Crain's Detroit Business Sept. 6, 2021, issue by Crain's Detroit Business

CRAIN’S 2021

LGBTQ IN BUSINESS These leaders are door-openers, role models and change agents. PAGE 10

MACKINAC CONFERENCE

CANNABIS: Gage deal shows Michigan M&A ‘green rush’ is on in earnest. PAGE 3

Virus restrictions outlined for annual event. PAGE 7

CRAINSDETROIT.COM I SEPTEMBER 6, 2021

SPECIAL REPORT: ANN ARBOR

‘A SUCCESS STORY’

NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

How Pfizer’s closure planted a thousand seeds in Ann Arbor

 How Peter Allen steers deals — and student careers. PAGE 19

BY NICK MANES

he shuttering of a large employer is often a disaster for a community. But that scenario in Ann Arbor 15 years ago turned into a catalyst. In 2007, Pfizer Inc. announced the closing of its massive research and development operation in the city, laying off about 2,100 employees. Since then, Ann Arbor has only further solidified its standing as a hub for the growth of biotechnology companies and other hightech, high-growth companies.

 Michigan Medicine’s new hospital tower muscles on. PAGE 20  Land trust pairs with developers on affordable housing. PAGE 23

Above: East Liberty Street is pictured in Ann Arbor. Right: An aerial view of the Pfizer R&D center in Ann Arbor, whose closure was announced in 2006.

FILE PHOTO

 Small businesses hope students help with labor shortage. PAGE 24

NEWSPAPER

DOWNTOWN REAL ESTATE Vacancy rate ticks upward in prime office buildings downtown. PAGE 5

That wasn’t the view at the time “This is one of the biggest losses for the community in decades,” Conan Smith, a former Washtenaw County commissioner and now president and CEO of the Michigan Environmental Council, reportedly said at the time. “It’s not just Ann Arbor, either, but the entire region.” Instead, the torrent of talent and an effort to regroup after Pfizer’s closure in the city spawned 15 contract research companies staffed by former See PFIZER on Page 25

TE CAMPUS

NEED TO KNOW

POWER OUTAGES

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT  BEAUMONT, SPECTRUM SIGN FORMAL INTEGRATION DEAL THE NEWS: Beaumont Health and Spectrum Health have taken a step forward in their quest to create the state’s largest health system, signing a formal integration agreement that spells out how they would combine. They said they hope to complete the deal by fall if regulators sign off on it. They are temporarily calling the combined system BHSH System. Specific details of the latest agreement were not released. WHY IT MATTERS: A merger would create a $12 billion, 22-hospital health system with its own health insurer. The combination would also be the biggest employer in the state. The merger effort is the third for Beaumont after it worked on two previous deals with other systems that didn’t pan out.

Delta Township Assembly will add two weeks of downtime. Ford will stop making pickups at its Kansas City Assembly Plant for the next two weeks. Shifts will be cut at truck plants in Dearborn and Louisville, Ky.

and primates, according to the Centers for Disease Control and Prevention. The zoo said no COVID-19 infections have been found in its animals. Viral spread from animals to humans is considered a low risk, the CDC says.

WHY IT MATTERS: The cuts will compound an already short supply of cars, trucks and SUVs on dealer lots nationwide that have pushed prices to record levels. Automakers reported that U.S. dealers had just less than a million new vehicles on their lots in August, 72 percent lower than the 3.58 million in August 2019.

 TOP ILITCH EXECUTIVE DEPARTS FOR NEW JOB

 GM, FORD CUT MORE SHIFTS AMID MICROCHIP SHORTAGE

 DETROIT ZOO TO VACCINATE SOME ANIMALS FOR COVID-19

THE NEWS: The global shortage of computer chips is getting worse, forcing automakers to temporarily close factories including those that build popular pickup trucks. General Motors Co. said Thursday that it would pause production at seven North American plants during the next two weeks, including two that make the company’s top-selling Chevrolet Silverado pickup. GM said the only plants running in Michigan next week will be in Flint and Lansing Grand River. Lansing

THE NEWS: Some animals are rolling up their fur for a COVID-19 vaccine at the Detroit Zoo. The zoo in Royal Oak said its gorillas, chimpanzees, tigers and lions are getting a vaccine developed by Zoetis, a veterinary drug company, and authorized by the U.S. Agriculture Department. Other animals will follow. WHY IT MATTERS: Research is still going on, but it is known that COVID-19 can spread in some animals and some infections have been reported in big cats

THE NEWS: Chris Granger, a top executive at Detroit-based Ilitch Holdings Inc., has taken a new job. Los Angeles-based venue management company Oak View Group announced Wednesday on Twitter that Granger was hired as CEO of Oak Group Facilities as the company expands its reach at stadiums around the country. WHY IT MATTERS: Granger oversaw the Ilitch family’s entertainment venues and the business operations of the Detroit Tigers and Red Wings. Granger will remain in Detroit in his new role, an Ilitch spokesman said.

DTE adds $70 million to tree-trimming budget  DTE Energy Co., feeling the heat from customers and regulators over multiple summer electricity outages caused by powerful storms, plans to invest an additional $70 million in tree trimming in hardest-hit communities. The extra tree trimming, which the Detroit-based utility hopes to complete by the end of 2022, is on top of the $190 million that DTE spends annually removing trees and limbs that often bring down power lines during fierce storms. Residential, commercial and industrial customers will not see an increase in their monthly electric rates as a result of the additional tree trimming along 3,500 miles of power lines. The money is coming out of shareholder profits and savings, the company said. DTE Energy CEO Jerry Norcia said the utility’s infrastructure has experienced nine “hard-hitting severe storms” over nine weeks this summer, “something we have never experienced.” The additional investment will increase the number of tree trimmers DTE employs or contracts with from 1,200 to 1,500. The company also will add 200 power line workers to its workforce of 850.

Corrections  The Cool Places to Work feature in the Aug. 23 issue contained an incorrect URL for ICAT Logistics DTW. The correct web address is icatlogisticsdtw.com.  A Cool Places to Work profile for Windquest Group gave an incorrect figure for the company’s paid time off. It should have said the company offers unlimited paid time off from the date of hire.

DTE hopes the extra trimming will reduce power outages. | CONTRIBUTED PHOTO

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Gage Growth acquisition puts Michigan in marijuana M&A sights BY ANNALISE FRANK

MAKING IT WORK WORKFORCE

TalentEi’s office in downtown Detroit, designed by MarxModa, features idea rooms and other collaboration areas, but during the pandemic, the company has found that employees are more productive working from home. | TALENTEI

Office designers and furniture suppliers such as MarxModa are pivoting as their customers do BY KURT NAGL

By the start of 2020, Brian Balasia had signed a new lease and spent hundreds of thousands of dollars building out a new downtown Detroit office to accommodate his growing software business. Because of COVID-19, his company never moved its employees in; it probably never will. “We actually saw an increase in productivity of about 23 percent” while working at home, said Balasia, CEO of TalentEi, whose soft-

ware helps companies streamline recruiting. “From a business perspective, it’s hard to go back to less productivity.” The company’s freshly furnished, 5,000-square-foot office at 751 Griswold St. is outfitted with conference rooms enclosed by glass doors and full-wall whiteboards. Couches and communal workspaces are set up throughout. It’s a model for the state-of-theart corporate office. It has also sat virtually untouched since March 12, 2020, like the pre-remote work

era frozen in time. “It’s probably one of the most beautiful offices I’ve seen.” It was designed by MarxModa, one of Michigan’s largest office designers and furniture suppliers, which also happens to be TalentEi’s landlord. The Herman Miller furniture dealer moved into its Detroit headquarters in 2018 and leased space to TalentEi, which had outgrown its digs in the Guardian Building. See OFFICE on Page 28

“THE VOLUMES OF ORDERS ARE SIGNIFICANTLY UP, BUT THE SIZES OF ORDERS ARE SIGNIFICANTLY DOWN.” — Joe Marx, CEO, MarxModa

With the latest cannabis company acquisition deal in the works, Michigan has joined the big-bucks “green rush” to consolidate the industry. Last week,TerrAscend Corp. announced a $545 million deal to buy Gage Growth Corp., one of Michigan’s biggest marijuana sellers. The combined company will have operations in Canada and five U.S. states, including seven cultivation and processing facilities, and 23 retail outlets serving the medical and adult-use markets. The network is set to expand to 34 stores in coming months. The deal, subject to shareholder and regulatory approvals, is expected to close in the first half of 2022. The rush to combine in the cannabis business stems in part from its regulatory peculiarities. Because marijuana isn’t legal at the federal level, companies have to cultivate and process it in the state in which they want to sell it. As more states legalize marijuana, companies are keen to build up a presence in new markets, helping them reach more customers and work toward building nationally recognized brands. Legal cannabis sales in the U.S. are expected to grow about 50 percent in 2021 to exceed $24 billion, including CBD and other cannabinoids, according to data company BDSA. Michigan is the third-largest U.S. cannabis market behind California and Colorado. Marijuana sales in Michigan reached $171 million in July, representing an annual market of about $2.1 billion. Enterprises are keen to acquire and consolidate as larger companies seek to grab market share, said Matthew Rizzo, a managing director, accountant and consultant for Bloomfield Hills-based financial and strategic advisory company O’Keefe. Without federal legality, companies have to go state by state with growth strategies. See GAGE on Page 28

ENTERTAINMENT

Phoenix Theatres expands into West Michigan, confident of pandemic rebound BY JAY DAVIS

Despite the ongoing dampening theater attendance and uncertainty within the industry, Farmington-based Phoenix Theatres is expanding. Phoenix Theatres, established in 2000, later this year will open its fourth Michigan movie house at Woodland Mall in Kentwood, near Grand Rapids — a 14-screen, 47,000-square-foot theater. Phoenix Theatres is putting $4 million into the project, according to company founder Cory Jacobson.

“For me, the opportunity is there,” Jacobson said of taking over a space previously occupied by a Celebration Cinema location that closed in 2020. “I think that if you wait six, eight months or a year, the opportunity might not be there. There are a lot of things the shopping center could do with the space. It’d be a tragedy to let a theater close in such a great location. The mall features some great retailers at the top of their game. In an era of depressed malls, (Woodland Mall) is a winner.” The mall features tenants includ-

ing Macy’s and Von Maur department stores, a Cheesecake Factory restaurant and an Apple store. Phoenix has locations in Wayne, Monroe and Livonia, along with theaters in Iowa and Massachusetts. The West Michigan site opening will give it 50 screens total, according to a news release. The new location will offer moviegoers amenities including heated reclining seats, 4K digital projection and four screens with Dolby Atmos sound. See PHOENIX on Page 29

A rendering shows the plan for the Phoenix Theatres at Woodland Mall in Kentwood, near Grand Rapids — a 14-screen, 47,000-square-foot theater. |PHOENIX THEATRES SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 3

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The building at the southwest corner of Woodward Avenue and West Grand Boulevard is heading to auction in early October. | COSTAR GROUP INC.

Once a possible high-rise, New Center site heads to auction A building in Detroit’s New Center area is heading for auction. This one is unique, however, because it has in recent years been Kirk viewed as a possiPINHO ble high-rise development opportunity by its owner, Philadelphia-based developer David Grasso, whose wide-ranging business interests include restaurants, apartment hotels — more on that in a minute — and co-working space. The 38,000-square-foot building at 6561-6565 Woodward Ave., the southwest corner of Woodward and West Grand Boulevard, goes to auction Oct. 4-6 with a minimum starting bid of $750,000. Turns out, however, that New Center’s loss is the Book Tower’s gain. In a text message Tuesday morning, Grasso said: “6565 Woodward is an amazing property in an exceptional location. Unfortunately, over the past few years my focus has shifted more and more to expanding my hospitality business around the country. We are now in nine states and growing.” That hospitality business is Roost Apartment Hotels, which you may recognize from some news last week that they were opening a 118-unit location inside Dan Gilbert’s Book Tower redevelopment on Washington Boulevard downtown. (A Cleveland location in Gilbert’s The May building is also planned.) The New Center building is currently vacant and was built in 1940, according to the online auction listing. A pair of brokers with Detroit-based O’Connor Real Estate, Vincent Mazzola and Randall Fogelman, are working on the auction. The listing says the properties zoning allows for the development of a 46-story, 569,000-square-foot skyscraper at the site, which is 0.35 acres.

Construction of a 16-story tower with 165 residences planned for Gratiot Avenue and Brush Street is set to be complete in spring 2022.| LIFTBUILD

“6565 WOODWARD IS AN AMAZING PROPERTY IN AN EXCEPTIONAL LOCATION. UNFORTUNATELY, OVER THE PAST FEW YEARS MY FOCUS HAS SHIFTED MORE AND MORE TO EXPANDING MY HOSPITALITY BUSINESS AROUND THE COUNTRY. WE ARE NOW IN NINE STATES AND GROWING.” — David Grasso, developer

In interviews in 2017, Grasso told me he was pondering what to do with the building, which he bought from Midtown Detroit Inc. He considered both redeveloping the building as well as building more than 20 stories on top of it. Obviously, though, those grand visions never came to pass.

Groundbreaking for new Greektown tower Sept. 13 The groundbreaking ceremony for

a new residential building in Detroit’s Greektown neighborhood is set for Sept. 13. Plans for the 16-story building on Gratiot Avenue were first revealed last summer. It’s expected to have 165 units, with 12 condos and 153 apartments. The development cost is expected to come in at $64.6 million. Work on the site has been taking place for several weeks and construction is expected to be complete in spring 2023. The developer is Gratiot Acquisition Partners LLC, an entity connected to LiftBuild, a Southfield-based subsidiary of Southfield-based general contractor Barton Malow Co. The event is from 11 a.m. to noon at 340 Macomb St. but is closed to the public. Expected speakers include Ryan Maibach, president and CEO of Barton Malow; Norm Pappas, president and CEO of Pappas Financial, one of the investors in the project; Melanie Markowicz, executive director of the Greektown Neighborhood Partnership; and Detroit Mayor Mike Duggan. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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The vacancy rate in downtown Detroit’s prime office buildings increased to 10.2 percent, a new report from JLL finds. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

Vacancy rate ticks upward in prime office buildings downtown, report says BY KIRK PINHO

There’s more space available for rent in downtown Detroit’s prime office buildings this year. That’s according to a new report from the Royal Oak office of Chicago-based brokerage house JLL, which released its annual Skyline report last week. The report says there is a 10.2 percent vacancy rate among 21 office buildings totaling more than 10.9 million square feet, ranging in location from the downtown core north to the New Center area. That’s up from 7.7 percent vacancy in 2019 and just under 9 percent in 2020, according to JLL data. Asking rents fell as well, dropping 0.4 percent to $25.92 per square foot. “The COVID-19 pandemic has dampened office leasing activity, as vacancies have trended slightly upward year-over-year,” Harrison West, research manager for JLL, said in a statement. “211 West Fort and the Renaissance Center contain nearly two-thirds of the skyline’s vacancy and rent growth has stagnated in the skyline.” The Renaissance Center accounts for nearly 45 percent of all the vacant space among more than 20 prime office buildings downtown. The Renaissance Center, Detroit’s “city within a city,” consists of seven towers, including Detroit’s tallest building, the 727-foot Detroit Marriott at the Renaissance Center hotel. The complex, built in the mid-1970s and early 1980s, famously has its own ZIP code. Its office component totals nearly 3 million square feet, or a little more than a quarter of the more than 27 percent of the office space tallied for the JLL report. Although the 585,000-square-foot Tower 300 and 307,000-square-foot Tower 500 are fully leased, the 593,000-square-foot Tower 200 is just 53.5 percent leased and the 30,000-square-foot Tower 600 is 75.2 percent leased, according to the re-

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port. The 588,000-square-foot Tower 100 is 85 percent leased while the 576,000-square-foot Tower 400 is 90.4 percent leased, the report says. Total vacant space in the towers, including sublease availability, is north of 521,400 square feet. CBRE Inc., which leases and manages the Renaissance Center on behalf of Detroit-based owner General Motors Co., declined comment Wednesday. The 211 West Fort tower, which is owned by a joint venture between Grosse Pointe-based Foster Financial Co. and Tribus, a family office, is 46.4 percent leased with 239,000 of its 446,000 square feet vacant, according to the JLL report; Foster Financial’s Doug Noble, however, said Wednesday the tower is actually 78 percent occupied. “As re-entry begins and occupiers reassess their office space needs, we expect to see an emphasis put on high-quality space, amenities and wellness. While many of Detroit’s high-profile skyline buildings provide these attributes, those that do not could struggle to fill their remaining vacancies moving forward,” West said. The report doesn’t consider corporate headquarters buildings, such as the new Little Caesars Global Resource Center or the new Huntington Bank headquarters, both on Woodward. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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RESTAURANT ROUNDUP

Soft reopen for Townhouse Detroit; doughnut shop takes break The Whitney to host Cityfest

BY JAY DAVIS

Townhouse Detroit is conducting a soft reopening that started last week in preparation for a full reopening later this fall. The downtown restaurant at 500 Woodward Ave. will be open 5-11 p.m. Sundays through Thursdays and 5 p.m.-midnight Fridays and Saturdays. Townhouse Detroit, closed since the state-mandated COVID-related restaurants shutdown was ordered in November 2020, was previously expected to reopen in July. The full reopening, now anticipated for early October, will come after construction is complete on portions of the restaurant’s interior and atrium, according to a news release. Townhouse, owned and operated by Birmingham-based Heirloom Hospitality, will be reservation only during the soft launch. The restaurant, with a second location in Birmingham, is hiring servers, bartenders, beverage manager and cooks.

