. Some people think DEI is only an African-American concern. They mistakenly think it’s about expanding hiring practices to benefit African Americans exclusively, and although that is important and a step we need to take, DEI includes everybody — Black, white, Asian, Native American, Muslim, you name it. It’s also about access for women and trans people. It’s about giving everybody access to opportunity. DEI is about expanding possibilities for people who don’t look like you or come from the same roots. I grew up Pentecostal, and my wife grew up Catholic. Some people say we’re both Christian, so what’s the problem? But there are big differences in how you move and dance and praise and worship, and we’ve found a way to worship together. It helps that we love each other, and we want to find a way. That isn’t true for strangers. So what incentive is there to build tolerance, expand access and work toward inclusion? First, there’s a huge amount of tension between all races, cultures and communities in America right now, and that is not good for progress, the economy or our future. Of course, a lot of people think DEI has nothing to do with current problems, but I believe if we had true DEI in play, we wouldn’t have these problems. Like if people weren’t afraid of losing power, they wouldn’t pass election laws in Georgia that make it a crime to support people waiting in line to vote. And we wouldn’t have South Dakota Gov. Kristi Noem signing legislation barring transgender athletes from playing on girls sports teams. If we lived with universal understanding, people in power wouldn’t need to skew our system to keep a non-diverse minority at the
We can’t tackle big issues like police helm. Usually when people take harsh brutality or gender pay gaps right out measures, it’s because they feel threat- of the starting gate. All we can do is ened. I’m not excusing bad leader- talk and bring more people into the conversations. ship, but it helps I often hear to try to get unDEI IS ABOUT EXPANDING people say, “I derneath probdon’t see color.” lematic perspec- POSSIBILITIES FOR PEOPLE As a Black man, I tives. want you to see So what is the WHO DON’T LOOK LIKE YOU my color. Bethreat? Letting OR COME FROM THE SAME cause my race ineveryone in forms my backdoesn’t mean ROOTS. ground and my there is less opportunity for those already there. It’s perspective, too. We need to see each the difference between seeing abun- other if we are to build DEI. The key to dance or scarcity, and I’ll always diversity is NOT to erase difference. It’s to embrace it. choose abundance.
My young children don’t perceive difference. That is learned. They run on the soccer field alongside other kids, kick the same ball and have a great time. To them, people are people, fun is fun. But at some point, those perspectives change. I do DEI work so my children won’t have to fight for access. Diversity and inclusion means understanding values and differences, being open to other cultures and lifestyles. Because humans are the same, regardless of race, religion, or sexual orientation, all deserving of opportunity and access. Recently, I moved into a new house. Neighbors came over to introduce
themselves, and we’ve become fast friends. They are white and Jewish; we are Black and Christian. And we’re friends. The best way to make diversity the status quo is to make an effort to understand other people. That starts at home. My neighbor and I walk together. We talk while our kids jump on the trampoline. It’s how the world should be. By welcoming us to the neighborhood, they started the conversation, and it keeps going. Everyone can do this. Just get to know someone different from you and be OK with that. That is the start to a better America.
DESIGNED FOR FAMILY BUSINESS LEADERS, BY FAMILY BUSINESS LEADERS.
From complex succession planning to tight-knit company culture, family businesses have unique circumstances and face challenges that other companies don't. As a fourth-generation family-owned business, Crain Communications understands this. That’s why we've launched our inaugural Family Business Summit.
JUNE 16-17 VIRTUAL PROGRAMMING June 16 & 17, 1-2:30PM
Emceed by our CEO KC Crain, this summit will bring the community together to learn, collaborate and build lasting peer-to-peer relationships.
IN-PERSON HAPPY HOUR June 17, 4:30-6PM
The two-day summit includes Crain's signature insightful and engaging virtual programming, an interactive workshop and—for those who select this option—concludes with an in-person happy hour for socially-distanced networking.
ADMISSION $100 - virtual program & workshop
CONFIRMED SPEAKERS (MORE TO COME!):
$150 - virtual program, workshop & in-person happy hour
RYAN MAIBACH, President and CEO, Barton Malow Holdings ALISON ORLANS, President and CEO, Orlans PC, eTitle, and eVantage LINZIE VENEGAS, Vice President, Ideal Group JESSE VENEGAS, Vice President of Strategy, Ideal Group
TO REGISTER, visit crainsdetroit.com/familybusiness Sponsor this event for an array of valuable benefits. Depending on the package you choose, your logo will appear on marketing materials, event communications and the broadcast, you'll gain access to interact and network with attendees, print and digital advertising and more. To learn more about sponsorship opportunities, contact Crain's Detroit Business Associate Publisher Lisa Rudy at lrudy@crain.com.
MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 7
DIVERSITY, EQUITY AND INCLUSION
Th w di co
Tal iss
VALAURIAN WALLER FOR CRAIN’S DETROIT BUSINESS
BY A SPE BUS
THE WORK CONTINUES
Gary Abernathy is vice president of practice development at Marsh & McLennan Agency and leader of its diversity and inclusion practice in Michigan.
With racial and social injustice at the forefront, organizations dive deeper into DEI BY ALLISON TORRES BURTKA | SPECIAL TO CRAIN'S DETROIT BUSINESS
As racial and social injustices and inequities have become more prominent in the past year or so, organizations have been taking a look in the mirror to see how diverse they are, whether they are truly inclusive and what underrepresented voices they may be missing. At the same time, customers are demanding more. A company can’t just post a message of solidarity on social media, make an effort to hire more diverse employees and call it a day. “Many organizations have put out numerous statements, and that’s great. But what I hear a lot from my friends and different professional colleagues is, ‘We’re waiting to see now what action takes place,’” said Gary Abernathy, vice president of practice development at Marsh & McLennan Agency and leader of its diversity and inclusion practice in Michigan.
Although some organizations are much further along in their diversity, equity and inclusion work than others, many have stepped up their efforts in the last year or two, recognizing the urgency of walking the walk and not just talking the talk. The first thing organizations often do is improve hiring practices to be more inclusive, or train employees on DEI topics like unconscious bias. Some organizations create diversity councils and use DEI scorecards to hold themselves accountable for making progress internally and externally. Marsh & McLennan created a national DEI council a few years ago. “A lot of that has really been accelerated, as you can imagine, with the tragic events across 2020, from George Floyd to Breonna Taylor, and so many countless others,” Abernathy said.
About a year ago, Marsh & McLennan started holding quarterly discussions called MMA Voices. “The powerful thing about this is that it allowed colleagues who were comfortable to share their experience of what they were feeling,” through peer-to-peer engagement, and it allowed the organization to support them, Abernathy said. The pandemic has made organic conversations in the hallway or the lunch room difficult. So, late last year, Marsh & McLennan created “coffee conversations,” which are informal, 30-minute discussions a couple of times per quarter. They pick a podcast or a certain topic and open up dialogue about it, “creating those spaces where everyone feels safe and vulnerable, and just naturally learns from each other,” Abernathy said.
“MANY ORGANIZATIONS HAVE PUT OUT NUMEROUS STATEMENTS, AND THAT’S GREAT. BUT WHAT I HEAR A LOT FROM MY FRIENDS AND DIFFERENT PROFESSIONAL COLLEAGUES IS, ‘WE’RE WAITING TO SEE NOW WHAT ACTION TAKES PLACE.’” — Gary Abernathy, vice president of practice development, Marsh & McLennan Agency
See DEI on Page 9
8 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
P008_P009_CD_20210503.indd 8
4/29/21 3:10 PM
C er e incl up espe pain they be and “W forc alwa and not vice men “Re an i A vers “I al for Ame rien as a of tr and “W ic,” ten in th the us h stru D said lack and take sens be g focu one in t and stin bad cert are imp livin T an e coll tice new just was “And in th way
The emotional weight of difficult conversations
Talking about DEI issues can take toll
VALAURIAN WALLER FOR CRAIN’S DETROIT BUSINESS
BY ALLISON TORRES BURTKA | SPECIAL TO CRAIN'S DETROIT BUSINESS
Conversations about race and other elements of diversity, equity and inclusion can be difficult. Opening up can be emotional and personal, especially if people are sharing a painful experience or admitting that they’ve made mistakes. People may be used to keeping the emotional and personal outside of work. “When I first entered the workforce, I remember my mom would always tell me, ‘Leave work at work and leave home at home,’” but that’s not realistic, said Gary Abernathy, vice president of practice development at Marsh & McLennan Agency. “Regardless of what our title is, we’re an individual first.” Abernathy has led sensitive conversations about race in the past year. “I always tell people that I can’t speak for everyone that’s Black or African American, but I can tell you my experience,” he said. For example: “Gary, as a Black male, is likely carrying a lot of trauma, a lot of anxiety, a lot of fear and anger right now,” he said. “We ask everyone to be empathetic,” Abernathy said. “Because we often see each other how we show up in the office today, but we don’t know the journeys in the past that many of us have taken to get there and the struggles that we’re having today.” DivDat President Jason Bierkle said learning about customers who lack easy access to online banking and bill paying, which many of us take for granted, has made him more sensitive to what other people might be going through. “We did this one focus group, and I’ll never forget that one person said that they would walk in to make a delinquent payment, and the cashier would give them the stink eye,” which made them feel bad, he said. “We don’t know what certain segments of our population are going through and how they’re impacted by this environment we’re living in right now.” Talking about DEI issues can take an emotional toll. “For many of our colleagues, seeing this social injustice and unrest, it felt like almost a new experience for them, and they just couldn’t understand where it was coming from,” Abernathy said. “And then for many of our colleagues in the minority community, this is a way of life, unfortunately.” See EMOTION on Page 11
Diane Antishin, DTE’s vice president of Human Resources and chief diversity and inclusion officer. | VALAURIAN WALLER FOR CRAIN’S DETROIT BUSINESS
DEI
From Page 8
The informal setting allows people to say, for example: “Hey, I’m hearing this term, or I’m seeing this on social media, I don’t know what it means,” or “I’m trying to have these conversations at home with my children, and I’m struggling,” Abernathy explained. For example, a recent conversation focused on privilege, a word that people can become defensive about. But this conversation “reset the expectations of privilege — that privilege isn’t something you should feel ashamed of or feel bad about,” and that everyone has privilege in some aspect of their lives, Abernathy said. DTE Energy has also enabled these sorts of conversations, both enterprise-wide and by equipping leaders with extensive tools and resources to educate themselves and invite conversation. “So much of this work is dependent on leaders creating permission to have what can sometimes be very, very challenging conversations,” said Diane Antishin, DTE’s vice president of Human Resources and chief diversity and inclusion officer. “I think the killing of George Floyd awakened the sensitivities of the entire country,” Antishin said. It has made people more willing “to hear the lived experiences and perspectives of individuals who, probably two or three years ago, were
“THERE’S A VERY CLEAR AND PRONOUNCED BUSINESS CASE FOR THIS TO WORK.” — Diane Antishin, vice president of Human Resources and chief diversity and inclusion officer, DTE
not actively talking about that in the workplace.”
Putting structures in place Last year, Robin Carter-Cooper became Oakland County’s first chief diversity, equity and inclusion officer. “A lot of times, people come right in, and they start making these assumptions and assertions, kind of creating their own narrative,” she said. “I’ve been doing this work long enough to know that that’s not really equity.” To avoid that, one of her first priorities was to incorporate people’s voices, so she created an Equity Council, made up of 30 people in different roles. People had to apply for a spot on the council, which required a written application and an interview process with a panel that included members of the community. The response was enthusiastic: 103 people applied for 30 spots. The council, formed in January, works to create a culture that respects diversity, equity and inclusion and promotes cultural sensitivity and understanding among employees. It also aims to ensure that public services are provided in a culturally sensitive manner. “Having strong equity teams re-
ally builds capacity. You want to make sure that not only you, as the person leading this work, have support, but you also want to make sure that it can sustain, and you really can’t sustain the work with one person or three people,” Carter-Cooper said. The structure that equity teams provide helps the work permeate through the organization and become normalized, she said. The council members went through training “to start making sense of what it means to operationalize equity through all of our systems,” Carter-Cooper said. The county has brought in a consultant for a cultural audit, looking at how employees feel and how equitable the organization’s practices and compensation are, for example. It’s undergoing another audit that looks outward, at how the county provides services to different communities. Carter-Cooper is using these audits to generate data that will help the county focus its efforts. Within Oakland County, the needs of Pontiac versus Rochester versus Southfield may be very different, Carter-Cooper said. The county is using focus groups to engage different groups in the community and find out: “How do they view county services? And what
would they like to see from the county?” It’s important to gather such input at the beginning of the process rather than the end, “which doesn’t feel much like equity,” Carter-Cooper said. “Because if you’ve already had your plan, and then you call people in the end, their voices aren’t really valued.”
Building internal accountability DTE Energy has been doing DEI work for decades, but “the events of 2020 and into 2021 now have caused a heightened sense of urgency and awareness around diversity, equity and inclusion issues,” Antishin said. In 2019, DTE began asking all of its senior leaders to develop their own DEI plan for their business unit and linking it to performance expectations. They expanded these plans to all directors last year, and then to the next tier of managers this year. The plans cover a range of efforts, from starting conversations to supplier diversity. DTE has been building leaders’ capacity in this area through training and other resources. “There’s a very clear and pronounced business case for this work, and leaders need to be able to tie into that to tell that story in their own way and personally connect to it,” Antishin said. See DEI on Page 11
MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 9
P008_P009_CD_20210503.indd 9
4/29/21 3:10 PM
HEALTH CARE
Strained ambulance firms rethink business plans Volumes decline as people avoid 911 calls during pandemic; consolidation trend likely to continue BY JAY GREENE
Ambulance companies rely on growth in volume of reimbursable transports to cover expenses and even turn a profit. But since the COVID-19 pandemic struck in March 2020, Michigan companies have been facing more severe staffing shortages, they have seen volume decline by as much as 40 percent as people choose not to call 911 to avoid potential coronavirus exposure at hospitals and interfacility transfers have slowed. Across Michigan, ambulance companies’ and EMS responders’ revenue fell, but their expenses didn’t. Last year, 13 ambulance providers went out of business or merged with another company, according to the Michigan Department of Health and Human Services. Six providers closed and five merged with other operators. Closures were in the counties of Saginaw, Cheboygan, Kalkaska, Delta and Alger. Even before the pandemic, the nation’s 911 system was strained. In Michigan, 911 calls are answered by a patchwork of nonprofit, for-profit, hospital-affiliated, fire department and municipal-run services. Michigan has about 800 licensed life-support agencies but only 300 that transport patients. The other 500 are medical first responders or basic life support agencies. “Most likely the closures were first responders. The majority happened in northern Michigan. The pandemic has exposed even more the reimbursement and staffing issues we
“WITH COVID, OUR CALL VOLUMES DROPPED 40 PERCENT AND WE ARE NOT TRANSFERRING OTHER PATIENTS FOR OTHER CARE AS MUCH. ” — Marc Breckenridge, a paramedic and manager of government and media relations, Emergent
face,” said Angela Madden, executive director of the Michigan Association of Ambulance Services in Lansing. Kolby Miller, CEO of Medstar Ambulance in Clinton Township, said consolidation in the ambulance industry has been going on for several years and the COVID-19 pandemic will hasten the trend. Medstar is owned by Ascension Michigan, Henry Ford Health System and McLaren Healthcare Corp. “You get to a point where ambulance organizations, whether they’re public or private, the revenue doesn’t keep up with the demand for wages and benefits. And eventually it becomes insurmountable. And organizations just close when you can’t meet your paychecks,” Miller said. Traditionally, ambulance companies were owned by funeral homes, fire or police departments or government-affiliated. Later, private companies, including hospitals and for-profit companies, began operating ambulance services. For example, Medstar is a nonprofit owned by hospitals and Emergent also is a 501c(3) organization owned by six local community ambulance providers. Last year, Beaumont sold its ambulance company to
Superior Air-Ground Ambulance Service of Michigan Inc. Over the past decade, private equity firms have acquired ambulance companies. Three private companies have taken over nearly 70 percent of the market, including Kohlberg Kravis Roberts & Co., the largest, and portfolio company Enhanced Equity. While ambulances respond to all types of 911 calls, they are often only reimbursed when they transport people to the hospital. During the pandemic, calls for medical help in many areas of the state have surged, but those resulting in transport to hospitals have fallen. Larger ambulance companies like Medstar, which employs 800 health care workers, will continue to grow as smaller companies seek to survive by sharing expenses and through economies of scale, Miller said. “The model also allows for stability in both the 911 delivery and the inter-hospital delivery because it consolidates the geography of volume, and then we can improve service by sharing resources,” Miller said. Another problem affecting all ambulance providers is the shortage of paramedics and emergency medical technicians. During the pandemic,
fewer emergency personnel have been trained and replacements have been insufficient to keep up with demand. “We are an accredited paramedic training institution. We were doing our part, but the number of education programs have diminished, so the access to training that people might need for EMT and paramedic has diminished,” Miller said. Emergent Health Partners in Ann Arbor, one of the state’s largest EMS providers with six affiliate ambulance companies and 849 employees, is another emergency provider hit hard by multiple factors all connected with the COVID-19 pandemic, but also by longstanding reimbursement and staffing issues. With volume down and expenses up, Marc Breckenridge, a paramedic and manager of government and media relations with Emergent, said 2020 was a very difficult financial year. Revenue dropped to $72.2 million in 2020 from $73.9 million in 2019. However, Emergent's 2020 revenue was boosted by federal COVID-19 relief funds, paycheck protection and Medicare advance payments of $2.65 million. “With COVID, our call volumes dropped 40 percent and we are not transferring other patients for other care as much,” Breckenridge said. “Probably the biggest reason is that patients in a facility like a nursing home are urged to stay there in order to mitigate disease spread.” Breckenridge said fewer people are calling 911 for help when they need it.