An event that sees every inch of space inside The Whitney put to use is returning for a third installment. Cityfest, billed as a “celebration of spirited dining,” returns to the iconic Detroit restaurant Sept. 10-19. The event includes a variety of dining and drinking experiences that utilize the 127-year-old former David Whitney House dining rooms, gardens, carriage house and basement. Cityfest events include a Back East Feast that includes champagne, raw bar, lobster, king crab and mussels; the Bloody Mary Garden Party featuring more than 100 ingredients; and a tasting and dinner to sample The Whitney’s special Celebration champagne as well as new proprietary bourbon, gin, beer and private label wines. For more details and tickets visit thewhitney.com/cityfest.

Dutch Girl Donuts in Detroit is taking a break as it works to staff up. | GOOGLE STREETVIEW

Aldi adds store in Allen Park

Dutch Girl Donuts takes a break A beloved doughnut shop in Detroit is taking a “pause in operations” that began Wednesday. “In an effort to resume a full staff and hours that we have prided ourselves on for 75 years, we have decided to temporarily pause operations,” Dutch Girl Donuts said in a Facebook post. “We appreciate all your support over the years and will continue to keep you updated.” Fans of the shop at 19000 Woodward Ave. south of Seven Mile Road say they hope the closure is temporary. The doughnut shop closed for a week earlier this summer. Dutch Girl also closed for a week in September 2020. Calls to owner Gene Timmer and manager Jon Timmer seeking comment were not returned.

Townhouse Detroit is updating its menu as well as its space as it prepares for a full reopening in October. | CALLIE CRAIG

The Whitney will host its third annual Cityfest event Sept. 10-19. The event features 10 days worth of happenings. | THE WHITNEY

Discount retailer Aldi added another Michigan location last week. Aldi opened at 23035 Outer Drive in Allen Park on Thursday. The 12,000-square-foot grocery store will operate 9 a.m.-8 p.m. daily, according to a news release. It will be the 38th Aldi in metro Detroit and 89th in the state, according to Aldi Webberville Division Vice President Ryan Fritsch. Aldi, founded in Germany in 1946, operates more than 2,000 stores in 37 U.S. states. The company plans to open three more stores in Michigan by the end of the year — in Roseville, White Lake and Emmett Township near Battle Creek — as part of the retailer’s aggressive expansion plan to open approximately 100 new stores in 2021 across the country. Aldi also plans to expand curbside pickup service to 500 additional stores, bringing the total to more than 1,200 stores.

FOOD & DRINK

Grey Ghost owners to open restaurant in Eddystone redevelopment Restaurant to feature 85 seats in more than 5,000 square feet in former Detroit hotel “AS WE LOOK TO CONTINUE THE EXPANSION OF OUR FAMILY OF RESTAURANTS, THE EDDYSTONE CONCEPT IMMEDIATELY STOOD OUT TO US AS A GREAT OPPORTUNITY GIVEN THE BEAUTIFUL ARCHITECTURE OF THE BUILDING AND THE LOCATION WITHIN THE DISTRICT DETROIT.”

BY JAY DAVIS

The group behind Grey Ghost restaurant in Brush Park is planning a new dining spot in the Eddystone Hotel redevelopment in Detroit. Four Man Ladder Management, which also owns Second Best bar, has been selected by Olympia Development of Michigan to develop and operate the restaurant in the former hotel at 110 Sproat St. directly north of Little Caesars Arena. Four Man Ladder, established in 2015, will start interior construction later this year, according to a Monday news release. The Illitch family's real estate development organization is heading up the building's redevelopment. The hotel itself is being restored to include 92 apartments, with 20 percent of the units designated as affordable, the release says. The operation includes chefs John Vermiglio and Joe Giacomino, along with Beverage Director Will Lee and

— John Vermiglio, chef

Chef John Vermiglio, left, Director of Operations Michael Gray, Chef Joe Giacomino and Beverage Director Will Lee comprise the Four Man Ladder Group. The group, which own and operate Brush Park’s Grey Ghost and Second Best, has been chosen by Olympia Development to establish a new restaurant in the shuttered Eddystone Hotel. | SOCIAL GATHERING CO.

6 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

Director of Operations Michael Gray. “On the heels of the fifth anniversary of our flagship restaurant Grey Ghost, we are extremely excited to embark on our third venture and to partner with Olympia Development on this special opportunity,” Vermi-

glio said in the release. “As we look to continue the expansion of our family of restaurants, the Eddystone concept immediately stood out to us as a great opportunity given the beautiful architecture of the building and the location within The District Detroit. We are looking forward to starting construction and sharing more details as we progress.” The plan calls for a 5,000-squarefoot restaurant, with 85 seats between a dining room, bar and lounge, the release states. The restaurant is expected to open in the spring. More details on concept, design and menu are to be announced later this year. “We have been very impressed by how the Four Man Ladder team has operated Grey Ghost Detroit and Second Best over the years and are really happy to have them as partners in this project in The District Detroit,” Olympia Vice President of Development Stefan Stration said in the release.

POLICY

What color is your wristband? Chamber outlines Mackinac precautions Attendees, speakers, chamber staff to be required to prove they have been vaccinated BY CHAD LIVENGOOD

The Detroit Regional Chamber is keeping its plans to host its annual Mackinac Policy Conference in person at the Grand Hotel on Mackinac Island later this month, with a variety of restrictions designed to mitigate spread of COVID-19. Detroit chamber CEO Sandy Baruah said Thursday that the Sept. 20-23 conference will go on, albeit with fewer participants and efforts to reduce the potential for the coronavirus to spread among attendees. “I think it’s safe to say everything will be the same except for the things that are different,” Baruah said. All attendees, speakers and chamber staff on the island will be required to prove they’ve been vaccinated against COVID-19 through a third-party mobile app with “no exceptions,” Baruah said. Attendees will be required to wear face masks inside “high trafficked” areas of the Grand Hotel, including the theater and hallways leading to the theater and registration desk at the entrance of the hotel, Baruah said. Attendance will be capped at 1,300, down from the 1,600-1,700 business, political, philanthropic, education and civic leaders who normally attend the four-day confab.

The annual Mackinac Policy Conference is going forward for 2021 after skipping 2020 amid the coronavirus pandemic.

“We’ll probably be south of (1,300) when all is said and done,” Baruah said. Sept. 10 is the deadline for Mackinac Policy Conference attendees to complete the COVID vaccination verification process through CLEAR’s passport app. Baruah and conference chairman Wright Lassiter III, CEO of Henry Ford Health System, detailed conference logistics and the agenda Thurs-

day morning during a media briefing. All meals that are part of the conference will be outdoors, Baruah said. Also new for this year’s conference, attendees will be given green, yellow and red wrist bands so other attendees can know their comfort level for shaking hands (green), bumping elbows (yellow) or remaining socially distant (red), Baruah said.

Michigan is averaging just less than 2,000 new confirmed cases of COVID-19 each day, state data show. For the past week, the COVID testing positivity rate has been above 10 percent; public health experts say any positivity rate above 3 percent is evidence of uncontrolled community spread. By comparison, Michigan’s COVID positivity rate hovered between 3 percent and 4 percent during the last week in August 2020 and there were fewer than 750 new daily cases that week, a Crain’s analysis of state data shows. Lassiter acknowledged some people may be wary of holding an in-person conference given how COVID cases surged last fall as the weather got cooler and people started spending more time indoors. Henry Ford’s epidemiologists are modeling the current spread of the coronavirus and it’s suggesting there may be a “plateauing” of new cases in the coming weeks, he said. “Obviously, these are predictive models, so these are not guarantees,” Lassiter said. “But we’ve seen fairly constant data that suggests that ... there’s a possibility of a plateauing of cases as we move into the month of September. “Again, that’s not definitive. I’d say

like an investment banker, we’re not guaranteeing the future, but we’re giving you a sense of what that looks like.” A clinical advisory team of health experts at Henry Ford has advised the chamber on masking protocols and vaccination requirement for attendees. “Our clinical advisory team has been very comfortable that the conditions that we put in place with requiring vaccination and the masking expectation that we have for our attendees can provide appropriate safety,” Lassiter said. Baruah said the chamber has had about 150 cancellations for the conference. Attendees who canceled cited a variety of reasons, including travel restrictions by their employers and disagreement with the chamber’s COVID vaccination requirement. No sponsors of the conference have pulled out, in part, because of the chamber’s “strong stance” on the vaccination requirement, Baruah said. “This will be by far the most safe and protocol-intensive large event in Michigan since this pandemic started,” Baruah said. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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COMMENTARY

Let private insurers manage Medicaid mental health system BY RICK MURDOCK

DANIEL SAAD FOR CRAIN’S DETROIT BUSINESS

EDITORIAL

To fix outages, it’s time to see forest among trees

good start. That’s how we’d describe the $70 million that DTE Energy Co. plans to spend by 2022 on extra tree-trimming after a miserable summer of storm-related power outages, flooding and general infrastructure mayhem across Michigan. That’s on top of $190 million the utility spends annually on routine clearing of troublesome trees. But there’s still more to be done. Namely: an updated, transparTHE CATACLYSMIC ent accounting of the costs involved in WEATHER OF finding a permanent solution to prolonged SUMMER 2021 outages. HAS DRIVEN The framework is underway. The MichHOME THE igan Public Service FRAGILITY OF Commission is investigating how DTE, OUR ELECTRIC Consumers Energy GRID AND THE Co. and smaller utiliin the state reMISERY — AND ties sponded to this sumFINANCIAL COST mer’s storms and what they’re doing to — OF BEING make their systems WITHOUT POWER more resilient in the future. FOR DAYS. The three-person state commission has asked for, among other things, a detailed analysis of the cost of burying electric power lines underground. That can’t come soon enough. The debate over burying power lines has been like a record stuck on repeat for more than 20 years — and DTE has been using the same ballpark cost of $30 billion that entire time. How can that figure not have changed? And how is it being calculated? Burying lines may or may not be the right fix. If it is, the next step is identifying where

it’s feasible and how to spread out the costs fairly. The MPSC needs updated numbers to inform the debate, including cost estimates by community. What works for Warren may not work for Bad Axe — and the costs should be tailored accordingly, even if that means updating archaic utility laws. DTE said last week that residential, commercial and industrial customers will not see an increase in their monthly electric rates as a result of the additional tree trimming along 3,500 miles of power lines. The money is coming out of shareholder profits and savings, the company said. But we suspect customers would be willing to pay more for permanent fixes. The cataclysmic weather of summer 2021 has driven home the fragility of our electric grid and the misery — and financial cost — of being without power for days. The MPSC is in place to ensure safety, transparency and accountabilty from the state’s utilities. It’s encouraging to see the commission showing a little more muscle of late – for example, it’s instructed DTE to disclose the 10 ZIP codes with the most frequent outages, and the top ZIP codes where the company plans to prioritize the additional tree-trimming. DTE did not disclose which communities would be prioritized in its announcement this week. Other short-term relief also could be coming. A one-time credit on customers’ bills is a reasonable short-term solution for prolonged outages, as some advocacy groups and elected officials are demanding. The required $25 credit for outages that last longer than 120 hours — note that’s five days — is hardly an incentive for speedy restoration. But the real goal is to reduce the outages in the first place. It will take foresight and teamwork from the public and private sector to make that happen.

egislation reforming Michigan’s Medicaid system, that would integrate physical and mental health care, is an opportunity to greatly improve health outcomes of those served by that program. In fact, the proposed Rick Murdock is legislation would make the former Medicaid operate like executive health insurance enjoyed director of the by those in the private Michigan sector. Association of I say that having been Health Plans, a trade group that engaged in Medicaid and behavioral services since represents 1991, first serving in the commercial health insurance state budget office and then having helped carriers. launch our Medicaid managed physical care program in 1996. After leaving state government, I served as the head of the Michigan Association of Health Plans, retiring in 2016. Nobody disputes that the status quo is failing Michiganders at a time of great need. Our experience with COVID-19 shows the need for dramatic changes to meet our behavioral needs. Today, someone enrolled in Medicaid has his or her physical health services managed by a state-licensed health plan that oversees their physical health needs — hip replacement, diabetes and other chronic diseases, whatever problems they may have — often working with a variety of specialists to get the best possible outcomes. To innovate and meet consumer needs, health plans use interventions that address social determinants of health, such as housing assistance, food security, non-emergency transportation and employing community health workers who have peer relationships with consumers. But a person in Medicaid with mental health needs is put in an entirely different system, with little or no coordination with their physical health providers — even though data shows most persons with mental health concerns have physical health problems. Historically, those with mental health needs were institutionalized in state-run hospitals, often poorly run, with little hope for treatment that would return them to society. In the 1980s and 1990s Democratic and Republican administrations, following best practices, nationally shifted treatment from institutions to the local community mental health system. That is where Michigan’s Medicaid recipients go today for psychiatric, drug rehabilitation, 24/7 residential services or other services. Because there are often too few providers, services vary from county to county and there continue to be cost overruns. Senate Bills 597 and 598 would provide Medicaid patients an integrated care system that serves the needs of the “whole person.” This is what most of us already have access to

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

from our employer-provided insurance. The bills would continue the state’s investment in behavioral care that funds additional psychiatric beds, enhances and sustains current community mental health systems and adds additional providers to meet patients’ needs. It would also provide choices of health plans and providers for beneficiaries, give more consumer rights including access to the state office of recipient rights within the State Ombudsman office, and access to the Patient Right to Independent Review Act. Health plans would be required to reinvest any savings in additional services and benefits. In addition to core services, health plans operating under state oversight would be expected to provide vital transportation, food services and housing options to patients that are simply not available in our current system. Taking lessons learned from the integration of other populations, including children with special health care needs, transitions would take place and population groups would be phased in. I retired to help start the Michigan ACE Initiative and bring attention to adverse childhood experiences that are at the root of many addictive and chronic diseases we face as NOBODY adults. Awareness of adverse childhood ex- DISPUTES THAT periences can help us deliver timely and THE STATUS QUO early interventions to IS FAILING lessen or eliminate the harmful conse- MICHIGANDERS quences of ACEs. AT A TIME OF We know from the research and our ex- GREAT NEED. perience with the Michigan ACE Initiative that solutions to reduce the harmful effects of adverse childhood experiences are hampered without an integrated and coordinated base of services. At a more personal level, my younger brother who had a disability was enrolled in Medicaid and was a frequent user of community mental health services in his county. I would occasionally drive him to receive care and he described how he maneuvered through the two very separate and distinct health systems. He talked about his many encounters on the behavioral side and agreed that information sharing between these two separate systems might have assisted him and his health physicians in managing his diabetes. Like other beneficiaries, he didn’t care who was managing the program — only that those services are readily available, and that behavioral and physical health providers work together to help them get better. That’s what’s being proposed in SBs 597 and 598 under consideration in the Michigan Senate. Unfortunately, my brother has since passed due to his disability and COVID-19 related conditions, but our conversations remain firmly in my mind. We can do better. It’s time to stop relying on a clearly broken system and bring real reform to Medicaid that treats the whole person. It’s too important to ignore any longer.

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

Key to U.S. food security underground in northern Michigan BY TED PAGANO AND RYAN BENNETT

id you know the United States imports 96 percent of a mineral critical to food production? And that global production of this commodity is deTed Pagano is pendent upon authe CEO of thoritarian reMichigan gimes such as Potash. Russia, Belarus and China? Potash — a naturally occurring salt rich in potassium — is one of the most important elements needed to grow the food that nourishes our families. Ryan Bennett is The naturally president of the occurring minWest Michigan eral allows Building Trades plants to flourCouncil. ish, producing higher crop yields with less water. While the stability of the U.S. food supply is imperiled because of geopolitics and the whims of our adversaries in control of this mineral, a solution is close at hand — and close to home. One of the world’s largest and purest supplies of potash, discovered only recently, lies below the ground in northern Michigan. Responsibly extracting it will protect our food supply and our economy. Demand for potash is at an all-time high amid the coronavirus pandemic, and the price has skyrocketed, from $250 per ton in 2020 to $600 per ton in

2021. U.S. farmers use 10 million tons yearly. Countries like Belarus and Russia are enriched by these prices, while the American farmer pays the price. This problem came into focus early last week when the Biden administration unveiled new sanctions against Belarus. The Treasury Department is imposing penalties on Belaruskali OAO, a state-owned operation that has a hand in producing roughly 20 percent of the world’s potash. What the full impact to U.S. potash imports will be is uncertain, but this development emphasizes how perilous relying on a foreign supply can be. Sanctions may well be necessary to

pressure a repressive nation, but they ride as similar mines in Canada and also impact global food security and elsewhere. Bringing this potash to our farmers highlight the dire need for the U.S. to develop a sustainable domestic ONE OF THE WORLD’S LARGEST AND supply of potash. The best op- PUREST SUPPLIES OF POTASH LIES BELOW portunity is right THE GROUND IN NORTHERN MICHIGAN. here in Michigan. About a mile and a half below the will require a significant investment, ground in Mecosta and Osceola coun- with a large-scale construction proties is one of the highest-grade potash gram that will provide hundreds of deposits in the world, left there by an union jobs, followed by 150 full-time ancient sea. positions that will benefit local comIt was discovered when core sam- munities. The Michigan Potash & Salt Comples from a mine being closed were reexamined and were found to be at pany will be working with all stakeleast twice as rich in potassium chlo- holders to ensure operations are per-

formed safely and efficiently without adversely impacting the environment. Approximately 90 percent of the water used in the extraction process will be recycled indefinitely. Michigan holds the key to lessening the U.S.’s reliance on foreign supply of a nutrient critical to our national food security and in the process create hundreds of good paying union jobs. With the support of the state of Michigan we can move this project forward and create significant economic impact in northern Michigan. The time to move forward has arrived. Doing so will help our farmers and our local economy and strengthen our national security.