Medstar Ambulance emergency workers load a patient for an interfacility transfer. Ambulance companies have seen revenue fall during the pandemic.| MEDSTAR AMBULANCE
“They are waiting until the last minute,” he said. “By then, it’s sometimes much too late to help.” Miller said Medstar has been challenged by making sure its ambulance staff has enough personal protective equipment to do their jobs and at the same time trying to ensure stress doesn’t affect the mental well-being of the workforce. During the second surge last fall, Miller said 35 Medstar employees were either diagnosed with COVID-19 or exhibiting symptoms. “As a large EMS 911 provider, not only do we care for the patients with COVID, and the difficulties in providing that care, but we’re also the ones who have to tell the family members that they can’t come to the hospital, or they’re not going to be able to see their family member for some time, and then manage the impact of that interaction on the patient’s home,” Miller said. “The care is more complicated. The support of the patient and family members is more personally taxing.” Miller said the impact on field personnel “is just crushing. I’ve been in this business for 37 years, as a paramedic and as an administrator, and I have never dealt with the challenges of balancing the demands and the pressures on our organization the way we are right now.” Nationally, ambulance companies are asking states and the federal government for more financial relief. The American Ambulance Association recently asked the U.S. Department of Health and Human Services for $2.6 billion in emergency funding. Madden said the Michigan Associ-
10 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
P010_P011_CD_20210503.indd 10
4/29/21 3:26 PM
atio Mic are mill and EMS men “W crea es fu fede Med cost Mad con W type reim ple dem area thos tals A man told er p mos capa L hop ness tran serv cine tran “W futu look that COV ty p and help big ture
Con (313
ers sfer. enue
last me-
halnce tive the ress eing
fall, yees with ms. not with vidones bers l, or heir and nteriller ted. mily g.” pern in arand I nges the way
nies govThe n rent of $2.6
oci-
FOCUS | DIVERSITY, EQUITY AND INCLUSION
DEI
From Page 8
By now, most business leaders realize that diverse and inclusive teams are good for business, but getting all employees to fully understand how is a common challenge. And race is only one aspect of diversity. A culture of inclusion also allows LGBTQ people and those of different genders and physical and developmental abilities to feel like they can show up as who they are. It’s important to make sure everyone understands that DEI work involves everyone and benefits everyone, Antishin said. This means “helping every single person to feel a true sense of inclusion, because we know at DTE when people feel included, their energy rises, and we’re a company very much focused on energy. That’s our products and services, but also the human energy created within DTE.”
Commitment to serving the underserved
ation of Ambulance Services and the Michigan Association of Fire Chiefs are asking the state Legislature for $5 million to boost training programs and $10 million annually to increase EMS salaries and purchase equipment upgrades. “We haven’t had a Medicaid increase in 21 years. If the state increases funding $10 million, that plus the federal match will bring rates up to Medicare, which is still lower than costs, but will help us quite a bit,” said Madden, adding that legislators are considering the requests. While ambulances respond to all types of 911 calls, they are often only reimbursed when they transport people to the hospital. During the pandemic, calls for medical help in many areas of the state have surged, but those resulting in transport to hospitals have fallen. As hospitals become overwhelmed, many ambulance services have been told to treat patients in place whenever possible and transport only the most acute cases to protect hospital capacity. Looking to the future, Emergent is hoping to come up with a new business model that combines traditional transportation and first responder services with community paramedicine and emergency treat, triage and transport (ET3), Breckenridge said. “We are trying to project what the future post-COVID world is going to look like. There’s so many changes that have been made because of COVID,” he said. “We hope community paramedicine is made permanent and increases in reimbursement will help form our future existence. The big question is what pathway the future holds.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Meaningful DEI work points both inward and outward. And inclusion can spawn new business models. DivDat operates a network of kiosks to help people who are “unbanked” or “underbanked” pay their bills without getting charged fees. Underbanked customers may not have checking accounts or credit cards, or Internet access at home to pay bills online, so they typically pay with cash at payment centers. But doing so is a hassle, because payment centers often have limited hours. “When we talk about diversity, equity and inclusion, we’re talking about inclusion in the whole banking process, and a big part of the banking process that we all use it for is bill payment,” says Jason Bierkle, president of DivDat. The DivDat Kiosk Network launched in 2014, and now it has nearly 100 kiosks in metro Detroit. The need became particularly acute during the COVID-19 pandemic, because some payment centers closed. DivDat responded by adding 12 new Detroit city departments to the options at their kiosks. DivDat is paid by the billing agency or company for payments its kiosks process. The kiosks are an evolution of DivDat’s longtime billing business. The kiosks are located in places like independent grocery stores and community centers. “If you’re walk-
EMOTION
From Page 9
If someone from an underrepresented or marginalized group opens up about their experience, that can add another layer of emotional burden. Diane Antishin, vice president of Human Resources and chief diversity and inclusion officer at DTE Energy, takes this into account. “It’s not the burden or responsibility of an individual in a minority to educate you about diversity, equity and inclusion,” and everyone has their own learning to do, she said. “While we definitely open up forums for people to share their experiences and encourage that dialogue and
“WE HAVE SOME WHO FEEL THEY WANT US TO MOVE FASTER, AND THEY WANT TO SEE MORE ACTION. THEN YOU HAVE OTHERS THAT ARE STILL JUST TRYING TO UNDERSTAND THE CONCEPTS AROUND INCLUSIVITY AND UNDERSTANDING THE IMPORTANCE.” — Gary Abernathy, vice president of practice development, Marsh & McLennan Agency
ing in a payment, chances are you’re doing it for a lot of different bills. So rather than getting on a bus, or getting in a car and driving to the water department, and ... driving all around town to pay your bills, you can just go to one kiosk and pay all of your bills,” Bierkle said. The kiosks also allow people to pay only part of a bill if they can’t pay the whole balance. This option may be more important now, considering the economy and COVID, Bierkle said.
m a h g n i m r i Coming to B IN THE HEART OF OAKLAND COUNTY’S PREMIER SHOPPING DISTRICT... 5300 sq ft under development with frontage on two of Birmingham’s most iconic avenues Supporting a more walkable, vibrant and beautiful Birmingham Bringing new life into Birmingham’s historic buildings
FOR LEASING & OTHER INFORMATION:
The long term DEI strategy has to become part of your culture, and it takes time, Abernathy said. It also doesn’t have an end date. “You’re never going to reach the end of this journey,” he said. Making an organization more diverse, equitable and inclusive has to be a long-term effort. “I think it’s important for us to acknowledge that, where we are right now, there’s a lot of angst around this work. And we just have to make sure we’re building processes and policies and systems, so that once the angst is gone, the work doesn’t stop,” Carter-Cooper said. Even if an organization has established a clear path and is moving along, people may disagree about the speed or direction it’s moving in. “We have some who feel they want us to move faster, and they want to see more action. Then you have others that are still just trying to understand the concepts around inclusivity and understanding the importance,” Abernathy said. “So you’re trying to find that balance where you’re being progressive, but you’re also not leaving individuals behind.” discussion, we also create a parallel expectation that that’s not the only way that our employees learn.” People often tell Abernathy they want to help but aren’t sure what to say or do, and they’re afraid of saying the wrong thing. He encourages people to educate themselves, but also not to be afraid to reach out to someone they know who has had different experiences. He tells them it’s OK to say, “I value you. I have no idea what you’re going through individually, but anything that I can do to support you, I want you to know that you’re important to me.” These DEI conversations also aim to create safe spaces so that “team members know that it’s OK to not be OK right now,” Abernathy said.
(248) 646-3151
REDEFINING
RELATIONSHIP BANKING COMMERCIAL LENDING Guy Rau - EVP, Michigan Senior Lender
Your business is our priority. Our relationship-first approach
identifies your needs and creates custom-tailored solutions to help meet them. Feel confident with the only bank that knows you by name––and your business by second nature. We’re redefining relationship banking. Your way.
Troy – 5600 New King Dr. Suite 150 Troy, MI 48098 248-886-0086 | Toll-free: 866-707-2871
Office – 248-922-6955
www.waterfordbankna.com
Member FDIC. Equal Housing Lender.
|
All loans subject to credit approval. NMLS# 520256
MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 11
P010_P011_CD_20210503.indd 11
4/29/21 3:26 PM
REAL ESTATE
Fannie Mae seeks receivership for Jeffersonian Houze Request comes as co-owners of high-rise apartment building on Detroit River battle in court BY KIRK PINHO
Fannie Mae is asking a federal judge to appoint a receiver to oversee the management, leasing and financial operations of an iconic Detroit riverfront high-rise apartment building. The request, filed last week in the U.S. District Court of Eastern Michigan, comes as the co-owners of the Jeffersonian Houze — formerly the Jeffersonian — tower at 9000 E. Jefferson Ave. have been embroiled in a legal battle in Wayne County Circuit Court for more than two months. One of the co-owners, Arie Leibovitz, a Southfield-based real estate investor and developer who is 50-50 owner of the tower, alleges mismanagement, self-dealing — which is not a crime but breach of fiduciary trust — and accounting and financial reporting failures by the tower’s other owner, Joe Barbat, in the Wayne County complaint. “The state court complaint has laid bare the severe mismanagement and failed operations of the property, including an obvious dispute between borrower’s members as how to properly and effectively manage and operate the property,” Fannie Mae’s motion for a receiver reads. “Fannie Mae is justly concerned that while the two competing principals of borrower battle it out in arbitration, they will continue to neglect borrower’s obligations regarding the operation and maintenance of the property.” The two complaints place the future of the 30-story high-rise in jeopardy as Barbat faces multiple legal battles in multiple courts. A spokesperson for attorneys representing Leibovitz said they declined comment due to pending arbitration. Leibovitz’s lawsuit also asked the judge to appoint a receiver, although he has since withdrawn that request, according to Fannie Mae’s motion for a receiver. “Fannie Mae has filed an action for receivership as a result of concerns over a partnership dispute pertaining to the property,” Jessica Mathis, general counsel and COO of Barbat’s West Bloomfield Township-based Barbat Holdings LLC, said in an emailed statement Tuesday evening. “Our highest priorities are the residents and employees that live and work at the property. Ownership and (Fannie Mae) will be working together while these partnership issues are resolved. The property is current on its financial obligations to Fannie Mae and we look forward to a quick resolution to this matter. The property has been impacted severely by the eviction moratorium. We welcome Fannie Mae and our business partners to help us continue to support our valued tenants at the Jeffersonian during these challenging times.” The Fannie Mae request cited the Leibovitz lawsuit’s request for a receiver as an event of default because it would be an unauthorized transfer of the property. It also says the ownership group “failed to timely notify” Fannie Mae of Leibovitz’s legal action, another event of default. The county court complaint also “may materially impair Fannie Mae’s lien and security interest,” which constitutes another default, Fannie Mae says in its receivership request. Ambler, Pa.-based Berkadia Com-
“It is unclear what Eagle Construction did with all those funds as there remains various unpaid contractors,” the lawsuit reads. One of them is SCI Floorcovering Inc., which had five invoices totaling $47,442 that were never paid. Another is Aikins Construction, which is owed $745,041 for parking deck repairs, according to the lawsuit.
Barbat’s denial
Fannie Mae is asking a federal judge to appoint a receiver to oversee the management, finances and leasing of the Jeffersonian Houze apartment tower on the east Detroit riverfront. | KIRK PINHO/CRAIN’S DETROIT BUSINESS
mercial Lending LLC originated a $35.919 million, 15-year Fannie Mae loan at 3.84 percent to the ownership group, according to the complaint and accompanying documents. The five-year interest-only term calls for monthly payments ranging from $107,278 if the month has 28 days to $118,772 if it has 31 days. The principal and interest payments, scheduled to start in 2025, are for $168,186, the loan documents say. Fannie Mae, a federal government-sponsored entity, does not issue home mortgages but does issue debt for commercial multifamily property. It is seeking the appointment of B. Riley Advisory Services as receiver, which the motion says had previously been receiver for Riverfront Towers. Barbat and Leibovitz paid $30.2 million for the building in December 2017 with another $10.2 million in renovations planned.
A partnership forms According to the Leibovitz lawsuit, which was filed Feb. 12, Leibovitz and Barbat, who both have substantial real estate holdings in and around Detroit, met on a trip to the Bahamas. Barbat, who is CEO and chairman of Southfield-based Wireless Toyz and chairman of the West Bloomfield Township-based real estate investment and management company Barbat Holdings LLC, wanted to diversify his business interests and sought Leibovitz’s advice. Later, during a dinner in West Bloomfield Township, the two men discussed the Jeffersonian, which had recently gone up for sale and which Barbat had submitted an offer to purchase. However, he was concerned his offer would be rejected and sought to bring Leibovitz on board as a partner. But, the lawsuit says, although Barbat initially proposed that both men contribute equal sums to the partnership, he reneged and said he wouldn’t contribute his share. Leibovitz, through his Arie-El Financial LLC, loaned Barbat $2.1 million to
“The allegations in the State Court Complaint are significant and concerning to Fannie Mae,” the federal complaint says.