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KEYNOTES FROM:

CRAIN’S AWARDS

Deadlines nearing for last Notables programs of 2021

JIM FARLEY Ford Motor Company

There’s still time to recognize outstanding business leaders in Michigan in 2021. Deadlines are coming up for our last two Notables programs of the year: Notable Real Estate Executives: The deadline to nominate Michigan real estate executives who have distinguished themselves through innovation and impact in the industry is Friday, Sept. 10. Winners will be honGENE SPERLING ored in a special section in the Nov. White House COVID Czar 15 issue of Crain’s. Notable Women in Banking: FOR A COMPLETE Nominations for distinguished women in the banking industry, including central banking, retail and/or commercial, internet banking, credit union, savingsDTE and loans, Foundation Logo investment banks/companies, brokerage firms Each folder within this file contain vector files (.ai) in: 280 (coated and uncoated versions), CMYK ( coated and uncoated versions), RGB, Hex, black/white and reverse. and mortgagePantone companies, are due Friday, Sept. 24. Winners will be honored in the Dec. 13 issue of Crain’s. Vertical Horizontal To submit a nomination for either program, visit crainsdetroit.com/ nominate. Questions? Contact Special Projects Editor Amy Bragg: abragg@ crain.com.

DELANE PARNELL PlayVS

STEPHEN MACK JONES Author

DON WAS Blue Note Records

MEG WHITMAN Teach for America

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SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 9

CRAIN’S 2021

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LGBTQ IN BUSINESS The leaders on this list are change-agents, door-openers and role models, their peers and colleagues told us. They create safety and community where they live and work. They hire and mentor other LBGTQ people and help them succeed. Many of them said that coming out and being themselves at work has been a journey, reminding us that the gains made for LGBTQ equity have been expansive in a relatively short period of time — within the span of many of these professionals’ careers.

GETTY IMAGES/ISTOCK PHOTO

METHODOLOGY: The leaders featured in this report were selected from nominations by a team of Crain’s Detroit Business editors based on their career accomplishments, track record of success in the field and effectiveness of their efforts, as outlined in a detailed application form. The honorees did not pay to be included on the list. Notable LGBTQ in Business was managed and written by Leslie D. Green. For questions about this report, contact Special Projects Editor Amy Bragg: abragg@crain.com.

TOMMY ALLEN

APRIL ANDERSON

MATTHEW BUSKARD

Publisher, Rapid Growth Media

Co-owner and CEO, Good Cakes & Bakes

Owner, Bobcat Bonnie’s

Tommy Allen is a fixture in Grand Rapids. The visual artist is also publisher of Rapid Growth, an online economic development magazine that strives to give everyone a voice. He consults with elected officials, executives, religious communities and community members on issues facing members of the LGBTQ+ community In addition to his work on Rapid Growth, Allen serves as an advisory board member on LGBTQ issues for the Grand Rapids Community Foundation and is interim board president of the Grand Rapids Pride Center. In 2015, the mayor appointed Allen to the Grand Rapids Community Relations Commission. He now serves as chair. Under his leadership, the CRC developed a historic human rights ordinance that, in part, helps protect people from false accusations. It also protected a Native American burial ground and established the city’s Indigenous People’s Day commemoration.

April Anderson co-founded her Detroit bakery Good Cakes and Bakes in 2013 with her wife Michelle Anderson. Now they employ 14 people — and Anderson prides herself on creating a welcoming, safe place to shop and work, prioritizing hiring from the community and employing returning citizens. Anderson is a 2018 James Beard Foundation Chef Boot Camp Alum and was a pastry chef for the James Beard Media Awards that year. This year, Good Cakes and Bakes was one of two Michigan food businesses to receive a $15,000 James Beard Foundation Food and Beverage Investment Fund for Black and Indigenous Americans. And in May, the bakery was named the Detroit Regional LGBT Chamber’s Small Business of the Year. The award is presented to a small business owned by a person who identifies as LBGTQ whose business is growing and who has given back to the LGBTQ community. “As a pillar in her community, April has showcased her advocacy for decades as a community servant, role model, and a growing entrepreneur,” the Chamber wrote of Anderson in presenting the award.

10 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

Matthew Buskard and his partner established Corktown restaurant Bobcat Bonnie’s in 2015 when community mainstay O’Blivions went up for sale. Now, there’s a team of 250 employees at five locations, with a sixth location in Toledo scheduled to open soon. Buskard and his team received diversity training to ensure Bonnie’s culture is inclusive and supportive of the diverse communities in which it does business. “He is more compassionate and passionate than any other owner I have worked for. I believe being a part of the LGBTQ community furthers his compassion ... This is a part of him that he has instilled in his business model,” said Brittany Grzywa, Bobcat Bonnie’s director of operations. He is also vice president of the Corktown Business Association, which supports local kids’ sports’ teams, families experiencing crises and others.

GIACOMO (JACK) DECHELLIS Senior Director of Research Operations, Beaumont Health Beaumont promoted Jack DeChellis to senior director of research operations in 2020, and now he manages a $30 million budget along with more than 160 employees who conduct commercial drug and device-sponsored clinical trials, develop new therapies and initiate other research initiatives. DeChellis is also founding chair of Beaumont’s LGBTQ+ employee resource group, which provides networking opportunities and coordinates the health system’s presence at various pride and community events. The group also collaborated to create the Sexual Orientation and Gender Identity educational modules used in Beaumont’s medical records system. DeChellis previously served as Human Rights Campaign membership chair for the state of Michigan, where he recruited more members than in any other state.

JAMIE EBAUGH Executive Director, Southwest Counseling Solutions Promoted this year, Jamie Ebaugh now manages 160 people, a $21 million budget and the operation of Adult Outpatient Services, the Housing Resource Center and Children, Youth and Families services for Southwest Counseling Solutions. Under Ebaugh’s leadership, the nonprofit expanded its homeless services, added veteran services through a new housing program and implemented diversity, equity and inclusion hiring practices along with sexual orientation and gender identity training for staff. He also advocated for Southwest Counseling to become a certified community behavioral health clinic through a federal grant, allowing it to better serve uninsured and underinsured Detroiters. “He has a deep understanding of our counseling programs that is both ground-level and highly strategic,” said Southwest Solutions President and CEO Sean de Four. “Jamie’s passionate commitment to serve and provide the best possible service to individuals and families in need has earned the respect and trust of the counseling staff and our entire organization, as well as community partners and stakeholders.”

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Vice President of Finance & Strategy, Corktown Health Corktown Health focuses on LGBTQ-affirming medical and mental health care along with other supportive services. In less than two years there, Mike Flores helped the nonprofit formalize a 10-year strategy and led the implementation of a telehealth platform that includes features such as preferred name usage, which is important to the LGBTQ+ population. He also is leading efforts to open a new affirming dental clinic and a full-service clinic in Oakland County. “We gained an executive that will help us realize our vision,” said Corktown Health CEO Anthony Williams. The Ferndale Arts and Cultural Commission elected Flores as chair in January 2020. Flores, who was a Crain’s 2019 40 Under 40 honoree, helped the commission create a database that connects artists with local opportunities and increase is digital footprint and collaborate. He is the only person of color on the commission and the first to lead it.

“I BELIEVE BEING A PART OF THE LGBTQ COMMUNITY FURTHERS HIS COMPASSION.” — Brittany Gryzwa, Director of Operations, Bobcat Bonnie’s, on Matthew Buskard

RICARDO GARCIA

LGBTQ+ women by management level

Manager of Special Events & Sales, Michigan Science Center

LGBTQ+ women are underrepresented at every stage of the management pipeline, considerably worse than LGBTQ+ men’s representation. On average LGBTQ+ women make up 5.1% of the U.S. population.

Prior to the pandemic, Ricardo Garcia led internal and external events and community education engagement and managed conventions. Since COVID put many large events on hold, he has been coordinating exhibit installations and managing other internal projects, including onand off-site summer camps. “Many roles at the Science Center require the ability to manage complex responsibilities and juggle multiple projects simultaneously. Ricardo handles this with ease. He anticipates opportunities in the market, giving us an edge with bookings, and he helps us stay connected with all of the amazing events happening around town,” said Christian Greer, president and CEO of the Michigan Science Center. In addition, Garcia advocated for and now leads an equality and inclusion sign project at the center. He also encourages conversations about equality and diversity within the nonprofit and externally. Detroit Young Professionals honored Garcia in 2019 with a Vanguard Award for emerging leaders.

Entry level 2.3% Manager 1.6% Senior manager/director 1.2% Vice president 0.7% Senior vice president and C-suite 0.6%

LGBTQ+ men by management level On average LGBTQ+ men make up 3.9% of the U.S. population. Entry level 3.1% Manager 2.8% Senior manager/director 3.0% Vice president 1.9% Senior vice president and C-suite 2.9% SOURCE: WILLIAMS INSTITUTE, UCLA SCHOOL OF LAW; WOMEN IN THE WORKPLACE 2019, LEANIN.ORG AND MCKINSEY, 2019, WOMENINTHEWORKPLACE.COM; WOMEN IN THE WORKPLACE 2018, LEANIN.ORG AND MCKINSEY, 2018, WOMENINTHEWORKPLACE.COM

BOBCAT BONNIE’S Crain’s 2021 Notable LGBTQ in Business Award

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SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 11

2021 NOTABLE LGBTQ IN BUSINESS PHIL GILCHRIST

DAN HAGERMAN

JEFF HALL

RENEE HARMON

Executive Director, Anton Art Center

Senior Manager, EY LLP

Founder and CEO, Second to None

Since becoming executive director in 2015, Phil Gilchrist has increased program offerings and audience engagement and helped Anton Art Center partner with nonprofit Advancing Macomb, which has resulted in new public artworks and play infrastructure. Following the murder of George Floyd, Gilchrist collaborated with the board president and community stakeholders to establish an IDEA (Inclusivity, Diversity, Equity and Access) Council. The council recently hosted a community conversation for Black residents to share their experiences and to garner feedback on a public art project that will feature two Black artists. By appointment, Gilchrist serves on the Macomb County Art Institute Authority and the Mount Clemens Downtown Development Authority. He also serves on the board of CultureSource and is founding president of Macomb County Pride. “His leadership approach from building relationships, establishing partnerships and associated accountability, has been instrumental in developing the Art Center from a ‘small-town’ nonprofit organization into a major player in the regional arts community,” said Barbara Rossmann, president and CEO of Henry Ford Macomb Hospitals.

Dan Hagerman provides tax guidance, tax planning consulting, legislative insights into tax policy and support during IRS audits to his portfolio of clients. He is also a relationship adviser to the founder and CEO of a minority-owned business through EY’s Entrepreneur Access Network, an accelerator program that supports Black and Latinx high-growth company leaders. And he advocates for equity and inclusion as council chair of EY Detroit DEI and chair of the LGBTQ+ professional network. “In 2020, Dan was nominated for and accepted on the People Advisory Forum, a small group of 25 people that speak on a regular basis with firm leadership to influence firm policy and strategy. Dan was also asked by firm leadership to represent the firm at the 2020 Out & Equal Conference,” said Matt Bouw, a partner in Business Tax Services at EY US LLP. Outside the office, Hagerman, who is a foster parent, serves on the board of the Ruth Ellis Center, which supports at-risk LGBTQ+ youth.

Jeff Hall leads a team that designs and implements mystery shopping programs, customer surveys and operations/sales compliance solutions. Hall, who strives for equity within the workplace, has 50 percent female representation on his executive leadership team. Second to None, which is a member of the National Gay and Lesbian Chamber of Commerce, supports the Ozone House, which provides young people with shelter and support. Under his direction, his advertising and marketing firm also developed a community stewardship program that takes a portion of profits and puts them in a donor-advised fund for grants to nonprofits that focus on youth, the arts, social services and education. “I … know that he is extremely well-regarded by his employees and in the wider Ann Arbor community where he has contributed his time and money to local charities and nonprofit boards, while advocating for the LGBTQ community in the workplace,” said Claudia Rast, an attorney and shareholder at Butzel Long. Personally, Hall is chair of Ele’s Place in Ann Arbor, which supports grieving youth and their families. He also serves on the board of St. Joe’s Chelsea Community Hospital.

Vice President of Leadership Development, United Wholesale Mortgage

3 IN 20 LGBTQ+ WOMEN BELIEVE THAT THEIR SEXUAL ORIENTATION WILL NEGATIVELY AFFECT THEIR CAREER ADVANCEMENT AT WORK. — McKinsey, 2018, womenintheworkplace.com

In 2010, Renee Harmon took her former partner and mother of their three children to court to seek parenting time. Though the Michigan Supreme Court denied Harmon’s appeal, her case opened the door for a landmark victory for same-sex marriage by the U.S. Supreme Court. Since then, Harmon has been a champion for equality. She is responsible for leading UWM’s diversity and inclusion initiatives and for coaching and training its 825 leaders on the principles of servant leadership. “She’s a champion for ‘the little guy’ and always has an eye for ‘how can we do more?’ I’ve been privileged to work with Renee for over 10 years, and she truly can be described as a ‘life-changer,’” said Bob Fuller, UWM director of People Data. In addition to implementing a new leader boot camp, unconscious bias training and emotional intelligence training, Harmon also developed the role and responsibilities for the company’s first D&I coach. Her efforts also resulted in two employee resource groups, including one for the company’s LGBTQ+ community.

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Congratulations Trevor Thomas, Executive Director of Diversity, Equity and Inclusion for Consumers Energy, for being named a 2021 Crain’s Detroit Business Notable LGBTQ in Business award honoree. Whether advocating in DC, Lansing and our hometowns or driving a progressive Diversity, Equity & Inclusion strategy at Consumers Energy, you have worked tirelessly to create a safe, inclusive and respectful world for all. Thank you for being a force of change for equality. From all of us at Consumers Energy, we celebrate you. Trevor Thomas

Executive Director of Diversity, Equity and Inclusion

12 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

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KEVIN HEARD Founder and President, Detroit Regional LGBT Chamber of Commerce Diversity & Engagement Program Manager, USA Today Network Kevin Heard helps maintain Gannett’s employee resource groups and has worked with the Gannett Foundation to establish a $50,000 Social Impact Fund that allows ERGs to donate to nonprofits that align with their missions. The LGBTQ+ ERG, specifically, partners with True Colors United, which provides resources to homeless LGBTQ+ youth. Heard also curated and moderated a panel discussion on trans reporting for journalists at USA Today, designed the company’s corporate SharePoint inclusion hub and developed a “U at USA Today: On-Demand” vlog series. “Innovator. Inclusion, Diversity & Equity champion. Team player. Collaborator and change agent. All immediately come to mind when I think of Kevin Heard. With excitement and ambition, he stepped into a newly created role and made it his own,” said LaToya Johnson, director of Inclusion Diversity & Equity for USA Today Network. Under Heard’s guidance, the LGBT Chamber produced the 2021 Virtual COLOURS Conference and Pride Awards, held earlier this year. The conference, which received support from major regional corporations and boasted notable speakers, focused on LGBTQ businesses in Michigan, DE&I best practices and LGBT supplier diversity.

RANDY HYDE

SEAN HYLAND

Senior Vice President of External Relations, Invest Detroit

Managing Director of Interactive, Accenture

Randy Hyde leads fundraising, marketing and communications for Invest Detroit. Under his direction, the organization raised $43 million in 2020, more than $20 million more than the goal set during the pandemic-related economic crisis. He’s particularly interested in the company’s neighborhood development initiatives that serve underserved — Black, brown, women and immigrant — populations. And as a member of Invest Detroit’s diversity and inclusion committee, Hyde shares an LGBTQ perspective. “Randy is a … key connection point and community leader and has orchestrated many significant programs and initiatives with far-reaching community impact through our neighborhood, small business and venture investment work. He’s a thoughtful, strategic leader, committed to uplifting those who struggle for access,” said Invest Detroit President and CEO Dave Blaszkiewicz.

Sean Hyland was promoted in June 2021 and now oversees 75 people doing the creative, digital, loyalty, e-commerce and personalization work for one of Acc e nt u re’s global hospitality clients. One major project included developing and deploying a new customer experience for Carnival Corp.’s Princess Cruises. When he learned there was no LGBTQ presence for Accenture’s Detroit-area employees, he took on the responsibility of creating a Detroit Pride Employee Resource Group. In addition to providing education training, networking and volunteer opportunities, the ERG partnered with the Ruth Ellis Center on clothing drives and an internship program. Globally, Hyland has served as a faculty member for Accenture’s LGBT Leaders Learning Series, as part of Global Pride at Accenture, to help unite queer leaders. He also serves on the company’s Detroit’s anti-racism taskforce.

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NOTABLE

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ERIN KNOTT

ROLAND LEGGETT

Executive Director, Equality Michigan

Movement Political Director, Michigan United

Equality Michigan provides education, victim services, outreach and other resources that empower Michigan’s LGBTQ+ residents to live safely. When Erin Knott, Kalamazoo’s first openly lesbian vice mayor, began leading the nonprofit in 2019, Equality Michigan was facing financial, relational and other difficulties. She has since helped the organization turn around through partnerships and advocacy of an amendment to the Elliott-Larsen Civil Rights Act to include sexual orientation, gender identity and expression. Further, Knott stood with Gov. Gretchen Whitmer as she signed an executive order protecting LGBTQ+ people from discrimination in executive employment, state contracting and government services. And Knott advocated for the Department of Insurance and Financial Services to issue an updated bulletin to health insurers that prohibits discrimination because of sexual orientation and gender identity.

Roland Leggett is a national movement leader who is exceptionally skilled at strategic thinking and campaign execution, said Attorney Michael Einheuser, chair of the Detroit Board of Water Commissioners. His role at Michigan United includes strategic visioning and planning. He focuses on connecting the social justice organization to “grassroots and grass-tops leadership” throughout the state. He also looks to bridge the gap between leaders and activists as chair and executive committee member of the LGBT& Allies Caucus of the Michigan Democratic Party. Leggett previously served as regional political director of the Biden/Harris Campaign where he worked with a diverse coalition of labor and progressive organizations, elected officials and political activists. Leggett was also president of Detroit’s Human Rights Commission and vice chair of the Ruth Ellis Center Board.

GETTY IMAGES/ISTOCK PHOTO

2021 NOTABLE LGBTQ IN BUSINESS

Here, congratulating Marc Vanderburg CRAIN’S 2021 NOTABLE LGBTQ IN BUSINESS RECIPIENT Marc is dedicated to his role as HAP’s Vice President, Retention and Sales Operations. He also provides unwavering support for Metro Detroit’s LGBTQ+ community. From his work with the Ruth Ellis Center to his fundraising strategies, his positions on boards, LGBTQ+ advocacy efforts and more – Marc is a true embodiment of this award.

hap.org 14 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

CURTIS LIPSCOMB

RAFFAELE MAUTONE

Executive Director, LGBT Detroit

Founder & CEO, AaDya Security

For nearly 20 years, Curtis Lipscomb has advocated for, developed and implemented dynamic programming at LGBT Detroit, which raises awareness and supports the region’s LGBT culture. A few of its initiatives include Healing and Support Services, which provides counseling and crisis intervention; Woman 2 Woman, for lesbian and bi-attractional women to talk; and Many Men and Many Voices, a high-impact HIV prevention program. He also works with LGBT Detroit Mobilization, a legislative advocacy organization. In other words, Lipscomb wants to make “Detroit a safer place for all to work, play and live without fear and malice.” In 2020, Gov. Gretchen Whitmer appointed Lipscomb to Michigan’s Coronavirus Task Force on Racial Disparities. He is also a member of the Detroit Symphony Orchestra Diversity and Inclusion Task Force and a consultant to the National Black Justice Coalition. “He is a leader who knows how to bring the right people together despite their differences to make positive strides and ensure the well-being of all parties,” said Cindy Bolden Calhoun, executive director and CFO of Community Health Awareness Group.

Raffaele Mautone has spent 20 years in cybersecurity, including being CIO and vice president of business operations for Duo Security and vice president of worldwide sales and marketing operations for McAfee. In 2019, he launched AaDya, a cybersecurity and IT software-as-a-service solutions company for small and medium businesses. A member of the National and Detroit LGBT Chambers of Commerce and a mentor to cybersecurity students at Eastern Michigan University, Mautone believes diversity and inclusion are powerful economic drivers. “He is authentic, compassionate, inclusive and above all an optimist that can lead teams to places that they did not know they could go,” said Julie Cullivan, a board member and adviser at AaDya and former CTO at Forescout Technologies.

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Apply today at Michigan.gov/WorkShare SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 15

2021 NOTABLE LGBTQ IN BUSINESS

JEREMY MOSS

Chie Gift

Senator, State of Michigan

CONGRATULATIONS!

Adrian Ohmer Investment Director

Crain’s 2021 Notable LGBTQ in Business kresge.org

Jeremy Moss is the first openly gay Michigan state senator. He represents southern Oakland County and is assistant Democratic leader, the top-ranking Democrat on the Senate Regulatory Reform Committee and a member of the Senate Economic and Small Business Development and the Senate Local Government committees. He was previously Democratic Whip of the Michigan House of Representatives. Elected to the Senate in 2018, Moss has successfully expanded the Neighborhood Enterprise Zone Act to allow more homes to qualify for affordable rehabilitation. Moreover, he sponsored legislation to amend the Elliott-Larsen Civil Rights Act to include sexual orientation and gender identity as classes protected from discrimination and sponsored and co-sponsored legislation to repeal Michigan’s ban on marriage equality, repeal a law that allows state-funded adoption agencies to decline LGBTQ parents and to include sexual orientation and gender identity in Michigan’s hate crimes statute. “As Michigan’s first openly LGBTQ+ senator, Jeremy is boldly paving the way for a new generation of leaders and has even changed a few hearts and minds in the process,” said Senate Minority Leader Jim Ananich (D-Flint). “He’s a compassionate advocate for the people of his district and a sharp policymaker who knows how to negotiate policy without negotiating his values. Jeremy’s success is proof that you shouldn’t wait until it’s ‘your turn’ — you make your own path by working hard, seizing opportunities and leading with your convictions.” For many years, Moss championed a resolution to declare June as LGBTQ Pride Month in Michigan. The state adopted the resolution in June.

RECOGNIZE INDUSTRY ACHIEVERS IN CRAIN’S

Listing opportunities: Debora Stein at dstein@crain.com

On behalf of Mercantile Bank

THANK YOU Rann Paynter for your leadership Congratulations to all of the 2021 Notable LGBTQ in Business award honorees!

16 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

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cove tens room cent of L ped redu N plac crea ty. “M serv com ever tion ‘eve ors, al be In Life, the N Asso men the U ing.

T. RANN PAYNTER

President and CEO, Michigan Bankers Association

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Rann Paynter, who identifies as gay, is an essential leader in one of the most conservative career fields in this country, said Kenneth Kelly, president and CEO of First Independence Bank in Detroit. “He currently leads the Michigan Bankers Association, which is the voice for all banks in the state of Michigan and is interconnected to the American Bankers Association. Most importantly, Rann has the respect of the bankers in the state because of his leadership,” Kelly said. Rather than just “checking boxes,” Paynter hopes to be intentional in Michigan Bankers Association’s efforts regarding diversity, equity and inclusion. He appointed a team devoted to DEI and encouraged the board of directors to establish a related DEI statement. Paynter also serves on the board of trustees of the Graduate School of Banking in Madison, Wis. In his tenure as chairman, he led discussions about diversity, equity and inclusion at the school and championed efforts to diversify the school’s faculty.

“HE IS NOTHING SHORT OF A CHANGE AGENT, ALWAYS BRINGING HIS AUTHENTIC SELF TO A CONVERSATION AND USING HIS SEAT AT THE TABLE TO ADVOCATE FOR THOSE WHO DON’T HAVE ACCESS TO THOSE SAME ROOMS,” — Venus Phillips, Investment Director, Kresge Foundation, on Adrian Ohmer

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BRUCE NICELY

ADRIAN OHMER

Chief Clinical Officer, Gift of Life Michigan

Investment Director, The Kresge Foundation

Bruce Nicely manages a budget of about $37 million and leads 200 people in all clinical aspects of organ and tissue donation for transplantation and research for Gift of Life Michigan. Under his guidance, the nonprofit built a free-standing organ recovery center with a three-bed intensive care unit, four operating rooms and a 150-seat conference center. The development eases Gift of Life’s reliance on hospitals, expedites the donation process and reduces expenses. Nicely also strives for a workplace culture committed to increasing and maintaining diversity. “Much like the community we serve, we know that our success comes from the contributions of everyone, and that the organization is better and stronger when ‘everyone’ means people of all colors, genders, backgrounds, spiritual beliefs, and more,” Nicely said. In addition to his work at Gift of Life, Nicely serves on the board of the National American Arab Nurses Association and the Organ Procurement Organization Committee of the United Network for Organ Sharing.

As investment director for the public markets team, Adrian Ohmer is responsible for growing and protecting about half of Kresge Foundation’s $4 billion in assets. He also oversees the nonprofit’s “25 x 25” initiative to have 25 percent of its U.S.based assets managed by diverse investment professionals by the year 2025. In addition to his work at Kresge, Ohmer is an adjunct clinical professor of law at the University of Michigan, a member of Unified HIV Health and Beyond finance committee and a member of the Diversity & Inclusion Council for the Institutional Limited Partners Association. His work at ILPA resulted in a new set of industry standards to increase diversity across the private investments industry. “Adrian embodies the values of equity and inclusion at his core. Whether in his work as an investor or a nonprofit board member, he is nothing short of a change agent, always bringing his authentic self to a conversation and using his seat at the table to advocate for those who don’t have access to those same rooms,” said Kresge Foundation Investment Director Venus Phillips.

T. Rann Paynter President & CEO Michigan Bankers Association

IndependentBank.com

A DEEP NEWS DIVE WITH A

BRIAN PETERSON

KYLIE QUETELL

Founder and President, Bees in the D

Senior Vice President, Rock Connections

Founded five years ago, Brian Peterson and his husband, also named Brian, have grown Bees in the D to a nonprofit with more than 200 volunteers working to educate the public and contribute to the health of honeybee colonies and native pollinators. Bees in the D expanded from placing six beehives in two locations to placing 200 beehives in 60 locations in Michigan and Canada. The organization, which works with residents, schools, businesses and others, has earned numerous honors, including the Keep Michigan Beautiful Award, the Garden Club of Michigan Community Award and others. Peterson also has received the Michigan Science Teacher of the Year Award and the Presidential Award for Excellence in Mathematics and Science Teaching. “Brian’s dedication as an educator comes through in everything that he does, from his Forager Friday live streams to the educational programming he does for Bees in the D in the schools. But he also knows that educating people isn’t just about a classroom. He lives an authentic life as an award-winning teacher, an entrepreneur, a soon-tobe master gardener and a gay man married to the love of his life,” said Melanie Grund, community engagement liaison for Oakland County Neighborhood & Housing Development.

Kylie Quetell leads nearly 700 team members charged with connecting potential homebuyers and refinance candidates with the Rocket Cloud Force to help them accomplish their goals. Her work includes leading efficiency initiatives that increase workplace engagement. Through large and small efforts, such as advocating for putting rainbow flags on display throughout the offices, she also strives to ensure she and her peers are represented throughout Rocket Companies. And Quetell has represented Rocket Companies while speaking at National Association of Gay and Lesbian Real Estate Professionals events, where she amplifies that people who identify as LGBTQ are valued in the industry. “Each day, she puts her team members first and consistently thinks of ways to make our environment more inclusive. She is an inspiration to all minorities with her forward thinking, relentless drive for equal opportunity and her pioneering spirit. She is truly an asset to the Rock Family of Companies,” said Jason Morrison, executive vice president of Client Connections at Rocket Mortgage.

SATURDAY VIBE

Month XX, 2021

Legal advocate. Pride grand marshal. Leading donor. A life well planned can offer each of us – any of us –

THE POWER TO GIVE.

As we work to help clients do good, we also recognize the good their advisors do every day. The Raymond James Pride Financial Advisors Network is proud to congratulate Crain’s 2021 Notable LGBTQ Business Leaders, including one of our own:

Lynne Wright, WMS

Senior Vice President, Investments // Ann Arbor, Michigan Learn more about our Advisor Inclusion Networks at raymondjames.com/advisor-opportunities.

LIFE WELL PLANNED

© 2021 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. Raymond James® is a registered trademark of Raymond James Financial, Inc. To qualify for the list, nominees must serve in a senior role, make significant contributions to advancing equality at their workplace or beyond, and act as a role model or mentor. This ranking is not based in any way on the individual’s abilities in regard to providing investment advice or management. This ranking is not indicative of an advisor’s future performance, is not an endorsement, and may not be representative of an individual client’s experience. Raymond James is not affiliated with Crain’s. 21-AdvisorInclusion-0345 JPR 8/21

SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 17

2021 NOTABLE LGBTQ IN BUSINESS ANGELO REA

STEPHEN RICHARDSON

ROY SEXTON

ADAM STERLING

Senior Vice President, Enterprise Risk Management, Flagstar Bank

Controls & Robotics Maintenance Manager, Stellantis Automobiles — FCA Americas

Director of Marketing, Clark Hill PLC

Resident Life & Business Development Director, Henry Ford Village Senior Living

Angelo Rea manages residential government risk, residential government internal control and third-party origination approval and risk for Flagstar Bank. Over the years, he developed a nationwide training program on government products and homeownership and helped create the Detroit Home Mortgage program and Community Comeback Mortgage program in Pontiac. He also serves on industry committees for the Federal Housing Administration and the Veterans Administration. As past chair of Flagstar’s LGBTQ employee resource group, Rea introduced the organization to the LGBTQ community and began the process of educating team members on the challenges they face. He still lobbies the bank for grants and donations to serve the community. Rea also serves on the boards of Matrix Human Services and the Detroit Regional LGBTQ Chamber.

Stephen Richardson leads a team of engineers at Stellantis’ Mack Avenue Grand Cherokee plant in Detroit. “Steve is the guy you want for a job. You know if you he’s coming to your rescue it will all be OK and soon,” said Ronald Schelli, a professional maintenance leader at Stellantis. “Steve is autonomously leading a major culture changing initiative, a skilled trades classification — Industrial Controls — that will set up the plant for success with highly skilled professionals to run our automation.” Richardson also operates a nightclub called Backstreet at Large Multiplex that he founded in Detroit in 2020 as a safe space for members of the LGBTQ community. Under his direction, Backstreet collaborates with the Ruth Ellis Center, Affirmations, the Detroit Regional LGBT Chamber of Commerce, the Metro Detroit Softball League, AccessHIV and other members of the community.

TREVOR THOMAS

MARC VANDERBURG

Executive Director of Diversity, Equity, Inclusion, Consumers Energy and CMS Energy

Vice President, Retention and Sales Operations, Health Alliance Plan

Promoted in 2021, Thomas was integral to Consumers Energy’s commitment to providing unconscious bias training to all its employees and to having diverse hiring committees and candidate pools. In April, Forbes magazine named Consumers one of the top employers for diversity in America. In 2020, LGBTQ magazine The Advocate named Thomas a Champion of Pride for his work, which has included helping to get the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act passed and the Ryan White CARE Act reauthorized. Moreover, Thomas co-chairs Fair and Equal Michigan, which is dedicated to getting an LGBTQ non-discrimination rights law passed. The organization’s coalition includes 530,000 grassroots citizens, national and local LGBTQ groups, CEOs, philanthropists, and leaders on both sides of the political aisle.

Marc Vanderburg’s many responsibilities include overseeing HAP’s wellness program and overseeing a 60-plus member team that includes sales and labor relationships. “Marc ’s leadership through the challenges of the pandemic has been remarkable. HAP served as a resource for many consumers, and Marc ensured all information was relevant, up to date and of high value,” said Margaret Anderson, senior vice president and chief sales and marketing officer for HAP. Vanderburg also focuses on ensuring that his team operates with the principles of diversity, equity, inclusion and justice in mind. “Marc serves on many different leadership forums and teams throughout HAP and Henry Ford Health System and provides exceptional value to ensure our consumers are always at the center of developing and implementing strategic initiatives,” Anderson said. Vanderburg is most proud of his work with the Ruth Ellis Center, which serves LGBTQ+ youth. He serves as co-chair of the development committee and sits on the facilities committee.

18 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

38% OF LGBTQ+ MEN AND 46% OF LGBTQ+ WOMEN ASPIRE TO EXECUTIVE LEADERSHIP ROLES SO THEY CAN BE A ROLE MODEL FOR OTHERS LIKE THEM. — Women in the Workplace 2019, LeanIn.Org and McKinsey, 2019, womenintheworkplace.com

Roy Sexton joined Clark Hill three years ago as marketing manager, but the firm quickly promoted him to director. Now he oversees a team of professionals across the country and supports affinity programs at Clark Hill, including BOLD for women, PRIDE for LGBTQI employees and THRIVE for people of color. In 2018, Michigan Lawyers Weekly named him an Unsung Legal Hero for consistently going beyond the call of duty. As treasurer of the international board of the Legal Marketing Association, Sexton helped launch an outside DEI consultancy. He is also a guest on podcasts where he illustrates how inclusion brings growth and success to any organization. In the nonprofit realm, Sexton co-founded The Penny Seats, an outdoor theater company in Ann Arbor. He also chaired the governance committee for Mosaic Youth Theatre of Detroit.

NAN WASHBURN Music Director and Conductor, Michigan Philharmonic “Nan Harrison Washburn has been able to combine her quest for musical excellence with her mission of inclusion and education for the entire community. She has personally transformed the Michigan Philharmonic from a small community organization (the Plymouth-Canton Symphony Orchestra) into a highly respected nationally recognized ensemble with the highest musical standards,” said David Wagner, program director and host at WRCJ-FM Detroit. Under Washburn’s direction, the Michigan Philharmonic also established a youth orchestra that now includes five ensembles with more than 100 students. The philharmonic also established educational programs serving 10,000 students in five school districts. “Her bold and imaginative programming of world premieres have spanned different cultures and musical styles, while showing the universality of great music that can inspire, educate and enlighten,” Wagner said. Washburn also serves on the board of the Women’s Philharmonic Advocacy and is music director of the National Women’s Music Festival Orchestra. For the latter, she put together an ensemble performance with women composers, many of whom identify as LGBTQ.

“NAN HARRISON WASHBURN HAS BEEN ABLE TO COMBINE HER QUEST FOR MUSICAL EXCELLENCE WITH HER MISSION OF INCLUSION AND EDUCATION FOR THE ENTIRE COMMUNITY.” — David Wagner, program director and host at WRCJ-FM Detroit

Under Adam Sterling’s leadership, the Resident Life team at Henry Ford Village won the national 2019 Silver NuStep Pinnacle award for senior wellness programming. The community boasts more than 125 resident clubs and programs that provide intentional development, which Sterling said is the key to successful aging. Sterling helped bring national LGBT SageCare certification training to Henry Ford Village, which provides staff with cultural competency training that will help them understand the unique concerns and needs of LGBTQ seniors. “Adam has been a steady source of energy and conscience for our organization to appreciate the unique needs of the LGBTQ senior community that we can fulfill, as well as the tremendous opportunity to be gained from the inclusion of so many amazingly successful and tremendous people who through their unique lives enrich our entire community of residents and make our organization a truly amazing place to live and work,” said Bruce Blalock, CEO and executive director of Henry Ford Village Inc.