Financial concerns Barbat
Leibovitz
contribute to the deal and retain a 50-50 ownership structure. Leibovtiz claims in his lawsuit that Barbat told him in initial discussions about the purchase that his Houze Living LLC was experienced and could provide The Jeffersonian’s property management services, but after a purchase agreement was signed and before the deal was finalized, Barbat backed away from that assertion, saying his company was incapable of doing so. As such, The Jeffersonian has had a string of property managers in the last three-plus years: Southfield-based Village Green Cos. (December 2017 to February 2019); Essential Property Management LLC (February 2019 to February 2020); JS Dean (February 2020 to July 2020); and then ultimately Houze Living (July 2020 to present). Although the lawsuit says Barbat fired those first three organizations, a source familiar with the matter said Village Green terminated its relationship with him following breach of contract. In addition, the property management firm musical chairs has left the building’s financial records in disarray as all the firms used different software and Houze Living was not equipped to handle the transitions properly, the lawsuit claims. That means a cohesive and comprehensive set of financial records does not exist, the lawsuit says. In defiance of the operating agreement, the lawsuit says Barbat has paid himself $323,324 in management fees. Fannie Mae says that the allegations in Wayne County Circuit Court, if proven true, would be additional default events.
The Leibovitz lawsuit also says that Barbat has been giving false or misleading financial reports to Leibovitz and their lender that hide “authorized management fees.” For example, the March 31, 2020, P&L statements don’t reflect $171,115 in management fees Barbat allegedly paid himself and the June 30, 2020, statements don’t reflect $184,494 in year-to-date management fees paid to Barbat’s affiliate, the lawsuit says. Leibovitz also raises concerns that Houze Living is violating Michigan law and the ownership group’s loan agreement because the security deposit liability listed in the June 30, 2020, financials is $12,030.58 while the rent roll provided to the lender is $223,251.51, raising “reasonable concern that Barbat is not directing Houze Living to maintain security deposits in a separate account ...” In addition, the lawsuit claims that Barbat’s Eagle Construction Services was paid $730,140 between February 2018 to October 2019 and requests for support for the charges were only met with “cursory spreadsheets that do not cover or address the majority of the payments he has authorized.” “For at least $604,437 of these payments, Barbat has provided no documentation or support whatsoever or provided any records that would show the description of services performed, the materials or labor supplied, or even an identification of where the work was even performed on the property,” the lawsuit reads. It also alleges that Barbat submitted six construction loan draw requests — effectively, milestone-based benchmarks — totaling $4 million, although that money didn’t go directly to subcontractors. Instead, “Barbat swept those funds from (owner) River Houze’s account and deposited them in Eagle Construction’s bank account.”
For his part, Barbat, through an attorney, Birmingham-based Scott Yaldo, issued a statement in February denying the allegations leveled in the Leibovitz lawsuit. “These allegations are absolutely false, hypocritical and are merely an attempt by Arie Leibovitz to seek to change the terms of an agreed upon operating agreement that he signed ... and which does not allow him the controls he so desires, and which he clearly cannot honor or fulfill,” the statement reads. It continues: “We are disappointed in the recent false and unwarranted claims that Arie Leibovitz has filed against his own company, and maintain that the allegations are entirely baseless, frivolous, and frankly, delusional. At minimum, they arise out of Mr. Leibovitz’s misunderstanding of the operations involved, all of which are well documented by the management team, and which wholly and unequivocally disprove Mr. Leibovitz’ allegations.” “There has been absolutely no wrongdoing by any of the defendants named in the litigation, rather only by Mr. Leibovitz himself, which wrongdoing will be borne out in a soon to be filed countersuit against Mr. Leibovitz, in which we will seek all available remedies available to us under the law, and under the parties’ operating agreement, and we are confident that the legal proceedings will prove just that.” In Fannie Mae’s motion seeking receivership, it says Barbat alleges Leibovitz entered into $1.5 million worth of unauthorized construction contracts for the Jeffersonian resulting in liens against the property.
Eviction trouble The lawsuits weren’t the only trouble the Jeffersonian Houze found itself in the last year. In April 2020, Attorney General Dana Nessel slapped Barbat and Leibovitz with a cease and desist letter after about 80 residents received eviction notices after falling behind in rent payments. At the time, evictions were prohibited unless the tenants posed a substantial risk to another person or the property because of the COVID-19 pandemic. Still, more than 70 eviction cases were filed by the Jeffersonian owners in Wayne County’s 36th District Court between Nov. 2 and Jan. 6, according to data the court provided in mid-February. In addition, the city of Detroit said at that time that 20 blight tickets had been issued to the owners between July 9, 2019, and Sept. 10, 2020, although five of those were deemed to be not the ownership’s fault. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
12 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
P012_CD_20210503.indd 12
4/29/21 3:56 PM
JOIN OUR
NEXT GENERATION
CELEBRATION
VIRTUAL EVENT MAY 13 | 4P.M.
This year’s class of business pioneers, philanthropists and trailblazers will be revealed in a special print and digital report on May 10. We’ll celebrate their success at a surprise-filled, interactive virtual event on May 13, where our winners will tell their stories.
TO REGISTER, VISIT crainsdetroit.com/20sregister. TITLE SPONSOR
Raise your profile with the region’s top young professionals, their employers and associates: sponsor this event. Crain’s 20 in their Twenties is one of our most popular annual events and widest-read special reports. LIMITED SPONSORSHIPS ARE STILL AVAILABLE. To learn more about sponsorship opportunities, contact Crain's Detroit Business Associate Publisher Lisa Rudy at lrudy@crain.com.
PN_Full_Page_Template.indd 1
4/29/21 2:02 PM
MERGERS AND ACQUISITIONS
Lineage Logistics to acquire European freight forwarder UTI Dutch company specializes in shipping refrigerated and containerized foods BY DUSTIN WALSH
Novi-based Lineage Logistics announced last week a deal to acquire Dutch freight company UTI Forwarding from its private equity owner Nordian Capital Partners. The deal marks the world’s largest temperature controlled warehousing firm’s entrance into the European freight industry, allowing Lineage to distribute refrigerated foods from its warehouses throughout Europe. Terms of the deal were not disclosed. UTI specializes in the exporting and importing of temperature controlled and containerized food products to ports across Europe. “Together we will offer a one stop solution to our shared customers that creates new efficiencies between import- and export-based container movements and our warehouses that will help us reduce waste in the supply chain,” Mike McClendon, president of international operations and executive vice president of network optimization at Lineage, said in a press release. “UTI has an exceptional management team and we are excited to partner with them to expand this offering to new customers while investing in technology to further drive growth and savings.” ING Financial Services LLC acted as financial adviser to UTI and Nordian. Rabobank acted as Lineage’s financial adviser and NautaDutilh served as its legal counsel. Earlier this year, Lineage acquired Maryland-based Cryo-Trans, an owner of refrigerated and insulated railcars. The transaction valued CryoTrans at more than $500 million, Bloomberg reported. Lineage, a real estate investment trust, operates more than 330 temperature-controlled warehouses, spanning almost 2 billion cubic feet of storage capacity across 15 countries. It provides other services including lastmile delivery, freight consolidation and port logistics. About one-third of all refrigerated foods consumed in the U.S. pass through at least one of Lineage’s ware-
During 2020, Lineage made 39 acquisitions to the tune of $3.6 billion — or a pace of one acquisition every nine days through the year. | LINEAGE LOGISTICS
The deal to buy UTI, a freight forwarding company located in Rotterdam, marks Lineage’s entrance into the European freight industry, allowing it to distribute refrigerated foods from its warehouses throughout Europe. | UTI FORWARDING
houses. And COVID-19 produced greater opportunity as consumers shifted dining habits away from restaurants, buying almost all of their food from grocery stores. The bulk of Lineage’s business is distribution to markets. So while restaurant distributors like U.S. Foods suffered, Lineage thrived. During 2020, Lineage made 39 acquisitions to the tune of $3.6 billion — or a pace of one acquisition every nine days through the year. The acquisitions added 130 warehouses in 10 countries to the company’s portfolio and 5,000 new employees.
In March, Lineage raised $1.9 billion from investors. The equity comes from new and existing investors, including BentallGreenOak, D1 Capital Partners, Oxford Properties, CenterSquare Investment Management, MS Tactical Value and Conversant Capital, OP Trust and Cohen & Steers. The firm closed on a $1.6 billion investment round in September last year. The company is now valued at roughly $15.5 billion. Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh
RETAIL
French luxury retailer Hermès to open at Somerset Collection June opening expected for 3,100-square-foot store, its first location in Michigan BY KURT NAGL
Hermès, the Parisian retailer known for its Birkin bags and luxury leather goods, plans to open at Somerset Collection in June, more than a year after announcing its entry into Michigan. The 3,100-square-foot store is targeting mid-June for its debut. Store spokesman Peter Malachi confirmed the opening timetable. The retailer is filling the first-floor space vacated by Crate & Barrel after the furniture and housewares seller moved its only Michigan store to Twelve Oaks Mall in Novi last year. Crate & Barrel had occupied two levels at Somerset, which will not be used by Hermès. Peter Van Dyke, a spokesman for the mall, said another yet-to-be-announced tenant has
French luxury retail company Hermès has been planning its first store in Michigan since early 2020. | HERMÈS
signed on to take over that vacant space. Once open, the Hermès store at the upscale mall in Troy will be the retailer’s first in Michigan. It operates more than 30 locations throughout the country, mostly on the coasts, but also has a store in Chicago and one near Cleveland. Details on the build-out at Somerset are being kept under wraps until it is nearer to opening, according to the company. Founded in 1837, Hermès sells luxury bags, perfume and fashion accessories for women and men. Its expansion to Somerset suggests $10,000 handbags have not gone out of style, despite financial challenges the COVID-19 pandemic has posed to businesses and consumers.
Like most retail companies with a prominent brick-and-mortar presence, Hermès suffered revenue declines when the pandemic caused nationwide closures last year. However, its sales have recovered more quickly than anticipated and stronger than competitors such as Louis Vuitton, according to a report from the Wall Street Journal. It had the strongest fourth quarter across the luxury sector last year. Hermès will have plenty of luxury company at Somerset. The 1.45 million-square-foot upscale mall, owned by Southfield-based The Forbes Co., is home to several upscale retailers including Louis Vuitton, Versace and Burberry. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
14 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
P014_CD_20210503.indd 14
4/29/21 4:12 PM
HEALTH CARE
DMC watchdog: Future in question; $1B investment paid off Oversight board’s final report outlines concerns about capital expenditure levels BY JAY GREENE
Oversight board Legacy DMC has submitted a concluding report that outlines future concerns about investor-owned Tenet Healthcare Corp.’s ongoing ownership of six-hospital Detroit Medical Center. Legacy DMC was created in January 2011 when nonprofit DMC was sold in 2010 to for-profit Vanguard Health System Inc. and later to for-profit Tenet in 2013. It was given responsibility to monitor the buyer’s compliance with 20 covenants in the purchase and sales agreement and issue an annual report. As it has for the past several years, Legacy DMC expressed concerns that Tenet might not be investing enough in capital improvements to sustain current operations to a level suitable to the community into the future. Legacy’s concluding report reminds state officials that the board’s monitoring ended Dec. 31. DMC no longer has any legal obligation prohibiting Tenet from selling or closing DMC’s individual hospitals or closing core clinical services, or to continue medical education, support research or invest in any particular capital projects. The eight-page report was presented first to the Michigan attorney general’s office, which had oversight of the process, and then released to the public. “The (DMC) system is in much better shape today than it was 10 years ago. This is largely because the new owners, Tenet, have invested the money in capital that was necessary to rebuild the structure of the system, so that it could deliver quality health care again. They made other changes to the process so that the system was running in an efficient and profitable manner,” said Dick Widgren, Legacy DMC’s chairman, in an interview last week. In acquiring the financially struggling nonprofit medical center, DMC’s new owners provided more than $1 billion in capital for projects that included DMC Heart Hospital and a new patient tower at Children’s Hospital of Michigan. Vanguard and Tenet also paid out $391 million to retire DMC bonds and assumed about $335 million in unfunded employee pension and physician medical malpractice liability. “Having achieved those levels of gains, we wanted to feel comfortable that they’re going to continue to sustain what they’ve achieved” and not scale back “making continuing capital investments,” said Widgren, the former CFO of Urban Science in Detroit. In 2019 and 2020, DMC cut back capital maintenance investments from $70 million annually to $67 million in 2019 and $54 million in 2020. “We are of the opinion that the system needs to be somewhere in the neighborhood of $70 million of capital expenditures a year to not lose ground” on maintaining the six hospital physical plants, Widgren said. “They have pulled down from $70 million in recent years and it looks like that seems to be a bit of a sweet spot for them in terms of wanting to maintain the cash flow out of the system. They’re obviously moving money from the Detroit system into the parent company over in Dallas. That has to have some impact on the cash
The six-hospital Detroit Medical Center was sold in 2010 to for-profit Vanguard Health System Inc. and later to for-profit Tenet in 2013. | KURT NAGL/CRAIN’S DETROIT BUSINESS
Widgren
Gregory
available for capital expenditures.” Knowledgeable sources, who asked to remain anonymous for fear of retribution, have told Crain’s over the years that Tenet regularly takes $80 million to $100 million a year in profits out of DMC. Crain’s has reported that DMC’s hospitals, based on Medicare cost reports, earn $100 million or more per year. “Recognizing that this is the final report, the Legacy board has outlined for the community, as well as local and state elected officials, what to keep in mind, absent this oversight, for the coming years,” Widgren said. In a statement, DMC said after a decade of for-profit ownership by Vanguard and Tenet that it has “not only met but exceeded the commitments made to the people of our region and Michigan,” according to Audrey Gregory, DMC’s CEO, in a statement. “Over the last 10 years a transformation has taken place at the DMC. This transformation has been powered by dedication to the community, hard work and a commitment of critical resources to ensure that the DMC, in partnership with Tenet Health, is well positioned to continue its role as one of the region’s premier health care providers and a world-class academic medical center.” While Legacy DMC was not given authority to comment directly on DMC’s medical education contractual relationships, Widgren said Legacy DMC has expressed concerns about the deteriorating relationship over the years between DMC and Wayne State
University School of Medicine. “It has declined. It wasn’t as good as it needed to be at the beginning of the 10-year time frame and it has declined from that,” Widgren said. “It’s hard for me to comprehend how a system the size of DMC can be sitting across the street from a medical school the quality of Wayne State and the two of them aren’t working together like they did before or should be doing now.” Since 2010, DMC has been involved in a number of controversies with WSU. For example, DMC has cut payments to Wayne State medical school by more than 40 percent over the past decade, supported the disaffiliation of WSU’s pediatrics department that led to DMC’s affiliation with Central Michigan University medical school in pediatrics and moved to bar now rival Wayne Pediatrics from its Children’s Hospital. “I don’t have a quick answer about how it could be solved,” Widgren said. “But it just seems like it would make a ton of sense for the two to get back working together in a collaborative fashion and making the best of both sides of that equation.” DMC maintains it has the largest residency training program in Michigan and has increased the number of residents recently by more than 20 percent to 1,072. Last year the DMC spent $78.7 million on training, up from $63.4 million spent in 2010. Just in the past couple of years, DMC lost an appeal in 2020 to reinstate its 14-resident neurosurgery training program after the Accreditation Council for Graduate Medical Education yanked its accreditation. Some 12 residents needed to find other hospitals to finish their training. “We are proud of our service and contributions to the community and grateful to this community for decades of support and partnerships,” Gregory said. “It is an honor and privilege to be part of the Detroit community and care for those who depend on
us. Be assured that we will not waver in our commitment to this community and our goal of building an even stronger DMC.” Last October, Legacy hired the Quantum Group to negotiate DMC’s future charity care policies with Tenet. Legacy triggered a clause in the original 2010 contract with Vanguard that required DMC to negotiate a new charity and indigent care agreement. Negotiations were led by Stephen D’Arcy, former chair of the DMC before the 2010 sale that extended DMC’s current charity care policies. In previous reports, Legacy noted its concerns related to the impact on care for the indigent of the DMC’s continuing staff reductions, reduced capital spending, and the adequacy of its support of education and research. “We encourage state and local governments to essentially pick up where we left off in working with DMC management to ensure health care will continue to indigent Detroiters and those who fall through the Medicaid and Affordable Care Act cracks,” said Widgren. Earlier this year, Legacy contributed $2.5 million to the DMC Foundation and The Children’s Foundation. The foundations were formed with philanthropic funds raised while the DMC was a nonprofit health system. Legacy held those funds in the event of unexpected expenses as part of its oversight role. Widgren said Legacy DMC this year has transferred $4 million to the foundations and plans to contribute the final $1 million to the foundations this summer. In its previous report, Legacy DMC said in June 2020 that it remained concerned with ongoing maintenance of DMC infrastructure, medical student and graduate medical education programs and with the safety net obligations to inner-city Detroit residents. “The safety net is more than provid-
ing charity care, and we’ve discussed this with DMC,” Widgren said. “Does it meet the needs of the community? There really is no recognized structure of that process in Detroit. If you compare that with other major cities, like Atlanta or Miami, they have a communitywide structure and recognized responsibilities to maintain the safety net.” Legacy’s 11-page June report concluded that Tenet has complied with the majority of the sales agreement, but that DMC failed to meet the seventh covenant, the general reporting obligations. “We asked for information on a number of areas that they didn’t provide,” said Widgren, adding: “We tried to monitor capital, spending on research, spending on staff salaries that basically measured whether they are meeting their operating needs.” Widgren said DMC gave anecdotal answers rather than definitive facts. “This caused us some concern about the future,” he said. What does Widgren believe should happen with DMC going forward into the future? “I have strong feelings about what should be done in the future,” he said. “Ideally, I’d like to see DMC continue investments in the system and make it the best system they can. I think they try to be really good at what they do. Sometimes they have a conflict with doing good (for Detroit) and doing good for their shareholders.” Widgren said Tenet needs to decide whether to further invest in DMC and Detroit. “The theory (out there is they) probably could dismantle it and sell (the system off) in pieces,” Widgren said. “If they sold the (hospitals), I think there’s a great combination of things that could come out of that, if done correctly.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 15
P015_CD_20210503.indd 15
4/29/21 4:11 PM
PEOPLE ON THE MOVE
Advert s ng Sect on To p ace your ng v www cra nsde ro com peop e on he move or or more n orma on con ac Debora S e n a 917 226 5470 d e n@cra n com
ENERGY
INSURANCE AGENCY / BROKERAGE
NONPROFIT
NONPROFIT
Detro t Refinery Marathon Petro eum Corporat on
Patterson-Bryant, Inc.
Max M. & Marjorie S. Fisher Foundation
Max M. & Marjorie S. Fisher Foundation
Camarrah Morgan joined the Max M. & Marjorie S. Fisher Foundation as a Program Partner in February 2021. Camarrah has over 20 years of business acumen and early learning. She began partnering with the Foundation in 2010 through various capacities in support of the Brightmoor Child Care Quality Initiative. Most recently, while operating her own consulting business, she co-led the development of Detroit Champions for HOPE through Detroit’s Hope Starts Here comprehensive early childhood framework.
Lisa Soble Siegmann joined the Max M. & Marjorie S. Fisher Foundation team in April 2021 as a Program Partner leading the Jewish grantmaking portfolio. Lisa has worked in the field of Jewish communal service for her entire career. She spent eighteen years at the Jewish Federation of Metropolitan Detroit, then four years at the Jewish Community Center of Metropolitan Detroit. Her main focus has been Jewish family education, where she has positively impacted thousands of families.
NONPROFIT
PROFESSIONAL SERVICES
Max M. & Marjorie S. Fisher Foundation
UG2
Wade
commun
Con ac Debo a S e n a Trim ds e n@c a n com
Wade Trim is pleased to announce Robert (Bob) DeJaegher has joined the firm’s Industrial/Commercial/ Energy team as vice president and area manager for energy services. DeJaegher brings over 40 years of experience with large, complex construction projects and has served as a construction and/or program manager on over 500 projects with a focus on energy infrastructure. He will serve Wade Trim’s energy clients in Florida, Michigan, Pennsylvania, and throughout the United States.
The Community House of Birmingham, a non-profit resource and destination for personal, professional, recreational and philanthropic pursuits, Valentine announces the appointments of two new board members. Joe Valentine, former Birmingham City Manager, will serve on the Board of Directors Kallabat for The Community House, and Mallory Kallabat, an attorney with Clark Hill PLC, will serve on the Board of Directors for The Community House Foundation. As members of the Board of Directors, Valentine and Kallabat will promote the mission of The Community House, provide leadership and promote fundraising efforts. Each will serve a minimum 3-year term, with the ability to serve a second 3-year term.
PROMOTE.
UG2, a national facility Kenya C. James services and solutions joined the Max M. & provider, is pleased to Marjorie S. Fisher announce the Foundation in August appointment of Steve of 2020 as an Alletag as Executive your Success Administrative Assistant. Kenya Ce ebrate Director. Steve is a respected w th Repr nts & Recogn t on veteran has been working in the social and well-known industry Products impact sector for 20 years, with more than 40 years of mostly in development. She has experience in facility operations. worked for Girl Scouts of He’s held regional executive Southeastern Michigan and leadership positions with some Alzheimer’s Association – of the 4 0 nation’s largest facility 40 Michigan Chapter. Kenya serves services providers. Steve will T as Associate Minister at St. Peter have senior operational oversight AME Zion Church in Hamtramck, of UG2’s accounts in the Midwest MI, is a Lifetime Girl Scout, a as well as support business member of the NAACP in development activities. Hamtramck and an avid reader.
Why not?
PROMOTE. Why not?
Celebrate your Success with Reprints & Recognition Products!
September 2, 2019 | crainsdetroit.com
PROMOTE. Why not?
40 40
Dandridge Floyd, 37
UNDER
Assistant Superintendent of Human Relations and Labor Relations, Oakland Schools
T
hroughout Dandridge Floyd’s careers — whether as a social worker, attorney or assistant superintendent of Oakland Schools — making change has always been a center point. When United Way pitched a framework to Oakland Schools for a countywide breakfast program to address poor nutrition as a way to improve academic achievement, Floyd — who experienced food insecurity growing up — knew firsthand the powerful impact it could have. To secure the needed funds, Floyd led a team that earned support from all 28 local districts to finance the program — despite the fact that a majority of them would see no benefit. “The local districts were phenomenal,” Floyd said. “The biggest surprise was how quickly it happened. Education is a democratic system and democracy can be very slow, but this happened in six to seven months. That showed how committed people were to making sure the students of Oakland County have everything they need to be successful.” In a county where over 7,000 children suffer from hunger, and only two in five eligible students access a school breakfast, Floyd said a common misperception is that “Oakland County is rich.” “That makes this program all the more important, because if that is the bias or the thought process people have about Oakland County, then these kids would have never gotten help.” In a groundbreaking public/nonprofit partnership between the Oakland County Board of Commissioners, Oakland Schools and United Way, Oakland County is Better with Breakfast was born. “I’m impacting lives now,” Floyd said. “I know the effect food insecurity had on me and my peers growing up, and this was an opportunity to make a change that I wish an adult could have made for me.” — Laura Cassar
Ce eb a e you Success w h Rep n s & Recogn on P oduc s
October 30, 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
October 30, 2017 | crainsdetroit.com
• UBS plans to open wealth management office in Detroit in mid-2018 • Office to include 6,000-squareBy Annalise Frank foot space30,nonprofits and civic October 2017 | crainsdetroit.com groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings office in Detroit “I’m impacting lives now. management I know undergoing renovations in mid-2018 6,000-squarethe effect food insecurity• Office had onto includeUBS plans to open an office in downfoot space nonprofits and civic town Detroit in mid-2018, the company Annalise Frank growing groups meByand my peers up, andcan useannounced free of charge Monday. • Bedrock-ownedUBS buildings Group AG’s U.S. and Canadian UBSan plans to open wealth this•was opportunity toundergoing make a renovations wealth management business, New Jermanagement office in Detroit sey-based Wealth Management change I wish an adult UBScould plans to open an office UBS in downin that mid-2018 Americas, to lease 13,000 square UBS will lease 13,000 feet from Bedrock LLC starting around mid-2018 in two buildings: the Grintown Detroit in mid-2018, theplans company • Office to include 6,000-squarefeet on the connected sixth floors of nell Building (center left) at 1515 Woodward Ave. and the Sanders Building (center right) at 1529 have made for me.” announced Monday. foot space nonprofits and civic buildings at 1515 Wood- Woodward Ave. Group AG’sneighboring U.S. and Canadian groups can use free UBS of charge ward Ave. and Fourteen metro Detroit employees don’t really have adequate resources wealth management business, New 1529 Jer- Woodward Ave. • Bedrock-owned buildings The twoManagement buildings built around 1900 are will move to the downtown office to or adequate office space to host dosey-based UBS Wealth undergoing renovations by Detroit-based will lease LLC 13,000 feet from Bedrock LLC starting around mid-2018 buildings: Grin- meetings or things nor events the or board start, but the office has the capacity toin two Americas, plans toowned lease 13,000 square UBSBedrock nell Building (center at 1515 Woodward andnew the Sanders Buildingalong (centerthose right) at 1529 Bush said. and are undergoing said left) lines,” hold another six toAve. eight staff memon inthe connected sixth floors of renovations, Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All RightsUBS reserved. plans to open anfeet office downAve. for bers, Bush said. It will act as an extension John Bush, 60, WoodMichiganWoodward market head UBS’s investment in the new ofneighboring buildings at 1515 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD1134 town Detroit in mid-2018, the company UBS Wealth ManagementFourteen Americas.metro of fice will resources be “significant,” he said, as its the other wealth management offices. don’t really have adequate Detroit employees announced Monday. ward Ave. and 1529 Woodward Ave. “The real impetus open atonew The twoCanadian buildings built around 1900 arefor us “uniqueness Bush is based Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofortheadequate UBS Group AG’s U.S. and office inBedrock Detroit is to support what’s owned by Detroit-based LLC he could or not yet provide an estimate but travels to to the will meetings norothers eventsand or board things start, but the goofficeoffice, has the capacity wealth management business, New Jering renovations, on in the city, ” saidhold Bush, a Detroit and are undergoing said on the be spending in thealong Detroit branch. those lines,” Bush said.cost of the build-out, as some another six to eight new stafftime memsey-based UBS Wealth Management nativemarket who grew City. “We John Bush, 60, Michigan headup forin Garden have yet The location have a less UBS’s investment in the new of- to be finalized. said. will act asDetroit an extension fromBush Bedrock LLCItstarting around mid-2018 in twowill buildings: the Grin- contracts Americas, plans to lease 13,000 square UBS will lease 13,000 feetbers, UBS Wealth Management Americas. really felt like we wantedofto have a physfice will be “significant,” hecompany said, as its the other wealth management offices. The plans to start its buildtraditional, more “urban” feelright) than 1515 Woodward Ave. and the Sanders Building (center atthe 1529 feet on the connected sixth floors of nell Building (center left) at “The real impetus for us to open new ical presence to reinforce “uniqueness comes at saidnext year, depending Bush is based outothers, of the he Birmingham outa price.” processHeearly said. New York-based architecAve. adowntown neighboring buildings office at 1515 Wood- toWoodward in Detroit is our support go-particular vision what’s for this areatravels and toture he will could not yet an estimate office, but the firm others and will Cale on when renovations on the buildings Verderame design the provide ward Ave. and 1529 ing Woodward don’t really have adequate resources Fourteen metro Detroit employees on in theAve. city,”tosaid Bush, a Detroit reinforce our on Barton the cost of the build-out, as some be spending time inspace; the Detroit branch. are complete. Southfield-based Malow The two buildings builtnative around 1900 areup in adequate office space to have host dowill moveCity. to tothe officelocation to or will who grew Garden “Wedowntown commitment contracts finalized. The Detroit have aon less based in Switzerland, employs Co. has signed as general contractor.yet to beUBS, owned by Detroit-based Bedrock nor events or board or things start, thea physoffice has the capacity really felt likeLLC we wanted tobut The company plans to startacross its buildtraditional, moreto“urban” than the outmeetings the city. ” have 60,000 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, along those lines,” Bush said. early next year, depending hold six to eight new he staff memical presencesaid downtown toWealth reinforce others, said. New office York-based architecUBS another — 6,000 square out feetprocess — at no cost percent of them work in the AmeriJohn Bush, 60, Michiganour market head UBS’s investment the renovations new of- on the buildings bers, said. It will act an extension vision for for thisMparticular oninorganizations, when tureasfirm VerderametoCale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and UBS Wealth Management will beMalow “significant,” he said, as its of the other also wealth management offices. ficeBarton to Americas. reinforce our Americas are be complete. space; Southfield-based Bush said. The space will called UBS Wealth Management Americas em“The real impetus for commitment us to open a new “uniqueness comes at a price.” He said is based thehas Birmingham to has Bush based signed on as Woodward general contractor. metro De- out ofCo. ploys 280employs in Michigan, 225 of whom Gallery. Its UBS, design and in artSwitzerland, office in Detroit is to support what’s go- office, but travels to theUBS heabout couldhalf not an estimate others and the city. ” 60,000 across 54 countries. About 34 Detroit. plans towill rent will out of yet the provide troit offices in are based in metro aim to showcase Detroit’s history ing on in the city,” said Bush, on the cost the build-out, asthem somework in the Amerispending Detroit branch. UBS a Detroit Wealth B be percent office — 6,000 square at noofcost irm i n g h a time m , in the The wealth management business andfeet a— hub-and-spoke layout ofwill renative who grew up in Garden contracts have yet tocas, be finalized. M a n a gCity. e m“We e n t Troy, The Detroit locationtowill have a and less other according to a news release. UBS nonprofits organizations, Farmington recorded operating income of $2.13 flect the city’s road system. really felt like we wanted to have a physAmericas also Hills, The plans to startManagement its buildtraditional, more “urban” Wealth Americas em- quarter of 2017 — a Bushfeel said.than The the space will becompany called Plymouth in the third “Some of theUBS organizations that op- billion ical presence downtown reinforce has tometro De- others, he said. New York-based outdesign process early year,280 depending architecploys in Michigan, 225 of whom Woodward Gallery. Its and art next John Bush erate and Dearborn. and provide services in the city 7 percent increase over last year. our vision for this particular area and troit offices in ture firm Verderame Cale when renovations the buildings the onDetroit’s in metro Detroit. will will aimdesign to showcase history areonbased to reinforce our B i r m i n g h a m , space; Southfield-based complete. Malow arelayout The wealth management business andBarton a hub-and-spoke will reReprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. commitment to Troy, Farmington Co. has signed on as general UBS, basedis prohibited. in Switzerland, employs income recorded operating contractor. flectFurther the city’s road without system. duplication permission Visit www.crainsdetroit.com. #CD936of $2.13 Hills, Plymouth the city.” billion in About the third “Somehalf of the organizations that op60,000 across 54 countries. 34quarter of 2017 — a UBS plans to rent out about of the John Bush and Dearborn. UBS Wealth 7 percent and provide city work percentinofthe them in theincrease Ameri-over last year. office — 6,000 squareerate feet — at no cost services Management to nonprofits and other organizations, cas, according to a news release. UBS Reprinted with permission from Crain’s Crain Communications Inc. All Rights reserved. Americas also Wealth Management Americas emBush said. The space will be Detroit calledBusiness. UBS © 2019 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936 has metro DeWoodward Gallery. Its design and art ploys 280 in Michigan, 225 of whom troit offices in will aim to showcase Detroit’s history are based in metro Detroit. Birmingham, The wealth management business and a hub-and-spoke layout will reCRAINSDETROIT.COM I MARCH 9, 2020 I Troy, Farmington recorded operating income of $2.13 flect the city’s road system. THE CONVERSATION Hills, Plymouth “Some of the organizations that op- billion in the third quarter of 2017 — a John Bush erate and provide services in the city 7 percent increase over last year. and Dearborn.