LYNNE WRIGHT Senior Vice President of Investments, Wright Wealth Management Lynne Wright began her career in finance in an era when equality for women, particularly those identifying as lesbian, was not the norm. After working more hours than her colleagues, she worked her way up to become a Chairman’s Council producer for Raymond James. Yet, as far as Wright is concerned, one of her greatest successes is knowing that members of the LGBTQ+ community can learn from her experiences as they navigate careers in the industry. “Lynne is an advocate, mentor and true champion of diversity and inclusion, including being a tireless advocate for LGBTQ+ advisers, associates and clients. Her compassion for the community is apparent in her dedication to her clients, the community, her team as well as the members of the Pride Financial Advisors Network. Lynne helped pave the way for diversity and inclusion within the industry and firm through her advocacy and support for the LGBTQ+ community and beyond,” said Renée Baker, head of PCG Advisor Inclusion Networks for Raymond James. In 2020, Investment News honored Wright with its See It, Be It Role Model award for excellence in diversity and inclusion.

HELP WANTED Ann Arbor small businesses turn back to students to fill jobs.

ANN ARBOR

PAGE 24

THE DEVELOPMENT TRACK

NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

Peter Allen steers real estate deals as well as his students’ careers Peter Allen, founder of Peter Allen + Associates and a University of Michigan educator, outside of University of Michigan’s Jeff T. Blau Hall, named after a former student.

BY KIRK PINHO Peter Allen’s career as a real estate de-

In this package

veloper can be traced back to his days as a college student, selling homes in the summers on farmland his grandfather developed with single-family detached housing beginning in the summer of 1964. But it was the Vietnam era. After graduating from DePauw University in 1967, it was his four years in the U.S. Navy — two on a destroyer, two spent teaching the safe handling of nuclear weapons — that perhaps launched him into the arena where he may be most influential: the classroom. Allen, 76, is retiring after the fall semester as a University of Michigan lecturer on real estate development, having taught in what is now the Stephen M. Ross School of Business as well as the A. Alfred Taubman College of Architecture and Urban Planning for four decades, seeing some 4,000 students cross his gradebook.

 Ann Arbor’s biotech ecosystem. PAGE 1  Peter Allen steers deals as well as careers. THIS PAGE  Michigan Medicine’s new hospital construction muscles on. PAGE 20  Ann Arbor nonprofit aims to get affordable housing built. PAGE 23

“I WAS ALWAYS TEACHING BRIGHT, YOUNG PEOPLE HEADED ALL OVER THE GLOBE.” — Peter Allen, real estate developer

“I was always teaching bright, young people headed all over the globe,” said Allen. Although teaching was always a part-time position for him, never shedding his development hardhat for academia completely, he nonetheless didn’t let that dampen his passion for the lectern, former students say. Those thousands of pupils range from some of the most influential in the business nationally to long-eminent local developers, from behind-the-scenes powerbrokers to emerging talent in and around Detroit, in the private, public and not-for-profit sphere. He peppers conversations with their achievements and accolades. Jeff did this while a young student, just a junior surrounded by grad students, more than 30

years ago, Allen said. Hannah did that, Alex is up to this, Myles and Clarke and Dang pulled off that. And then there is Sterling Heights native Omar Uddin, a recent former student who is now an intern with Allen, working on Allen’s next initiative, the Equitable Ann Arbor Land Trust, focusing on affordable housing in Ann Arbor (see related story, Page 23). Uddin’s dream: working on real estate development to the east in Detroit. His dream is much like many of those who have gone through his course starting in 1981, when Allen was talking about things like walkability and large cities when so many had fled them for the suburbs. See ALLEN on Page 22

SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 19

NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

FOCUS | ANN ARBOR

Construction work is underway on Michigan Medicine’s new hospital in Ann Arbor after delays caused by the pandemic.

Michigan Medicine’s new hospital tower muscles on After nearly yearlong delay due to COVID-19, project scheduled for fall 2024 opening BY DUSTIN WALSH

Michigan Medicine’s new $920 million hospital tower resumed construction in the spring after a nearly yearlong delay due to the COVID-19 pandemic. The project is now slated for a fall 2025 open date, pushed back from its original fall 2024 opening. Despite the delays — construction broke ground in October 2019 — the university health system’s leaders are optimistic the project will transform health care across the state and raise the system’s already strong national profile. Michigan Medicine is ranked the 11th best health system in the country by U.S. News & World Report. The hospital will include state-ofthe-art equipment and design, increasing access for patients in need of complex and high acuity care, Michigan Medicine said. The facility will include 264 private rooms along with two floors of operating and procedure rooms. The new clinical inpatient tower, which will span 690,000 square feet, will be at Ann Street and Zina Pitcher Place, west of UM’s 550-bed University Hospital, an 11-story facility that opened in 1986, and the Frankel Cardiovascular Center. The crux of the new design is the ability to transform rooms into an intensive care unit, giving the system

Construction work at Michigan Medicine’s new hospital in Ann Arbor last month. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

flexibility to handle the needs of patients in the event of a catastrophe like the current pandemic, said Hitinder Gurm, associate chief clinical officer for the system’s adult hospitals and an interventional cardiologist. “Had we had this building a year ago, we could have treated a lot more COVID patients,” Gurm said. “We don’t know what will happen 10 years from now, 15 years from now. Medicine is always advancing, so maybe patients that currently spend two or

20 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

three days in the ICU might spend much less, so we want to be ready to shift those beds to the patient care we need at any specific time.” Of the 264 beds at the hospital, 240 will be able to become ICU beds if there is need. Of those beds, 96 can be transformed into negative pressure rooms, which extracts the air potentially contaminated with a virus from the hospital. Currently, Michigan Medicine has 32 negative pressure rooms.

After con“WE NEED MORE SPACE AS struction of the new rooms and HEALTH CARE NEEDS CHANGE relocation of the AND WE CONTINUE TO SEE existing beds, the project will MORE ACUTE PATIENTS.” add a total of — Dr. Marschall Runge, CEO, 154 new beds to Michigan Medicine the medical campus. Michigan Medicine isn’t just in- than in the 1980s and 1990s. It’s great vesting in the new 12-story tower for that we have these capabilities but capabilities but for capacity. The cur- we’re struggling for space.” rent hospital is usually full at upward The project, of course, isn’t only goof 85 percent capacity, Dr. Marschall ing to improve the health system but Runge, CEO of the system, said. is likely to have a spillover effect on “It’s tough to manage our system at the Ann Arbor community. that capacity,” Runge said. “We need For instance, in the last 10 years the more space as health care needs university has spun out 110 new startchange and we continue to see more ups, a number of them in the health acute patients.” care field. Michigan Medicine also Michigan Medicine had nearly 2.7 employs nearly 30,000. million patient visits across its system “Modern health care is the largest in 2020 and 95,000 emergency room employer in many states, and we emvisits. ploy a lot in the area,” Gurm said. Gurm said the lack of capacity is We’re also a hub for education and due to the hospital’s patient popula- research and a large number of tion getting older and requiring more spinoffs happen. When we have a complex health care. center that is providing even more “We’re treating older and older pa- complex care, creating that intersectients as people are living longer,” tion of research and patient experiGurm said. “Older people lead more ence, there will be an impact that goes active lives because of the success of beyond those walls. It’s good for us our treatments to people in their 50s, and good for Ann Arbor.” 60s and 70s. So now we’re doing more complex procedures and surgeries Contact: dwalsh@crain.com; that provide a better quality of life (313) 446-6042; @dustinpwalsh

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FOCUS | ANN ARBOR

ALLEN

From Page 19

“While Peter served generations of students formally as a professor, I think he also played a role as a kind of Willy Wonka of commercial real estate, inspiring generations of students with the potential of buildings and public spaces, encouraging them to use their brains and hearts and imaginations to build great places — and build wealth in the process,” said Hannah Mae Merten, urban innovation and strategy director with Dan Gilbert’s Bedrock LLC real estate company.

Visionary thinking Allen says great real estate investment starts in areas that carry a certain amount of risk. So, he says to students, look to the areas you want to be after graduation, wherever they are on the globe. From there, find gold. “You know the great neighborhoods, you know what’s the best emerging neighborhood, and you want to find the worst property in the best emerging neighborhood to do as your development project because it’s got the most upside and it’s already being lifted by the other boats,” Allen said. But trumpeting walkability and city living didn’t always resonate with students, particularly in the early days of the course. “What I found really interesting about him, which I didn’t realize but certainly realize now, is he was really visionary in thinking about walkable cities,” said Richard Broder, a former student from the early 1980s who is now CEO of the influential Detroit-based Broder & Sachse Real Estate development firm, said. “He was like, ‘People are gonna want to walk to work, live in a downtown, work, live and play in an urban area.’ To be honest, we’re like, ‘That’s just crazy talk. Suburbs are burgeoning and we’re all going to go to the green fields and that’s the way life is.’ He was right.” That shift came well into Allen’s career in the classroom, long after he was sounding its rebound. The suburban migration came as, decades earlier, freeways like I-75, I-375, M-10 and I-94 were built over bulldozed, largely Black neighborhoods, providing white city residents the ability to easily commute from

Peter Allen, founder of Peter Allen + Associates and a University of Michigan educator, on the roof of his office overlooking the Huron River in Ann Arbor. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

The term project

It’s been decades since Broder had Allen’s class in the early 1980s. Ditto with Jeff Blau, the CEO of Stephen Ross’ Related Cos., who Allen famously in real estate circles helped land his first job with Ross. Scott; Merten; Monique Becker, cofounder of Detroit-based Mona Lisa Development; Peter McGrath, associate director in the Detroit office of brokerage house Savills plc; Dang Duong, managing partner of Detroit-based SRG Partners LLC; Luke Bonner, senior economic development adviser for Sterling Heights and CEO of Ann Arbor-based economic incentive, real estate and economic development consulting company Bonner Advisory Group LLC; and Josh Bails, a public private partnership specialist with the city of Detroit, all took Allen’s course in the last 15 years or so. They all had different recollections, different experiences of Allen’s class. If there is one constant memory, however, it was the term project. For virtually as long as Allen has been teaching, his course has been weighted with 15 percent of the grade based on textbook work, and the remaining 85 percent based on a group term project in which an interdisciplinary cohort of students worked “THE CLASS DOESN’T END AT together on a loTHE END OF THE SEMESTER. cal real estate HE’S ALWAYS HELPING PEOPLE d e v e l o p m e nt — not GET JOBS OR HELPING PEOPLE proposal theoretical, not pie-in-the-sky, WITH THEIR CAREERS.” but practical — Jeff Blau, CEO, Related Cos. and impleoutside Detroit’s borders into the city mentable, somewhere around Ann Arfor jobs and then return to their sub- bor. “The ideal team was an architect, ururban homes at night. But Allen was described as ahead of ban planner, and a business school stuhis time in identifying what people dent, and then having an engineer or would be looking for when scouting public policy or law student was a nice addition,” Allen said of his earlier verplaces to develop, live and work. “I think he’s still ahead of the curve, sions of the group project roster. “The evolution was the teams got trying to identify where the emerging markets are,” said Derric Scott, CEO of smaller, no more than four, but the idethe East Jefferson Development Corp. al teams were three,” Allen said. “They and a former Ford Land Development learned the most. They worked the Co. executive. hardest, but it all came together more “Twenty-five years ago I said De- smoothly with three than four people. troit’s the most undervalued big city And then I expanded the geographic on the planet,” Allen said. “I was al- boundaries beyond our region, and we ways touting Detroit as such a great began to take on Detroit. And eventualgem in the rough, before way before ly, the last 10 years, I said you could do your term project anywhere in the the bankruptcy.” 22 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

country, anywhere on the planet. I had term projects in Shanghai, Paris, Italy, all over.” “Brazil,” he added, remembering a country he almost forgot.

‘Positivity and perseverance’ Uddin, who was a business major, and his group — consisting of three other students — proposed a nine-story development on the burned-down former First Unitarian Church (long suspected as an arson target) at Woodward Avenue and Edmund Street immediately across from Little Caesars Arena. There, his group floated a residential building called The Circuit with first-floor restaurant/dining space. “It’s really evolving, there’s not much residential in that area to suit all the commercial movement happening,” Uddin said, almost as a sales pitch behind the project, which gets its name from the idea of “completing the circuit” of development in the vicinity. Many of those term projects Allen remembers well, such as a recent Detroit effort by students Duong, Clarke Lewis and Myles Hamby, all of whom went on to work for Detroit-based The Platform LLC, which took on their Baltimore Station project’s first and second phase. The first phase has been completed although the second phase has been stalled as the company re-envisions what goes on the site east of Woodward Avenue at Baltimore and John R streets. “That was probably the most urgent, the most obvious to them, and it caused their team to form, it caused them all to go work for The Platform,” Allen said. Duong remembered Allen’s instruction fondly. “Due to the large upfront capital and critical network of stakeholders, real estate development is very hard to break into, especially as an outsider to Detroit and a minority, unless you come from a real estate development family or have lots of money,” he said. “From Peter, I was able to learn the technical skills in the business and make the critical connections. But above all, I’m always inspired by Peter’s positivity and perseverance — traits critical in this business that has so many dead ends but offers worthwhile rewards to those who are relentless in finding solutions.”

Practical approach

on with published white papers. In a way, he creates an ecosystem and fosters it. “So Peter was really encouraging, like, ‘Here’s my Rolodex,’” said Scott. “He would literally share his entire Rolodex. He had like 5,000, 10,000 contacts. Like, Steve Ross’ number in there, OK? ‘Call it,’ (Allen would say.) ‘He might not answer the phone, but Steve Ross’ number is in there.’” “Peter also set it up to bring in those real estate experts and professionals so students can build those relationships from the outside,” said Becker, whose Mona Lisa Development is active in the city’s Virginia Park neighborhood — where her class term project ended up being the first Mona Lisa redevelopment effort, a duplex with the company’s cofounder, Elyse Wolf. “Peter played a huge part in my career and kind of shaping that. Blau’s case is perhaps one of the more well-known in Michigan real estate lore. Blau, who took Allen’s graduate-level course as an undergraduate in the late 1980s, ultimately ended up interning for Allen and established a relationship with him. And Ross, the billionaire Related Cos. chairman who had gifted the university some money, was in attendance at what was then the University of Michigan/Urban Land Institute Real Estate Forum, now called RECON, shorthand for Real Estate Convention. “Peter introduced me to Stephen (Ross) at the conference and we both sat in the back row, and listened to the conference and talked and that’s how we met,” Blau said. “Peter, for sure, gets all the credit for that.”

In the sometimes wonky and theoretical world of commercial real estate, Allen’s former students described his class as having a practical approach, former students said. That practical approach largely came in the form of the capstone project. “Peter had the ability to sort of influence in real life deals, which I thought was refreshing because, in a program like Michigan, it’s a very theoretical, you Best lessons didn’t get the real practical sort of hands-on approach,” said Scott, who But sometimes, for all the term projduring his time with Ford Land was re- ects, all the lectures and all the guest sponsible for the Wagner Place devel- speakers — sometimes three or four in opment in west downtown “I THINK HE’S STILL AHEAD Dearborn. OF THE CURVE, TRYING TO Students learned about IDENTIFY WHERE THE the circle of risks EMERGING MARKETS ARE.” in commercial real estate, with — Derric Scott, CEO, East Jefferson Development Corp. the risks growing as more were identified. First, there were eight or each class — the best lessons can come nine. Today, there are 13 or 14, depend- over a slice or two of pizza. ing on who you ask and when they took Allen would order his two glasses of the course. red wine and glass of milk, spring for They include things like the econom- the first few pizzas for people who ic cycle, construction costs, sales and showed up and the informal chatter beleasing, the environment, political con- gan between students and professor, cerns and equity and debt. students and speakers, all intermin“All that holds true today and all gling at The Pizza House of Ann Arbor a those things are things that we analyze few blocks from the class. on a deal. It was a great learning experi“Sometimes the wait staff knew it ence and I would say still very applica- was coming,” said McGrath, who took ble today,” Blau said. Allen’s course in 2013. Speakers included Fernando Palazuelo, the owner of Detroit’s Packard Ties that bind Plant, representatives of the Ilitch famiFor people like Blau, whose Related ly’s Olympia Development of Michigan Cos. has been active in Detroit real es- and others. For Bails, that experience — altate in recent years with a pair of known projects planned — the Detroit Center though he didn’t know it then, perhaps for Innovation and an affordable hous- — was instrumental. “That experience alone has been ing development with The Platform — some of the most valuable work Allen very helpful in my job,” he said. “The did came well after final grades were city gets all sorts of grand scale pitches of what people want to do if you give submitted. “The class doesn’t end at the end of them these 200 vacant lots on the east the semester,” said Blau. “He’s always side and how they’re going to build a helping people get jobs or helping peo- whole neighborhood. I feel like I have a more critical eye, and know what quesple with their careers.” Allen keeps a detailed spreadsheet of tions to ask, because of the experiences former students: contact information, of seeing people come in with these regions of the country they ended up in, grand ideas and now seeing down the their real estate specialties. He keeps in line what has and hasn’t worked.” touch with them on LinkedIn, too, congratulating them on new jobs or pro- Contact: kpinho@crain.com; motions, or telling them they are spot (313) 446-0412; @kirkpinhoCDB

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FOCUS | ANN ARBOR

Land trust pairs developers with affordable housing projects BY KIRK PINHO

Ann Arbor’s affordable housing crisis has been well documented, with a shortage of several thousand units prompting the city to look at varying ways to address the issue. Peter Allen also thinks he has part of the solution. The retiring University of Michigan real estate professor has started a nonprofit, the Equitable Ann Arbor Land Trust, which he calls EA2 for short. With the goal of spurring 1,000 to 5,000 units of affordable and market-rate housing in the city over the next five to 10 years, he and the nonprofit’s executive director, Sarah Lorenz, have a lot of work ahead of them. But he thinks his program can serve as a model to solve housing issues using what cities like not just Ann Arbor, but others around the country, have ample supply of: publicly owned land. It would work like this. EA2, in advance of a request for proposals process, would get advance zoning change approvals, site planning, utility taps and other public approvals, plus negotiate land sale or lease terms and percentage of affordable housing units or subsidies, Allen said. All that advance legwork helps eliminate some of the risk in the risky

Among the properties the land trust is targeting are the vacant property known as the Y Lot at 350 S. Fifth Ave. downtown, the site of the former Ann Arbor YMCA. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

business of real estate development. “The site would be ‘shovel ready’ as much as possible for the winner of the RFP,” Allen said. “EA2 would then earn a reasonable fee based on the developed land value from the land owner. It also hopes to earn a longterm partnership interest in the development. As a nonprofit, EA2’s sources of revenue will then be reinvested in further deals to address Ann Arbor’s sustainability and affordability concerns.” The benefit, Allen says, is for everyone. The city wins by increasing its tax revenue and, potentially, revenue

from long-term land leases, as well as combating gentrification, increasing affordability and sustainability. And the developer lowers its risk. “The best sites are publicly owned,” Allen said. “The public owners don’t know how to go through the development process as well as they should. They’re learning and they’re trying, but we think we can facilitate that process as a catalytic developer to help hold the hand of those public owners to get those sites fully entitled, shovel ready and to find an appropriate developer.” In addition, the land trust is pursuing loans from nonprofits to put its

first parcels of land under option. Allen also noted that all the developments he envisions would have underground parking and street-level retail that would “excite the sidewalk.” The goal, Allen said, is to catalyze developments with 25 percent of their housing units affordable at 60 percent of the Area Median Income, with the other 75 percent available at market rate, and have as many of those units available for sale as possible to help build wealth. “We’ve got to give them a chance to have appreciation,” Allen said. “All these developments will be in downtown, where there’s likely strong appreciation, and we want to capture that for the benefit of their net worth.” He also noted that they would try to bring in small local investors. Among the properties the land trust is targeting are the vacant property known as the Y Lot at 350 S. Fifth Ave. downtown, the site of the former Ann Arbor YMCA for 45 years until 2005 when a new one was built on West Washington. That could be a 19-story building with 250,000 square feet, Allen said. He said, in all, there are 10 sites EA2 has identified as its top targets and it is prioritizing them, although no agreements have been made with their owners yet. “We continue to make serious progress, identifying and prioritizing

sites with the leadership, but nothing is signed,” Allen said. Christopher Taylor, Ann Arbor’s mayor, said the city has met with Allen about EA2 and would be involved in changing land uses, although no formal agreements have been reached. Ann Arbor’s affordable housing crisis includes the need to create about 2,800 units of new, permanent affordable housing by 2035, or else risk economic stratification that one report warns could be irreversible. The 2015 study by Alexandria, Va.based CZB LLC commissioned by the Washtenaw County Office of Community and Economic Development says that the number of people in Ann Arbor and Ypsilanti paying more than half of their income for housing more than doubled from 2,200 to 4,404 between 2000 and 2012, and it increased 74 percent for those paying more than 30 percent of their income, from 7,288 to 12,646. Experts generally say people should spend no more than 30 percent of their income on housing. In November, Ann Arbor voters approved a 20-year, one-mill property tax that would raise $6.55 million in its first year, 2021, and run through 2041, the ballot language read. The goal was to create 1,250 to 1,500 new affordable units at 60 percent AMI. See NONPROFIT on Page 24

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FOCUS | ANN ARBOR

Ann Arbor small businesses turn back to students for help

Some owners forced to consider changes in hiring practices to fill vacant jobs BY JAY DAVIS

pus at UM full time for the first time in close to 18 months, and business owners are hopeful those students will return to work. Habte Dadi, owner of The Blue Nile Ethiopian restaurant, is looking for students to fill positions such as busser, server and bartender. Business has remained steady at The Blue Nile throughout the pandemic. Dadi declined to disclose revenue figures, but said a loyal customer base built since it opened in 1989 has helped immensely. Dadi co-owns the business with his wife, Almaz Lessanework. They are doing the lion’s share of the work at the restaurant these days, which has forced them to limit hours and close on Mondays until it can build up its staff. “We know the students are busy. We don’t want to hire anyone who’s going to quit after a couple of weeks,” Dadi said. “We’re looking for people badly. We’ve been doing as much as we can. I think all business owners have. That’s the only way we’ve been able to handle everything going on: To do the best we can.”

Ongoing hiring issues are pushing Jim Saborio to consider doing something he hasn’t done in 12 years of owning Comet Coffee: hire college students. Saborio’s business is in the Nickels Arcade section of downtown Ann Arbor, a strip of small businesses between State and Maynard streets. The coffee shop operates 8 a.m.-6 p.m. daily. In addition to working himself, Saborio has two full-time employees — down from six prior to the COVID-19 pandemic, he said. “I typically don’t hire students because a lot of the kids who go to (the University of Michigan) don’t work,” Saborio said. “I need to hire four more full-time employees, and I’m looking at students now because there just isn’t anybody working right now.” The pandemic has left small business owners in a pinch when it comes to finding reliable help. There are several theories as to why a labor shortage persists and business owners have been forced to adapt to keep their doors open. Days and hours of operation are being cut. Owners of family-owned businesses have become more dependent on relatives and friends to staff operations.

What’s driving shortage

Making do With a relatively low unemployment rate in Ann Arbor, many small businesses there are having trouble hiring and keeping workers, including those in the areas of retail and food and drink that rely on students for full- and parttime help over the course of each school year. Students are back on cam-

Jim Saborio, who has owned Comet Coffee in Ann Arbor for 12 years, is considering hiring students for the first time because he’s so short-staffed. | JAY DAVIS/CRAIN’S DETROIT BUSINESS

Hiring in Ann Arbor is not a new issue. Donald Grimes, a regional economic specialist at UM, points out that the city’s unemployment rate is higher now (4.7 percent in July) than in a pre-pandemic July 2019 (4 percent), so presumably there are more people available to work. The state unemployment rate is 4.8 percent. Grimes said expanded federal unemployment benefits, which expired Sept. 4, could have been making it more difficult for employers to hire and keep people, along with wages. “Places like retail and restaurants have always paid relatively low wages,” Grimes said. “That will, of course, ease up in September when the expanded (unemployment benefits) end. But that will only be a temporary solution for them. This ‘labor shortage’ situation is driven by demographics. There aren’t enough new young people entering the workforce to replace the baby boomers who will be retiring. Periods when it’s easy to find new staff will be the exception for the next decade.”

‘We need more help’ Richard DeVarti, third-generation owner of Casa Dominick’s Italian restaurant, said business has been good since it reopened July 13 — nearly

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In Washtenaw County, the AMI for a one-person household is $74,600; for a two-person household, $85,200; for a three-person household, $95,900; and a four-person household, $106,500. Sixty percent of AMI for a one-person household is $44,760, while for a two-person household it is $51,120. For a three-person household, it’s $57,540 and for a four-person household, it’s $63,900. The millage is expected to generate approximately $130 million over 20 years, and 80 percent of that would go toward the housing, while the remaining would go for support services for residents of the housing.

18 months after closing due to the coronavirus pandemic. The problem is, there’s not enough staff to meet demand. “We have a staff of about 15 people. I need more but I can’t find new people,” said Devarti, owner of the 61-year-old restaurant at 812 Monroe St. named after his father and known for its sangria. “We’re even paying more like everybody else. Right now, we’re going through an end-of-summer transition. Some of the staff have left for classes. Some only want to work weekends because of their course loads.” Dominick’s operates seasonally, opening the Monday after UM’s spring break and closing in November following the Wolverines' last football game each season. Its staff is a mix of locals and college students. With the additional unemployment benefits expired and students back in town, DeVarti is hopeful that pushes more people to seek employment. “I’m 67 years old,” DeVarti said. “Throughout (the pandemic) and our reopening. I’ve been on my feet a lot and have had to work a lot harder than I used to.” Asad Kamal is also looking forward to a new pool of potential hires with school back in session. Kamal, who manages Apples & Oranges Computer and Electronics Repair with two brothers and their father, is looking to add to their staff in the areas of sales and marketing, computer support technician and manager. “We’ve had good business over the course of the pandemic, but we need to add to the staff so we can get a break,” said Kamal, whose business operates 10 a.m.-6 p.m. Monday through Friday, 11 a.m.-5 p.m. Saturday and is closed Sunday. Kamal has posted the positions to job boards at UM and Eastern Michigan University and Washtenaw Community College as well as Indeed. com. Students in business and information technology programs would be a good fit, Kamal said. “We’ve done really well because you had a lot of students obviously moving to online courses. They come in and need their computers fixed right away so they can get back to a Zoom class,” Kamal said. “Now with everyone being back, we’re expecting even more business. We need more help. It’s really that simple.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981 Affordable housing has, in the past, been a contentious issue in the city, with different members of the City Council having competing visions for how best to address the issue. “Everybody always has spoken in favor of affordable housing, everybody loves affordable housing,” Taylor said. “But when affordable housing is proposed at a particular site, there is occasionally a different conversation. The rubber has not yet met the road on parcel A, B or C. When parcel A, B or C shows up with a whole lot of housing on it in an area where it did not previously exist, I guess then we’ll see whether the force of the millage’s passage has momentum.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

FOCUS | ANN ARBOR

PFIZER

we’re actually feeling the growth of an ... industry cluster out of the ingredients that we’ve grown in the Ann Arbor region over the long term.” Snyder, asked what made companies like HandyLab and Esperion a good investment in the late 1990s: “The team. It’s one thing to have a technology. So the one thing I always tried to remind people: Professors were successful because their goal was to come up with new technologies, new science, and to prove their point they had to make something work once. That is much different than having a commercial company that can make something in a repeatable fashion and in high volumes.”

From Page 1

employees of the New York Citybased pharmaceutical giant, and did much to set in motion Michigan’s biotech and venture capital industries. The Ann Arbor area is now home to about 250 life sciences companies, according to Ann Arbor Spark, an economic development organization. Of Ann Arbor’s 69 venture capital-backed companies, about onethird operate in the life sciences sector, according to a recent report. The closing of Pfizer’s plant in Ann Arbor ultimately resulted in a “success story,” according to Chris Rizik, the CEO and fund manager of Renaissance Venture Capital, an Ann Arbor venture capital firm founded in 2008, just after the closure of Pfizer’s 174-acre complex. That land is now part of the University of Michigan’s North Campus Research Complex. “(Ann Arbor leaders) got ahead of the issues you’d face with a closed facility,” Rizik said. “And created opportunities for people who wanted to stay in Ann Arbor, to stay in Ann Arbor.” But longtime observers of Ann Arbor’s startup community also note that the foundation that allowed the community to not just weather that storm, but emerge stronger began taking shape at least a decade earlier. What follows are selections from a multitude of interviews done with company founders, executives, venture capitalists and industry observers showcasing how the last two decades in Ann Arbor have contributed to making Michigan the 14th-largest bioscience state in the country, according to figures from industry trade group MichBio, with a $28 billion economic impact and ap- Rizik proximately 40,000 jobs in the sector:

‘We were ready’

The Pfizer property in Ann Arbor in 2011, after the University of Michigan took over parts of it. | JOSEPH TOBIANSKI/AP

raised $100 million in the late 1990s: “A lot of people in Ann Arbor (in the late 1990s) weren’t familiar with what venture capital was ... There were a few people doing good stuff, but it was a pretty small community.”

‘A tremendous amount of talent’

In 2003, Pfizer acquired Esperion Inc. for $1.3 billion. Founded by scientist Roger Newton — who worked at Pfizer prior to founding Esperion — and known for development of the cholesterol-lowering drug Lipitor, the blockbuster drug of blockbuster drugs — and other pharmaceutical researchers in the Ann Arbor area, Esperion was developing a pill for the millions of people who could not take the statin pills of which Lipitor was the most successful example. That acquisition was just Early years one of many twists and turns in the Esperion story. In the late 1990s, the Four years later, when words “venture capital” the company decided to were all but a foreign lanshutter operations in Ann guage in Michigan. EarArbor, the pharma giant ly-stage companies in need had no interest in keeping of significant capital to Williams under its umbrella the varigrow and scale operations ous drugs being developed had very few options, acby teams like Esperion, according to veteran execucording to the founder. tives. Scientists like Newton Jeff Williams, a serial suddenly found themselves Ann Arbor startup execuas entrepreneurs, able to tive who led exits for a negotiate with the pharmahandful of Ann Arbor life ceutical giant and move the science companies, includtechnology on which they ing HandyLab and Neuhad been working into new MoDx: “I think there were Newton startup ventures. The move really huge changes behelped make Ann Arbor a tween 1995 and 2000 ... hotbed for talented scienwhere really you had altists-turned-entrepreneurs. most no venture capital at Newton: “I would say all in Michigan, and you maybe two-thirds of the had very little interest in it, people (working at Pfizer) really. And ... even (the Unistayed (in Ann Arbor), and versity of Michigan) was reprobably another one-third ally averse to — and defimoved to different places or nitely not encouraging changed their area of focus, — professors to be involved Snyder as far as their livelihood. with startup companies in the 1990s. And then it started to But we had a tremendous amount of talent and that’s why so many other evolve a bit.” Rick Snyder, Republican former companies stayed right in the area, governor of Michigan, venture capi- just like we did. “Pfizer was ... very open to not tal investor and technology executive, whose Avalon Investments leaving what could be potential ther-

apeutics. They had something like 20 or 25 different compounds that they parceled out (like with Esperion’s then in-development drug). There were a lot of opportunities that were available, and then people began to flourish. And them leaving was, I think, a blessing in many ways for young entrepreneurs to be able to find talented people just in their own backyard, as opposed to having to go to the coasts or someplace else.” Tim Petersen, founder and managing parter at Arboretum Ventures, an Ann Arbor health care venture capital firm that invested in Esperion and several other biotech firms: “I think one of the most significant things about the Pfizer closure was a bunch of talent got sort of moved ... People left, but lots of people wanted to stay because they liked living here. Many of them were sort of unshackled from the ‘big company’ stuff and found they really liked the smaller environments. And so, if you want to sort of point to that as a catalyzing force. Unless I’m misremembering, you can’t really say: ‘22 people left from there and then started the next Moderna.’ That’s not exactly what happened. It’s more, ‘They sprinkled here, they sprinkled there.’ And a lot them really realized that they liked (working at) a smaller company (with) a more nimble experience.”

Creating something new After buying back the technology from Pfizer, Newton launched the second Esperion, which went public via an initial public offering in 2013 for $80 million. The company’s drugs, Nexletol and Nexlizet, were granted FDA approval in early 2020, and that year the company saw sales of $227.5 million. Newton has since retired from the company and moved to northern Michigan while also working on two newer endeavors. In addition to the 15 research companies that spun out of Pfizer after its Ann Arbor closing, Esperion spurred another half-dozen companies that raised tens of millions of dollars in venture capital, according to tracking from the Michigan Venture Capital Association. In the years around the closure of Pfizer, other Ann Arbor biotech companies also found successful exits. HealthMedia, a life science com-

pany with an internet-based wellness and disease management program, was acquired by Johnson & Johnson in 2008 for $175 million, according to tracking from EntryPoint, an Ann Arbor-based nonprofit entrepreneurial research organization. In 2009, medical device multinational Becton, Dickinson and Co. acquired HandyLab, the company run by Williams and founded a decade earlier by Kalyan Handique and Sundu Brahmasandra, for a reported $275 million. Becton Dickinson also acquired Accuri Cytometers Inc., another Ann Arbor biotech company, for a reported $205 million. Such deals are indicative of a healthy startup ecosystem, according to observers, which always includes a health talent pool. Valenti Mina Sooch, a veteran biotech founder and executive, who is CEO of Farmington Hills-based Ocuphire Pharma Inc., working on treating eye disorders: “Every successful M&A (deal) or IPO creates the growth and the spin-out opportunity for individuals that are in those executive Sooch leadership roles to either join together again in another company, or start their own idea with another colleague that they know from their past lives ... The talent pool, it’s not 100 percent available for every role you need, but you can start a company and fill 50 percent literally within months Heintz by leveraging the local networks.” Emily Heintz, founder and managing partner of EntryPoint: “I would say events like (Pfizer) are things that are the catalyst for jelling all of the natural ingredients together in the region. So the fact that the University of Michigan is lo- Krutko cated here, and a lot of the talent is here, and a lot of that tightknit community is here: (that all) enables those events to happen. But those things really spark a lot of activity. So I would say, rather than us still feeling the ripple effect from Pfizer,

The exits and success stories for companies like Esperion, HandyLab and others also played out against the backdrop of the Great Recession on a national scale, and the much longer recession in Michigan. The growth of biotech as an industry in Ann Arbor, as well as other Michigan cities including Kalamazoo and Grand Rapids, went a long way toward diversifying the state’s economy away from the cyclical automotive sector, long a rallying cry for Michigan’s business and political classes. Sam Valenti, a veteran venture capital investor in Michigan and the CEO of the Bloomfield Hills-based Valenti Capital family office: “People take Michigan venture capital for granted, like it was always there ... (and) the state of Michigan being a bad ass all of a sudden. We were all messed up. We were a little, itty-bitty nothing ... (The growth of biotech) excited me because it was an area that I had no expertise in, but I knew that we were ready. But it took really hard-working, brilliant people to make it happen.” Newton: “I look at situations where unexpected change gives you then the opportunity of opening a new door and then pursue something that you’ve never thought you would have. I thought I was going to be a lifetime (Pfizer predecessor) Warner Lambert Parke Davis scientist. Guess what? That didn’t happen.” Paul Krutko, president and CEO of Ann Arbor Spark, said the city’s institutions came together to help create something new: “The legacy is the leadership of the academic, the private sector and the government sectors here kind of dusted themselves off and said, ‘Well we could feel sorry for ourselves, or we could do something.’ One of the lessons (that emerged): Is it better to have 100 companies that are employing 31 people (each) than it is to have one employing 3,100? So, if 10 percent of those fail, you still have the 90 times 31. They have the potential to grow. So the idea of planting lots of flowers and creating a robust startup community around the largest public research university in the United States I think was prescient.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 25

FINANCE

Credit Acceptance moves forward after paying settlement Southfield-based subprime lender’s $27.2 million payment considered ‘cost of doing business’ BY NICK MANES

A $27.2 million settlement agreement finalized last week by Credit Acceptance Corp. and the state of Massachusetts may amount to little more than a “cost of doing business” for the Southfield-based company. Still, the settlement that the subprime auto lender struck with the office of Massachusetts Attorney General Maura Healy could go a long way toward helping those consumers who have found themselves negatively affected by the company’s practices, alleged to include harassment of those late on payments and high fees, according to consumer advocates and court documents. The settlement will be made available to about 3,000 residents of the state. If distributed evenly that comes out to approximately $9,000 per person. “It’s a significant settlement,” said Lisa Stifler, director of state policy at the Durham, N.C.-based advocacy organization Center for Responsible Lending, noting the multitude of allegations in Healy’s lawsuit against the company last summer. Credit Acceptance (NASDAQ: CACC), with a market capitalization of more than $10 billion, did not respond to multiple requests for comment from Crain’s last week, but in a news release referred to the allegations made in the lawsuit as “vigorously contested.” No admission of liability was among the terms of the agreement. “However, Credit Acceptance believes it to be in the best interest of the Company to conclude this litigation, and is pleased to announce its resolution,” it said in the statement. “The Company looks forward to continuing to serve customers in the Commonwealth of Massachusetts through its financing programs.” As a subprime lender focused on loans to people with limited incomes, or poor or no credit history, such settlements and lawsuits by regulators are all but inevitable for a company like Credit Acceptance, according to Matthew Roling, a finance professor at the Mike Ilitch School of Business at Wayne State University in Detroit.

Credit Acceptance has its headquarters in Southfield. | COSTAR GROUP INC.

“The system they participate in is broken, and this is a dirty business,” Roling said, referring to subprime lending. “This is a cost of doing business for them and I imagine they view it that way internally.” The size of the settlement, just more than $27 million, is to Credit Acceptance the equivalent to “you or I getting a speeding ticket,” Roling said. The Massachusetts attorney general has been particularly active in pursuing settlements against subprime auto lenders, having previously secured other settlements totaling more than $47 million, according to a news release from Healy’s office. The settlement against Credit Acceptance makes for the largest, according to Healy. “Predatory car loans, like predatory student loans or mortgages, hurt families and communities,” Healy said in a news release last week. “Through our ongoing, extensive investigation into the subprime auto industry, we have a proven record of taking action and getting results for our residents who have been exploited by unscrupulous lenders.”

Making changes Partial terms of the settlement were reported by Crain’s in April, at the same time longtime CEO Brett Roberts announced his retirement from the lender. Kenneth Booth was named the company’s new chief executive at the same time. The lawsuit against CAC filed by Healy last year made several allegations, including that the company “harassed” borrowers by calling them multiple times per day, and alleged that Credit Acceptance did not inform investors that the company had topped off the pools of loans they packaged and securitized with higher-risk loans, despite claiming otherwise in disclosures to investors. Going forward, Credit Acceptance must make certain changes to its business practices in Massachusetts, per the terms of the settlement. That includes providing borrowers who purchase a vehicle service contract a “with a clear and conspicuous, one-sided, single-page, standalone document” that allows the borrower to cancel the contract and have money refunded.

The vehicle service contract serves as a sort of warranty for repairs on the used cars, which Credit Acceptance charges around $1,500 for two years, according to a report by Plain Site, which noted that about half of Credit Acceptance’s loans include the contracts.

Analysts see potential Sources contacted by Crain’s differ somewhat on what the lawsuit may mean for Credit Acceptance going forward. Many of the business changes CAC must make in Massachusetts, per the terms of the settlement, are largely just bringing the company into compliance with state law, noted Stifler, who added that the state has among the strongest consumer lending protection laws in the country. Stifler expressed some optimism that other states may take up other such lawsuits now that Massachusetts has been successful in securing a significant settlement. Officials in Michigan have no plans to take action against Credit Acceptance.

"We were not aware of the settlement, but will review it," a spokesperson said Friday in an email. "The Attorney General’s Corporate Oversight Division does not hesitate to take action to protect consumers where the opportunities arise." Beyond the consumer lending issues for Credit Acceptance, the company still faces at least one federal lawsuit brought by investors, union pension funds, which was amended last month. The company makes high profits on loans that are often never fully repaid, according to court documents. Those profits come from a variety of methods, including fees that are often undisclosed to borrowers at time of purchase, aggressive collection practices and high rates of vehicle repossession that generally results in the cars being resold. In 2019, Credit Acceptance saw profit of $656 million on about $1.5 billion in revenue, a profit margin of about 60 percent. In 2020, the company reported a reduced profit margin of just more than 37 percent. The company’s stock jumped on news last week that the Massachusetts lawsuit had been settled and climbed even higher the following day. A share of the company’s stock was trading at $660 prior to the opening of markets last Friday morning, nearly 15 points higher than five days earlier. To that end, less than one day after the settlement was finalized, investment analysts were touting the company’s earnings potential going forward. “Not only does the stock have decent short-term momentum, but it is seeing solid activity on the earnings estimate revision front as well,” Zacks Equity Research wrote in an investor memo last week. “These positive earnings estimate revisions suggest that analysts are becoming more optimistic on CACC’s earnings for the coming quarter and year. In fact, consensus estimates have moved sharply higher for both of these time frames over the past four weeks, suggesting that Credit Acceptance could be a solid choice for investors.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

NONPROFITS

Pope Francis Center finds new site for homeless housing facility BY SHERRI WELCH

The Pope Francis Center has secured a purchase agreement with the city of Detroit for a 5.3-acre parcel that will serve as the future home of a bridge housing facility for the homeless. The sale price for the Core City neighborhood parcel has not yet been finalized, pending the outcome of studies to determine any environmental remediation needs, said the Rev. Tim McCabe, executive director of the Pope Francis Center. The vacant property, which is north of Corktown, is bounded by Warren Avenue, Lawton Street, the Jeffries Service Drive and railroad tracks. The sale is contingent on Detroit City Council approval of the development plan, McCabe said, noting the plan is expected to go before both bodies this

fall. The goal is to break ground on the Pope Francis Center Bridge Housing Campus this year, as soon as the development plan gets city council approval, McCabe he said. As envisioned, the bridge facility will include 40 studio apartments, an outdoor shelter facility with radiant heat from above and heated sidewalks to help protect people who aren’t yet ready to come indoors, a medical clinic and 10 respite beds for homeless people discharged from the hospital but too sick to be back on the streets. Fusco, Shaffer & Pappas Inc. is serving as architect on the project.

26 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

The first of two public meetings held by the city on the project took place last Monday, hosted by the Core City Neighborhood Association at 3301 23rd Street in Detroit. The Woodbridge Neighborhood Development, representing the Woodbridge neighborhood just east of the property planned for the bridge housing project, was to host a second public meeting on the project over Zoom Thursday. “We want to be good neighbors, to make sure everyone knows what is happening and can give input if they want to,” McCabe said. “It’s important to me that we listen to the folks who live there because we hope to be a part of that community.” The Core City site is the second proposed for the project, which has been in development for three and a half

years. Earlier plans to build the bridge housing facility in northeast Detroit on East Canfield Street near Mt. Elliott were shelved after community pushback. “That canceled site was a setback and difficult and challenging, but I feel like from a faith perspective, this is a better place for us,” McCabe said. Being bordered by the expressway and rail line tucks the site in a bit, he said, and it’s near a major bus line on Grand River. “Core City is so welcoming,” he said. With support from developers, religious leaders and community leaders, “it just feels like the right place to be.” The new facility will fill a need for transitional housing for homeless individuals who aren’t yet ready for permanent housing, McCabe said. Federal government support favors

the housing first model of getting homeless people into permanent housing first and then addressing the issues causing their homelessness, whether financial insecurity, addiction or chronic illness. “It’s great for those for whom it works,” McCabe said, but it doesn’t work for everybody. “If we put them in housing too quickly, the recidivism rate is high.” Pope Francis Center’s new bridge housing facility will provide individualized care with social work, addiction, psychiatric services and independent living and job readiness training, helping to stabilize the chronically homeless and work with them to transition to permanent supportive housing. Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

ENTERTAINMENT

Arts, culture groups add COVID rules as fall season gears up University Musical Society, DSO, Broadway in Detroit will require vaccines, tests, masking BY SHERRI WELCH

A growing number of arts and culture groups in Southeast Michigan are now requiring full vaccination or negative COVID tests for patrons and masking for everyone inside performance venues. The University Musical Society in Ann Arbor put the policies in place effective Wednesday, the same day the Detroit Symphony Orchestra announced its policy. Broadway in Detroit on Thursday said similar policies will be in effect for its audience members attending productions at venues including Fisher Theater, Detroit Opera House and Music Hall, beginning Oct. 10. The local moves come as prominent institutions across the country, like Carnegie Hall and the Broadway theaters in New York and Kennedy Center in Washington, D.C., put similar requirements in place. Billmann “We’ve been watching current conditions quite a bit over the last few months and also looking at what other arts organizations are doing across the country,” said Sara Billmann, vice president, marketing and communications for University Musical Society, an independent performing arts group that operates in leased venues on the University of Michigan campus and other sites in the community. “We felt this was the safest and most appropriate approach for welcoming audiences back for live, in-person events.” With the Pfizer vaccine gaining full approval from the Food and Drug Administration and with many other non-arts businesses, events, and health care providers similarly mandating the vaccine, “I expect to see more of these announcements from the arts and culture field in the coming days,” said Omari Rush, executive director of CultureSource, the association of arts and cultural groups in the region. “CultureSource is very much in support of organizations making thoughtful decisions like these, which are based on historic precedents for mandating vaccination, science, and recommendations from local health officials,” he said. “We want to see these institutions retain the high level of trust communities already have in them, and we want as many people as possible to enjoy creative expression in our region.” The Detroit Symphony Orchestra will require proof of vaccinations or a negative test for those attending performances at the Max M. and Marjorie S. Fisher Music Center and Orchestra Hall. Guests also must wear masks inside the buildings, regardless of vaccination status. The new requirements take effect Sept. 18 as the DSO begins its 202122 season. “While we understand everyone’s desire to return to normal, we have concluded that these new policies are necessary to safely welcome back as many people as possible,” DSO President and CEO Anne Par-

The University Musical Society hosted the Minnesota Orchestra at Hill Auditorium in January 2020. | MINNESOTA ORCHESTRA VIA TWITTER

The Detroit Symphony Orchestra also announced its policy for performances last week. | DETROIT SYMPHONY ORCHESTRA

sons said in a news release. “I remain hopeful that the steps we take now will be temporary and that they will ultimately help to reduce the spread of COVID-19.” UMS is requiring that all patrons of its indoor performances be fully vaccinated or have a negative PCR test taken within 72 hours of the performance start time. The test requirement extends to children under age 12 who are not yet able to receive the vaccine. All volunteers, artists and staff are also required to be vaccinated. The delta variant hastened the policy, Billmann said, as did sentiment among its audience members. UMS and other arts groups have been taking a read of how audience members are feeling as part of regional, audience surveys commissioned by CultureSource and administered by WolfBrown. The nonprofits are surveying audiences three to five times this year, depending on the size of their database. The larger regional audience sur-

vey conducted in August included feedback from the audiences of 28 nonprofit arts and culture groups. Of those surveyed, 63 percent said they’d be more likely to attend an event with the requirements for vaccination/testing and masks in place, and another 10 percent said they’d only attend events with those requirements in place. Eight percent said they would not attend if those requirements were enacted, and 3 percent said they’d be less likely to with them. UMS audience members, 95 percent of whom say they are already vaccinated, were among those who indicated they would feel more comfortable knowing the person they were sitting next to was also vaccinated, Billmann said. A small percentage indicated the requirements would be a deal breaker, she said, but the number in that camp dropped significantly between the June and August surveys. UMS is launching its season this month with digital events. Its first

indoor event is set for Oct. 12 at the 3,600-seat Hill Auditorium on UM’s campus. It will operate at 100 percent capacity, like other groups putting the requirements in place. “We will open at full capacity because we really believe and have been advised by public health officials if we have a vaccine mandate and required masks ... those two measures together will keep audiences as safe as possible,” Billmann said. The policies are in place through December. “Beyond that is anyone’s guess at this point,” she said. “We are really excited to welcome audiences back to the theater, but we cannot open our doors unless we can provide a safe and healthy environment for audiences, performers and staff,” said Al Lichtenstein, executive director for Broadway In Detroit, in a news release. “The overwhelming majority of theatre patrons across the country have warmly welcomed these kind of safety protocols. We feel most of our guests will respond the same.”

Broadway in Detroit venues have upgraded HVAC systems with MERV 13 filters, increased cleaning and disinfecting protocols, new sanitizing stations through their buildings and cashless options onsite, including debit/credit cards and mobile pay. Like other groups, all Broadway in Detroit event staff are required to be fully vaccinated and will be masked at every performance. “Any ticket holder who does not comply with any COVID-19 protocol may be required to leave the venue without any entitlement to a refund,” Broadway in Detroit said. Other arts groups are taking a wait and see or less prescriptive approach as the launch of their seasons and in-person performances near. Meadow Brook Theatre is encouraging patrons to get vaccinated but not requiring it at this point. The performing arts nonprofit, which operates from leased space on Oakland University’s campus, is monitoring all of the guidelines issued by the Centers for Disease Control and Prevention, the state of Michigan, the Actors’ Equity Association and OU, said marketing coordinator Kai Stidham. “We have not discussed proof at this time, but we are requiring masks to be worn in our buildings at this time, regardless of vaccination status.” The theater has put contactless ticket scanning in place and updated its HVAC system. It plans to open at full capacity, offering all 584 seats in its venue to patrons when the 2021-22 season opens Sept. 8. Music Hall is also not requiring proof of vaccinations or testing for the performances it produces, President and Artistic Director Vince Paul said in an email to Crain’s. “Protocols have been fluid for a while which is why we created the outdoor amphitheater but alas, winter is coming and it’s time to move inside,” he said. “The first and foremost strategy is to observe government and CDC mandates, not internet opinions.” Staff are required to be vaccinated to work inside the building and wear masks at all times when patrons are in the hall, he said. And unionized stage hands have their own set of mandates of vaccinations and masks while working on the stage. “At this time, we are not checking vaccination cards at the door. There is ample signage requesting patrons who are not vaccinated to please wear a mask while inside the building,” Paul said. Patrons also have the option to buy tickets in Music Hall’s “socially distant balcony” where masks are mandatory and there are a minimum of two empty seats between groups, he said. With the initiative, the hall will lose about 100 of its 1,701 seats. Sales for Music Hall’s upcoming season of more than 200 shows have been very strong already, Paul said, “so we know the market is there.” “The trick is to stay in tune with data numbers and provide safe options for patrons when possible, but shutting down is not one of them unless it is mandated.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 27

“WE’RE JUST REALLY SPENDING TIME EVALUATING WHAT IT MEANS TO BE A TEAM. IF IT WASN’T FOR THE PANDEMIC, I DON’T THINK WE WOULD HAVE APPRECIATED THINKING THROUGH HOW WE WERE WORKING.” — Brian Balasia

From Page 3

For MarxModa, TalentEi’s move away from the office means more than potentially losing a tenant. Its core business is at stake as clients from Rocket Mortgage and OneStream Software LLC to General Motors Co. and Lear Corp. rethink office work. “Now is not the time to revert to contracts on what our lease arrangements are,” said Joe Marx, CEO of MarxModa. “We’re as flexible as we can be.” Marx understands the situation. Much of the 24,500-square-foot headquarters building he spent three years renovating has gone unused for the past two years. Most of his 50 employees who were based downtown still work primarily remote, a trend that continues for many offices in metro Detroit. Flexibility has been key to keeping business afloat in times of great disruption, Marx said, and for MarxModa, that has meant meeting clients where they are — in their homes. Home office orders have become a “critical” new business category for the company, Marx said. It is approaching 10 percent of MarxModa’s overall sales and could exceed that if working from home indeed becomes the norm. Home office sales were “close to zero” before the pandemic. “It’s a critical piece of our business moving forward, but it will never be the volume of business that our commercial corporate clients are,” Marx said. He declined to detail the financial impact on the company, but demand for office furniture declined significantly during the pandemic. As the general timetable for returning to the office continues to be pushed back because of the COVID-19 delta variant, it is unclear when demand will pick back up. Herman Miller (NASDAQ: MLHR)

GAGE

From Page 3

“I can tell you that they are buying a lot of these companies for astronomical multiples,” Rizzo said. “A reason for that is because everybody’s trying to grab market share really quick so they don’t want to miss any potential opportunities ...” Gage is attractive in part because it’s vertically integrated, Rizzo said — meaning it does everything from growing to retail. And Michigan is drawing attention not just because it’s a big market, but also because cannabis prices here haven’t fallen yet like they have in states including California and Colorado that have been “milked pretty hard,” Rizzo said, and have a lot of inventory. “It’s smart to get in now for these

reported a loss of $9 million in its fiscal year ending May 30, 2020, due mostly to the pandemic, which forced the West Michigan manufacturer to cut production hours and spending. Business seems to be rebounding, though. Consolidated net sales for the fourth quarter of fiscal year 2021, ending May 29, were $621.5 million, up 30.6 percent compared to the same time last year, according to its most recent earnings report. Driving the growth are sales for home office and workplace-related products, which increased 213 percent over last year, the company said. Marx said around 75 percent of his big clients are offering employees new home office equipment, from adjustable-height desks to ergonomic office chairs. “The majority of our clients are looking for recommendations for their team, and many are offering to subsidize that,” Marx said. “How do we put together packages so that they’re not sitting at a kitchen table to get work done, which is fine for an hour but not long term.” The increase in home office sales has helped offset some lost business on the corporate office side, but it hasn’t replaced it. “The volumes of orders are significantly up, but the sizes of orders are significantly down,” Marx said. While the return to the office seems to be delayed indefinitely, many of MarxModa’s clients are continuing to plan for the return, however that might look. OneStream Software is taking a reverse approach from the remote-minded TalentEi. The company, recently valued at $6 billion, is forging ahead with its new headquarters in downtown Birmingham, but its design has changed substantially due to the pandemic and evolving employee preferences, said Melissa Dusten, facilities manager for OneStream. “We are moving away from a traguys, but I don’t know for how much longer it’s going to be smart,” he added. The deal makes sense to help propel the Gage brand into more markets and garner more access to capital, Gage CEO Fabian Monaco told Crain’s. “Frankly, if you take a look at how the market has been trending … usually the larger entities, the ones commanding financials that are really something you just can’t ignore, those are the companies getting better cost of capital, more access to capital and frankly better opportunities … than being a standalone single state operator,” Monaco said. Leadership including Monaco will remain on with TerrAscend, he said. He expects the Gage brand to remain, opening more stores in more states and “play(ing) a big role” in the combined company’s branding strat-

28 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

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MARXMODA

OFFICE

egies moving forward. Gage opened its 10th provisioning center last month, this one in Burton outside Flint. It joins locations from Ferndale to Traverse City. The company projects it will have a total of 20 or more stores in the state by the end of this year. The company also has a licensing deal with California cannabis and lifestyle brand Cookies, opening a store under that name in Detroit last year. It expects to bring Cookies to more states under the TerrAscend deal. This year Gage also struck a licensing and supply deal with rapper Wiz Khalifa. Gage has its corporate headquarters in Toronto, according to filings with the federal government, but operates the large bulk of its operations out of offices in Troy. It has nearly 400 employees and few are in Cana-

Gage Growth Corp. plans to have up to 20 adult and medical use cannabis provisioning centers in Michigan by the end of 2021. | GAGE GROWTH CORP.

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TALENTEI MARXMODA

Above, MarxModa worked with TalentEi to build out its new office at 751 Griswold St., which has sat empty since the pandemic hit in March 2020. At left, the home desk set up of Whitney Marx, principal of MarxModa, and her dog Grendel.

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ditional style office and implementing a hybrid workplace,” Dusten said. “Before, our office was configured with benching and traditional cubical style workstations. MarxModa has helped us migrate away from that typical layout to create a flexible and collaborative workspace.” MarxModa also helped OneStream design a new office in Fort Lauderdale, Fla., last year that included privacy panels, 6-foot spacing and other elements designed to make employees feel safe. They will also be incorporated in Birmingham, which will feature lounge areas, recreational space and a variety of meeting spaces that include individual focus rooms, team huddle rooms and an executive board room. “We have tailored our space to accommodate social distancing depending on everyone’s comfort level,” said Chelsea Scott, special events manager for OneStream. “We’re bringing in the comfort of home and having that reflected in the office in a ‘resimercial’ style design.” Marx said the concept of hoteling and unassigned workspaces has beda — just there for purposes of the public market, as cannabis companies can’t list on U.S. exchanges because marijuana remains illegal at the federal level. TerrAscend is also based in the Toronto area. What’s now called Gage Growth started out in 2017 as Wolverine Partners Corp., according to Securities and Exchange Commission documents as of March. It formed a Michigan operation called Spartan Partners Corp. in 2018 and through subsidiaries did business in the state’s cannabis industry. In 2019, Wolverine agreed to acquire the Gage brand from Radicle Cannabis Holdings Inc. The same year, Wolverine bought an investment company called Rivers Innovations Inc. and said it was changing its corporate name to Gage Growth Corp. With the same

come increasingly popular. Amenities and entertainment are also top of mind. “The decision is not when to come back to work, it’s what do (employees) come back to,” Marx said. “It used to be if you have a thousand employees, you need this much space. Those rules are all out the window now.” At TalentEi, productivity among its 20 employees can be measured relatively precisely with lines of code and assignments completed. Balasia thought at first that the uptick was due to the COVID-19 lockdown and employees having little else to do but work. When the gains continued, he realized there was more to it. For one, employees reported being less distracted at home, Balasia said. “The types of collaborations we’re doing are best served in five-minute meetings, quick touchpoints,” he said. “For people to get up from their desks and tap someone on the shoulder, and for them to not disrupt everybody and go to a meeting room … by being remote on some of these online platforms, we found people were less concerned about sending a quick message and saying, ‘Do you have 5 minutes to talk about an idea?’” A better work-life balance, such as being able to see kids before and after they go to school, is likely improving employee satisfaction, which improves productivity, Balasia said. He is working with MarxModa on ways to bring comforts of the office into the homes of employees to make sure productivity stays up. The two have not made any decisions regarding TalentEi’s lease, but Balasia said there are no plans to bring employees back to the office regularly. As part of his focus on home office solutions, Balasia said he is trying new ways to keep employees engaged, such as “catering” remote team lunches by sending out Grub Hub gift cards, or mailing out food baskets to maintain the tradition of office snacks. “We’re just really spending time evaluating what it means to be a team,” he said. “If it wasn’t for the pandemic, I don’t think we would have appreciated thinking through how we were working.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

announcement, it added some more expertise: cannabis industry veteran Bruce Linton as executive chairman. Linton founded and is the former CEO of Canopy Growth Corp., which was the first publicly traded cannabis company in North America, on the Toronto Stock Exchange. Gage posted strong growth in the second quarter of 2021. The company generated a record $26.4 million in revenue, up 130 percent from the same time last year, it reported last week. TerrAscend reported $53.4 million in total revenue for its own second quarter, up 106 percent from the same quarter the previous year. — Bloomberg contributed to this report. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

Crews work on the new Woodland Mall Phoenix Theatre in Kentwood, just outside of Grand Rapids. Phoenix Theatres owner Cory Jacobson is putting $4 million into the project. | JORDAN HOHMAN

PHOENIX

From Page 3

A Phoenix Theatres mobile app and website allow customers to reserve seats. Tickets and concessions can be purchased at the same register, according to a release. Having those amenities and more will be important going forward, Jacobson said. “The theaters that survive will be the theaters that have all the amenities people want,” said Jacobson, who was made aware of the vacant property late last year. “We’ve put in the heated seats in all our theaters. With all the amenities we’re offering, our presentation will be unmatched.”

Aid helps business stay afloat Theaters in Michigan and across the country were forced to close for extended periods during the coronavirus pandemic. Jacobson said the last year-plus has been disastrous for every theatrical business. National box office revenue is down 73.7 percent from 2019, but up 10 percent from 2020, Jacobson said, citing ticket sales tracking site ComScore. Detroit area box office revenue is down 63 percent from 2019, according to ComScore. Phoenix Theatres revenue is down 63 percent from 2019, Jacobson said, but it has seen some improvement recently, with Aug. 27-29 figures coming in just 20 percent lower than the same weekend in 2019, according to Jacobson. “This is following a pattern that is consistent with monthly projections developed in February 2020, showing stable monthly gains throughout 2021, culminating in Q4 with projections estimating a return to 70 percent of Q4 2019 revenue and a return to 100 percent of 2019 business levels by the summer of 2022,” he said in an email. A survey of 14 sectors from movies to advertising to video games found that movie theater revenue won’t return to 2019 levels until 2024, according to a report from PricewaterhouseCoopers. The impact hit staffing at Phoenix’s Theatres, which laid off all ser-

Jacobson

Hohman

vice staff at its theaters while general managers and office staff remained on payroll throughout the pandemic pause, he said. Phoenix Theatres has received $10 million in Shuttered Venue Operator Grant funds, according to Jacobson. A $3 million loan from the Federal Reserve’s Main Street Lending Program helped Phoenix meet operating costs, he said. The business also received $580,162 in Payroll Protection Program loans to preserve 158 jobs at five theaters. The PPP funds were distributed to each individual theater. “All the funds we’ve received have been very, very helpful,” Jacobson said. “Once we were able to open, we used the PPP funds as they were intended. We were able to bridge our financial gap with all the funding.” Jordan Hohman, executive in charge of project development of the Woodland Mall Phoenix Theatre, said that when its theaters reopened this past spring, about one-third of the laid-off staff was rehired. Positions were offered to everyone on staff prior to the pandemic, Hohman said. The company is actively hiring to fill the gaps as some former staffers either don’t want to return or have found jobs in other areas.

Future of the business Sales have also been affected by deals that movie studios have brokered with streaming services to release films in theaters and digitally on the same day. For example, “The Suicide Squad,” a major Warner Bros. film, was released Aug. 6 on HBOMax and in theaters. The film debuted at $26.5 million in U.S ticket sales its first weekend. By comparison, the 2016 “Suicide Squad” film opened at more than $133 million its first weekend. The Ryan Reynolds-led “Free Guy,” which opened Aug. 13 only in the-

aters, opened with $51 million domestically its first weekend. “There’s certainly something to be said about exclusivity,” Hohman said. “If you look at ‘The Suicide Squad,’ ticket sales dropped 72 percent the second week. For ‘Free Guy,’ it was only 44 percent. I think those numbers show how disposable things are when they’re released in theaters and online. And you can’t match the experience you get inside a premium movie theater.” Jacobson believes the change in theater/streaming release model is strictly pandemic-related. “I understand there’s still some hesitancy from some portion of the public to go to a theater, restaurant or a bar. I think the studios felt the need to give people options,” he said. “But if you look at the overall health of the industry, the studios can’t afford to make big pictures and not release them in theaters. The theatrical experience is very important. “On the other hand, it’s also an economic reality right now that we can’t deny. Certain members of the public won’t go back out at all until the pandemic recedes completely. If and when that happens, business will go back to normal.” Despite dwindling recent numbers, Jacobson is optimistic about the movie theater industry as a whole. Some big-budget films that have been held back due to the pandemic will release exclusively in theaters over the next year, he said. Film studios need the cash from ticket sales to survive, he said. Changing the traditional window model has been discussed, too, which would see smaller-budget films stay in theaters for 45-60 days and big-budget movies at 90 days. “You have big pictures, like the new Bond movie coming in October and ‘Top Gun’ at Thanksgiving or thereabout. I don’t see those heading to streaming early, because the studios need that theatrical money for those films because of what they cost to make,” Jacobson said. “There are a glut of films out there for next 10 months to a year that have been held back for the last year and a half, so that will make 2022 a good year for movie lovers.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

SEPTEMBER 6, 2021 | CRAIN’S DETROIT BUSINESS | 29

THE CONVERSATION

Alexis Dishman on expanding Michigan Women Forward’s reach MICHIGAN WOMEN FORWARD: Alexis Dishman began her new position as chief lending officer for the foundation in September after having served on MWF’s board for six years. Dishman, 43, with more than 20 years experience in corporate banking and with nonprofits, manages all aspects of the foundation’s lending functions, including expanding a technical assistance program for borrowers, managing organizational risks and leading the expansion of the loan fund from 200 loans to more than 1,500 over the next three years. Michigan Women Forward, the only public statewide foundation devoted to the economic and personal well-being of women and girls in the state, has provided loans and grants to more than 200 women- and minority-owned businesses in the last year. The Southfield resident is focused on implementing more programs and getting Michigan Women Forward access to more capital. | BY JAY DAVIS  Last fall was an interesting time to start with the foundation, right? It was not an easy decision to make a change during the pandemic. I’ll share that I served on the Michigan Women Forward board for six years, so I’ve seen the evolution of the loan program. The decision the board made to pursue (Community Development Financial Institution) certification, and to expand its loan program is now a focal point of the organization. It wasn’t as difficult a decision to make to take the position because I was already invested in the organization. Given my work with the organization on a volunteer basis, I believe in its mission. The opportunity to work in the ecosystem, and support women entrepreneurs and entrepreneurs of color, was too great.  Has Michigan Women Forward been certified as a Community Development Financial Institution? We received some questions from the CDFI Fund. We’ve responded to the questions. We’re waiting on the final certification. We hope to hear back very soon. There are some things going on with the federal government that (the certification) isn’t necessarily a priority. We hope to hear back soon, though.  What does gaining that certification mean for the foundation? The CDFI certification gives us one more stamp of approval. We’re a (Small Business Association) lender. One thing the certification will do is give us access to more capital. We try to minimize the cost of capital to our borrowers. There are some costs associated with underwriting. It enables us to do more. We’re partnering with numerous stakeholders across the state to make

sure we have a robust small business economy.  Michigan Women Forward over the last year-plus has provided more than 200 grants and loans to women- and minority-owned businesses to help COVID-19 pandemic recovery. Why is that important to the foundation? We’ve provided businesses with 157 grants for up to $5,000 each and microloans of up to $10,000 each to 44 business owners. We really took the time to talk with entrepreneurs to see what types of issues they were facing. We saw an opportunity to figure out how we could be helpful is assisting them to help sustain those businesses. About 90 percent of our clients have been impacted by the pandemic. We’re looking for ways to support the ecosystem and help businesses make it through. For a certain period of time, that was the only thing we could focus on. Now we’re taking the time to look at what we’ve learned as a result of the pandemic. One thing that came to light for us is the lack of financial preparedness some of our clients had. Some of them couldn’t articulate what their need was in terms of how much money they needed. Many entrepreneurs are good at what they do, but they may not have taken business courses or have a background in managing finances. In recognition of that, we’ve developed programs that strengthen the system.

resilience I have, along with help from those who’ve mentored me, I’ve been able to continue to move forward. I learned so much through my traditional banking career. I learned to give back. I’ve been afforded a lot of great opportunities, so it’s important that I give back and help with the revitalization of Detroit. I focused for about five years on community development projects in Michigan and Ohio. I was a small business lender with Comerica (Bank), so I’ve always had an affinity for entrepreneurs, and I saw an opportunity with Michigan Women Forward to give

 You’ve got more than 20 years experience in banking. What’s that been like for you as a Black woman? I’m not going to say the road has been easy at all. With some resolve, and the

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back. I’ve found it’s important to mentor others and lift them up as I climb. Without my mentors, I couldn’t say I have the resolve I have. Through some times, there were some people who didn’t understand and who weren’t lifting up diversity. Now it’s definitely being lifted up.  Anything else on the horizon for Michigan Women Forward? We just launched our 53 Voices program. With the program, we’re trying to reduce some of the biases with pitch competitions. Historically, women are seen as not moving as quickly through those competitions, and there aren’t usually many women who win those competitions. We came up with a challenge most recently to use voice recordings as part of the process. Voice recordings will hopefully eliminate as many of those biases as possible. The judges will hear plans and concepts. Sometimes they get caught up, unintentionally, at how the person pitching looks and their surroundings and aren’t as in tune with what they’re saying. We’ll have 53 finalists selected from voice recordings. We’ll offer three courses to all 53 finalists. We have a digital marketing class, and a class focused on how to prepare the perfect pitch. All 53 finalists will receive at least $100. The top 10 will do another 53-second recording, video and voice, and we’ll put out a call for community voting. Each of those 10 will receive $250. From those 10, voters will select a top three. The winner receives $5,000, second place $2,500 and third place $1,000. We’re trying to provide more prize money and more technical support. Alexis Dishman, chief lending officer, Michigan Women Forward

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RUMBLINGS

Forgotten Harvest Ale headed to stores through Atwater deal OAK PARK-BASED FOOD RESCUE Forgotten Harvest’s brand will get a boost through a new promotional partnership with Atwater Brewery. The Detroit brewery last week began distribution of Forgotten Harvest Ale, in conjunction with national Hunger Action Month in September. The brand partnership is meant to raise awareness for Forgotten Harvest and its mission to reduce food insecurity. It’s “especially exciting for us because it will put our name out in front of so many new people who may not be aware of our work,” Kirk Mayes, CEO of Forgotten Harvest, said in a news release. This year marks the first seasonal batch of Forgotten Harvest Ale

Forgotten Harvest Ale

30 | CRAIN’S DETROIT BUSINESS | SEPTEMBER 6, 2021

brewed. If successful, there is the potential to do it again in the future as a seasonal beer, Atwater said in an emailed statement. Revenue sharing is not part of the partnership, but Atwater said it plans to make a donation to Forgotten Harvest to support its efforts. Forgotten Harvest Ale is a traditional harvest style ale brewed with crops fresh from Michigan farms and all Michigan hops, said Atwater President Mark Rieth, in a release. “We’re thrilled to put the Forgotten Harvest label on this ale because the fresh ingredients come directly from the harvest and, more importantly, because we’ll be supporting the outstanding work that Forgotten Harvest has done in met-

ro Detroit for more than 30 years.” The brewer will also host a launch party tapping event at its Atwater Brewery and Taphouse Detroit location, 237 Jos. Campau, from 4-6 p.m. Sept. 2, offering $2 Forgotten Harvest Ale pints. The co-branding agreement with Atwater is at least the second Forgotten Harvest has forged under Mayes’ leadership. In 2016, seven local food manufacturers agreed to co-brand their products with the Forgotten Harvest brand or to produce private label products for Forgotten Harvest, increased the food rescue’s brand awareness and provided it with a percentage of the sale price of the items with its name on them to support its mission.

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 Michigan Medicine’s new hospital tower muscles on

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