UBS to open downtown Detroit office
UBS to open downtown Detroit office
Bedrock LLC
De o bu ne
The Community House
Bedrock LLC
C a n Peop e on he Mo e howca e ndu ach e e
ENGINEERING / DESIGN and he compan e o he
NONPROFIT
Bedrock LLC
NEW H RE? PROMOT ON? BOARD APPO NTMENT?
Patterson-Bryant, Inc. is pleased to announce the promotion of Vernita Duvall to Sr. Vice President. Vernita specializes in providing employee benefits to corporations and non-profit organizations. She will work proactively to expand company and community engagement through her numerous existing community and corporate affiliations, which include The City of Pontiac, Flagstar Bank, Michigan Diversity Council, The Leverage Network, and as an elected official on The Pontiac Public Library Board.
PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S
Ma a hon Pe o eum Co po a on s De o efine y we comes BreAnna Lockhart as s new commun y e a ons ep esen a ve Bo n and a sed on De o s wes s de she b ngs mo e han s x yea s o commun y o gan z ng o he efine y B eAnna w manage he efine y s pub c ou each he p ng ac a e engagemen oppo un es ha c ea e sha ed va ue and find common g ound o d ve mpac u ou comes n he commun y P o o Ma a hon B eAnna was p og am manage a Wayne S a e Un ve s y a da a ana ys o he C y o De o and commun y o gan ze o he Ame Co ps U ban Sa e y P og am
Albert Berriz talks workforce housing, Ann Arbor and Cuba
Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. | BY KIRK PINHO Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936
MCKINLEY INC.: Ann Arbor-based real estate company McKinley Inc. saw the writing on the wall for its retail portfolio a few years ago and cut bait, turning its focus primarily to its large crop of tens of thousands of workforce housing units across the country. One of the people at the helm of that decision was Albert Berriz, CEO and managing member, who came to America as a young boy fleeing Cuba and now steers a large company with a portfolio valued at more than $4 billion. Crain’s Detroit Business: Can you talk a little bit about how the McKinley portfolio began and where it’s at today? Berriz: McKinley started in 1968 in Ann Arbor, and it was founded by (former U.S.) Ambassador Ron Weiser. It started in the student housing business and eventually transitioned into more traditional multifamily housing, and in addition to that, office and retail, as well. Today, we’re primarily a workforce housing multifamily operator. We have essentially disposed of our retail and office assets in an effort to really focus on multifamily and also focus on an asset class that I think is more in line with our current goal, which is to have a generational multifamily real estate enterprise and a pool of assets that really are long term in nature. Explain workforce housing versus affordable housing. We’re not in luxury housing. Our residents are working. They’re going to wake up tomorrow morning and go to work. Our average rents are, for example, in Washtenaw County, about $1,100 to $1,200 or in Orange County, or Seminole County, Florida, $1,400 or $1,500. So these are affordable rents. And the difference between us and affordable housing is our buildings are not subsidized. They’re all market rate, and they’re all privately owned. The owners are not receiving any form of subsidy, nor are the residents. However, if you wanted to sort of assess residents and low-income housing tax credit deals compared to ours, they’re probably not too dissimilar, the median incomes. The McKinley residents in, let’s say, Washtenaw County, when you look at the numbers are probably not going to be too much different than what you would see in a traditional LIHTC deal. But again, our buildings, the primary differences, our buildings are market rate and they’re not subsidized any way.
I don’t think it’s overblown to use the affordword “crisis” for Ann Arbor’s afford able housing situation. Give us your perspective on how the city should go about addressing it. I think it’s a supply issue. The reality is that Ann Arbor has not really welcomed solutions from the private sector and has only sought solutions from the public housing side or the community nonprofit side. And both of those groups, while I think they’re very well intentioned, don’t have the capital and the expertise to resolve the problem at the scale it’s needed. To put it in perspective, you know, the Washtenaw County study that came out had a need of about 3,000 units. And if you look at the cost per unit today, and let’s say $250,000 or $300,000 per unit to build a brand new unit today, you know, it’s an $800 million to a $1 billion problem, so I don’t think that’s a problem that gets resolved on the public side or on the community nonprofit side. You know, they have to go to places to seek capital and there just isn’t enough capital, nor do they have enough resources or expertise to resolve the problems. So the city I think, by and large, has attempted to do this in those ways because they really haven’t welcomed the private side. And there is a lot of expertise and there’s a lot of capital that could do this, from the private side perspective. It just hasn’t been the way that Ann Arbor operates, so you see what has happened in Ann Arbor year over year, decade over decade is there’s a lot of conversations about affordable housing, but there’s no solutions. You were talking a little bit earlier about how McKinley got out of retail and office. What led to that decision and how has that reflected or shaped your business strategy? It was a risk profile that we were just not comfortable with. We are a generational business and so we look at our assets in
a way that we never expect to sell them. We expect to invest in them so they last for long term, and we just couldn’t see that on retail. We saw a significant degradation of our rent rolls. We had buildings that were, let’s say, 70 percent to 80 percent investment-grade credit tenant composition and then we saw that we saw that quickly degrade. We just didn’t see a place where we could really have an asset class retail that would last for the long run. And then office in many ways, the same way. The way people are shopping and the way people are occupying offices today, the risk profile is very different than it was, let’s say, when we were making those investments 20 and 30 years ago, so for us, it was the right move. It’s paid off because, had we held many of the assets today, they would be significantly compromised. I think they would be worth a lot less. We started those sales about six years ago, and we sold a lot of that early on, so we sold them still at a time they were being valued significantly more than they would be worth today, in our opinion. And we sold some big buildings. I mean, these weren’t small buildings. We sold a 1 millionsquare-foot shopping center, for example, in Norfolk, Va., which is one of the largest power centers in the state of Virginia. So these weren’t small assets. So they were important for us to move them out at the right time, and for people that thought that was there was a good upside for them, so we actually sold them at good prices, and certainly we couldn’t have sold them at those prices tod today.
trajectory was to where you are today in terms of the head of McKinley. I left (Cuba) compliments of Fidel Castro in early 1959 because of the Cuban Revolution. We had to flee. It was survival to leave the country at the time and my parents relocated to Miami. We were fortunate for that. We’re fortunate to have left alive, fortunate to have resettled in what is without question the greatest country on the planet. I was not born here. I was born in Havana and I emigrated as a Cuban refugee just before I was 4 years old with my parents. What consumes your day outside of the office? My wife and I walk. We like to boat, so those are the two things. In our summers we live at Saugatuck, and it’s a great place to live. We’d live there year-round, but it’s a little too cold in the winter.
Can you give thumbnail sketch of coming here and what your
Albert Berriz, CEO and managing member, McKinley Inc.
Laura P car e o
Rep n s Sa es Manage Phone (732) 723 0569 Fax (888) 299 2205 Ema p ca e o@c a n com
Reprinted with permission from Crain’s Detroit Business. © 2020 Crain Communications Inc. All rights reserved. Further duplication without permission is prohibited. #CD1156
S H A R E Y O U R C O M P A N Y S J O Laura UR NEY Picariello Reprints Sales Manager Phone: (732) 723-0569
(888) 299-2205 Fea ure your a es m es ones aunches par nersh ps awards andFax more n Cra n s Email: lpicariello@crain.com
For more n orma on con ac Debora S e n a ds e n@cra n com or subm d rec y o
CRAINSDETROIT.COM/COMPANYMOVES
16 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
P016_CD_20210503 ndd 16
Lau a P ca e o
Rep n Sa e Manage Phone 732 723 0569 a 888 299 2205 Ema p ca e o@c a n com
DEALS&DETAILS CONTRACTS Ronce S er ng He gh s a cons ruc on managemen firm was awarded he con rac or he new Depar men o Pub c Works mun c pa garage or he c y o Grosse Po n e Park The pro ec nc udes cons rucon manager serv ces or new a bu d ng comp ex oca ed a Mack Avenue and assoc a ed s e work Webs e Ronce - nc com
EXPANSIONS Ross Mor gage Corp Troy a res den a mor gage ender opened a branch n Corne us N C Ross Mor gage opera es n M ch gan W scons n nd ana Oh o Pennsy van a F or da Georg a Nor h Caro na Sou h Caro na Tennessee Lou s ana Ken ucky and Mary and Webs e rossmor gage com Boo Camp Express a fi ness cener opened a 7836 Te egraph Road Tay or Phone (313) 633-9926 Webs e boo campexp com A h e co Phys ca Therapy Ch cago a phys ca herapy cha n opened a new oca on a 43715 Ford Road Canon Townsh p Phone (734) 656-2546 Webs e a h e co com/Can onM
MERGERS & ACQUISITIONS KS K chen & Ba h Br gh on a k chen and ba h des gn firm acqu red S ar e K chens Grand Rapds a k chen and ba h des gn cen er Terms o he dea were no d sc osed Webs es ks k chens com s arek chens com H gh Leve Marke ng Wes B oomfie d Townsh p a webs e and d g a marke ng agency merged w h Be Med a B rm ngham A a a webs e and d g a marke ng agency The new comb ned company w use he name H gh Leve Marke ng s ar ng h s spr ng Webs es h gh eve marke ng com gobe med a com MacQueen Equ pmen LLC S Pau M nn an equ pmen supp er acqu red Be Equ pmen Co Lake Or on a was e managemen equ pmen supp er MacQueen Equ pmen has e ec ed o keep he Be Equ pmen name Webs es macqueengroup com be equ p com ATA Na ona T e Group LLC Farm ng on H s a e company and s subs d ar es and affi a ed compan es nc ud ng Ta on T e Agency were acqu red by a new y ormed ho d ng company n par nersh p w h CNL S ra eg c Cap a LLC Or ando F a an nves men company and sub-managed by Lev ne Le ch man S ra eg c Cap a LLC Bever y H s Ca a pr va e equ y firm The managemen eam o ATA and Ta on w rema n unchanged Webs e a a e com GrowGenera on Corp Denver Co o a cha n o hydropon c and organ c garden cen ers acqu red Downr ver Hydropon cs Browns own Townsh p an ndoor garden supp y cen er Founded n 2011 Downr ver Hydro has annua revenues approach ng $10 m on GrowGen s por o o o hydropon c garden cen ers now nc udes 53 s ores across 12 s a es w h seven o hose oca ons n M ch gan Webs es downr verhydro com growgenera on com
4 29 21 4 08 PM
HEALTH CARE
Older metro Detroit veterans line up for COVID-19 vaccines BY JAY GREENE
More than 36 percent of veterans who receive care at the John D. Dingell VA Medical Center in Detroit have received a first dose of the Moderna COVID-19 vaccine since late December when regular clinics began, with only a small number of vets expressing reluctance to take the doses. The percentage of veterans with a first dose is lower than the 49 percent in Michigan for residents 16 or older, but VA officials say an undetermined number of veterans have received their vaccine outside of the VA at a hospital, pharmacy or local health department. The vast majority of the 40 vets refusing to take the vaccine are younger veterans, many of whom either are worried about side effects, concerned about how fast the vaccines were developed or don’t feel the disease would cause them serious problems, said Dr. Raghuram Matta, the Detroit VA’s deputy chief of staff in charge of COVID-19 mitigation and vaccine efforts. “Vaccinations are higher in older age group and lower for younger veteran groups,” said Matta. “People will change their mind over time as more people take them. We tell them in almost seven months since the phase three clinical trial, and after 180 million total doses given out (including people with multiple chronic conditions), there have been few serious side effects.” The highest percentage of veterans vaccinated are those ages 75-84 at 46.4 percent, followed by ages 65-74 at 41.2 percent, ages 50-64 at 35.9 percent, ages greater than 85 at 34.5 percent and lowest for those under age 50 at 17.2 percent, Matta said. Michigan vaccination data shows 18 percent of those under age 50 have received a first dose. “Fortunately, the number of veterans missing that second appointment is very low. We have been contacting them when they are overdue,” Matta said. “I would say there are less than 40 veterans who got the first dose and refused to come for a second dose.” Why do veterans miss their second appointment? “They are giving us a variety of reasons. They did not feel good in the days after the first and they don’t want to get the second dose,” Matta said. “We are confident they will come back because they have good rapport with their primary care physician.” Like in Michigan and nationally, vaccine demand has been decreasing somewhat. “It is getting harder for us because the veterans who were interested in the vaccine have mostly received it in their own time and now we are dealing more groups that have the vaccine hesitancy,” Matta said. What are veterans’ reasons not to get the vaccine? “There are three reasons. One is the side effects, the second is the speed of vaccine development and the third, for the younger veterans, they may feel that even if they get COVID, they may recover quickly and they just don’t want to take the vaccine. But Matta said he believes the vast majority of veterans, like many in the public, will eventually change their mind as they see more and more peo-
ple become vaccinated. May 3, 2021 “A b s o l u t e l y . Those hesitant tell us they are thinking about it. Or they will say ‘I will come back next month when I come in for my Matta (regular medical) appointment,’” Matta said. “Our providers have impressed upon them the urgency in getting the vaccine as soon as possible.” Matta said no veterans have had any serious reactions to the vaccines during the four months they have been given out. “The common ones are the pain at the injection site and flu-like symptoms, and that’s in the first 24 to 48 hours,” he said. Vaccine clinics have been held the past several weeks in metro Detroit for veterans, spouses and caregivers. Veterans can receive vaccines at the Dingell VA at 4646 John R St. in Detroit, the Pontiac CBOC (community-based outpatient clinic) at 44200 Woodward Ave., Suite 208, and the Yale CBOC at 7470 Brockway Road. On May 15, another VA vaccine clinic will be held at VFW 9283 Post in Southgate from 8 a.m. to 3 p.m. Since Dec. 22, the Detroit VA has administered 20,000 doses of the twodose Moderna vaccine with 9,000 vets fully vaccinated and 2,000 waiting for second doses. “Initially, we were offering the vaccine to the veterans in our nursing home and those over the age of 75. This also included veterans on dialysis and veterans who are receiving organ transplants,” Matta said. “Soon, we expanded to veterans over 50.” “We are all in this together and it is a team effort to vaccinate as many people as quickly as possible to protect our Veterans and the Detroit community against COVID-19,” said Dr. Pamela Reeves, executive director of the Detroit VA Health Care System, in a statement. “We are taking our vaccine clinics into the communities we serve with the goal to reach as many veterans as possible.” Outreach efforts to homebound vets or those having transportation troubles have been very successful the last several months, Matta said. “We have veterans who are eligible for transportation and we have authority to bring them in for their appointments, but there were some that were truly homebound where it would be a big inconvenience for them to leave their home,” Matta said. “We have a primary care program where a nurse and pharmacists have taken the vaccine doses to both veteran homes and administered them,” he said. The Detroit VA has the capability of administering 2,100 doses per week, or about 300 per day, but lately only about 1,600 veterans have been receiving doses each week. “Any vet who wants an appointment we can give them right away,” Matta said. “Some of our veterans are telling them that they already got the shot from an outside pharmacy and some of them already have an appointment
CRAIN’S DETROIT BUSINESS
A Detroit veteran takes a Moderna shot at a VA clinic set up at the VFW Post 9283 in Southgate | DETROIT VA HEALTH CARE SYSTEM
set up and we’re not likely to cancel.” Matta said the VA’s goal is to get as many vets vaccinated as possible. “We have 33,000 veterans enrolled actively in primary care, but our total unique (in the Detroit VA’s service area) is about 64,000,” Matta said.
COVID-19 testing and hospitalizations Of the 15,332 veterans who have been tested at the Detroit VA, Matta said 827, or 5.4 percent, have tested positive. With 315 veterans hospitalized (38 percent who tested positive), 163 of those were in critical care and intensive care units. Matta declined to disclose the number of veteran deaths to COVID-19. Nationally, the Veterans Administration said there have been 1,752 known veteran deaths out of 253,000 total COVID-19 cases with 4,012 active cases as of April 28. One veteran who tested positive for COVID-19 was hospitalized for 75 days and ended up on a mechanical ventilator and feeding tube in the intensive care unit for 40 days. “He had a very complicated hospital course in the ICU and required many interventions,” Matta said. “During this time, his family remained in contact via FaceTime which kept his spirits up. (He) was finally discharged home after a hero’s send off where the staff lined up (to wish him good luck).” Matta said veterans should feel comfortable coming to the Detroit VA because more than 78 percent of the 1,900 staff employees have been vaccinated. At least 62 percent of private hospital employees and 45 percent of nursing home staff have been vaccinated, Crain’s has reported. Detroit VA employee deaths have totaled one compared with Ann Arbor with one, Saginaw with two, Indianapolis with six, Denver with four, Cleveland with two for a national total of 139, according to the Department of Veteran Affairs as of April 23. Nationally, there are more than 9 million enrolled veterans and over 6 million veterans receiving health care each year. VA employs nearly 380,000 individuals. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Advertising Section
CLASSIFIEDS To place your listing, contact Suzanne Janik at 313-446-0455 / sjanik@crain.com or, for more information, visit our website at: www.crainsdetroit.com/classifieds
JOB FRONT POSITIONS AVAILABLE
Assurance Senior Associate, External Audit Generalist (Mult Pos),
PricewaterhouseCoopers LLP, Detroit, MI. Provide clnts bus advice of tech acct & fin reporting stds, proactively identifying & articulating emerging tech issues. Req Bach’s deg or foreign equiv in Acct, Tax, Bus Admin or rel + 3 yrs rel work exp; OR Master’s deg or foreign equiv in Acct, Tax, Bus Admin or rel + 1 yr rel work exp. Travel up to 20% is req. Apply by mail, referencing Job Code MI2936, Attn: HR SSC/Talent Management, 4040 W. Boy Scout Blvd, Tampa, FL 33607.
REAL ESTATE OFFICE BUILDING
INVESTMENT OPPORTUNITIES
12 Residential Land Contracts For Sale
Port Huron, MI
Great investment, Retirement Sale Will sell entire contracts/deeds for 85% bal. value & they pay you 11% All are Located in Morenci, MI Jerry Call/Text 517-525-0445
LET YOUR TENANT MAKE YOUR PAYMENTS! 56,000 sq ft building, can be two units, 5 truck wells, crane bays, HD electric. Email: srsco3500@gmail.com
VACANT LAND
WANTED: VACANT LAND PARCEL FOR CONSTRUCTION
Seeking a vacant land parcel within a 20-minute drive of the John D. Dingell VA Medical Center at 4646 John R Street, Detroit, MI. VA proposes to construct and operate a Fisher House on the site. Fisher Houses provide a “home away from home” for the family members and caregivers of hospitalized Veterans and Active Duty Servicemembers. The ready-to-develop parcel should be a minimum of 1.25 acres, in an established neighborhood and within easy walking distance to public transportation, shopping, and eateries. The parcel must not be in a 100-year floodplain or possess any other barriers to development. Please contact Shahidat Abbas at shahidat.abbas@va.gov with available parcels in the greater Detroit area or for additional details on VA’s requirements.
VISIT OUR WEBSITE: www.crainsdetroit.com/classifieds
MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 17
COVID-19
Burn Fitness files for bankruptcy due to pandemic strains Livonia location to close after bitter rental dispute; owner outspoken against lockdowns BY KURT NAGL
Burn Fitness LLC, whose owner bemoaned pandemic lockdowns and organized a workout protest on the lawn of the Michigan State Capitol last summer, is filing for bankruptcy. Operating at 30 percent capacity has not been enough to make up for financial losses from being forced closed for nearly six months, said Alyssa Tushman, who launched her gym and yoga studio in 2010 and operates locations in Rochester Hills, Clawson and Livonia. As part of the restructuring, the Livonia gym will close by the end of May. Tushman said it was “impossible” to work out a deal with her landlord Grand Sakwa Properties LLC, which sued the gym last year for missed rental payments and won earlier this month a judgment for $350,000. Burn Fitness filed for Chapter 11 bankruptcy protection Friday in U.S. Bankruptcy Court for the Eastern District of Michigan. Southfield-based law firm Maddin, Hauser, Roth & Heller PC is representing the company. Tushman said she is working to keep afloat her other two locations, where revenues are down more than 50 percent but landlords have been more flexible on rent amid business disruptions. She said the fitness industry has been devastated by the pandemic. “I absolutely think the lockdowns here were egregious,” said Tushman, who also serves as vice chair of the Michigan Fitness Club Association. “They went too far and too long, and they told the story to be afraid.” Many other gyms and fitness studios have gone under since the lockdown began in March 2020. Small independent businesses, such as Live Cycle Delight and Rebel Cycle Studio in Detroit, were the first to throw in the towel. Franchise locations followed, including the Retro Fitness in St. Clair Shores and YMCA locations in St. Clair Shores and Livonia. Larger chains have halted new openings and, in some cases, contracted — Fitness 19 shuttered locations in Farmington, Livonia, West Bloomfield and Commerce Township.
“I ABSOLUTELY THINK THE LOCKDOWNS HERE WERE EGREGIOUS. THEY WENT TOO FAR AND TOO LONG, AND THEY TOLD THE STORY TO BE AFRAID.” Burn Fitness will close its Livonia location by the end of May after its owner was sued over unpaid rent by the landlord, who won a $350,000 judgment earlier this month. | BURN FITNESS
thousands of dollars” in HVAC upgrades and electrostatic sprayers. “The fitness industry did everything right … we invited MIOSHA (Michigan Occupational Safety and Health Administration) into the gym,” Tushman said. “We were rewarded with bankruptcy.” Burn Fitness employs around 60 people across its locations. The Livonia closure will result in 15-20 layoffs, Tushman said. She plans to notify the location’s 2,000 members about the closure, “make them whole” and offer transfers to the other two locations. “I know that people think that lockdowns saved lives, but it also took peoples’ livelihoods,” she said. Tushman started the business in 2010 after successfully beating breast cancer, crediting her survival to exercise, health and wellness. The company had been profitable and earned almost $5 million in revenue in 2019 and was “never late for a single rent payment or bill in 10 years,” Tushman said. That changed in 2020 when revenue was cut by more than half, and the small gym chain lost half of
its members because of the pandemic. Tushman is optimistic about keeping her other locations open, but much is riding on the goodwill of landlords. She said the property owner in Clawson is allowing her to pay 30 percent of the normal monthly rent and holding off on collecting back rent until the business rebounds. She said her landlord in Rochester Hills is also showing patience. In some cases, landlords are forbidden from reducing or forbearing rent, based on certain loan covenants. It’s unclear if that played a factor in the Burn Fitness dispute with Grand Sakwa in Livonia. Alan Greene, senior lawyer at Detroit-based law firm Dykema, which represented Grand Sakwa in the rental lawsuit, said the property manager tried to settle out of court but it was Burn Fitness that refused. He said the company “discussed settlement on the threat of filing for bankruptcy” only after the $350,000 judgment against them. “While Burn Fitness (a major
tenant) of the shopping center failed and refused to pay any rent or other charges for over a year, the Landlord was still required to make debt service payments, tax payments, utility and security payments, maintain the parking lots and landscaping, etc.,” Greene said in an email. “We recognize the hardships that the pandemic has created on many businesses, both to landlords and tenants. But I want to say that the claim of Burn Fitness that we were not willing to work anything out is completely false.” Gov. Gretchen Whitmer said Thursday that capacity at gyms and other public gathering places will increase in tandem with vaccination rates. While that’s “too little, too late” for Burn Fitness in Livonia, Tushman said, she thinks the rest of the business will regain its strength. “I still think this industry is going to have a recovery starting in June,” she said. — Crain’s Senior Reporter Kirk Pinho contributed to this report
Plante Moran has shuttered its 125,000-square-foot Victor Center office and placed the building up for sale as it merges that office with its existing office in the Southfield Town Center. | COSTAR GROUP INC.
A formal announcement of the new office is expected in May when the construction is completed, said John Irving, the Plante Moran spokesperson. The company’s existing offices in Auburn Hills, Macomb Township, Detroit and Ann Arbor will not be affected by the consolidation. According to CoStar, the asking rent in the 3000 Town Center tower is $16 per square foot per year to $24 per square foot per year, plus the cost of electric. Transwestern manages and leases Southfield Town Center, which is 2.2 million square feet. In 2014, New York City-based 601W Cos. paid $177.5 million for the complex. In 2018, Crain’s reported that the complex had undergone some $56 million in renovations, including tenant improvement allowances, under 601W’s ownership. Among its major leases recently, Secure-24 took about 100,000
square feet in the building for its new headquarters in 2019. The 2014 sale of the Southfield Town Center came about after a mortgage default. According to commercial mortgage-backed securities data from Bloomberg LP at the time, Blackstone Group LP failed to pay the balance due on a $235 million mortgage on the property originated in 2004 by Irving, Calif.-based Greenwich Capital Financial Products Inc. The loan was transferred to Wells Fargo Bank NA for special servicing. A loan modification letter originally stipulated that Blackstone pay the balance by Nov. 5, 2012. The complex was appraised in the summer 2014 at $177.5 million, 45 percent below a 2004 appraisal of $321 million, according to Bloomberg loan data.
Nationally, fitness industry revenue fell 60 percent in 2020, and 17 percent of gyms closed permanently, according to the International Health, Racquet & Sportsclub Association. Some of the country’s largest chains, including 24 Hour Fitness and the iconic Gold’s Gym, filed for Chapter 11 bankruptcy. Industry leaders have argued that fitness was ignored during the pandemic in more ways than one. By closing gyms in the name of public health, Tushman said, officials gave rise to sedentary lifestyles, which helped cause the “Quarantine 15” weight gain for many people. Secondly, while bars, restaurants and movie theaters flexed their lobbying muscle for state and federal aid, gyms largely fell by the wayside. Burn Fitness received around $675,000 in Paycheck Protection Program loans for its three locations, according to federal data. Additionally, Tushman said she received two local grants worth a couple of thousand dollars each. She said the assistance covered only about two months of payroll and that she invested “tens of
PLANTE MORAN
From Page 3
The new lease was signed March 13, 2020, at the onset of the global pandemic. Plante Moran’s new office is designed by Southfield-based architecture and planning firm HED and the general contractor is Detroit-based Sachse Construction. A build-out cost was not disclosed. Plante Moran’s real estate division, Plante Moran CRESA, represented Plante Moran while Transwestern represented the landlord in the deal. The combined office will have approximately 880 people, with 550 of them coming from the Victor Center building. Minus “a small number of essential technology staff,” Plante Moran’s employees in Metro Detroit are currently working from home, the spokesperson said. 18 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
— Alyssa Tushman, Burn Fitness owner and vice chair of the Michigan Fitness Club Association
Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl
Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
PROTECT
From Page 3
“I checked and checked to see if us being forced to shut down was covered and it isn’t,” said Koch, whose staff of 11 had to be cut during the closure. She brought back staffers at reduced hours under the state’s Work Share program. “Even if you, as a small business owner, have insurance, you have to be very well versed in what it covers. I learned my lesson the hard way,” she said. Jeff Diefenbach, senior vice president and managing director of Farmington Hills-based wholesale insurance broker Burns and Wilcox, said the industry hasn’t yet figured out pandemic insurance. Some carriers are dipping their toes into it, but with lower limits to reduce their potential exposure to loss. “If this were covered, it’d be a huge loss. How do you (as an insurance carrier) charge for that?” Diefenbach said. “A lot of insurance carriers have that issue. (Pandemic insurance) isn’t quite like flood insurance. With flood insurance, folks who buy it are typically in a floodplain. Consequently, people with flood insurance have a better chance at a loss, so flood insurance can be expensive. “Pandemic viruses, things like that, could be in the same category: How do you determine what the loss is and what to charge for it?”” Birmingham-based insurance agent Shane Henry, president of Consolidated Agencies, said that if forced closure due to the pandemic were covered, that could bankrupt insurance companies. Henry, whose family has run the independent insurance agency since 1961, said there’s always been an exclusion written into business interruption insurance policies for virus, bacteria and fungus. “That was there before COVID because of how catastrophic something like that can be,” Henry said. “A business shutting down because of a virus, the effects could be too devastating for anyone to pay for. It’d make the coverage so expensive that no one would want to get it. “If a restaurant burns down, that’s just one restaurant. As an insurance
K-Tec Systems in Ferndale is among companies that will not be able to recoup losses suffered due to the pandemic. The company’s sales fell 50 percent early in the pandemic. | K-TEC SYSTEMS
Koch
Diefenbach
company, you can afford to pay business interruption insurance for that one restaurant, but with a virus, now you’re talking hundreds of restaurants all closing at virtually the same time. The insurance companies don’t have enough money in their pockets to pay for that.” In the U.S., more than 1,000 businesses facing closure or bankruptcy have sued for coverage. Insurers argue they don’t have to pay out on pandemic claims in part because the coronavirus didn’t damage property. Their stance is being tested as new cases are filed by big businesses with the resources to wage long court battles where the stakes are much higher. So far, it hasn’t gone well for business owners. According to the University of Pennsylvania Law School, which has developed a tool to track COVID-related litigation, the insurers have overwhelmingly won. Henry said some insurance companies are beginning to look at ways to help clients recover pandemic-related losses. Some specialty brokers following the outbreak began offering “allrisk” coverage.
Harris
Norton
“It can get pricey, though,” Henry said. “Most companies still won’t do it.” Many insurers are revising policies to broadly exclude pandemic risk going forward, said Daniel Hale, CEO and president of Marsh & McLennan Agency of Michigan’s Business Insurance Practice. Hale said his group, which offers coverage to midsize companies, is advocating for a public-private partnership to establish a federally backed pandemic reinsurance program. The Pandemic Risk Insurance Act of 2020 was introduced in Congress in May to create a federal backstop for pandemic business interruption claims, similar to the Terrorism Risk Insurance Act of 2002, which followed the Sept. 11 terrorist attacks. While some specialty policies may cover pandemic claims, the vast majority do not explicitly do so, Hale said. “The insurance industry has a role to play in developing new solutions to outbreaks, epidemics and pandemics that incorporate lessons we are learning today,” he said. “Ultimately, a public-private pandemic risk solution is the best option for enabling a smooth
FLAGSTAR
From Page 3
“But (the revenue is) still there, still regularly providing good returns. And then when those special opportunities present themselves, you jump on it and you generate just a tremendous amount of capital.” Executives estimate the combined bank will pump out $500 million in excess capital each year, after paying a dividend to shareholders. Upon closing of the deal later this year, DiNello, 66, will transition to a nonexecutive board chair role of the new company. The increased talent and depth in the mortgage sector that NYCB gains from this acquisition, coupled with the expansion of geography for both institutions, makes for a win for all, said Michael Bell, co-leader of the financial institutions practice group for the Detroit-based Honigman LLP law firm. “I’m not suggesting the New York bank was a one-trick pony. Maybe they’re a five-trick pony,” Bell, who was not involved in the deal, told Crain’s in an interview. “But this makes them a nine-trick pony.” Investors also appeared to like the deal as proposed, as the share prices for both banks shot up significantly.
The acquisition of Flagstar Bank by New York Community Bank allows for both lenders to move beyond their traditional savings and loan models | FLAGSTAR BANK
The merger came “in a bid to mitigate loan growth headwinds and create an attractive franchise across a nine-state Northeast/Midwest footprint,” Pauline Bell, an equity analyst at CFRA Research, wrote in an investor note. “We view the strategic potential favorably and are optimistic about the combination given the opportunities to diversify NYCB’s revenue and loan mix and improve its funding profile cutting reliance on wholesale funding sources, but business and cultural integration will be critical.”
‘Part of the engine’ With the combined approximately
$87 billion in assets, the new bank created by the acquisition will be roughly the size of Dallas-based Comerica Inc. Once headquartered in Detroit, Comerica closed 2020 with just north of $88 billion in assets, according to a regulatory filing. By comparison, the combined bank being created by the merger of TCF and Huntington, set to close in the coming weeks and promising dual headquarters in Detroit and Columbus, Ohio, would have assets of about $168 billion, making it among the 20 largest banks in the country. The deal as proposed amounts to Flagstar shareholders holding approximately 32 percent of the combined
and quick economic recovery and protection from future events.” Diefenbach said there is a mechanism that could help insurance companies should they decide to cover pandemic losses: reinsurance. Companies such as Germany-based Munich Re provide financial protection to insurance companies, handling risks that are too large for the insurance companies to deal with on their own. Munich Re did offer pandemic coverage, but stopped after recording $1.8 billion in losses in the first half of 2020. “It’s not as big a deal in the Midwest because a lot of things are weather-related,” Diefenbach said. “If you’re a company like (Travelers Insurance), and you’re writing in Florida or Louisiana, or you have an event like (Hurricane Katrina) or the Texas winter storm, there’s potential for billions of dollars in losses. If Travelers pays out $50 million, anything past that is covered by reinsurance. If the reinsurer gets stuck with huge losses, that could put them under. Then a company like Travelers wouldn’t be able to get coverage. “The insurance industry is kind of fascinating. No one company could pay for the losses suffered in Katrina or during the pandemic, so it has to be spread around.” Business interruption coverage may not kick in for most during the pandemic, but it remains a good option for covering other losses. The Michigan Department of Insurance and Financial Services last spring released a report detailing how business owners could cover pandemic-related losses, but cautions such coverage would have had to be purchased before the public health crisis. “We strongly encourage businesses to review their policies, including policy exclusions, coverage limits, and applicable deductibles, and contact their insurance companies to determine what their policies cover as each insurance policy is different and the coverage varies,” the DIFS report states. Diefenbach said more small businesses are reviewing their policies in light of the pandemic and questioning carriers more. Talisa Norton, owner of All Pro Design and Printing in Farmington Hills, has business interruption insurance in her policy, but didn’t know it early in
the pandemic. Norton, who has run her business for 16 years, admitted she wasn’t sure what type of insurance she had. Norton did not file a claim to keep costs low, she said. “As a business owner, even though you know you have insurance, you kind of limp along without using it because using it results in an increase in your policy,” Norton said. “I can’t afford any increases.” Norton cut staff for a couple of months early in the pandemic but stayed open with the help of her husband. Sales dropped 27 percent from the start of the pandemic until she reopened in June. With 2020 as an election year, that helped All Pro end the year down just 7 percent from 2019. Felicia Harris, founder and CEO of Rochester Hills-based Everything HR and EverythingHR Financial Services, said small business owners must hire professionals to help them put insurance policies in place and ensure they are properly covered in case of a catastrophe. The costs may be cumbersome, Harris said, but small business owners can’t afford to go without professional assistance. American Society of Employers Executive Vice President Michael Burns said that in his experience, small business owners don’t focus on developing emergency response plans or taking a detailed look at insurance coverages. “Until something happens, those are not a high-value items because they don’t know what the emergency might be,” Burns said. Diefenbach acknowledged that what can be covered under pandemic insurance is being reviewed. “There really isn’t a consensus on how to handle this going forward. Contrary to popular belief, insurance companies don’t have buckets of money sitting around,” he said. “If you look at an insurance carrier’s stock prices, they typically don’t do all that great. They’re not all that profitable. It’s very difficult to estimate what an insurance company’s exposure to loss is and what rates to charge. You can’t do that with a pandemic. It’s so huge.” — Bloomberg contributed to this report.
company, and four of the 12 board members will come from Flagstar, including DiNello, who will chair the governing body. The representation of Flagstar, while being the minority party in the combined company is “unprecedented,” DiNello told Crain’s in an interview. “It sends a message that the Flagstar part of this organization is a very, very important part of the engine going forward,” said the outgoing CEO. Based on figures reported at the end of last year by both banks, the two lenders combined have 8,000 total employees. The deal is promising “cost-savings,” and NYCB CFO John Pinto told analysts that he expects an unspecified number of “back-office redundancies,” upon completion of the merger. Bank executives tout the fact that the two institutions already operate on the same technology platform, meaning that integration should be simplified. Flagstar is expected to keep its branding in the Midwest, executives said. DiNello noted that NYCB already has multiple brands within its overall portfolio, and so far, has not moved to unify them. Moreover, because of the lack of overlap in geography and core areas of business, DiNello said he antici-
pates “zero” diminishment at the bank’s headquarters in Troy, which will become a regional outpost for the new ownership. Cangemi with NYCB told analysts that the combined bank will likely need to hire for roles as it grows over time. Additonally, Flagstar is among the largest sponsors of the Detroit Pistons, which signed a deal with the bank in 2017 to put its logo on jerseys. The bank also has signage throughout Little Caesars Arena and is involved with other sponsor programs, including the “Pistons IPO,” a season ticket promotion launched last year. Team spokesman Clark Williams said Flagstar’s pending acquisition does not change its sponsorship deal with the Pistons, which was also echoed by DiNello. A roughly 40-year veteran of Flagstar, DiNello told Crain’s that he’s “at peace” with transitioning away from the day-to-day CEO position. “It’s been a good run for me. I’m 66 years old. It’s time,” DiNello said in an interview. “Whether we were going to do this or not, I wasn’t far away from stepping away from day-to-day.” — Crain’s reporter Kurt Nagl contributed to this report.
Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981
Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 19
3. The former Blue Cross Blue Shield of Michigan buildings in Southfield fell into receivership a few years ago and have been renamed the West Eleven Office Park by new ownership group Friedman Real Estate, based in Farmington Hills. Before Friedman took over, the saga of the four-building complex included a double murder and an alleged $17 million mortgage scheme in Toronto, a property manager apparently living in the buildings with his spouse and pets in violation of zoning rules, buildings that tenants say were woefully neglected and mismanaged, a pair of dismissed Chapter 11 bankruptcy filings and a rare receivership request by main occupants, the former Federal Mogul Corp. (now Tennecco) and Stefanini Inc. Friedman Real Estate paid $22.9 million for the note on the buildings via sheriff’s deed in May 2019. The complex totals 697,000 square feet. 4. Southfield-based law firm Stevenson & Bullock PLC was the receiver for the Boulevard West building in Detroit’s New Center area, which was seized in a federal court case against owner Mashiyat Rashid, a West Bloomfield Township man who plead20 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
7. The former Forefront condominium building in downtown Birmingham developed by Joey Jonna on South Old Woodward Avenue was placed in receivership with Farmington Hills-based M. Shapiro Real Estate Group. Jonna owed $2.4 million on a $7.3 million construction loan that he defaulted on, plus another $80,000 in property taxes, the Detroit Free Press reported in May 2019. Ultimately, Joe Barbat paid $6.75 million for the eight unfinished condominium units with plans to turn them into 30 apartments. The remaining two units in the 10-unit development — which at the time it was announced in June 2014 was expected to command sale prices of $1,000 per square foot or more — had sold prior to Barbat buying the others. 8. The former Sakthi Automotive Group USA Inc. property in southwest Detroit came under the control of Grosse Pointe Farms-based receiver Lark Advisors LLC after the auto supplier defaulted on its debts. Rocket Companies Inc. (NYSE: RKT) founder Dan Gilbert’s real estate company, Detroit-based Bedrock LLC, purchased the property’s 37 acres and buildings totaling about 620,000 square feet in September for $38.5 million, the billionaire’s first major foray into the region’s red-hot industrial market. “Acquiring this property provides us with a rare opportunity to capitalize on the growing demand for industrial space in Detroit,” Sam Hamburger, Bedrock’s vice president of acquisitions, said in a news release at the time.
COSTAR GROUP
4
5
COSTAR GROUP
3
6
COSTAR GROUP
6. Also in 2015, the Eastland Center mall in Harper Woods fell into receivership under Syracuse, N.Y.-based Spinosa Management Group after missing loan payments. Ashkenazy Acquisition owed $42.5 million as of April 2015 on $46 million in loans taken out against the property in 2006, Crain’s reported at the time. By November 2018, the mall had a new owner in Great Neck, N.Y.-based Kohan Retail Investment Group, which paid a winning $3.125 million bid for 640,000 square feet of the mall, which went into foreclosure in 2016. At the time, Crain’s reported that Kohan owned 27 shopping center properties, many of which were bought out of bankruptcy or foreclosure.
2
7
KIRK PINHO/CRAIN’S DETROIT BUSINESS
2. The Mall at Partridge Creek outdoor shopping center in Clinton Township, also owned by Starwood Capital Partners, is heading toward receivership as well. The company has been in default on $725 million in CMBS debt secured by Partridge Creek and three other malls in Florida, Virginia and North Carolina. Partridge Creek is now managed by the Royal Oak office of JLL (formerly Jones Lang LaSalle) although the identity of the receiver is not known. “Discussions with Borr (borrower) have not resulted in an acceptable resolution strategy, therefore SS (special servicer) has entered into discussions with a receiver and plans to move forward with legal proceedings in each jurisdiction to have the receiver appointed at each property,” the loan commentary posted on CoStar Group Inc., a Washington, D.C.-based real estate information service, dated for April reads. “Borrower has been cooperating with the transition.”
5. The Northland Center shopping mall in Southfield was under Frank Simon’s receivership in 2015 when the city paid $2.4 million for it, Crain’s reported at the time. An Oakland County circuit judge approved the sale in October 2015. The mall closed in March 2015 after Ashkenazy Acquisition Corp., its previous owner, defaulted on a $31 million loan tied to the property, after Macy’s, the last remaining anchor at the mall, pulled out. Most recently, Bloomfield Hills-based Contour Cos. has proposed sparing the mall from demolition and repurposing it into what would become the state’s largest apartment complex, with some 2,885 units over multiple phases and more than 300,000 square feet of commercial space. As most recently proposed in November, the first phase would cost at least $285 million.
8
COSTAR GROUP
1. The Fairlane Town Center shopping mall in Dearborn has been under control of a receiver since at least May 2020 and faces liquidation after its owner, Miami Beach, Fla.-based owner Starwood Capital Partners, defaulted on a $161 million commercial mortgage-backed securities loan with a $135.7 million remaining balance, according to Trepp LLC, a New York City-based firm that tracks CMBS debt. About $39.7 million of that is for Fairlane, while $65.7 million is for the Shops at Willow Bend in Plano, Texas, and $30.3 million is for Stony Point Fashion Park in Richmond, Va. Fort Worth-based The Woodmont Co. has taken over management of the mall and the receiver is Trigild in Dallas. “If it is determined that now is the right time to start the process it is expected that the first property that will be brought to the market will be the Fairlane mall as the other two properties have activity that needs to be completed to help drive the value of each asset,” the Fairlane CMBS loan commentary says.
LARRY A. PEPLIN
What follows is a partial list of key properties in the region that have been in receivership in the last several years or face the possibility of one in the coming months.
1
COSTAR GROUP
From Page 1
ed guilty in October 2018 to crimes associated with a $150 million in health care fraud that involved what prosecutors said was the distribution of more than 6.6 million dosage units of controlled substances. An investment group led by Kevin Lewand of Birmingham-based Lewand Custom Homes paid $3.2 million for the building in July 2019. It is about 77,000 square feet and 83 percent leased, according to CoStar Group Inc.
KIRK PINHO/CRAIN’S DETROIT BUSINESS
RECEIVERSHIP
SUPPLY CHAIN
From Page 1
remained relatively steady. Meanwhile consumer spending on consumer electronics grew exponentially, as people were forced to stay home and find enjoyment. All the computers, wireless earbuds, gaming consoles and wireless speakers require microchips and the increased demand immediately filled the void left by the auto industry. Simply put, auto companies lost their place in line. Now, a year later, microchip shortages persist and factories across the U.S. are temporarily shutting down. Ford Motor Co. projects the semiconductor shortage will reduce its global vehicle output by 1.1 million vehicles in 2021. For Zingerman’s, the story is of similar dynamics. Cheese production slammed to a halt as Italy and Spain and other parts of Europe battled the virus last spring, followed by mandatory store closures in the U.S. Orders dried up, cheese spoiled, distributors docked their ships. But demand never faltered and as the industry came back on line, it’s battled to play catch-up. To meet demand, purveyors ordered more imported cheese than necessary. This leads to even greater shortages from producers and distributors. So if a retailer can’t get access to a wheel of imported Fleur de Marquis now, it may order more than normal when it is available to ensure it doesn’t run out of stock in the future. This is called the bullwhip effect, said John Taylor, associate professor of global supply chain management and chair of the department of marketing and supply chain management at Wayne State University. “Companies are having difficulty figuring out what their customers’ real demand is and are putting a lot of extra orders into the system,” Taylor said. “Everyone is hedging their bets. This all leads to a lack of clarity what the demand signal really is. When you get a bullwhip, things begin to see out of stock conditions and then overflowing inventory. Industries are gyrating from having not enough product to having too much.”
Hard cheddar Exacerbating issues are shipping delays linked to a multitude of issues, including dock workers and truck driver shortages and a bullwhip effect on shipping containers. When the economy cranked into overdrive last summer, freight companies turned to larger ships capable of carrying more containers and would “cut and run” at ports — offloading containers and leaving for another port before putting empty containers back on the ship, supply chain publication The Loadstar reported last week. This resulted in empty containers piling up in some ports and leaving other ports with not enough containers. “This issue is beyond the ability for vendors to meet that demand and capacity,” said Jon Gold, vice president of supply chain and customs policy for the Washington D.C.based National Retail Federation. “Our members can’t even get empty containers. There are vessels sitting in the ports of Los Angeles and Long Beach for a week plus. And others sitting in port trying to get out of the gate. We’ve seen delays and supply chain issues before, but never one so
Kevin Bowker, Zingerman’s cheesemonger, slices some of the $500,000 a month in cheese the deli imports. | ZINGERMAN’S
Zingerman’s porter Ricardo Ortiz brings in a shipment at the Ann Arbor delicatessen. | ZINGERMAN’S
global in nature. No one is being spared.” The six-day blockage of the Suez Canal by the grounded ship Ever Given also exacerbated delays. Sean Hartwig, Zingerman’s specialty food manager, works with brokers out of Rungis, France, and La Spezia, Italy, to export products to Zingerman’s Ann Arbor deli. The process of ordering a cheese and getting it delivered to Zingerman’s typically takes a month — a week on the water, a week to unload at the docks on the East Coast and two weeks to get out of the port to the deli’s door in Ann Arbor. Today, it’s as long as three months, Hartwig said. The delays are also leading to higher shipping costs. The price for a container has reached near-record highs in recent months and shows no signs of receding. A 40-foot container coming from Asia to North America is now as much as 50 percent more expensive than a year ago, Bloomberg reported. Shipping costs for Zingerman’s are up as much as 20 percent in recent months, almost double previous costs, Hartwig said. Zingerman’s
has eaten those costs in some cases and passed them on to the consumer in others. That also means Hartwig is being more cognizant of the types of cheeses he orders. The more perishable, the less likely it is to make it to behind the glass at the deli and more likely Zingerman’s will have to foot the bill for spoiled product. “A Brie from France typically has a three-week shelf life once it reaches us, but now those three weeks are consumed in port,” Hartwig said. “Our consolidators are much less likely to want to absorb those costs right now, so it’s really heightened the need to make good choices.” To offset the costs, Hartwig has reduced his monthly ordering schedule to a more bulked-up order every six weeks. “By ordering every six weeks, I am ensuring we have enough weight and product to justify the costs,” Hartwig said. “We now have $2,500 to $4,000 orders instead of $1,500 on a truck. It weakens the impact of the surcharges on small importers like us.” But by pushing the orders out and ordering more, Hartwig is contributing to the bullwhip effect. “There’s just no standard we can count on right now,” he said. “Everyone is over purchasing current inventory right now and everything is selling out as soon as it comes in. It’s going to take time to sort out.” Gold of the National Retail Federation predicts the supply chain bullwhip will continue through at least the remainder of 2021. “There’s just too much uncertainty, COVID-19 surges and variants, for anyone to accurately predict when this all returns to some level of normal,” Gold said. “Everyone is working through this but there is no risk mitigation strategy playbook for the pandemic.” To alleviate fewer options due to the ongoing shipping delays, Hartwig turned to American cheese. Half of Zingerman’s cheese selection is now sourced domestically, opposed to roughly 40 percent last year. “The domestic producers and cheesemakers consistently are producing better and better quality meats and cheeses,” Hartwig said. “It’s not a hardship to replace an imported product with a domestic on quality, but it’s quite a bit more expensive than its European counterparts.” Domestic cheese is typically 30 percent to 50 percent more expensive, Hartwig said. The Consumer Price Index, which measures the average change over time in the prices paid by consumers, rose 2.6 percent for the 12 months ending March 2021, the largest over-the-year increase since August 2018, according to the U.S. Bureau of Labor Statistics. Food prices rose 3.5 percent and energy prices rose 13.2 percent. The higher costs are impacting consumers across the board, but Hartwig thinks the problems could lead to new opportunities. “For the uninspired purchasers, these issues are leading to less variety to limit all the overhead cost to bring the product in,” Hartwig said. “For those that are creative, you’re going to see unique products and solutions on a consistent basis and, potentially, newer producers are going to be able to come on board faster. That’s a good thing.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh MAY 3, 2021 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Mariam Noland, drumming up permanent endowment for the region COMMUNITY FOUNDATION FOR SOUTHEAST MICHIGAN: When Mariam Noland was recruited in by the late Joe Hudson Jr. to serve as the founding president in 1984, she told him she’d stay three years. But there was always something more to do. Noland, 73, is winding down her 36th year leading the foundation as she prepares to retire at year’s end. During that time, she’s championed building permanent endowment and convened leaders to support and develop significant efforts for the region, including greenways, the New Economy Initiative launched after the Great Recession to spur economic development and, of course, the “grand bargain” that saved the Detroit Institute of Arts’ collection even as it bolstered Detroit pension funds. | BY SHERRI WELCH `What was your impression when you first got to Detroit and the Community Foundation? I had come from traditions where building endowment was part of the call and was surprised to find they were not building endowment here. We decided that if we’re going to really strengthen that tradition of building endowment, we needed to help everybody do it, not just the Community Foundation. When we actually with the Kresge Foundation did a study of endowments, we found this region was so underendowed that we didn’t publish the study. We went about building the Van Dusen Endowment Challenge which we launched in 1990-91, providing incentives and training so that we could help any charity that wanted to build endowment do so, and do it in a way that they understood it. I remember (former Kresge CEO ) John Marshall said, ‘We have to tell them what endowment is, and I sort of went, ‘What?’ What he was trying to say was the notion of endowment we were trying to build was that it’s permanent assets, not to be invaded, which had been somewhat of a way of operating here. `Where do we stand on permanent endowment in the region today? We now have 230-some organizations building endowment at the Community Foundation, some of them starting it even during the last year. When the pandemic was just early on, we prepaid a year’s worth of payments to all of those charities working with us, and they started to realize in really bad times, it is really helpful to have this predictable, permanent source of money. So I think you are going to see additional interest in building endowment. At the Community Foundation, we’ve made $1.2 billion in total grants and have $1.1 billion in assets. `You’ve also played a big part in convening major funders to put support behind major initiatives in the region. We started greenways because we knew that there were public dollars coming
to recognize the potential of a blue greenway, the “Great Lakes Way,” over 150 miles from Lake Huron to Lake Erie. We’re just at the beginning of figuring out what it means that Michigan has this unique potential that can add value to the state, to the region. By using what you’ve got and building it out, you could boat the whole way and establish a tourist attraction and attract federal funding. We know this is a unique opportunity. What do we make of it?
into Michigan but none in Southeast Michigan. And so we thought, what can we do to bring some of those public dollars into building safe places for people to get out and recreate get healthier? We got into the New Economy Initiative because one of our board members, Paul Diamond, had worked at the Clinton White House. And our board chair Alan Gilmore said in 2006 that we had to get to work on diversifying our regional economy. I thought, what can we do on that? With the help of the Community Foundation board, we designed the New Economy Initiative, which since 2007, has awarded 620 grants and over $127 million to support entrepreneurs. I also put together with John Marshall the first meeting to discuss the riverfront conservancy. With the “grand bargain,” we were seen as the neutral place by all parties. When you’re around this place for 30 years, you know a lot of people. The Community Foundation holds two funds benefiting the federal court. I have to periodically report to the court, so I know the judges. Judge (Gerald) Rosen caught me downstairs at the deli in our building. What I always say, and I’m going to stop saying it, is ‘How can I help?’ He asked me to come to his chambers. And you always say yes to a federal judge. They were just beginning to try to figure out how to save the DIA and save the pensioners. They wanted to know how to get money from foundations. I remember telling them it’s not the easiest thing and foundations don’t act very fast. My first call was to my good friend Alberto Ibargüen (Knight Foundation) and my second call was to Darren Walker (Ford Foundation). We knew there had to be a couple foundations with enough money to make it work.
`To get away from it all, you take annual trips to Maui with your family, don’t you? We are very close to family on both sides. I have a spouse who likes to throw parties. So, when you invite your family to Maui, they tend to come. And it’s both sides of the family. We used to go like twice a year and invite family one of those times. And then it was family both of those times. So we’re going to Maui in July. There will probably be 14 family members. That’s called a vacation, by the way. There’s a lot of nature stuff we do. On Maui there’s actually a mountain so you can get up and hike, you know, very long. I’m not a beach sitter. It’s more hiking, and you know, just touring the island, more natural stuff. And overeating. `What would surprise people about you? I played in the band at my own wedding. I don’t play the drums right now; it’s a little hard to do in Grosse Pointe. But I told my husband I’m going to join a rock band when I retire. I also went to car racing school 15-20 years ago at the Bondurant racing school. Julie Fisher Cummings and I went together with the wife of an automotive executive. I was also trying to learn to fly while in St. Paul but gave it up when I came here. I like speed.
`What’s next for the Community Foundation? We are developing the vision for how
crainsdetroit.com
Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Jim Kirk, (312) 397-5503 or jkirk@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Executive Editor Kelley Root, (313) 446-0319 or kelley.root@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Digital Portfolio Manager Tim Simpson, (313) 446-6788 or tsimpson@crain.com Assistant Managing Editor Dawn Bradbury, (313) 446-5800 or dbradbury@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Chad Livengood, (313) 446-1654 or clivengood@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766 REPORTERS
Jason Davis, small and emerging businesses. (313) 446-1612 or Jason.davis@crain.com Annalise Frank, city of Detroit. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter, health care and energy. (313) 446-0325 or jgreene@crain.com Nick Manes, finance and technology. (313) 446-1626 or nmanes@crain.com Kurt Nagl, higher education, business of sports. (313) 446-0337 or knagl@crain.com Kirk Pinho, senior reporter, real estate. (313) 446-0412 or kpinho@crain.com Dustin Walsh, senior reporter, economy and workforce, manufacturing, cannabis. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com MEMBERSHIPS
CLASSIC $169/yr. (Can/Mex: $210, International: $340), ENHANCED $399/yr. (Can/Mex: $499, International: $799), PREMIER $1,299/yr. (Can/Mex/International: $1,299). To become a member visit www.crainsdetroit.com/ membership or call (877) 824-9374 Group and Corporate Membership Sales Deb Harper, (313) 446-1623 or dharper@crain.com ADVERTISING/MARKETING
Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Director of Events and Program Content Kristin Bull, (313) 446-1608 or kbull@crain.com Senior Account Executive John Petty Senior Account Manager Maria Marcantonio Advertising Sales Lindsey Apostol, Mark Polcyn, Sharon Mulroy People on the Move Manager Debora Stein, (917) 226-5470, dstein@crain.com Marketing Manager Lynn Zott, lzott@crain.com or (313) 446-6762 Insights Analyst Reginald Brown, reginald.brown@crain.com or (313) 446-1670 Senior Art Director Sylvia Kolaski Director of Media Services Joseph (Sam) Tanooki, (313) 446-0400 or sabdallah@crain.com Classified Sales and Sales Support Suzanne Janik CUSTOMER SERVICE
READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION
Mariam Noland, president, Community Foundation for Southeast Michigan
RUMBLINGS
Single copy purchases, publication information, or membership inquiries: (877) 824-9374 or customerservice@crainsdetroit.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com Crain’s Detroit Business is published by Crain Communications Inc.
Unreturned cans, bottles more than doubled to over 1B last year MICHIGAN CONSUMERS DIDN’T REDEEM 1.08 billion bottles and cans in 2020 for the 10-cents-per-container deposit. The Michigan Treasury Department is reporting a record-setting $108 million in unclaimed returns on bottles and cans last year. The nine-figure sum of unclaimed dimes is more than double the $43 million in glass and plastic bottles and aluminum cans that consumers didn’t redeem in 2019. It amounts to 108 unreturned containers for each Michiganian. As reported in Crain’s Forum last week, Michigan’s bottle deposit redemption rate has been falling annu22 | CRAIN’S DETROIT BUSINESS | MAY 3, 2021
Michigan consumers did not redeem $108 million in cans and bottles in 2020, according to the Michigan Treasury Department. | NIC ANTAYA FOR CRAIN’S
ally since 2010, contributing to an overall recycling rate of about 15 percent of recyclable materials. The coronavirus pandemic wors-
ened the declining redemption rate after bottle return operations inside grocery stores were suspended in the spring of 2020 at the height of the first wave of COVID-19 infections. In the second half of 2020, markets struggled to catch up with the backlog of returnables, causing some grocery store chains such as Kroger Co. to limit hours of operation for bottle return rooms because of storage capacity limits. Under Michigan’s bottle bill law, 75 percent of unredeemed bottle deposits — or $81 million in 2020 — goes to the Michigan Department of Environment, Great Lakes, and Energy for environmental cleanup projects.
Retailers get 25 percent of the unredeemed deposits, amounting to a record-setting $27 million for 2020. That’s still far short of the cost supermarkets and convenience stores incur handling bottle returns and maintaining automated bottle-counting machines, said Amy Drumm, vice president of government affairs for the Michigan Retailers Association. “It doesn’t come anywhere near close,” Drumm said. In 2019, Michigan retailers applied for a share of $10.8 million in unredeemed container deposits, according to the state Treasury Department.
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.
T:10.875" S:10.25"
It’s more than a bank account. It’s the tools to help get your business up and running.
The Chase Business Complete Banking℠ account
Start taking card payments anytime, anywhere in the US with QuickAccept using the Chase Mobile® app. Plus, receive same-day deposits at no extra cost. SM
Learn more at chase.com/business-complete-banking
QuickAccept is available in the Chase Mobile® app on select devices and not in US territories. Enrollment required. Usage subject to approval. Message and data rates may apply. Sameday deposits available for payments before 8pm ET Sunday–Friday. No cost for same-day deposits, but rates and fees apply for checking and processing. Deposits limits, verification, fraud monitoring, and other restrictions of WePay terms of service may apply. Participants compensated. Merchant services are provided by Paymentech, LLC and WePay Inc., subsidiaries of JPMorgan Chase Bank, N.A. Member FDIC. ©2021 JPMorgan Chase & Co.
T:14.5"
S:14"
Summer & Kam Johnson Owners, Zach & Zoë Chase for Business customers
AT&T BUSINESS TIP:
Get a
FASTER INTERNET
EXPERIENCE
20x FASTER AT&T Business Fiber® 1GIG
UP TO
upload speeds than cable*
NO NO
ANNUAL TERM COMMITMENT BUNDLE REQUIRED
Switch to AT&T Business Fiber—now at our lowest price ever.
Call: 844.740.FAST
Visit: att.com/businessfast
Limited availability in select areas. May not be available in your area. Call or go to att.com/businessfast to see if you qualify.
*Based on comparison of Internet 1000 w/wired upload connection to Comcast and Spectrum 1GIG svc w/upload speed of 35Mbps. AT&T Business Fiber. Go to www.att.com/smallbusiness/explore/internet.html to check qualification. Additional Fees & Taxes: AT&T one-time transactional fees and monthly cost recovery surcharges which are not government-required may apply, as well as taxes. See www.att.com/BusinessInternetFees for details. Installation: $99 installation charge may apply. Subject to Internet Terms of Service at att.com/internet-terms. Prices and offers subject to change without notice. Advertised services not available in all areas. Credit restrictions and other conditions and limitations may apply. ©2021 AT&T Intellectual Property. AT&T, Globe logo, and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners.