Crain's Detroit Business, April 6, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS April 6-12, 2015

Big money not always best

Will The News’ fate be decided soon?

Cuts threaten mental health authority

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OPENING DAY

Mexican mogul tied to Marquette deal Downtown building sale signal of more to come? [COURTESY OF SAFE ROADS YES] The pro-Proposition 1 ad campaign emphasizes safety concerns about poorly maintained roads.Would more facts build more support?

Roads tax ad push hitting potholes Prop 1 message concern: Emotion over detail By Dustin Walsh dwalsh@crain.com

Proposal 1, the May 5 ballot measure to provide additional funding to repair Michigan’s crumbling infrastructure, faces its own rough road as the advertising campaign may be falling flat. The campaign surrounding the proposal, which would generate $1.2 billion for roads repairs through a sales tax increase, has been focused on the dangers of Michigan roads. But is feeding on the emotions of drivers enough? That’s the question being asked by some advertising and public relations experts who assert the campaign is too thin on the education needed for voter buy-in. And if the proposal fails, it could raise questions about whether an earlier proposed strategy, which emphasized improvements to edu-

cation funding as well as road safety, would have made a difference. The proposal would have faced an uphill battle with either strategy. Other obstacles are the expected low voter turnout common to stand-alone elections and the complex nature of the overall proposal — only part of which is on the ballot — which is difficult to explain in soundbites. The ads, led by Lansing-based public relations firm Martin Waymire and Lansing-based GOP advertising agency WWP Strategies, focus on a campaign called “Safe Roads Yes.” The Safe Roads Yes effort had more than $3 million on hand at the last campaign finance reporting mile marker, on Feb. 10, according to an analysis by MLive.com.

NEWSPAPER

kpinho@crain.com

An entity with ties to Carlos Slim Helú, the Mexican business mogul with a net worth Forbes magazine pegs as $77.1 billion, has purchased a downtown Detroit office building. Real estate brokers are watching the deal closely and speculating that the purchase marks the beginning of an effort by Helú to scoop up other Detroit properties. The 164,000-square-foot Mar quette Building at West Congress Street and Washington Boulevard was sold to 243 Congress LLC , which is linked to Helú, late last year for $5.8 million. December’s purchase, documented in county records, of the 115-year-old vacant office building gives Helú an entry to a Detroit real estate landscape dominated by another billionaire, Dan Gilbert. “It’s unlikely he would stop at one, isn’t it?” asked Paul Chouk-

See PROPOSAL 1, Page 29

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ourian, managing director of the Southfield office of Colliers International Inc. “If they show some success with it, the floodgates could open. With that much ability, what might be a small investment for him could be huge in the city of Detroit. A fraction of his net worth could be a monster investment.” Steve Morris, principal of Farmington Hills-based Axis Advisors LLC , said the purchase might be considered a market test. “The probability is that this building certainly has a demand now with what’s going on, and that he’s just getting his feet wet and will look to do other things,” Morris said. “You can’t buy major office buildings that have a lot of vacancy that you can turn around. Those are gone. So this gets the appetite wet and there is the possibility, with his

track record, that he could build. There is need for lots of apartments and a need for office space.” See MARQUETTE, Page 28

[AP] Carlos Slim Helú

Blue Cross cash kept HMO afloat $30M needed to meet state requirements By Jay Greene jgreene@crain.com

crainsdetroit.com Vol. 30 No 14

By Kirk Pinho

Blue Cross Complete , a Medicaid HMO owned by Blue Care Network , needed a $30 million cash infusion last year to stay financially solvent and meet the state’s reserve requirements. Under health care reform and Healthy Michigan Medicaid expansion, Blue Cross Complete has more than tripled in size to more than 75,000 members in the three Southeast Michigan counties where it is licensed to do business.

All of the state’s 13 Medicaid HMOs have increased membership in the past year as Michigan has added more than 600,000 people through its Healthy Michigan Medicaid Expansion. Nearly 20 percent, or about 1.8 million, of the state’s population is now covered by Medicaid. But Blue Cross Complete — one of two Medicaid HMOs that lost money in 2014 — has lost $22.7 million during the last two years, according to annual reports filed to the Michigan Department

of Insurance and Financial Services . Flint-based HealthPlus Partners lost $8.9 million in 2014. The financial losses for Blue Cross Complete were attributed, in part, to the Medicaid plan adding administrative staff, technology and infrastructure to support a push for greater market share over the next several years. Blue Cross Complete is licensed to enroll Medicaid members only in Washtenaw, Livingston and Wayne counties. New Medicaid patients also used medical resources at a slightly higher rate than expected. See BLUE CROSS, Page 28

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CRAIN’S DETROIT BUSINESS // April 6, 2015

MICH-CELLANEOUS

MICHIGAN

BRIEFS Metro Health CEO in whistleblower lawsuit Metro Health CEO Michael Faas is the target of a whistleblower lawsuit filed by Laura SachaStaskiewicz, former director of Metro’s foundation. Sacha-Staskiewicz accuses Faas of “a pattern of illegal and unethical conduct,” questioning his actions regarding the proposed sale of the 208-bed hospital in suburban Wyoming to an out-of-state for-profit company, MiBiz reported. Sacha-Staskiewicz alleges she was fired in January after raising concerns about plans to dissolve Metro’s charitable foundation before the sale is approved with Tennessee-based Community Health Systems. She alleges the goal was to divert $50 million in proceeds from the sale to Metro-CHS rather than to the hospital’s charitable foundation. Metro Health had not responded last week to a request for comment. After months of discussions,

CHS in January said it plans to acquire 80 percent of Metro. The sale is subject to review by Michigan Attorney General Bill Schuette.

Dow Chemical to sell chlorine business to Olin Midland-based Dow Chemical Co. agreed to sell almost all its chlorine business, the world’s largest, to Olin Corp. in a $5 billion deal as it pares less-profitable products, Bloomberg reported. The deal allows Dow Chairman and CEO Andrew Liveris to exceed his target of selling $7 billion to $8.5 billion of low-margin assets as he focuses on products such as genetically modified corn seed and plastics for autos and packaging. Dow was founded in 1897 as a producer of bleach. Clayton, Mo.-based Olin, North America’s oldest maker of chlorine, now will become the world’s largest producer, said its CEO, Joseph Rupp.

䡲 Comstock Park-based Perrin B r e w i n g C o . L L C was acquired by Colorado-based Oskar Blues Brew i n g C o . , MiBiz reported. Terms of the deal were not disclosed. In 2014, Perrin produced almost 14,000 barrels, while Oskar Blues produced 149,000 barrels. Joe Infante, a Grand Rapids-based attorney at M i l l e r C a n f i e l d P a d d o c k & Stone PC who runs the firm’s alcoholic beverage team, said M&A activity will continue to increase among craft brewers, particularly among the larger players and public companies. 䡲 Be n t o n Ha r b o r- b a s e d Whirlpool Corp. will become the exclusive supplier of home appliances for Dan Ryan Builders, MiBiz reported. Dan Ryan Builders has built nearly 10,000 homes and operates in six Eastern states. 䡲 Chemical Financial Corp. closed on the $27.2 million acquisition of Coldwater-based Monarch Community Bancorp Inc. , MiBiz reported. Monarch will operate as a subsidiary until the bank’s IT systems are converted, at which point all Monarch branches will take the Chemical Bank name. 䡲 St art Garden LLC in Grand Rapids launched a new business accelerator with six corporate participants to support startups seeking to design Internet-connected devices, MiBiz reported. Steelcase

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Inc. , Amway Corp. , auto supplier Faurecia SA , Meijer Inc. , Spectrum Health and Priority Health are also involved in the Seamless Coalition and Accelerator. 䡲 The Michigan Department of Environmental Quality awarded a $1 million grant to help the city of Grand Rapids clean up the future site of the Biomedical Research Center being built by Michigan State University’s College of Human Medi cine , MiBiz reported. The Grand Rapids Press building used to be on the site. 䡲 The Western Michigan University Thomas M. Cooley Law School added two directors to its board, MiBiz reported. They are Kenneth Miller, a principle in the Kalamazoo-based investment management firm Havirco and the owner and CEO of Millennium Restaurant Group, also in Kalamazoo; and Richard Suhrheinrich, a judge on the U.S. Court of Appeals for the 6th Circuit. 䡲 California-based Gourmet Mushrooms Inc. acquired Diversified Natural Products Inc. in Scottville, east of Ludington, in a deal worth about $3.3 million, MiBiz reported. Gourmet Mushrooms hopes to produce up to 1 million pounds of various fungi from an operation that largely had been idled since 2008. The company currently employs 45 and has plans to hire 35 more by the end of the year. 䡲 Michigan Sugar Co. finished

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 23 CALENDAR . . . . . . . . . . . . . . . . . . . . . . 24 CLASSIFIED ADS . . . . . . . . . . . . . . . . 21 CRAIN’S LIST . . . . . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 22 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 26 WEEK ON THE WEB . . . . . . . . . . . . . . 26

COMPANY INDEX: SEE P 25 processing the annual harvest of sugar beets, the Bay City Times reported. The Monitor Townshipbased, grower-owned cooperative produces sugar under the Pioneer Sugar and Big Chief Sugar brands. In the fall, growers delivered more than 4.72 million tons of beets, up from more than 4.17 million tons in 2013. 䡲 In March, J.C. Huizenga sold Holland-based J.R. Automation and its smaller sister company, Stevensville-based Dane Systems, to an investment firm. At which point, his parent company, Huizenga Automation Group, gave bonuses to the employees at the two factories ranging from $500 to more than $50,000, MLive.com reported. The payout to 570 employees totaled $5.75 million.

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CRAIN’S DETROIT BUSINESS // April 6, 2015

BY THE NUMBERS: DETROIT TIGERS

Opening Day: A revenue bonanza By Bill Shea bshea@crain.com

It’s Opening Day in Detroit, and De troit Tigers fans will descend on downtown to not only celebrate the start of the 2015 season, but to spend money. Major League Baseball is big money, and the Tigers and their concessionaire, Delaware North Sportservice, are prepared to meet fan demand for beer, soda, hot dogs, chips and teambranded merchandise at Comerica

Park. That involved amassing enormous quantities of everything from soda to peanuts. Concessions and ticket sales from nearly 3 million fans last season, along with TV deals and other income streams, generated $254 million in revenue for the Tigers in 2014. Below is a look at some key metrics for Opening Day.

Big money isn’t always best for Tigers Team aims for salary balance as season opens By Bill Shea bshea@crain.com

When $28 million Detroit Tigers pitcher Justin Verlander delivers a fastball that’s hit on the ground down the left-field line, he’ll rely on $525,000 third baseman Nick Castellanos to field the ball. Their 2015 salaries provide a stark contrast that illustrates the vast economic disparity between the top and bottom of rosters that exists on every MajorLeague Baseball club. De- Justin troit will rely on Verlander: those low-paid $28M a year players in the team’s quest for a fifth consecutive playoff berth. Verlander, 31, will be paid $153,005 each day of the 183-day baseball season, while Castellanos, 23, will be paid Nick $2,868 per day in Castellanos: that time — or 1.8 $525,000 a year percent of what Verlander earns per day during the season. The Tigers this season will field a $173.8 million Opening Day roster, a number that includes salary and pro-rated signing bonuses calculated by BaseballProspectus.com. Of that total, $137 million will be paid to eight players who will earn at least $10 million or more in 2015. The remainder will be spread over nine players making between $1 million and $7 million, and 23 players who will be paid between $525,000 and MLB’s contractually negotiated minimum salary of $507,500. Besides Castellanos, other inexpensive players Detroit is expected to rely on this season include out-

fielder Anthony Gose ($515,000); infielder Andrew Romine ($520,000); backup catcher James McCann ($507,500); and pitchers Shane Greene ($515,000), Bruce Rondon ($510,000) and Ian Krol ($515,000). The team’s middle class — guys making more than $1 million but less than $10 million — include pitchers Alfredo Simon, Joakim Soria, Joba Chamberlain, Al Alburquerque and Tom Gorzelanny, and positional players Alex Avila, J.D. Martinez, Jose Iglesias and Rajai Davis. Players with just a year or two of MLB experience, like Castellanos and Greene, serve a couple of purposes, said Raymond “Skip” Sauer, former president of the North American Association of Sports Econo mists and chair of the economics department at Clemson University. “First, you need some balance in the squad in terms of proven players and those who are developing for the future. If experience was to become concentrated among, say, 30-year-old players, the whole roster could depreciate in playing ability (due to aging) at once,” he said. “Balance with youth coming through helps avoid this. “Second, young players are cheap relative to players with lots of major league experience. As players get closer to eligibility for arbitration and free agency, their bargaining power improves as does their salary. “Unless you are the (New York) Yankees or the (Boston) Red Sox , it doesn’t make sense to have a roster full of high-priced players. Only nine can be on the field at the same time.” One baseball insider says the Tigers have done a good job of finding not just the superstar talent, but the cheaper guys who play well. “When you have guys who are that good and that expensive at the See TIGERS, Page 26

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Crain’s catches up with Ronald Goldsberry, who in 1985, as CEO of Parker Chemical Co., was one of the most read-about men in America. Page 4

Dan Gilbert’s ambitious plans for the former Hudson’s site is just one of several projects to watch. Page 18

The New Orleans program that helps link minority entrepreneurs with venture capital comes to Detroit later this month. Page 25

Tiny fragments of plastic are wreaking havoc on the Great Lakes — our cosmetics and sweaters are to blame. University of Michigan scientists are on the case. Page 20

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April 8, 1985, issue looked at Ronald LOOKING BACK Crain’s Goldsberry’s expanding profile: in ads for Fortune magazine as well as a rare African-American CEO. Now, he can look back at a varied, productive career in Silicon Valley as well as metro Detroit. More at crainsdetroit.com/30

Goldsberry’s career spans Detroit to Silicon Valley and back By Amy Haimerl ahaimerl@crain.com

In 1985, Ronald Goldsberry was one of the most read-about men in America. That spring, Fortune magazine selected Goldsberry, president and CEO of Parker Chemical Co. — then based in Madison Heights and a subsidiary of Ford Motor Co. — to be a spokesman for the publication in ads that ran in national magazines such as The New Yorker and Sports Illustrated. Goldsberry’s professional credentials — U.S. Army captain, Ph.D

from Michigan State University in chemistry, MBA from Stanford University, CEO of a $100 million revenue firm — were burnished by the fact that he was one of the few African-American faces in the country’s C-suites. “They wanted to use me because my background was somewhat unique and appealing to the business readers they want to reach,” Goldsberry told Crain’s 30 years ago. Goldsberry was just 42 at the time, still at the beginning of what would become a distinguished career spanning corporate America,

Silicon Valley and even Detroit’s financial review board. Crain’s caught up with Goldsberry about where his career has taken him and what he’s learned since the days of Parker Chemical and Fortune. You are originally from Wilmington, Del. What brought you to Detroit? I came to Detroit about in the early 1980s when I was the head of Parker Chemical. I grew up with my mom, but my dad was a surgeon at Mt.Clemens Hospital, so it was really a significant point in my life that I was able to be here to start my career and to start a relationship with my dad, who was estranged at the time. That was a very important time. How was Detroit for you profes sionally? A s t h e m e t r o a r e a l o o k s t o attract new talent, one of their con cerns is career trajectory in the re gion. How did it work for you? From a business standpoint, Detroit was a major turning point. Ford Motor Co. acquired Parker, and Ford asked me if I would stay on to run the company. I became one of the first AfricanAmerican VPs at Ford Motor Co. Before Ford Motor Co., I had not stayed on a job more than about three or four years. I could not candidly tell you I had a career plan to stay at Ford or in Southeast Michigan. It was just one of those things that just worked out.

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You took an early retirement from Ford in 2000.What came next? I was approached to do a number of different things, but what got my attention was a chance to do a startup company based on utilizing connected technology to allow businesses to communicate. It sounds so obvious now, but then it was really innovative. It was during the whole dot-com era. I got there at the top and then, of course, the bust. That must have been difficult. How did you manage through the bust? It was tough. We started out with a lot of enthusiasm, a lot of capital, great ideas. For me, the most exhilarating thing was that we had all these really bright young people who had dreams and fascinations. People were either going to go to Harvard or Stanford for MBAs but had a dream to do this. For it not to work the way we thought we had planned or dreamed was one of the more difficult points of my life. But we kept transforming the model and then eventually sold it. What brought you back to Detroit from the Bay Area? The big decision for me was this: I loved San Francis-

co, I went to Stanford business school, but while I have a lot of contacts in the Bay Area, I can have a bigger impact in Michigan. Considering your background in Silicon Valley, what do you think of the effort to build a startup community here in Detroit? I’m a big fan of it. I was one of the charter members of the NewEconomyInitiative, which with Gov. Rick Snyder helped come up with the concept of investing in entrepreneurship in Detroit. I’m impressed by what the foundations and the executives like Dan Gilbert have done. As an anecdote, I tell some of my friends, when I’m in downtown and I come out of a building and close my eyes, I think I’m back in Silicon Valley. The euphoria. The atmosphere. The optimism you get. It is not by any stretch of imagination at a place where it could be called a Silicon Valley, but I think the foundation is there. What advice would you have for those trying to grow that sector? It can’t be an island to itself. Regionalization becomes a critical factor. How do you connect what’s happening downtown and midtown with the rest of the city, the rest of the state? How do you get the regionalization from a transportation standpoint? An inclusion standpoint? You served as a member of the Detroit Financial Advisory Board, the precursor to the Detroit Financial Review Commission that was created in the city’s bankruptcy. Your business experience and time with Deloitte made you a good choice, but how did it come about? Quite frankly, I was pretty shocked when I got a call from the governor’s office. I was hesitant at first. I was never that interested in getting directly involved in politics. But the committee recruiters — Gary Brown, Andy Dillon and the governor’s head of personnel — did a great job of explaining not just the financial condition but the barriers to having politicians make the tough decisions to deal with the issues. I told them that if I can be independent and make the tough decisions, I’m open to take that on. Did anything surprise you about the financials? Or in the outcome of the bankruptcy? One of the first things the board had to do was to declare that the city was in a financial crisis. I thought that was hilarious because you had all the facts and figures there. I was just shocked in all the public meetings we had with the mayor and City Council that we had to prove that there was a financial crisis.

“When I’m in downtown (Detroit) and I come out of a building and close my eyes, I think I’m back in Silicon Valley. The euphoria. The atmosphere. The optimism you get. ... I think the foundation is there.” Ronald Goldsberry

Then we decided to put the city under an emergency manager. We were hated for that. They called us carpetbaggers, Uncle Toms and threatened our lives. That was so surprising because I thought I was doing this as a friend to help the city. I didn’t know I was going to become the villain. It was very challenging and difficult. Even some of my friends said, “You’re crazy; this is not a financial crisis. This is being made up by the state.” But the numbers were all there. What advice do you have foryoung professionals in the region? Don’t think you have to have a full planned road map of what you want to do. Get the education and start off. Do a little, learn a lot. Do a lot more. That’s my philosophy. That will lead you to the right place. Once you have learned what you want to do, always follow your passion. I’m a big believer that we compete around the world and you have to be able to differentiate yourself. Everything else being equal, your competitive advantage is your passion. 䡲 Amy Haimerl: (313) 446-0416 Twitter: @haimeralad BLOOMBERG

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Growth-minded companies to lead MiQuest gala honorees More than 50 companies from across Michigan — half from metro Detroit — will be honored at the upcoming 11th annual Michigan Celebrates Small Business awards gala. The companies being honored at the May 7 event collectively achieved more than $308 million in revenue and employed 1,748 people last year, according to Lansingbased MiQuest, the managing partner for the event. Diane Durance, president of MiQuest, said she believes the common thread between the winning companies is their leadership. “These are growth-focused, ambitious entrepreneurs who are dedicated to their company. Across the board, these companies are not standing still,” Durance said. “All these different industries all over the state are being driven forward by someone with a vision.” A highlight of the event is the Michigan 50 Companies to Watch list, which considers companies with between six and 99 employees that generate between $750,000 and $50 million in annual revenue or have working capital from investors or received grants in 2015. (See list, this page.) A total of 22 industries, including one “Other” option with 18 sub-cat-

Local honorees Metro Detroit firms on the Companies to Watch list: AirTime Trampoline & Game Park, Novi Algal Scientific, Northville Apex Digital Solutions, Sterling Heights Armor Protective Packaging, Howell Beet Analytics Technology LLC, Plymouth Benzinga, Southfield Detroit Labs, Detroit Detroit Gun Works, Troy Digital Roots, Northville Energy Power Systems, Troy FirstSense Medical, Pontiac GamerSaloon.com, Royal Oak HistoSonics Inc., Ann Arbor InfoReady Corp., Ann Arbor Innovative Learning Group, Royal Oak jacapps, Bingham Farms Marvel Apps LLC, Royal Oak Mighty Good Coffee Roasting Co., Ann Arbor New Eagle, Ann Arbor NewFoundry, Ann Arbor Oxford Cos., Ann Arbor Rickman Enterprise Group LLC, Detroit Rubicon Genomics, Ann Arbor Troy Gymnastics, Troy For a full list of the Michigan 50 Companies to Watch, see www.michigancelebrates.biz

egories, are represented among the winners. Manufacturing, IT and professional services had the highest representation, according to Miche Suboski, managing director of MiQuest. The list also includes technology ventures, software companies, property management, retail and product development, among others. Every major region in the state is represented on the list. “Some of them started in a garage and now they employ more than 100 people,” Suboski said. One such company, Gaylordbased SunFrog Shirts LLC, claimed

it had grown so fast in the past few years that MiQuest had assumed their revenue projections were a typo. “They were growing so fast and doing so well that we were astounded. We said if this is true, they have to be one of the most innovative companies. Because how can you sell T-shirts and find a new way to do it?” Durance said. This year, the companies are planning to create 798 new jobs within those fields. The review team received 300 nominees, up 100 from last year, and hopes to increase that num-

ber significantly in the coming year. 䡲 The group’s Main Street USA winner is Detroit-based WalkerMiller Energy Services LLC, an energy efficiency services provider, which was named one of Crain’s Cool Places to Work in 2014. 䡲 The Small Business Innovation winner is Civionics LLC of Ann Arbor, a developer of wireless sensing systems to give manufacturers advance notice of potential equipment failure. The company recently won an elevator pitch contest at the annual Collaboration for Entrepreneurship event

sponsored by MiQuest. 䡲 The Government Contractor of the Year award winner is Kingsford-based Oldenburg Group, a shipbuilding parts manufacturer. Other individual award winners, including Small Business Person of the Year and Small Business Exporter of the Year, will be announced at the May 7 gala, at the Lansing Center in downtown Lansing. More than 1,000 people are expected to attend. Tickets can be purchased at www.michigancelebrates.biz. Natalie Broda contributed to this report.

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Report: Fate of Detroit News could soon be decided A new report from the Nieman Journalism Lab at Harvard Univer sity raises questions about the fate of The Detroit News. Newspaper industry analyst Ken Doctor wrote Thursday that New York-based private-equity firm Apollo Global Management is “nearing completion” of its $400 million acquisition of News owner, Digital First Media — a deal that will not include The News. Doctor has been the go-to source of information on the sale of the Digital First properties by its hedge fund owner, New York City-based Alden Global Capital LLC, and I asked him if he had any additional insight. “All I know is that (Digital First Media’s Detroit) ownership isn’t included,” he said via email. “In a sense, that’s a puzzlement, since DFM as a whole, other than the properties going to Gannett, seems to be moving to Apollo, lock, stock and barrel, with pensions, labor agreements, etc.” A message was left for Jon Wolman, editor and publisher of The

BILL SHEA bshea@crain.com News, and executives at Digital First Media. Previously, all involved have declined to comment. Charles Zehren of Rubenstein Associates Inc., outside media relationship handler for Apollo, declined comment. Doctor reported that Gannett Co. Inc., owner of the Detroit Free Press, is acquiring 10 Digital First newspapers elsewhere in the country as it also prepares to be spun off this summer as a new standalone newspaper company separate from its digital and broadcast holdings. Digital First has a 5 percent equity stake in the joint business partnership that operates the advertising, circulation, printing and delivery of The News and Free Press. The part-

nership, which operates under a joint operating agreement approved by the U.S. Justice Department, maintains separate newsrooms, both of which are financed by the partnership’s revenues. Crain’s has been told by a source familiar with the finances of the partnership that it was not profitable as of early 2014. Partnership executives had said the same thing publicly in 2009 and 2010, amid home delivery cutbacks and rounds of staff reductions to save money. Doctor offered some speculation on Detroit, and he believes the fate of The News is known to the top executives. “Gannett clearly has been part of these negotiations, through (DFM CEO John) Paton and the board,” he said. “(Gannett) is taking the properties it wants, unspooling the pool. So, it would make sense that in the Gannett/DFM discussions, the Detroit partnership would have been decided. “(There is) not much reason for a

new owner to take it on, given finances. I would assume then that Apollo-owned DFM wouldn’t want to operate The Detroit News and would negotiate any exit from it. “I would think the two parties — Gannett and Apollo — are right-sizing their deal, and The Detroit News’ fate will hang in the balance.” So that raises a question for mid2015, when Gannett orchestrates its newspaper spinoff, he said. “What are the financial advantages to Gannett of keeping The News or of ending or curtailing it? Whatever is financially best — and can be done within the law — is likely to happen.” So does The Detroit News join the newspaper graveyard with the Cincinnati Post, Rocky Mountain News and Honolulu Advertiser — major daily newspapers that either folded or were merged with rivals? Perhaps a savior comes along to prop it up, which seems a long-shot notion. Another possibility: It folds into the Free Press and produces stand-

alone pages as a section within its rival (as the Las Vegas Sun does inside the Las Vegas Review-Journal). Lastly, The News could become a purely digital publication, abandoning print altogether (something the Freep could do, as well, to save on the enormous cost of printing and delivery). The Seattle Post-Intelligencer went online-only in 2009. While there are opt-out clauses within the Detroit JOA, events seem to be happening more quickly than what the opt-out language covers. An early-termination clause within a 25-year joint operating agreement that created the current partnership on Aug. 3, 2005, states that after 10 years from that date, either party may opt out if the partnership has sustained three consecutive years of financial losses. If a sale does occur, the JOA includes language that outlines ownership changes: Gannett, as general partner with a 95 percent ownership stake in the partnership, must sign off on any sale of a limited partner’s stake in the JOA. The JOA language limits Gannett’s ability to block a sale to whether the buyer has “experience in and a good reputation within the publishing industry.” Gannett doesn’t need permission from The News’ owner for a sale of the Free Press, under the JOA language. The JOA expires in December 2025, but it automatically will renew for five years if neither party opts out. McLean, Va.-based Gannett bought The Detroit News and other newspapers and several television stations for $717 million in 1986 from the Detroit-based Evening News Association. In 2005, Gannett bought the Detroit Free Press for $262 million from the now-defunct Knight Ridder Inc. and sold The Detroit News for $25 million in stock to Denverbased MediaNews Group Inc. A version of this originally appeared as a blog at crainsdetroit.com.

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The following businesses filed for protection in U.S. Bankruptcy Court in Detroit March 27-April 3 . Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Mid-America Diesel Inc. , 414 N. Saginaw St., Holly, voluntary Chapter 11. Assets and liabilities not available. Brian J. Benner PC , P.O. Box 441, Keego Harbor, voluntary Chapter 11. Assets and liabilities not available. Scientific Image Center Properties Inc., Scientific Image Center Staffing Inc. , S c i e n t i f i c I m a g e C e n t e r M a n agement Inc. , Lifestyle Lift Holding Inc. , P a c i f i c S e a b o a r d M a n a g e m e n t Inc.,100 Kirts Blvd, Suite A, Troy, voluntary Chapter 11. Assets and liabilities not available. — Natalie Broda

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Macomb asst. county exec to head nonprofit By Chad Halcom chalcom@crain.com

Macomb County Assistant Executive Melissa Roy is stepping down to join Advancing Macomb , a nonprofit focusing on community reinvestment and economic development. John Paul Rea, 31, a senior planner and nine-year employee of the Macomb County Planning and Economic Devel opment Depart m e n t , replaces her in the position starting April 6. “I’ve been dedicated to Melissa Roy: helping raise Named executive the profile of director of Macomb CounAdvancing Macomb. ty,” Rea said in a statement on his promotion. “Now, working alongside Executive Hackel and his team, we can continue to advocate for all the wonderful things that happen here.” Roy, 39, an assistant to county Executive Mark Hackel since 2011, becomes the first executive director of the nonprofit organization, formed about two years ago after a 2012 request from Hackel to local business community leaders. Her last day in the position was April 3. Formerly known as Leaders Advancing Macomb, the nonprofit organization seeks to foster community and economic development, and to be a philanthropic mechanism for funding major projects or to build public and private sector collaboration in the county. Advancing Macomb just opened an office in Mt. Clemens, the county seat, this spring. Its board includes Chairman D a v i d G i r o d a t , president of F i f t h T h i r d B a n k eastern Michigan region; Treasurer P a u l T r u l i k , president of Apparatus Solutions Inc. in Detroit; and Secretary M a r i a S i l a m i a n o s , president of Omega Solutions LLC . Before joining Macomb County, Roy was senior director of government relations at the D e t r o i t R e g i o n a l C h a m b e r , where she had worked for 12 years. “Melissa was an exciting hire and now, an exciting new partner,” Hackel said in a statement. “She brought a new perspective to the county that helped modernize our communications, give us a regional and state-wide reach and establish quality relationships throughout those communities.” In the new role, Roy is expected to focus primarily on Macomb County, but will also look for regional collaboration opportunities. 䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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CRAIN’S DETROIT BUSINESS

OPINION Snyder should embrace school panel proposals

he majority of tax-supported K-12 schools in Detroit are failing children. Gov. Rick Snyder knows that. And more than 20 years of charter school expansions and a parade of state-appointed emergency managers haven’t solved the problem. The question is: What will the governor do next to try and fix education? He can start by embracing some of the most creative recommendations the Coalition for the Future of Detroit Schoolchildren delivered to him last week. The best of the bunch: Create an “education commission” — appointed by Detroit’s mayor — to oversee opening and closing all tax-supported schools while holding all schools to the same high standards. A single authority with the power to open and close schools is critical; right now, 14 different entities run Detroit’s hodgepodge of publicly financed schools, creating a patchwork — too few students spread across too many under-utilized buildings. The coalition also recommended that the governor create common enrollment and common transportation systems to serve all tax-supported schools. This is not an anti-charter proposal; helping parents find quality schools — and giving them transportation to reach those schools — helps charters. The coalition recognized that many parents choose schools based on location because transportation around the 139-square-mile city forces them to do so. Some analysts have fixated on the coalition’s call to return control of Detroit Public Schools to the elected board. But the proposed commission is key; the elected board must focus on educational quality and results — or risk having more schools closed by the appointed commission. Gov. Snyder has invested more of his political capital into helping Detroit become sustainable than any of his predecessors. Detroit’s economy, population growth and future rest on fixing schools. The coalition, which cut a broad swath through Detroit’s education, nonprofit, business and civic leadership, offers an opportunity to build a base of community support for continued school reform.

LETTERS

Road tax confusing, but worth passing Editor: I read Keith Crain’s column about the road funding (“Roads tax hike: What’s a person to do?” March 16, Page 6), and I also think a lot of people are very confused about this proposal. However, from what I know of the legislation, the confusion is not due to the legislation itself. Rather, the confusion is due to a persistent problem with Republican-run legislatures: lack of communication. Here’s what I know of the funding arrangement: First, the gas tax portion. At least half of the state of Michigan portion of the gas tax at the pump is due to sales taxes. Less than half the state tax is actual gas tax, for funding of the roads. This is the reason that Michigan has one of the higher state gas taxes in the U.S., while spending much less on its roads. It’s the sales tax that’s been added to the pump, doing nothing for the roads. The Legislature needed to resolve this, increasing the tax that goes to fixing roads, while not hurting folks whose wages have been stagnant — at best — for the past few years. But what the sales tax at the gas pump did do fund schools, and a host of other things. Not wanting to decrease funding in these areas because sales tax has been removed from fuel purchases, the Legislature created the increase in the sales tax. It also goes the rest of the way in providing additional funding for roads, so that we aren’t relying totally on gas taxes. When you look at the entire proposal, it doesn’t seem too bad, after all. It has bipartisan support in Lansing. Have the Republicans in Lansing done their usual thing of not communicating, once again? Unfortunately, yes. But both parties have come up with a pretty good solution for our road funding, given all the options available. A couple things Lansing needs to pay attention to, though: 1) As an accountant, I’m aware of a governmental accounting rule which states that one fund may borrow from another, larger fund, as long as it returns the money at a later date. I think Lansing needs to include in this legislation wording that states that this governmental

accounting rule is null and void with respect to this proposal. Politicians: Keep your grubby fingers off our road money. 2) In the past, we always stayed on top of our U.S. Senators and congressmen, pressing them to bring some of the federal gas tax money that D.C. grabbed from us at the pump (18+ cents/gallon) back to Michigan for our roads. Where is the pressure on Debbie Stabenow and Gary Peters and our representatives in Congress to do this? 3) What will be done to ensure that partisan political bickering doesn’t withhold this increased road funding to areas of Michigan? Just as an example, the Republicanrun Township of Canton never expects the Democrat-run Wayne County to pay attention to its roads. Again, at first glance, this road funding scheme can be quite confusing. But, when you learn about it, it sounds like a decent proposal, with bipartisan backing. Mike Beeman Financial professional, CFO, controller Canton Township

Noncompetes hurt workers Editor: On March 18, Crainsdetroit.com published a Bloomberg News article titled “Laws on noncompete agreements hurt Michigan, new study says.” The article argues that Michigan can reverse a drain of talent by banning noncompetes. This article comes on the heels of a bill proposal in the Michigan Legislature to limit noncompete agreements to business owners. The study on noncompetes itself seemingly has numerous flaws, such as the assumption that noncompetes are the sole factor of why “inventors” would move to states without noncompetes. It also ignores the history of Silicon Valley as a technology destination, the availability of venture capital and the existing tech companies that give inventors a start before going out on their own. This assumption ignores other social, economic and demographic trends of Michigan’s talent drain. For instance, many non-inventors leave Michigan for a myriad

of reasons that do not relate to noncompete agreements. But let’s assume that banning or restricting noncompetes in Michigan would help keep inventors in the state. The article focuses on employees and ignores the impact on job creators. Businesses prefer to protect their interests with reasonable noncompete agreements to ensure that the investment made in employees will not lead to disaster when that employee bolts to a competitor with the company’s customer lists and product knowledge. As the article points out, even with noncompetes essentially unlawful in California, Apple and Google had agreed not to poach employees from each other. Michigan needs to attract business to the state, and businesses prefer the protections a noncompete can offer. It is this reasonable balance of interests that makes Michigan’s noncompete law so beneficial. The Bloomberg article ignores the practical way Michigan’s noncompete statute operates. Under Michigan’s law, a noncompete must be reasonable to be enforced. This includes a realistic protection of business interests. For instance, Jimmy John’s attempting to restrict its delivery personnel from competing simply will not be enforced since there is no business interest in doing so. The “freaky-fast” delivery guy does not have the company’s customer list or knowledge of a secret Jimmy John’s recipe, and therefore there is no basis to prevent competition. On the other hand, a court will uphold a noncompete that protects an employer’s reasonable business interest and is still fair to the employee. For example, consider a company that provides medical support services to hospitals. Because the company spends a great deal of money to train its employees, it is known as producing highquality talent. As such, competitors, rather than investing in their own training, attempt to poach the company’s employees. Thus, after investing a great deal of money in these employees, they would leave for a competitor and end up in the same hospital where they were See Next Page

Detroit – a perfect sports town KEITH CRAIN Because of our printer deadlines, I don’t know how the MSU fans feel on Monday. But it was a spectacular feat for MSU to get to the Final Four. And to think that the Tigers are launching their 2015 season at the same time is quite remarkable. We believe that the Red Wings will be competing in their season playoffs for the umpteenth time — and, sadly,

the Pistons will end up, once again, with a short season and no playoffs. There probably isn’t another city in the country that has as many bigtime sports franchises, both professional and college, as Detroit. Detroit loves its sports teams, and fans show it every year by spending millions of dollars at the gate as well as buying all the sports paraphernalia that is available. And with a winning team, that amounts to a lot of shirts and jackets, just to name a few. One great attraction for economic development has always been

sports teams. I don’t know whether that has been used effectively in our city, but it’s a great draw. Sports are a big business, and they deserve the attention that all big businesses deserve. I am pleased we will be giving sports business a better look with our new weekly e-newsletter, championed by Bill Shea. But I am not sure that it would work in many other cities. Here, we have the combination of professional, college and even high school sports that create great enthusiasm

for our fans. But without keeping those winning streaks going, as the Pistons have learned, it is a much tougher fight to make a profitable business. The Lions can thank a lucrative television contract for remaining profitable all these years. That, indeed, is the exception, not the rule. There are not many businesses that combine such passion with business and consistently come out a winner. Certainly motor sports and racing have the added element of a big

business quotient mixed in with their passion to win. Winning is a dollars-and-cents proposition for sports teams and usually makes the ultimate difference in the bottom line. We aren’t sure how the Tigers are going to fare this year and the Red Wings always promise to be competitive. And the NCAA playoffs always seem to end with lot of excitement. But the bottom line for these teams is red or black. Let’s keep rooting for our home teams. Even if it is big business.

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Detroit should be in autonomous-vehicle driverâ&#x20AC;&#x2122;s seat OTHER VOICES W. Patrick Dreisig W. Patrick Dreisig is vice president and co-chairman of Butzel Longâ&#x20AC;&#x2122;s global automotive industry practice group.

os Angeles Mayor Eric Garcetti recently said that LA could be the first place in an urban center where autonomous vehicles could be promptly ordered up like a car service in a real neighborhood and not just in a protected area. My response: Why not Detroit? This is the perfect time for Detroit to decide to become Motor City 2.0: the worldwide capital of autonomous vehicles. Detroit is already in the early stages of redeveloping its downtown. The state of Michigan already has enacted legislation providing for the testing of AVs. Enormous research and development investments in AVs have been made by Detroit OEMs. The legal community â&#x20AC;&#x201D; including subject-matter experts at firms like mine â&#x20AC;&#x201D; are ahead of the curve in developing the legal infrastructure to support a testing â&#x20AC;&#x153;safe zoneâ&#x20AC;? in the city of Detroit. The infrastructure needed to support AV development could be integrated with ongoing efforts to

LETTERS From Previous Page

working, but now competing against the company. The imposition of a reasonable two-year law that prevents these employees from competing at the same hospitals where they worked for the company is a reasonable way to help prevent damage to its business. In this way, the employee is not prevented from working at any hospital, she just cannot turn around and compete at the same hospital where she worked for the company. The company, in turn, has a reasonable protection from the investment it made in the employee. But Michiganâ&#x20AC;&#x2122;s noncompete law goes even further to protect employee interests. The law allows a judge to rewrite, or â&#x20AC;&#x153;blue pencil,â&#x20AC;? a noncompete that is unfair. Therefore, if a company were to try to enforce an unfair noncompete, a court could rewrite the unfair provisions in favor of the employee. The current bill before the Michigan legislature to restrict noncompetes is sold as a protection for workers. But in reality, it would only hurt job creators, and that is not good for workers. Brett Miller Kitch Law Firm, Detroit

grab the lead now and avoid tearing things up later. In the technology space, asserting early leadership is critical. I could easily envision the following: äĄ˛ AV expansion east and west from the M-1 Rail line. Commuters need to get to and from the M-1 Rail line to reach their destinations. This could happen by ordering up an AV from home to reach the system and ordering another when departing the system to reach the ultimate destination. There would be no need to wait for a bus or park a car to get to and from the M-1 line.

äĄ˛ AVs and AV fleets could tie residential property to Detroitâ&#x20AC;&#x2122;s entertainment and commercial centers while reducing lifestyle costs and traffic in the central city. AVs could also provide a real neighborhood solution for underserved populations with little or no access to transportation while reducing legacy costs in operating the system. The results would be transformative. äĄ˛ Electric AV fleets should be offered for transportation within the city. Transportation to and from entertainment and sporting venues will expand the downtown experi-

ence beyond venues directly adjacent to parking destinations. This could get more people downtown and build Detroitâ&#x20AC;&#x2122;s brand. äĄ˛ Foreign OEMs will come to Detroit. The ability to develop AVs in real-life conditions will drive foreign automakers and their supply bases to Detroit. The job pool to support such an influx of new business would grow enormously beyond what is now available. This would fuel the growth of our region and potentially lead it back to the prominence it once had. Everything needed for success â&#x20AC;&#x201D; including political will, financing,

local OEMs developing AV products and an interested federal government â&#x20AC;&#x201D; are in place. We just need a vision and the right leadership to see it through. Leadership should consist of a concentrated group of decisionmakers with the background and passion to get this done. Dan Gilbert, Mike Ilitch, Mayor Duggan and empowered representatives of AV development in each of the domestic OEMs are choices that immediately come to mind. Leadership should assemble now and determine how to get this done. The time is now. äĄ˛

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More cuts threaten Oakland County Mental Health By Jay Greene

“We were able to stave off further cuts because we used our reserves. The problem is we don’t have any more reserves to use.”

jgreene@crain.com

The $29 million deficit that Oakland County Community Mental Health Authority faced two years ago has been reduced to a more manageable $11 million deficit heading into fiscal 2016, but more layoffs and provider rate cuts could happen if a solution isn’t found soon, Oakland officials said. Executive Director Willie Brooks said he has been meeting with state legislators, the Michigan Department of Community Health, mental health providers and fellow directors in Macomb and Wayne counties seeking a solution for Oakland’s funding shortfall for the year that starts Oct. 1. “We were able to stave off further cuts because we used our reserves. The problem is we don’t have any more reserves to use,” Brooks said. In 2014, Community Health cut state funding by an average of 5 percent, or $48 million, to the regional mental health authorities in Oakland, Wayne and Macomb counties. The cuts — called rebasing — were part of a multiyear effort that began in 2010 to move to a new statewide Medicaid rate for Michi-

Willie Brooks, Oakland County Community Mental Health

gan’s 10 regional mental health authorities. Overall, five regional authorities received increases and five had their budgets cut. The three Southeast regional directors — who service about 62 percent of the state’s mental health Medicaid recipients — predicted the cuts could lead to service disruption or reduction to the 140,000 beneficiaries they serve. For Oakland County, the cuts led to a 10 percent reduction in staff last year, provider rate cuts and some service cuts to non-Medicaid, lowincome people, Brooks said. The authority serves about 27,000 residents with developmental disabilities, adults with mental illness or substance use disorders, and children with serious emotional disturbances. “We are looking at increasing efficiency, but we are already one of the most efficient authorities in the

state,” Brooks said. “We will meet with our providers next month to come up with a plan” to balance the authority’s budget. Oakland’s service providers include Common Ground, Community Housing Network, Community Living Services, Community Network Services, Easter Seals Michigan, Macomb-Oakland Regional Center, Oakland Family Services Inc. and Training and Treatment Innovations. But the directors in Oakland and Macomb counties say they are in pretty good financial shape for fiscal 2016, as long as the state doesn’t make further cuts in rates. Tom Watkins, executive director of the Detroit Wayne Mental Health Authority, said belt tightening and efficiency improvements the past two years have paid off. The authority serves about 75,000 people.

“We do not anticipate any reduction in services during this fiscal year and without further state or federal reductions will be able to maintain and strengthen services in 2016,” said Watkins. “We have aggressively worked to enroll consumers into Healthy Michigan and to maximize traditional Medicaid for persons we serve,” he said From 2013 through 2015, Watkins said, the Wayne County authority experienced a $60 million reduction in state reduced general funds. “We have successfully moved over general fund (non-Medicaid) consumers and uninsured persons to Healthy Michigan,” Watkins said. John Kinch, executive director with the Macomb County Community Mental Health Authority, said Macomb has weathered about $23 million in total cuts the past two years and also doesn’t expect problems in 2016. “We used our surplus the first year, and the second year we reduced provider rates 5 percent to 7 percent,” Kinch said. “The state took away state dollars, but in a lot of cases federal money from Healthy Michigan (Medicaid) made up for it.”

Kinch said Macomb County has enrolled 47,000 people in Healthy Michigan Medicaid the past year, which has helped fund the authority and its 30,000 recipients. “We still have 35,000 uninsured people that require services, and that is a challenge,” he said. “We are fully funded for next year, unless they further cut” Macomb’s payments. But Brooks, like Watkins and Kinch, told Crain’s that Community Health needs to rethink how it divides up funding to the 10 regional authorities. “We service 62 percent of the people but are dictated in our funding by 38 percent of the people,” Brooks said. “We need a joint effort to be more effective statewide.” Kinch said the three regional authorities hope to host Community Health Director Nick Lyon this month to further explain their funding problem and to at least end the rebasing formula change. “The problem we have is that Oakland County has some of the sickest people here,” Brooks said. 䡲 Jay Greene: (313) 446-0325. Twitter: @jaybgreene

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SPECIAL REPORT

REAL ESTATE

KIRK PINHO Reporter’s Notebook WEB: kpinho@crain.com TWITTER: @kirkpinhoCDB

Lunch, hoops and big real estate deal It wasn’t at a fancy restaurant or in a board room that Dennis Bernard realized he had all but sealed the deal for the largest nonrecourse commercial mortgagebacked securities loan in Detroit. Ever. What’s a nonrecourse CMBS loan? Well, the short answer is that in this type of loan the lender looks solely to the real estate collateral for the recovery of amounts due under the loan; thereby “no recourse” to the borrower or guarantors other than for certain exceptions. Basically, it’s a fixed-income or floating rate security which uses commercial real estate loans as collateral. But more on that later. First, let’s talk about the layups leading up to the Compuware Corp. building sale. Yes, those kind of layups. The loan closing for the purchase was at Campus Martius Park, eating lunch from a food truck and then shooting hoops with representatives of the lender, Greenwich, Conn.-based Starwood Capital , in the Compuware HQ, which was about to be sold to Dan Gilbert’s Bedrock Real Estate Services LLC and Detroit-based Meridian Health for $142 million. “It was a nice day and they ate lunch at picnic tables and they were looking around saying, ‘This is like New York, Chicago or San Francisco.’” said Bernard, founder and president of Southfield-based Bernard Financial Group Inc. Bernard Financial originated the $125 million CMBS debt for the 1.1 millionsquare-foot building and an attached 2,600-space parking deck. Ten national lenders were approached, and there were serious offers from five or six of them. So, it’s a big statement to the market that the large-dollar transaction was both nonrecourse and had a vote of confidence from big out-oftown lenders. “It’s key because five years ago, you could shoot a rocket down Woodward Avenue and not hit a lender,” Bernard said. The complex, five-year deal closed in 50 days. It involved two companies setting up a 50-50 jointventure, a city that historically has not been seen as a good investment, and three companies — Quicken, Meridian and Compuware — changing their footprints. The purchase by 1000 Web ward LLC, the entity created for the deal, closed in December. And with those several dozen strokes of a pen, the non-recourse loan was on the books.

Deals building higher More office lease deals top 100,000 square feet; Detroit locations in demand

“Companies are feeling more stabilized today than in the past few years.” Paul Choukourian, Colliers International

By Kirk Pinho kpinho@crain.com

ast week, downtown Detroit’s big office leasing news came in the form of Ally Financial Inc. signing on to a mammoth lease — 13 full floors — at One Detroit Center. The 320,000-square-foot lease and headquarters relocation just as Dan Gilbert closed on his purchase of the landmark building is the latest example of an upward trend in the number of large local leases totaling more than 100,000 square feet. The Ally lease will also put the squeeze on office tenants looking for prime, Class A space downtown, where large blocks totaling 100,000 square feet are becoming few and far between, real estate brokers said. Those include 210,000 square feet available at the 500,000-square-foot [COSTAR] Stroh River Place and virOne Detroit Center. tually all of the 100,000square-foot Madison Office Building on St. Antoine Street. With the Ally deal, there will be about 250,000 square feet freeing up at the Re naissance Center, as well. “With many buildings in Detroit, it’s difficult to put that kind of space together in a contiguous fashion,” said Fred Liesveld, managing director of the local offices of Newmark Grubb Knight Frank. “When you’re looking for more than 100,000 square feet, you have to kind of cast your vision to those buildings that can accommodate that, and there’s going to be some in the city and some in the suburbs.”

Big is back

Last year, there were a dozen such large leases, topping 100,000 square feet, up from five in 2013, according to data reported to Crain’s by local brokerages. From automotive to financial services to health care, a wide variety of employers had the need for much larger blocks of space. Of the 2.2 million square feet included in the very large-space leases last year, 730,000 (33 percent) were downtown spread out in three deals. In 2013, the five 100,000 square-foot-plus leases totaled just 820,000 square feet, with 240,000 square feet (29 percent) of that being downtown

[CDB/DAVID HALL]

Tied for the top spot for local office leases is Meridian Health’s deal for 300,000 square feet in the Compuware headquarters building,which it bought in a joint venture with Bedrock Real Estate Services. term for the space they need to grow, reversing a in two separate deals. A variety of factors — including some not nec- trend where many corporate tenants were only interested in baby steps like short-term leases or essarily related to the bottom line — will come into play when large tenants consider urban ver- small-space deals. Local real estate experts said the industry can sus suburban leasing, said Jim Becker, principal thank a whole host of drivers for the overall jump and managing director in leased space, including of the Detroit office of an improved economy, Toronto-based brokercompanies having more age firm Avison Young. Connect with lists “When a tenant confidence in their futures, Find more of the area’s top looks at the downa trend toward consolidatoffice leases, industrial leases town market vs. the ing multiple office locations and building sales on Pages 13, 15 suburban market, into one, and the ripple efand 16, respectively, and on our it’s a $10 to $11 (per fects of the recession. Also searchable database at square foot) difference because of crainsdetroit.com/realestatedeals fading out of fashion are the (city income) tax and other very short-term leases. factors,” he said. “That’s a natural These days, as office leases deterrent. I think it’s also true that people make are set to expire, it’s more likely to sign a client to decisions that are beyond the economics to a longer commitment. come downtown.” “When you see what everyone went through And also fading away in both Detroit and the See OFFICE LEASES, Page 12 ’burbs are tenants too skittish to sign on longer-

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SPECIAL REPORT: REAL ESTATE

OFFICE LEASES, from Page 11: Larger deals in 2009, 2010 and 2011, everyone was just trying to buckle down, do some short-term deals to hold them over — and they are getting out of that stage,” said Paul Choukourian, managing director of the Southfield office of Colliers International Inc. Liesveld said it’s a relief that companies are thinking long-term again. “Companies are feeling more stabilized today than in the past few years, and as a result, decision-makers are more comfortable committing to longer-term decisions. Companies are beginning to look and plan for five and 10 years out,” he said. But he said that with “plenty of available spaces around town to move into,” there are still a lot of landlords offering tenant incentives to fill up vacant blocks of space. All told, there are 72.3 million square feet of office space in metro Detroit, according to data from Newmark Grubb. Need for construction? Of the office space in the region, 14 million square feet is in the greater downtown Detroit area, which had a 20.7 percent vacancy rate in the first quarter, while 58.4 million square feet is in the suburbs, which also had a 20.7 percent vacancy rate, according to Newmark Grubb. Yet for major, 100,000-squarefoot-plus users in metro Detroit, only a handful of contiguous blocks of quality office space are readily available, said Ron Gantner, partner in the Southfield office of Plante Moran Cresa.

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“The challenge is if there is available space in the market,” he said. “We may get to a point where we see some build-to-suit projects or spec buildings. If you’re a 100,000square-foot user, what is really the availability that’s out there?” In the suburbs, large blocks of space are available the 2.2 millionsquare-foot Southfield Town Center and the 1 million-square-foot Galleria Officentre in Southfield, for example. Sam Munaco, president of the regional office of Chicago-based Ad vocate Commercial Real Estate Advisors LLC, noted that companies are looking to consolidate multiple locations under one roof. For example, tied for the largest lease of 2014 is Detroit-based Meridian

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Office vacancy rates in metro Detroit Rates, first quarter 2015

SOUTHFIELD

DOWNTOWN

Size: 17.2 million square feet

Size: 12.8 million square feet

Vacancy rate: 24.3 percent

Vacancy rate: 20 percent AUBURN HILLS

TROY

Size: 2.4 million square feet

Size: 13.3 million square feet

Vacancy rate: 14.6 percent

GMAT WAIVER TO QUALIFIED APPLICANTS

Health’s deal for 300,000 square feet in the Compuware Corp. headquarters building, which it purchased in a 5050 joint venture with Dan Gilbert’s Bedrock Real Estate Services LLC in December. Meridian had leased space in two buildings for its 980 employees: One Kennedy Square at 777 Woodward Ave. and the Gilbertowned 1001 Woodward building. This should be another year of a significant number of sizable office leases, Choukourian said. “There are not a ton of companies over 100,000 square feet in this market, but a lot of the ones that are (that big) are looking around,” he said. 䡲

Vacancy rate: 24.4 percent

BLOOMFIELD HILLS Size: 3 million square feet

ALL SUBURBS

Vacancy rate: 7.2 percent

Size: 58.4 million square feet

FARMINGTON HILLS

Vacancy rate: 20.7 percent

Size: 6 million square feet

Vacancy rate: 19.6 percent

SOUTHEAST MICHIGAN

LIVONIA

Size: 72.3 million square feet

Size: 3.1 million square feet

Vacancy rate: 20.7 percent

Vacancy rate: 15.9 percent

Source: Newmark Grubb Knight Frank

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS // April 6, 2015

SPECIAL REPORT: REAL ESTATE

CRAIN'S LIST: OFFICE LEASES Ranked by square feet Rank

1 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Building

Compuware Corp. headquarters, Detroit

Compuware Corp. headquarters, Detroit Clark Street Cross Dock, Detroit Haggerty Corridor Corporate Park, Novi C Allied Center Building, Southfield C Metro Office Complex, Southfield Fairlane Business Park, Allen Park C Northern Equities Park, Novi

Owner, owner city

Tenant

Broker

Bedrock Real Estate Services LLC, Detroit Bedrock Real Estate Services LLC, Detroit General Development, Southfield Northern Equities Group, Farmington HiIls Redico LLC, Southfield

Quicken Loans Inc.

300,000

Meridian Health

300,000

Chrysler Group LLC

DTZ

189,960

Harman Becker Automotive Systems Blue Care Network of Michigan Federal Mogul

Savills Studley

188,042

Redico LLC and DTZ

180,291

CBRE Inc.

178,655

Roush

Transwestern

169,200

Harman, Beckes Automotive Systems Truven Health Analytics

Friedman Integrated Real Estate Solutions LLC CBRE Inc.

165,000

Compuware Corp.

130,000

Chrysler Group LLC

Bedrock Management Services LLC DTZ and Core Partners

127,700

American Landmark Properties Corp., Stokie, Ill. Griffin Capital, El Segundo, Calif. Savills Studley, New York City

Square feet

Executive Hills North, Auburn Hills C

Wickfield Properties LLC, Ann Arbor Bedrock Real Estate Services LLC, Detroit Peter Burton, Southfield

Travelers Tower II, Southfield

Time Equities, New York City

Accretive Health

CBRE Inc.

107,572

Federal Reserve Building, Detroit

Bedrock Real Estate Services LLC, Detroit Osprey Ltd., Brighton

Detroit Free Press & The Detroit News Bryllan LLC

Bedrock Management Services and CBRE Inc. Signature Associates

86,000

Nemer Group, Southfield

Blue Cross Blue Shield of Michigan Clark Hill PLC

DTZ and Nemer Property Group Inc. Advocate Commercial Real Estate Advisors of Michigan LLC and Signature Associates Redico LLC

80,440

Friedman Integrated Real Estate Solutions LLC Farbman Group

71,298

The Wickfield Center, Ann Arbor Compuware Corp. headquarters, Detroit C

12501 Grand River Ave., Brighton Township Omni Officentre, Southfield

One Detroit Center C, Detroit

iStar Financial, New York City

American Center, Southfield B

Redico LLC, Southfield

Sun Communities Operating Limited Partnership U.S. National Bank Association, Workforce Software Ambler, Pa. Farbman Group, Southfield Henry Ford

Seven Mile Crossing, Livonia C New Center One, Detroit C C

LNR Properties Inc., Miami Beach, Fla. Bedrock Real Estate Services LLC, Detroit Friedman Integrated Real Estate Solutions LLC, Farmington HIlls

Fifth Third Bank of Eastern Michigan Quicken Loans Inc.

The Hayman Cos., Troy Singer Investments, Bloomfield Hills Friedman Integrated Real Estate Solutions LLC, Farmington HIlls Redico LLC, Southfield

Marketing Associates LLC

One Detroit Center, Detroit

iStar Financial, New York City

McCann-Erickson USA Inc.

150 W. Jefferson Ave., Detroit

Piedmont Office Realty Trust, Johns Creek, Ga. Redico LLC, Southfield

CW Professional Services

Stuart Frankel Development Co., Troy Merrill Lynch, New York City John R. Spring Service Inc., Troy Harley Ellis Devereaux Corp., Southfield Ford Motor Land, Dearborn

Southfield Crossing II, Southfield One Woodward Avenue, Detroit

North Troy Corporate Park, Troy C

Troy Technology Park, Troy C 2367 E. Walton Blvd., Auburn Hills

North Troy Corporate Park, Troy C One Kennedy Square, Detroit C

Oakland Towne Square, Southfield B Oakland Office Commons, Troy Seven Mile Crossing III, Livonia Chicago Research Center, Troy

First Center Office Plaza, Southfield C Fairlane Business Park, Allen Park TCF Michigan headquarters, Livonia Freeway Industrial Park, Farmington Hills C Cambridge Crossings, Troy D Metro West Technology Park, Plymouth Township

TCF National Bank, Wayzata, Minn. LNR Properties Inc., Miami Beach, Fla. Robert Salsberry, Tecumseh Genoa Development Co., Bloomfield Hills

Auto Club Group

134,927

Travelers Tower II in Southfield,owned by New York City-based Time Equities, has Accretive Health as a tenant.

85,939

76,335

71,513

67,476

59,740

Raytheon

Plante Moran Cresa and Transwestern Bedrock Management Services LLC and CBRE Inc. Friedman Integrated Real Estate Solutions LLC and Bedrock Real Estate Solutions LLC The Hayman Cos.

Chrysler Group LLC

DTZ

55,350

Benesys Inc.

Friedman Integrated Real Estate Solutions LLC and Jones Lang LaSalle Redico LLC and Advocate Commercial Real Estate Advisors of Michigan LLC Signature Associates

53,770

Mohr Partners and Transwestern Redico LLC and CBRE Inc.

48,915 48,210

Magna Powertrain of America, Inc. Siemens Real Estate

Signature Associates

47,897

CBRE Inc.

46,564

Gallagher-Kaiser

Signature Associates

46,500

United Healthcare

45,366

PSCU Financial Services

Jones Lang LaSalle and Core Partners CBRE Inc.

U.S. Ecology

Signature Associates

44,495

Iron Mountain

42,930

The Woodbridge Group

Jones Lang LaSalle and Transwestern Signature Associates

Shiloh Industries, Inc.

Signature Associates

40,000

Verizon Wireless

[PHOTOS BY COSTAR GROUP]

66,195

American Center in Southfield ,owned by Redico,houses Sun Communities.

62,000

59,472

51,402

49,376

New Center One in Detroit is owned by Southfield-based Farbman Group.

45,138

42,000

List is based on information from CoStar Group Inc., CPIX, Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. Some leases were omitted because of a lack of complete information.

B Lease renewal plus expansion. C Lease renewal. D Expansion. LIST RESEARCHED BY KIRK PINHO

150 W.Jefferson Ave.is owned by Piedmont Office Realty Trust ofJohns Creek,Ga.

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CRAIN’S DETROIT BUSINESS // April 6, 2015

SPECIAL REPORT: REAL ESTATE

Space crunch prompts spec projects for local developers By Kirk Pinho kpinho@crain.com

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The rebound of the automotive industry since the recession is one of the triggers driving local developers to begin construction on — or start planning — several new speculative industrial projects in metro Detroit. Facing a dearth of modern space, companies like General Develop ment Co., Novi-based Amson Dembs Development Inc . and Troy-based Stuart Frankel Development Co . all have new speculative industrial projects — which are projects constructed without a tenant lined up — in the pipeline. The reason? The existing supply is nearly full. Areas like southeast Oakland County and Macomb County have industrial vacancy below 5 percent, according to the Southfield office of Newmark Grubb Knight Frank. “Of the existing inventory that remains now, that 5 percent, it almost should be taken out of the pool” because the space is so antiquated, said Mark Woods, agent/broker in the Southfield office of Signature

Associates Inc. Overall, the vacancy rate for the region was 7.7 percent in the first quarter and 2.9 million square feet was absorbed. In 2014, 6.1 million square feet was leased, up from 5.7 million square feet in 2013, according to Newmark Grubb. Scarcity is also bumping up lease rates, brokers said, which is good news for developers. The lack of available space and increase in demand for all industrial product types — warehouse/distribution, general light industrial and high-tech space — is causing rents to increase, which is making financing for projects easier to obtain, said Dan Labes, senior managing director in Newmark Grubb’s Farmington Hills office. “Demand remains relatively high because our vacancy rates are at an all-time low. As rental rates rise, developers can now afford to build a spec building, and interest rates are still at 40-year lows,” he said. In the fourth quarter last year and the first quarter this year, more than 600,000 square feet of new industrial

space came online and more than 2 million more square feet is on the way by the third quarter, with over half of that (1.3 million square feet) being in southern Oakland County, according to Newmark Grubb. Gary Weisman, principal of General Development, said his Southfield-based company’s first speculative construction since the recession will be a 52,000-squarefoot building in the Novi Corporate Campus at 12 Mile Road and West Park Drive co-developed with Amson Dembs. Groundbreaking is in the next 30 days. Ryan Dembs, principal with Amson Dembs, said his company’s other two spec industrial projects are a completed 110,000-squarefoot building in Lyon Township with a development cost of $8 million and a 75,000-square-foot building in the Beck North Corporate Park that is expected to cost between $6 million and $6.5 million to build and be complete by June. “My company did two spec builds last year, and both were moved very quickly,” he said. The two buildings in the Beck North Corporate Park were leased to Fujitsu Ten Corp . of America and Cre form Corp. Darren Frankel, principal of Stuart Frankel Development, said his company is constructing a 300,000square-foot spec building at the 150-acre Oakland Park development in Highland Park at I-75 and the Davison Freeway. It could open in three to five months once a user is identified and brownfield tax credits are secured, Frankel said. In January, the RACER Trust announced that 25 acres of vacant Detroit land was sold to General Development and Farmington Hills-based Friedman Integrated Real Estate Solutions LLC for a 190,000-square-foot logistics center employing more than 200 people in the Clark Street Technology Park. “The market has been primed for speculative buildings for probably two years now, but I think the cautious nature of developers and lenders has played a large role in not speculating as quickly in a recovery market as in previous recovery markets,” Weisman said. Kevin Hegg, vice president in the Canton Township office of Ashley Capital, said there is particularly a lack of large quality industrial space over 200,000 square feet. “The basic gap is that when the economy turned down, rents fell, but the materials costs did not fall,” he said. “The gap (between rents and building materials costs) is starting to shrink. It’s getting within reach of justifying moving forward.” 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDBS

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS // April 6, 2015

SPECIAL REPORT: REAL ESTATE

CRAIN'S LIST: INDUSTRIAL LEASES Ranked by square feet Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

Building

128 Spring St. (former Visteon Plant), Ypsilanti 16630 Southfiled Road, Allen Park B 4815 Cabot St., Detroit

Plymouth Road Technical Center, Livonia

Owner, owner city

Tenant

Broker

Square feet

Angstrom Capital Holdings LLC, Taylor Time Equities, New York City

Spring Road LLC

Signature Associates

600,000

Roush Industries

Colliers International Inc.

586,723

Industrial Realty Group, Los Angeles

Cabot Street Real Estate LLC

Signature Associates

421,794

Ashley Capital, Canton Twp.

Roush Enterprises Inc.

Ashley Capital

418,451

38481 Huron River Drive, Romulus

Ashley Capital, Canton Twp.

W.F. Whelan Co.

CBRE Inc., Colliers International Inc.

347,532

6331 Schooner Drive, Van Buren Twp B

DeMattia Group, Plymouth

Constellium Automotive USA LLC

Colliers International Inc.

320,680

Home Depot, Atlanta

Home Depot

Colliers International Inc.

285,400

Welsh Investments, Minneapolis

Archway Marketing Services

Colliers International Inc.

285,200

General Development Co. LLC, Southfield Kirco Distribution, Troy

Faurecia USA Holdings Inc.

Colliers International Inc.

278,000

Cardinal Health

CBRE Inc.

275,951

Kojaian Management Corp., Bloomfield Hills Ashley Capital, Canton Twp.

Archway Marketing Services

Colliers International Inc.

250,800

Fuyao Automotive N.A. Inc.

Signature Associates

247,936

Ashley Capital, Canton Twp.

Ashley Capital

236,146

Ashley Capital, Canton Twp.

The Butcher Engineering Enterprises Ltd. Plastipak Packaging Inc.

Signature Associates

225,765

Gary Fish, Detroit

Integrated Manufacturing

CBRE Inc.

223,250

Ashley Capital, Canton Twp.

NYX Inc.

Ashley Capital

215,621

Farbman Group, Southfield

PAE Applied Technologies LLC

Farbman

207,724

American Realty Capital Global Trust Inc., New York City General Development Co. LLC, Southfield Glen Dixon, Fort Wayne

Kuka Systems North America

Signature Associates

200,000

Chrysler Group LLC

DTZ

190,000

QEK Global Solutions

CBRE Inc.

183,000

Core Partners, Bingham Farms

JAC Products

Signature Associates

179,285

38481 Huron River Drive, Romulus 7525 Cogswell Road, Romulus

Oakland Technology Park, Auburn Hills Cardinal Health Distribution Center, Detroit 6703 Haggerty Road, Van Buren B Orion Commerce Center, Lake Orion C Brownstown Business Center, Brownstown Twp.

Romulus Business Center, Romulus B 6501 E. Nevada, Detroit Plymouth Road Technical Center, Livonia

Metro Commerce, Wayne B 7408 Metropolitan Parkway, Sterling Heights 2860 Clark St., Detroit Saleen Building, Troy 225 South Industrial, Saline

Granite Reit Americas Inc., Toronto

TG Fluid Systems USA Corp.

Lee Associates, Signature Associates

178,650

20495 - 20501 Pennsylvania Road, Brownstown Twp. B

Ashley Capital, Canton Twp.

Cabot Street Real Estate LLC

Signature Associates

158,736

Romulus Business Center, Romulus D

Ashley Capital, Canton Twp.

Progressive Distribution Centers Inc.

Signature Associates

158,154

Portfolio Real Estate, Auburn Hills

Concorde Manufacturing

CBRE Inc.

151,200

Cherry Creek Corporate Park, Shelby Twp.

Redico LLC, Southfield

Transform Automotive LLC

Signature Associates

150,116

23400 Haggerty Road, Farmington Hills B

Diamond Moba, Weston, Fla.

Diamond Moba

Plante Moran Cresa

142,754

Ashley Capital, Canton

Packaging Corp. of America

Ashley Capital

139,314

The Grossman Co., Phoenix

Toyota Motor Engineering & Manufacturing Hirata Corp. of America

Signature Associates, Burger & Co.

137,750

Signature Associates

133,848

Stag Industrial Management LLC, Boston Ashley Capital, Canton Twp.

Mobis North America

CBRE Inc.

129,500

ThyssenKrupp

Colliers International Inc.

128,269

Ashley Capital, Canton Twp.

Ferguson Enterprises Inc.

Ashley Capital

127,533

Ashley Capital, Canton Twp.

Virginia Tile Co.

Signature Associates

127,218

Dalfen America Corp., Westmount, Quebec Stag Industrial Management LLC, Boston General Development Co. LLC, Southfield Viking-Auburn Development Co., Troy Ashley Capital, Canton Twp.

Nippon Express USA Inc

Newmark Grubb Knight Frank, Colliers

123,750

Whelan Co.

CBRE Inc.

120,085

Atlas Copco

Colliers International Inc.

120,000

Grupo Antolin North America Inc.

Signature Associates, Plante Moran Cresa

111,798

NYX Inc.

Ashley Capital

108,868

United States Postal Service

Signature Associates

108,850

Expeditors International

Colliers International Inc.

105,169

Faurecia Automotive Seating LLC

100 Brighton Interior Drive, Brighton

275 Rex Boulevard, Auburn Hills

Plymouth Road Technical Center, Livonia 11820 Globe Street, Livonia

Lyon Business Center, Lyon Township D

Ashley Capital, Canton Twp.

9071 & 9075 Haggerty Road, Plymouth Brownstown Business Center, Brownstown Township Lyon Business Center, Lyon Township B Plymouth Road Technical Center, Livonia

Airport Distribution Center, Romulus 9075 Haggerty, Plymouth Oakland Technology Park, Auburn Hills Pinnacle Corporate Center, Auburn Hills B Plymouth Road Technical Center, Livonia B 13500 Huron St., Taylor Metro Airport Center, Romulus B Warren Business Center, Warren D

MYM 13500 JC Property Owner LLC, East Lansing Detroit Metro Airport Center LLC, Romulus Ashley Capital, Canton Twp.

Colliers International; L. Mason Capitani

105,168

Denso International

CBRE Inc.

103,047

1750 Porter, Detroit

Kojaian Management Corp., Bloomfield Hills Neal MacLean, Pleasant Ridge

American Lightweight

CBRE Inc.

100,740

5949 Jackson Road, Ann Arbor

Kevin Griffendorf, Ann Arbor

Edwards Brothers Malloy Inc

Colliers International Inc.

100,452

Van Buren Business Center, Van Buren

B Lease renewal. C Lease renewal plus expansion. D New lease. LIST RESEARCHED BY KIRK PINHO

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CRAIN’S DETROIT BUSINESS // April 6, 2015

SPECIAL REPORT: REAL ESTATE

CRAIN'S LIST: LOCAL SALES Ranked by price Rank

Building

Buyer

Seller

Broker/advisers

601 W. Cos., New York City

Blackstone Group LP, New York City

HFF Inc., Farbman Group

Starwood Capital Partners Inc., Greenwich, Conn.

Taubman Centers Inc., Bloomfield Hills

Eastdil Secured LLC

Bedrock Real Estate Services LLC, Meridian Health, Detroit

Compuware Corp., Detroit

Southfield Town Center, Southfield

The Mall at Partridge Creek, Fairlane Town Center, Clinton Township, Dearborn

Compuware Corp. headquarters, Detroit

Pines of Cloverlane, Hamptons of Cloverlane, Pittsfield Township

Hayman Co., Belfor Holdings Inc., Troy, Birmingham

Victor Corporate Center, Livonia

American Realty Capital LLC, New York City

Kojaian Management Corp., Southfield

CBRE Inc.

Valley Ranch Apartments, Ann Arbor

Capreit Acquistions, Toronto

McMullen Properties, Ann Arbor

CBRE Inc.

Robbins Executive Park, Troy

Physicians Realty Trust, Milwaukee

Wayne State University Physicians Group, Detroit

Newmark Grubb Knight Frank

1833 Frenchtown Center Drive, Monroe

Gladstone Commercial Corp., McLean, Va.

Spirit Realty Capital, Scottsdale, Ariz.

Jones Lang LaSalle

Fairlane Center, Allen Park

Lormax Stern Development Co., West Bloomfield Township

Archon Group, Irvin, Texas

Lormax Stern Development Co. CBRE Inc.

RAIT Financial Trust, Philadelphia

Urban Retail Properties Co., Chicago

CBRE Inc.

Bedrock Management Services LL

Sterling Equities Inc., New York City Hendricks-Berkadia Apartment R Estate Advisors

Oakland Plaza, Troy

North Troy Corporate Park building, Troy

Magna International, Troy

Friedman Integrated Real Estate Solutions LLC, Farmington Hills

Friedman Integrated Real Estate Solutions LLC

Eagles Landing of Troy Apartments, Troy

Kaftan Communities, Southfield

BDB Properties, Auburn Hills

Fourmidable Group Inc.

Oakland Square, Troy

RAIT Financial Trust, Philadelphia

Urban Retail Properties Co., Chicago

CBRE Inc.

3000 High Meadow Circle, Auburn Hills

Hirotec America Inc., Auburn Hills

General Development Co., Southfield

Plante Moran Cresa

1250 Brown Road, Auburn Hills

Randal Bellestri, Naples, Fla.

Shamrock Holdings Inc., Burbank, Calif.

Signature Associates

Northeast Corporate Center, Ann Arbor

Oxford Cos., Ann Arbor

CWCapital Asset Management LLC, Bethesda, Md.

CBRE Inc.

Long Lake Crossing Campus, Continental Automotive Building, Troy

Sovereign Partners, New York City

Piedmont Office Realty Trust, Johns Creek, Ga.

Transwestern

Old Wayne County Building, Detroit

600 Randolph SN LLC, New York City

Old Wayne County Building LP, Southfield

Jones Lang LaSalle, Klugman Commercial Properties

Ferndale Plaza, Ferndale

A.F. Jonna Development LLC, Bloomfield Hills

Model Properties, Flushing

Signature Associates

Kercheval Place, Gross Pointe

Versa Development, Southfield

Lormax Stern Development Co., West Bloomfield Township

Mid-America Real Estate Corp.

Palladium Building, Birmingham

A.F. Jonna Development LLC, Bloomfield Hills

The Related Cos., New York City

Farbman Group, Mid-America Re Estate Corp.

Premier Medical Office Building , Novi

Griffin-American Healthcare REIT, Irvine, Calif.

American Healthcare Investors, Irvine, Calif.

Unity Studio site, Allen Park

Time Equities Inc., New York City

City of Allen Park

Friedman Integrated Real Estate Solutions LLC, Paragon Corporat Realty Services Inc. CBRE Inc.

42400 Merrill Road, Sterling Heights

Mayco International LLC, Sterling Heights

Gladstone Commercial Corp., McLean, Va.

Newmark Grubb Knight Frank

Airport Distribution Center, Romulus

Dalfan America Corp., Westmount, Quebec

Westcore Properties, San Diego

Newmark Grubb Knight Frank, Jones Lang LaSalle

Grand River Plaza, Howell

Northeast Capital Group, Brooklyn, New York

DDR Corp., Beachwood, Ohio

Mid-America Real Estate Corp.

1886 West Auburn Road, Rochester Hills

American Realty Capital Healthcare Trust, New York City

JDB Property Management, Birmingham

CBRE Inc.

1 Dauch Drive, Detroit

Industrial Realty Group, Los Angeles

American Axle & Manufacturing, Detroit

Colliers International Inc.

Willits Building, Birmingham

Seligman Group, Southfield

The Related Cos., New York City

Mid-America Real Estate Corp.

[PHOTOS BY COSTAR GROUP]

Southfield Town Center,which covers 2.2 million square feet,was sold for $177.5 million to New York’s 601W.Cos.

Victor Corporate Center in Livonia was purchased by American Realty Capital.

The Old Wayne County Building in Detroit was bought for $13.4 million.

List is based on information from CoStar Group Inc., Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain in a transaction, but in some cases brokers may have been omitted. LIST RESEARCHED BY KIRK PINHO

Birmingham’s Palladium Building is now owned by A.F.Jonna Development LLC.

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CRAIN’S DETROIT BUSINESS // April 6, 2015

SPECIAL REPORT: REAL ESTATE

CRAIN'S LIST: LARGEST GENERAL CONTRACTORS Ranked by 2014 revenue Rank

Company Address Phone; website

Revenue ($000,000) 2014/2013/2012

Value of new contracts ($000,000) 2014/2013

John Rakolta Jr. chairman and CEO

$1,550.0 $1,307.0 $1,291.1

$1,436.5 $1,325.0

Top local executive(s)

Walbridge Aldinger Co.

Barton Malow Co. 26500 American Drive, Southfield 48034 (248) 436-5512; www.bartonmalow.com

Ryan Maibach president

$1,498.0 $1,145.5 $1,005.9

$1,803.3 $524.8

Belfor Holdings Inc.

Sheldon Yellen CEO

$1,453.9 B $1,313.8 $1,261.0

$1,480.3 $1,260.4

Walsh Construction Co. 3011 W. Grand Blvd., Suite 2300, Detroit 48202 (313) 873-6600; www.walshgroup.com

Sam Bahou business group leader

$350.1 $176.1 $126.2

$172.0 $420.2

Commercial Contracting Group Inc. 4260 N. Atlantic Blvd., Auburn Hills 48326 (248) 209-0500; www.cccnetwork.com

William Pettibone chairman

$321.0 $285.0 $304.0

$225.0 $204.0

Aristeo Construction Co. 12811 Farmington Road, Livonia 48150 (734) 427-9111; www.aristeo.com

Joseph Aristeo president

$315.6 $221.0 $206.0

$353.6 $228.0

Roncelli Inc. 6471 Metropolitan Parkway, Sterling Heights 48312 (586) 264-2060; www.roncelli-inc.com

$247.0 $223.0 $185.0

$145.0 $247.0

Black & Veatch 3550 Green Court, Ann Arbor 48105 (734) 665-1000; www.bv.com

Gary Roncelli chairman and CEO Thomas Wickersham president and COO James Doull Sr. vice president

$214.1 $192.8 $171.0

$44.9 $23.5

Ideal Contracting 2525 Clark St., Detroit 48209 (313) 849-0000; www.idealcontracting.com

Frank Venegas Jr. chairman and CEO

$191.6 $231.0 $182.0

NA $151.8

George W. Auch Co. 735 S. Paddock St., Pontiac 48341 (248) 334-2000; www.auchconstruction.com

Vincent DeLeonardis president and CEO

$140.3 $134.1 $122.7

$166.3 $169.8

Sachse Construction and Development Co. LLC 1528 Woodward Ave., Suite 600, Detroit 48226 (313) 481-8200; www.sachse.net

Todd Sachse CEO Steven Berlage president and COO David Kelly business manager

$135.2 $138.0 $115.4

$207.5 $158.6

$122.9 $200.3 $282.0

$136.3 $195.1

777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com

185 Oakland Ave., Suite 150, Birmingham 48009 (248) 594-1144; www.belfor.com

Turner Construction Co. 535 Griswold St., Suite 1525, Detroit 48226 (313) 596-0500; www.turnerconstruction.com/michigan

DeMaria 45500 Grand River Ave., Novi 48374-1305 (248) 348-8710; www.demariabuild.com

Joseph DeMaria Jr. president

$100.1 $101.6 $122.1

$131.8 $80.1

Rudolph/Libbe Inc. 47461 Clipper St., Plymouth 48170 (734) 455-0600; www.rudolphlibbe.com

$89.0 $61.4 $31.1

NA NA

FutureNet Group Inc. 12801 Auburn St., Detroit 48223 (313) 544-7117; www.futurenetgroup.com

Kenneth Swartz vice president and general manager Michigan operations Perry Mehta president and CEO

$85.0 $100.0 $65.0

$74.0 $68.0

T.H. Marsh 32121 Woodward Ave., Ste. 300, Royal Oak 48073 (248) 586-4130; www.thmarsh.com

Ryan Marsh president and CEO

$80.5 $71.0 $64.0

NA NA

Frank Rewold and Son Inc. 333 E. Second St., Rochester 48307 (248) 651-7242; www.frankrewold.com

Frank Rewold president and CEO

$70.1 $60.1 $65.7

$104.2 $58.1

The Colasanti Cos. 24500 Wood Court, Macomb Twp. 48042 (586) 598-9700; www.colasantigroup.com

$66.9 $69.7 $102.4

$134.8 NA

C.E. Gleeson Constructors Inc. 984 Livernois, Troy 48083 (248) 647-5500; www.gleesonconstructors.com

Christopher Colasanti president Angelo Colasanti CEO Charles Gleeson II president and CEO

$65.9 $54.7 $47.0

$72.0 $57.0

Kasco Inc. 226 E. Hudson St., Royal Oak 48067 (248) 547-1210; www.kascoinc.com

Michael Engle vice president

$61.9 $45.2 $47.6

$65.0 NA

The Christman Co. The Fisher Building, 3011 W. Grand Blvd., Detroit 48202-3030 (313) 908-6060; www.christmanco.com

Ronald Staley, FAPT senior vice president, Southeast Michigan operations

$61.1 $15.6 $60.9

$445.0 $550.0

This list of general contractors is a compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. Actual revenue figures may vary. NA = not available.

B In 2014, 92 percent of revenue for Belfor, a disaster recovery firm, was from construction management. The figure was 95 percent in 2013 and 2012. LIST RESEARCHED BY SONYA D. HILL

Spotlight: Contractors

Construction surge boosted revenue The combined revenue of the top 10 general contractors on the Crain’s list has quadrupled since 1986, climbing from $1.56 billion to $6.28 billion. No. 1 on the list in 1986 was Barton Malow Co., at $614.4 million in revenue. The top company on today’s list, Walbridge Aldinger Co., comes in at $1.55 billion a 152 percent increase in revenue between the two. There are many reasons for the increase in revenue of the top companies over the years, including the rise in the cost of materials and labor to be passed on to the customer. But among the biggest factors was a surge in construction in Michigan around 1996, due to contracts with the Detroit 3 automakers, hospitals, K-12 schools and universities. The construction of Comerica Park, Ford Field and the casinos also factored in. In addition, many contractors have added services and expanded their reach geographically. Take the top two on today’s list, for example. Walbridge Aldinger in 1995 signed an agreement with Brown & Root Inc., a Houston-based contractor, to form a separate entity to provide design and construction services for automakers outside North America. Today, its work can be found all over the world, including South America and the Middle East. Its services have expanded to include construction management, virtual design and digital mapping. Barton-Malow has expanded to take on projects throughout the country, including an office in Atlanta in 1986, a mid-Atlantic office in 1989, a full-service Phoenix office in 1999 and an Ohio office in the late 1990s. Among its more notable projects include Camden Yards, the stadium of the Baltimore Orioles and the Georgia Dome and a Shriner’s hospital in Florida. Its services have expanded to include program management, equipment installation and 3-D building modeling. Doug Maibach, excecutive vice president at Barton Malow, attributes its revenue growth to the number of projects and size of projects, particularly in industrial and manufacturing industries. Maibach said that demand and competition were also factors in revenue growth in the industry, especially as colleges and universities upgraded housing and research facilities in an effort to attract students. Some of its signature projects include helping in the redevelopment of the Daytona International Speedway, expanding and renovating the football stadiums for the University ofMichigan and Michigan State University, and building automotive facilities which he described as “not real glamorous … but rewarding.” — Sonya D.Hill

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Projects to watch around metro Detroit Laurel Park Place owner plans new look Laurel Park Place is getting a new look. CBL & Associates Properties Inc. (NYSE:CBL) last week announced several planned updates to the Livonia shopping center. The Chattanooga, Tenn.-based real estate investment trust did not disclose the exact amount it plans to invest in the renovation project, scheduled for completion by November. Changes planned for the nearly 500,000-square-foot mall include new seating, carpeting, tile and light fixtures, reconfigured ceilings to allow more natural sunlight and a refreshed Laurel Park Place logo atop the main entrance along Six Mile Road. New furniture is planned for the common area, and some mall restrooms will also get new tile flooring, fixtures and refinishing, mall officials said in a news release. Located at I-275 and Six Mile Road, Laurel Park Place is anchored by department stores Carson’s and Von Maur. The mall was 95 percent occupied in 2014, according to a spokes-

[CBL & ASSOCIATES PROPERTIES INC.]

An artist's rendering shows the potential new look inside Laurel Park Place in Livonia. woman, and features about 70 specialty stores, including Chico’s , Coldwater Creek, Francesca’s, John s t o n & M u r p h y , J o s . A . B a n k , Nine West , R o g e r s & H o l l a n d s J e w e l e r s , T a l b o t s , T e a v a n a and W h i t e House | Black Market. European fashion retailer H&M is expected to open at the center be-

fore the end of the year, mall officials said. In addition to Laurel Park Place, CBL owns four other Michigan properties: Fashion Square Mall , Lakes Mall , Saginaw; The Muskegon; Meridian Mall , Okemos; and Midland Mall, Midland. — Sherri Welch

[MCINT TES] [MCINTOSH PORIS ASSOCIA ASSOCIATES]

Groundbreaking for DuCharme Place in Detroit is set forJune 11.

Construction on DuCharme Place to begin in June Construction on the $42 million DuCharme Place apartment development near Lafayette Park is scheduled to begin in June, and the development will begin accepting residents in its 185 planned units in the first quarter of next year. Plans call for 12 studio units, 66 one-bedroom and 107 two-bedroom apartments. DuCharme Place is being developed by DuCharme Place LLC, the co-managing member of which is Walter Cohen of 21st Century Holdings, who has been behind other city developments like Stroh River Place, University Club, the Park Shelton and

Franklin Wright Village. A groundbreaking is scheduled for June 11, according to Mark Bennett, managing director of Birmingham-based MJBennett PLLC, which is providing legal and advisory services to Cohen on the development. Located at 1544 E. Lafayette Blvd., the four-building development will have apartments ranging from 500 to more than 1,000 square feet that will rent from $900 to $1,800 per month. The 3-acre project site is vacant land. There will be on-site parking, a

fitness center, rooftop gardens, a business center, a swimming pool and around-the-clock security, according to a news release. Some units will have private balconies or terraces, and fireplaces. Project funding comes from a U.S. Department of Housing and Urban Development mortgage, state equity and brownfield tax credits, among other sources. Detroit-based Sachse Construction is the general contractor on the project. Birmingham-based McIntosh Poris Associates is the project architect. — Kirk Pinho

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SPECIAL REPORT: REAL ESTATE

Is Detroit ready for an avantgarde building downtown? Opinions about building architecture can generate the same kinds of visceral reactions in people as a modern art sculpture or painting. Is the swooped metal, avant-garde look (rendering, right) proposed in a concept for a redevelopment of Detroit’s Hudson site the right look? Time will tell, but it’s what Dan Gilbert and Rock Ventures released as a possible look for the 2-acre gaping slot on Woodward Avenue. The site is being designed by Detroit-based Hamilton Anderson Associates and New York City-based Shop Architects PC, which has designed Google Inc.'s headquarters in Silicon Valley; the East River Waterfront in New York; the Georgia Dome in Atlanta; and Barclays Center at Atlantic Yards in Brooklyn. More information on the site will be available soon; it is expected to include at least 225,000 square feet of mixed-use space, at least 250 residential units and at least 900 parking spaces, according to DDA documents. Submission of a development plan is expected by the end of the year. For comparison’s sake, Crain’s has gathered images of other statement buildings found around the world. This is not a comprehensive architecture review. But it’s clear there are plenty of bold buildings around for design inspiration. Send your opinions on the Hudson’s site proposal to reporter Kirk Pinho at Kpinho@crain.com

7 T A t T 1

[ROCK VENTURES]

Concept for Hudson’s site redevelopment in Detroit.Architect: Hamilton Anderson Associates, Shop Architects P.C.

[CRAIN’S ARCHIVES]

Eli & Edythe Broad Art Museum, Michigan State University,East Lansing.Architect: Zaha Hadid

CHOUE T TE MARKE TING Mar ke t ing

[BLOOMBERG] BMWWelt.Wolf D.Prix and the Viennese architecture firm Coop Himmelb(l)au

ZOYES CRE ATIVE GROUP Cr e a t iv e

[WIKIPEDIA] Queen Sofia Palace of the Arts Architect: Santiago Calatrava

[WIKIPEDIA] Guggenheim Bilbao.Architect: Frank Gehry

Detroit-based businesses win early Wings arena pacts Olympia Development of Michigan said Detroit-based businesses have won $25 million of the first $30 million in contracts for the $535 million hockey arena soon to be under construction downtown. ODM is the real estate development arm of Detroit Red Wings owners Mike and Marian Ilitch’s business holdings, and is leading the arena project expected to break ground in coming weeks. The $30 million in bid packages were for abatement and demolition; abatement; mass excavation/earthwork; temporary shoring/earth retention systems; and site utilities/underground utility penetrations through concrete foundations and earth retention systems. The list of companies provided by ODM didn’t indicate how much each package was worth; how much money each company will receive

The project is part of a larger plan to improve the arena area and four neighborhoods around it.

under the bids; for which specific bids the companies received work; which specific work the companies will do; or where the non-Detroit based companies are located. The Detroit-based firms awarded work under the bids: Blaze-Iafrate Joint Venture LLC ; Brooks Lumber ; Detroit Dismantling Corp.; DMC Con sultants Inc. ; Giffels Webster ; Mc Coig Concrete Co. ; Motor City Elec tric Co. ; Superior Materials ; Testing Engineers & Consultants ; and Wa terfront Petroleum Terminal Co.

SIGNATURE A SSOCIATES L e asing /Man agemen t Olympia has a stated goal of 30 percent Detroit business participation and 51 percent Detroit resident employment in construction of the arena, which will be the Red Wings home and also an events center. Olympia still is seeking zoning approvals from the city before it can begin construction, but it is permitted to begin some earth-moving and site-prep work. The venue is scheduled to open by summer 2017. — Bill Shea

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Great Lakes researchers target microplastics pollution By Catherine Kavanaugh Crain News Service

Microplastic particles — not just in the form of tiny beads but fibers and fragments, too — are polluting the Great Lakes and launching new areas of study for scientists. From face scrubs to fleece jackets, the list of threats to the five lakes, which hold about 20 percent of the Earth’s surface freshwater, is growing. The latest concerns are polymer particles under 5 millimeters in size, and there are calls to start scrutinizing water samples for nanoplastics under 0.33 mm. Overall, the Great Lakes studies to date just scratch the surface of the problems polymers could be posing, said Jennifer Daley, a research fellow at the University of Michigan. “What we saw most were polyethylene, polypropylene or nylons, which makes sense because these dominate plastics production,” Daley said during a lecture last month at the Cranbrook Institute of Science in Bloomfield Hills. Cranbrook has an exhibit called “Plastic Waters: From the Great Lakes to the Oceans,” which is being presented by the Chicagobased Alliance for the Great Lakes and the California-based 5 Gyres Institute. “In the last few years, people

[ALLIANCE FOR THE GREAT LAKES]

Several states have outlawed microbeads in personal care items,and a handful of state legislatures have bills pending. have been asking: What about freshwater systems, particularly the Great Lakes?” Daley said. “They’re host to 30 million people, 21 percent of our freshwater and $4 billion in fishing alone. When you have that many people on a system, there are bound to be stressors.” Too much fiber One recent threat to make waves in the mass media came in January with coverage of water samples taken in 2013 from Lake Michigan. Scientists sounded the alarm that 12 percent of the debris consisted of microfibers. “To be honest, most microfibers

are probably coming from our washing machines,” Daley said, pointing to fabrics made from plastics such as polyester and nylon. Microfibers also were found in the gastrointestinal tracts of some fish and a double-crested cormorant, which eats fish. Another field study, this time of 100 fish by UM researchers, found similar results for the five species of fish tested. “While they didn’t find microbeads, they did find fibers in 11 to 36 percent of the fish,” Daley said. Scientists now are trying to determine the risks posed by the fine fibers on aquatic life along with the

[5 GYRES INSTITUTE]

Researchers found the highest concentration of particles near Buffalo,N.Y.

effects from highly publicized microbeads and small fragments from degrading macroplastics. Energy reduction One of the 5 Gyres exhibit pieces at Cranbrook shows a picture of a gutted fish next to about 15 little shards of blue, yellow, white, black, beige and brown plastic. The caption asks, “What’s in your

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sushi?” Scientists have a lot of other questions about the effects of microplastic litter on the marine environment. As a physical contaminant of organisms, Daley showed a slide that says ingested microplastics could have both behavioral and morphological effects. They could hinder mobility, reduce vigor, block intestines and gastric enzyme secretions, diminish feeding stimulus, hamper breathing and delay ovulation. Then, there are the chemical contaminants. Some research suggests aquatic organisms also are exposed to the chemicals associated with plastics. “This is all really early research, and we need to do more work,” Daley said.

Lansing

Microplastics, which are technically 0.33 to 5 millimeters, find their way into the waterways from wind, storm runoff, boats, wastewater treatment plants, and accidental and intentional dumping. The plastic bits float on the surface, are suspended in the water column, sink to bottom sediment and wash up on beaches. Most of the marine litter is plastic fragments from larger items that degraded into smaller pieces because of weathering, mechanical breakdowns and microbes. Sarah Neville, stewardship coordinator for the Alliance for the Great Lakes, said that even the adopt-abeach cleanups are getting more challenging because of teeny bits of plastic. Still, 14,500 volunteers in the eight Great Lakes states removed 51,797 pounds of trash from about 350 coastal areas in 2014. “Unlike the river cleanups, we don’t find refrigerators and tires,” Neville said. “These are small, small pieces of plastic that people are picking up, and they are adding up to these enormous values. … Plastic pollution is so problematic because See Next Page

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this might break down into smaller pieces, but it’s not something that’s going away. We’re finding it in wildlife, and we know it’s negatively affecting the environment.” Daley said the first and only published peer-reviewed article about microplastics in the Great Lakes was released in 2013. Tests were done on 21 water samples taken from Lakes Erie, Huron and Superior during a 2012 expedition led by Marcus Eriksen, researcher and cofounder of the 5 Gyres Institute. The researchers found that the lakes are teeming with debris — such as glass, metal and aluminum silicate from coal ash — and they estimated that 60 percent to 80 percent of the marine pollution is plastic. The highest concentrations were found in Lake Erie near Buffalo, N.Y. Two samples near this city contained 85 percent of all the microplastic particles collected — including many green, blue and purple-colored spheres, consistent with microbeads found in facial cleansers. Also, Lake Superior showed slightly higher particle counts than Lake Huron, but that could be because water samples were taken closer to the shore, which is closer to sources of pollution. What’s next? The findings from the expedition Erickson led brought about calls to ban microbeads from personal-care products. Illinois was the first to outlaw them in June 2014, banning the manufacture of personal-care products containing microbeads by the end of 2017 and the sale of those personal care products by the end of 2018. New Jersey followed, and similar proposals are pending in Michigan, New York, Minnesota, Wisconsin, Indiana, Colorado, California, Vermont, Connecticut and other states as well as at the federal level. Some businesses in the plastics industry also are scrambling to develop biodegradable ingredients for personal-care products. Last month, biomaterials com-

pany Metabolix announced it is partnering with Honeywell to create a microbead, perhaps with Mirel PHA biopolymers, which tests show are similar to cellulose and paper. Daley said marine scientists also want to delve deeper into questions about new life forms in microbial communities growing on the surfaces of plastics — socalled plastispheres — and whether the particles’ movement could “introduce alien species” to other areas. In addition, they wonder whether microplastics are interacting with chemicals in the environment, like legacy contaminants such as PCBs. “At this point, the literature tells us that plastics can absorb and concentrate pollutants,” Daley said. “Degraded plastics can leach chemical additives — bisphenol A, phthalates, flame retardants. The next question is, what does it mean to secondary impacts to organisms compared to other sources?” And how about other threats? “Nobody is really looking at nanoplastics,” Daley said. “A number of articles have suggested we look at them. We should start thinking about all plastics — not just stopping at 0.33 mm but also looking at the really small-ranged microplastics.” UM has formed a research platform with eco-toxicologists, chemists, biologists and social scientists to address some questions about microplastics in the Great Lakes. Daley said they will study food dynamics, physical characteristics of the plastics, source tracking, environmental health and best methods for sampling. “With young science, it’s beneficial to look at other focus areas to do our research, and some of those directions I can see in the future would be understanding the types of microplastic that are the biggest current threat,” Daley said. “Is it microbeads, microfibers, fragments? What is the risk of exposure to Great Lakes organisms, and what does realistic environmental concentrations mean?” 䡲 From Plastics News

Gibraltar steel plant to get new life with $53M investment plan By Dustin Walsh dwalshr@crain.com

The former McLouth Steel Corp. plant in Gibraltar is set to reopen after the Wayne CountyCommission last week unanimously approved a brownfield plan for the 42.5-acre property. Ferrous Cal Co ., a subsidiary of Cleveland-based metal processor Ferragon Corp., acquired the 600,000-square-foot plant and property in February from Steel Rolling Holdings Inc . Terms of that deal were not disclosed. Ferrous plans to invest $53 million to upgrade the plant, which has been idle for more than a decade, and property to produce steel for automotive companies in the region, the commission said in a news release.

The plant will operate under Ferrolux Metals Co. LLC, which also operates a plant in Wayne. The Gibraltar plant is expected to be operational by the summer of 2016, following the removal of hazardous materials, interior demolition and retrofitting. The plan is expected to create at least 100 jobs, though Ferrous said 15 employees will maintain the site until cleanup is complete. The redevelopment is supported by $9.9 million in reimbursable incentives, which will be covered over 30 years of incremental tax revenue capture, according to the brownfield contract. The brownfield plan was previously approved by the Wayne County Brownfield Redevelopment Au thority , Gibraltar City Council and the Commission’s Committee on

Economic Development. Detroit-based McLouth Steel built the plant in 1954. The plant changed hands several times until 2003, when it went idle. Steel Rolling Holdings acquired the plant in 2006. “This is a terrific reuse of an inactive steel plant, and the jobs are most certainly welcome,” Commissioner Joseph Palamara, D-Grosse Ile Township, said in a statement. “The cleanup also is very good news because of the environmentally sensitive nature of the area due to the refuge, the nearby Detroit River, marshes and other wetlands.” Contamination of the soil and groundwater on the property was discovered in 2006, according to the commission. 䡲 Dustin Walsh: (313) 446-6042

Nominations sought for 40 under 40 awards Since 1991, Crain’s Detroit Business has gathered 40 of the community’s high achievers for a special salute. Past winners have started companies, found success at a young age at established businesses and made nonprofits stronger.

colleagues, clients, family and friends to celebrate. To be eligible, nominees must be age 39 or younger as of Oct. 5, 2015. Nominations must be received by April 27. Winners will be notified this summer. Nominations are submitted online and can be found at crainsdetroit.com/section/nominate.

Crain’s is seeking nominations for the 2015 class of 40 under 40, which recognizes achievers across metro Detroit under age 40 based on factors such as financial impact and community leadership.

For questions regarding the nominations: Contact Bill Shea at bshea@crain.com or (313) 446-1626.

Winners will be profiled in the Oct. 5 issue and honored at an awards event in November. With more than 680 alumni invited, the event brings together the current class with

For technical questions regarding the nomination form: Contact YahNica Crawford at ycrawford@crain.com or (313) 446-1641.

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PEOPLE

SPOTLIGHT ANIMESH ANAND: CAO Special Tree Rehabilitation System Animesh Anand has been named to the newly created position of chief administrative officer at Special Tree Rehabilitation System, Romulus. The facility provides rehabilitation, care and treatment to children and adults who have brain or spinal cord injuries. It also offers other neuro-rehabilitation needs in sub-acute, resiAnand dential, outpatient, home and community settings. Anand will be responsible for developing, implementing and evaluating Special Tree’s clinical and business operations. Previously he was executive director for rehabilitation strategies and operations at Glacier Hills Senior Living Community, Ann Arbor. Anand, 40, has a doctorate in occupational therapy from the Rocky Mountain University of Health Professions, based in Provo, Utah. He is pursuing a master’s in management from Harvard University Extension School.

FINANCE

ON THE MOVE Send news items and photos to cdbdepartments@crain.com

CONSTRUCTION Todd Doenitz to director, Barton Malow Co., Southfield, from vice president and co-owner, Fastdecks Inc., Walled Lake.

EDUCATION Kristin Good to dean of math and sciences, Washtenaw Com munity College , Ann Arbor, from interim dean. Also, Kimberly Hurns

to dean of business and computer technologies, from interim dean; and Brandon Tucker to dean of advanced technologies and public service careers, from interim dean. Edgar Vann III to district director of government relations, Wayne County Community College District, Detroit, from district associate dean of student services.

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DEALS

& DETAILS Submit news to cdbdepartments@crain.com

ACQUISITIONS & MERGERS Drew Technologies Inc., Ann Arbor, a manufacturer of vehicle communication and diagnostic equipment for the vehicle inspection and automotive service industry, has been acquired by Opus In spection Inc., East Grandby, Conn., a subsidiary of Opus Group AB, Sweden. Websites: drewtech.com, opusinspection.com.

CONTRACTS Computing Source, Madison Heights, a digital evidence and legal support firm, announced it has enhanced its electronic discovery services by becoming a Relativity premium software hosting partner. Relativity software was developed by kCura, Chicago. Websites: computingsource.com, kcura.com. McCann Detroit, Birmingham, has been named advertising agency of record for creative and strategic responsibilities for Ameriprise Financial Services Inc., Minneapolis. Websites: mccanndetroit.com, ameriprise.com.

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Market Strategies International, Livonia, a market research company, has selected Stratacomm LLC, Southfield, a full-service communications firm, to provide strategic counsel and media relations support. Websites: market strategies.com, stratacomm.net.

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Eight Mile Boulevard Association luncheon Join the Eight Mile Boulevard Association for its 16th Annual 8MBA Leadership Luncheon. The event is 11 a.m.-2 p.m. April 24. It includes networking opportunities and a panel discussion featuring the “Big 4”: Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson. Charlie Langton, legal analyst, WWJ 950, will moderate the panel. The group will focus on current public policy issues facing Eight Mile Road and the region. More than 600 business owners, elected officials, department heads and regional corporate managers will also gather for networking and discussions. Raffles and a silent auction are planned to help raise money for improvements to Eight Mile Road. The luncheon will be at Cobo Center, Detroit. Tickets are $60 in advance, or $70 at the door. A table of 10 costs $500. To register or learn more, call (248) 398-3388 or visit eight mile.org/Leadership_Luncheon. Online registration ends April 21.

CALENDAR

WEDNESDAY APRIL 8

Grow Your Own Business Online With Google. 2:30-4:30 p.m. Troy Chamber of Commerce. Learn how to get found on Google and hear from a panel of experts from SS Digital Media; Elefant Design & Strategy; Media Genesis and Snap321. Northwood University, Troy. Free for members, $15 nonmembers, walk-ins free for members, $20 nonmembers. Contact: Jessica Hruska, (248) 641-8151; email: theteam@troychamber.com; website: troychamber.com.

UPCOMING EVENTS The Ohio Comeback Model. 11:30 a.m.-1:30 p.m. April 13. Detroit Economic Club. Ohio Gov. John Kasich is guest speaker. Cobo Center, Detroit. $45 DEC members, $55 guests of members, $75 nonmembers. Ticket sales end at noon April 12. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org. Advancing Women to the Top. 7:30-9:30 a.m. April 14. Dearborn Area Chamber of Commerce. Panelists include Donna Inch, CEO, Ford Land; Stan Jensen, president, Henry Ford College;

Kelley LaFontaine, LaFontaine Automotive Group; Jill Ford, special mayoral adviser and head of innovation and entrepreneurship, city of Detroit; and Marie Alexander, government relations, Ford Motor Co. Adoba Hotel, Dearborn. $30 chamber members, $35 nonmembers. Contact: Ron Hinrichs, (313) 584-6100; email: rhinrichs@dearbornareachamber.org; website: dearbornareachamber.org/events. Cutting Through the Red Tape: Resources That Can Help Your Business. 7:15-9 a.m. April 15. Automation Alley. Oakland County Executive L. Brooks Patterson; Donald Fracassi, acting mayor, city of Southfield; and Irene Spanos, director of Oakland County Economic Development & Community Affairs, share organizations’ programs and services. Southfield Public Library, Southfield. Free for foundation members; otherwise, $25. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com. Rules of the Game: 10 Strategies for Women in the Work place. 11:30 a.m.-1:30 p.m. April 15. Detroit Economic Club. Susan Packard, co-founder of

Scripps Interactive Networks & TV. The Townsend Hotel, Birmingham. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Ticket sales end at noon April 14. Contact: (313) 9638547; email: info@econclub.org; website: econclub.org. 11th Annual Economic Forum Breakfast. 7:30-10 a.m. April 22. Michigan Hispanic Chamber of Commerce. Guests include Steve Arwood, CEO and president, Michigan Department of Talent and Economic Development; Alejandra Castillo, national director, Minority Business Development Agency; G. Mustafa Mohatarem, chief economist, General Motors; and John Rakolta Jr., chairman and CEO, Walbridge Aldinger Co. Cindy Rakolta Goodaker, executive editor, Crain’s Detroit Business, will moderate. Detroit Athletic Club, Detroit. $75 members, $100 nonmembers. Contact: Barb Lange, (248) 7922763, ext. 101; email: blange@mhcc.org; website: mhcc.org.

Detroit debut for Linkner startup Detroit is the debut stop April 13 for Josh Linkner’s newest startup, Fuel Leadership LLC. The inaugural event, Fuel: Detroit, will take place at Sound Board in the MotorCity Casino Hotel. The Detroit conference will be followed by leadership conferences in Cleveland and Minneapolis. Sponsors in Detroit include Ernst & Young, Inc. magazine and Crain’s Detroit Business. Speakers include Michigan Gov. Rick Snyder; Ford MotorCo. CEO Mark Fields; basketball star-turned-businessman Magic Johnson; retired U.S.Navy commander and author Michael Abrashoff; actress Jessica Alba, who co-founded The Honest Co., a maker of eco-friendly products; and author and Godin entrepreneur Seth Godin. Tickets are $895 to $1,695. More information is at fuelleadership.com. Godin, an author on creativity and marketing, founded Internet direct marketing company Yoyodyne in 1995. He sold it to Yahoo Inc. in 1998. He later founded community site Squidoo, which was sold to HubPages. “There’s an endless amount of insight and creativity in Detroit, Sarasota, Dubai, etc. There’s no shortage,” Godin told Crain’s. “What we have everywhere is a shortage of people who instigate and who act as impresarios. That can happen and will happen in Detroit. Resources are more underused there. You can more easily buy a theater, lease a building, etc. It’s not overheated.”

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Report: State VC climate improves By Tom Henderson thenderson@crain.com

A new report from the Ann Arbor-based Michigan Venture Capital Association shows the sector continues to gain steam in Michigan as lawmakers in Lansing debate how and if they should continue to provide economic support. By all metrics, the report shows a much healthier venture capital climate locally, compared to five years ago. There are 129 venture capitalbacked companies in Michigan, a 70 percent increase in the five years. Fifty-one companies in Michigan received more than $204 million from state VC firms in 2014, up 89 percent in five years. In 2007, there were 11 VC firms based in Michigan, and no out-ofstate firms had offices here. Today, there are 26 VC firms based here and 11 out-of-state firms have opened offices here to source local deals. Last year, Michigan-based venture capital firms had $1.7 billion in capital under management, an increase of 45 percent in the last five years. The amount of capital under management by national VC firms with offices here was $3.1 billion, up 122 percent. There are 115 venture capital professionals working in the state, up 139 percent in five years. The two current funds the state created to invest in venture-capital firms, the $95 million Venture Michigan Fund I LP in 2006 and the $120 million Venture Michigan Fund II LP in 2010, are both fully committed.

“The growth in the number of fundraisings and venture-backed companies is a result in part of programs and investments the state of Michigan has made.” Jim Adox, MVCA chairman and managing director of the Ann Arbor office of Madison, Wis.-based Venture Investors LLC

Both those funds were created through loans backed by state tax vouchers, and legislators, Michigan Economic Development Corp. CEO Steve Arwood and even MVCA members agree that it wouldn’t make sense to borrow money to start another state fund to invest in VC firms. According to the House Fiscal Agency, the state could be on the hook for as much as $140 million in the next three years as returns from VMF I come in slower than expected,

thanks in part to the recent recession. But people differ on whether another fund-of-funds by the state, set up differently, should be used to continue to investing in the growing VC community. The MVCA says yes, Arwood says possibly and many legislators say definitely not. “We’ve spent more than a decade building a venture capital community in Michigan that can support the state’s extraordinary startup companies and contribute to the diverse economy that is crucial to the state post-recession,” said Maureen Miller Brosnan, the MVCA’s executive director, in a news release that accompanied the report. “We’re now at a point where, despite significant increases in venture capital under management at Michigan-based venture firms, it’s still not enough to meet future funding demands by Michigan startups.” “The growth in the number of fundraisings and venture-backed companies is a result in part of programs and investments the state of Michigan has made,” said Jim Adox, the MVCA chairman and managing director of the Ann Arbor office of Madison, Wis.-based Venture Investors LLC, told Crain’s. “We think these numbers strongly support further funding efforts by the state so Michigan can become the clear leader in job growth and company creation in the state,” he said. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

Forum helps link minority entrepreneurs with VC PowerMoves, a program of the New Orleans Startup Fund that connects underrepresented entrepreneurs with venture funding, is expanding to Detroit. The three-day event, April 13-15 at several Detroit venues, showcases local and nationally recruited minority entrepreneurs competing in public, venture capital-style pitch events, vying for $120,000 in direct prizes and a chance to raise their visibility to other investors. High-growth minority-owned companies typically don’t have the same networks to connect to angel and venture investors, said Rodrick Miller, president and CEO of the Detroit Economic Growth Corp. and a co-founder of the program in New Orleans. Bringing the program to Detroit also is chance to showcase the city as a good option for entrepreneurial companies, he said. “We’re much more likely to grow a Google or a Microsoft than to recruit one for the market,” Miller said. “This is fundamentally an essential program, not just for Detroit, but for the state of Michigan.” The event is hosted by the DEGC and Invest Detroit. Morgan Stanley is the presenting sponsor. The New Economy Initiative has contributed money for prizes and is investing in

To register Registration can be found at www.powermovesnola.org and clicking on the registration link for the Detroit event.

follow-up activities. Crain’s Detroit Business is media sponsor. Featured during the event are: Morgan Stanley Power Pitch Competitions. Two pitch competitions will each feature five companies competing for a total of $80,000 in cash prizes in an Angel Round and a Series A Round. Two firms with Detroit connections are entered in these events: Gap Pro, a cloud-based insurance verification system, in the Angel pitch, and Maker’s Row, an online B2B platform, in Series A. PowerUp Boot Camp. An additional 14 early-stage entrepreneurs of color have been receiving help for several months developing fundable business models with advice from successful entrepreneurs and investors. PowerUp will culminate with a Demo Day presentation where companies will pitch their ideas to thought leaders and sector experts and compete for a $20,000 cash prize and potential capital from investors.

Participating companies with Detroit ties are Evolve, learning support systems for high school students; FlashDelivery , restaurant and grocery delivery service; Guidesmob, interactive city guides; Networkingout, virtual workout club; Paralee Boyd Salon, hair care; and Warranty Ninja, simplified warranty management for consumer products. Other events: A Detroit medical technology startup, Functional Fluidics , will pitch its device and business plans at an invitation-only opening dinner event, raising its visibility in the VC arena. A lunchtime panel discussion will feature Lisa Price , founder of Carol’s Daughter , and Robin Richards, founder of CareerArc and Internships.com , and focus on launching a startup that grows with a clear path to an exit. It will be moderated by Carla Harris , vice chairman, global wealth management, director and senior client adviser at Morgan Stanley. The Morgan Stanley Power Pitch Competition sessions, PowerUp Boot Camp Demo Day, and the panel and luncheon are free and open to the public. The venues have limited seating, so pre-registration is strongly encouraged. On site registrations will only be accepted if space permits.

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TIGERS, from Page 3: Big money isn’t always best; team aims for salary balance top end, you do have to keep a steady pipeline of the cheap guys coming,” said ESPN senior baseball writer Buster Olney. The criticism that Detroit’s farm system has been sapped of talent because of past trades is invalid, Olney added. “They’ve managed to generate enough that it allows them to be top-heavy with their payroll,” he said. The Tigers also benefit from the willingness of team owner Mike Ilitch, a billionaire thanks to cofounding the Little Caesars pizza chain, to spend on players as if the team was in a far larger city. “They’re less tied to market size than any other team in baseball,” Olney said. Since his first full season as owner in 1993, Ilitch has spent $1.8 billion on player payroll. The rich are different Life for players at the bottom of the roster isn’t flashy compared to the multi-millionaire with the headline-grabbing contract. Paychecks, which begin April 15 and end Sept. 30 for the regular season, include deductions that leave less net cash for the low-paid players. Like the rest of us, baseball players pay federal, state and local taxes — which easily can consume almost half a paycheck — and most pay into a 401K and for other benefits. Players can be hit for taxes where they live in spring training, where they live during the regular season, and where they live in the offseason. “You could have three residences. Those attendant costs are more inflated in their impact for the guys at or close to the minimum,” said former Montreal Expos pitcher Steve Rogers, now the Major League Baseball Players Association ’s special assistant for player services Taxes and benefit costs aren’t the only expenses coming out of paychecks: Union dues are $70 a day, or $12,810 a season, regardless of a player’s total compensation. Players also typically pay 3 to 5 percent in fees for their agents, but MLB rules forbid any agent fee that would take a player’s gross salary under the league minimum. They also pay clubhouse dues that range from $20 or $30 per day every game for young players, to $150 per day for high-salary veterans. The clubhouse dues are for the staff that provides food and services in the clubhouse, such as cleaning uniforms and equipment. Players pay the dues partially out of their per diem, which this year is $100.50 a day for each of the 81 road games (and any days spent traveling). That’s at least $8,140.50 tax-free that all players receive for meals while traveling during the season, although the clubs usually provide all meals while traveling. “Most guys pay at least $50 a day in clubhouse dues, though the big

New Comerica Park restaurant to include Tiger Stadium artifacts By Bill Shea bshea@crain.com

The Detroit Tigers and their concessionaire, Delaware North Sportservice , are replacing the Leo’s Coney Island on Witherell Street at Comerica Park with a nostalgia-based eatery that will include the original Tiger Stadium dugout bench. The Corner Tap Room will open May 8. The plan was to have it open for Opening Day, but the interior woodwork needed more time, said Mark Szubeczak, Sportservice’s executive chef at the ballpark. News of the restaurant, which will be open for lunch during the week and lunch and dinner on game days, broke during a media food tasting the team hosted at the stadium to introduce the 2015 season’s new concession and retail offerings. The Corner Tap Room will seat 140, including patio seating when weather permits, and feature signs, seats and other nostalgia elements saved from the old Tiger Stadium, guys sometimes will pony up about $150 a day,” ex-Tigers reliever Todd Jones wrote in The Sporting News in 2007. “Clubhouse dues plus a roomservice burger and soda at the nice hotels in which we stay can eat up a day’s meal money in a hurry. We pay the same dues at home, too, where we don’t get meal money.” While the total amount of the deductions often surprise young players when they see their first check, they usually don’t mind all the fees, charges and payments, said Robert Raiola, a CPA and senior manager for New Jersey-based O’Connor Davies LLP who specializes in tax planning for individuals and their families in the sports and entertainment industries. “It’s good that they have to do that — they’re in the major leagues,” he said. And they’re no longer in the minor leagues, where compensation is far stingier. Minor-league players average $3,000 and $7,500 in salary for the entire five-month season — a level that has sparked a lawsuit against baseball, and labor union rallies at MLB spring training sites (including the Tigers’ spring camp in Lakeland, Fla.). There is no union for the minor leagues. A group of former minor-league players is seeking to have the Fair Labor Standards Act applied to minor-league players in hopes of improving wages and working conditions, despite MLB’s antitrust exemption, according to USA Today. Major-league clubs pay the salaries for their minor-league affiliates. Being sued are Major League Baseball, former commissioner Bud Selig and all 30 big-league clubs, with a trial scheduled for February 2017, the newspaper reported. Some minor-leaguers do earn See Next Page

[BILL SHEA/CDB]

New on the Comerica Park menu for the 2015 season is a Southwest pork/macand-cheese on a waffle creation. Szubeczak said. That will include artifacts from when the facility was Navin Field and Briggs Stadium, he said. The concessionaire and team worked with an archivist for the interior display. The entryway will be made of bricks taken from Michigan Avenue. The project is a joint venture between the club and concessionaire.

No cost was disclosed. New concession fare includes “bacon and eggs,” which is thickcut, maple-coated bacon topped with three deviled eggs and optional fried jalapenos. To assuage concern about eating deviled eggs in the summer heat, Szubeczak said the recipe calls for spicy sriracha instead of mayonnaise, and the eggs are kept chilled.

The concoction retails for $8. They will be sold at a portable cart near Section 125 and at the Michigan craft beer stand. Other new offerings include pork rinds with queso dip, a hot dog topped with potato chips and French onion dip, and a Southwest pork/mac-and-cheese on a waffle creation. The trick for the kitchen is creating items people want, but also can be sold en masse, Szubeczak said. “When you make things, you have to be able to prepare them in huge quantities,” he said. Some items, like a chicken Parmesan sandwich and a meatball sandwich last season, were not popular and were scrapped for this year. On the drawing board for the future is pancake-wrapped bacon, he said. There also will be healthy food options available at different concession points inside Comerica, Szubeczak added, including vegan, vegetarian and gluten-free items. 䡲

MLB salaries continue to clear fences The average Major League Baseball salary this season will be $4.25 million, up from $3.95 million to start 2014, according to an analysis by The Associated Press of all major league contracts on the books for Opening Day. The Detroit Tigers have a dozen players earning more than that. The average broke the $1 million mark in 1992, topped $2 million in 2001 and reached $3 million in 2008, the AP reported. The salaries are fueled by baseball’s $9 billion in gross revenues from last season, which was generated by enormous broadcast rights deals, digital media, merchandise licensing and sales, luxury suites leases and premium seating, ticket sales, and concessions.

Twenty years ago, Major League Baseball-wide revenue was $1.4 billion. Baseball’s minimum salary this season is $507,500, a number negotiated via the collective bargaining agreement and indexed against the federal Bureau of Labor Statistics’ annual Consumer Price Index for Urban Wage Earners and Clerical Workers. Of course, the lowest-paid baseball player earns far more than most Americans: Inflation adjusted U.S. median household income was $51,939 in 2013, the most recent data available from the U.S. Census Bureau. The Tigers are not starved for cash to pay their superstar salaries, or their bottom-of-the-

roster players. The team collected $84 million in gate receipts last season, according to Forbes.com, and $254 million in total revenue. That includes the $50 million a year the club gets from its local broadcast rights deal with Fox Sports Detroit, and its 1/30 fraction of the shared portion of MLB’s $9 billion in 2014 revenue. The 30 clubs share national broadcast rights deals and national merchandise and licensing agreements, along with baseball’s lucrative digital operation. Each team also shares 34 percent of its local revenue, such as ticket sales and regional sports network deals. — Bill Shea

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Crainâ&#x20AC;&#x2122;s Homecoming among Detroit-area Knight winners

From Previous Page

more. Prospects on the 40-man major-league roster make at least $41,400 annually while theyâ&#x20AC;&#x2122;re still in the minors, the AP reported, but thatâ&#x20AC;&#x2122;s a category that covers only up to 15 of the 150-plus minor leaguers in most organizations. Major league teams use a 25-man roster of the starting and reserve active players. The 40man roster is those players plus those on the disabled list, and minor leaguers the club is likely to call up when needed under the optional assignment system.

By Amy Haimerl ahaimerl@crain.com

How to get rich in baseball Low-paid players become high-paid players by being good at their job, and being patient within baseballâ&#x20AC;&#x2122;s service time schedule, which is the road map for most players to get significant raises. The big money usually comes for most players when they have accrued six years of service time in the majors, allowing them to become free agents â&#x20AC;&#x201D; the point at which teams bid for their services with hefty contracts (if the playerâ&#x20AC;&#x2122;s services are in demand by that point). Until then, players must wait for salary arbitration. Highly touted young players can get multimillion-dollar deals at the start of their careers, often via signing bonuses, but most work for near the league minimum until theyâ&#x20AC;&#x2122;re eligible for salary arbitration. Players with three or more years of service, but less than six years, may file for salary arbitration, according to MLBâ&#x20AC;&#x2122;s rules. A select few, known as â&#x20AC;&#x153;Super Twoâ&#x20AC;? players, can do so after two seasons in the majors, if they meet certain service time requirements. For example, if he plays well, Castellanos could see a considerable pay bump when he becomes eligible for salary arbitration in 2017. In salary arbitration, the player and the team exchange proposed contracts in January. The team cannot offer less than the playerâ&#x20AC;&#x2122;s total pay from the past season. Most cases result in a one-year deal and a raise based on performance and salaries of similar players. Clubs and players avoid going to arbitration about 90 percent of the time, and in those cases that do go to the three-person arbitration panel, the teams have prevailed

slightly more than the players. Tigers starting pitcher David Price got a one-year, $19.75 million deal in January to avoid salary arbitration, CBSSports.com baseball writer Jon Heyman reported at the time. That was a record increase in salary arbitration. His salary in 2014 was $14 million. Price is eligible for free agency after this season. In January 2014, pitcher Max Scherzer got a one-year, $15.5 million deal to avoid arbitration with the Tigers, and that was a raise from his $6.7 million salary in 2013. Scherzer became a free-agent after last season, and left Detroit in January for a seven-year, $210 million contract with the Washington Nationals. äĄ˛ Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Five Detroit innovators â&#x20AC;&#x201D; including Crainâ&#x20AC;&#x2122;s Detroit Homecoming project â&#x20AC;&#x201D; are winners of the first Knight Cities Challenge, hosted by the John S. and James L. Knight Foundation. The Miami-based foundation announced last week that 32 organizations spread across 12 cities would share $5 million. The winners were whittled down from 126 finalists nationwide and more than 7,000 entries. Detroit had the highest number of finalists â&#x20AC;&#x201C; 25 â&#x20AC;&#x201C; and turned in the second-largest number of winners, just behind Philadelphia. In total, the five local winners were awarded nearly $500,000. The city also can lay claim to a sixth winner, though itâ&#x20AC;&#x2122;s shared with New Orleans. â&#x20AC;&#x153;Knight was astounded by the response that Detroit offered,â&#x20AC;? said Katy Locker, Knightâ&#x20AC;&#x2122;s Detroit program director. â&#x20AC;&#x153;What the panelists saw in Detroitâ&#x20AC;&#x2122;s ideas was a commitment to entrepreneurship, a commitment and response to vacant buildings and vacant lands, and an interest in engagement and connections across our community.â&#x20AC;? Crainâ&#x20AC;&#x2122;s scored on the engagement front, earning $100,000 to build a digital community that can reconnect former Detroiters with their home city. The proposal was an offshoot of the three-day Detroit Homecoming event Crainâ&#x20AC;&#x2122;s convened in September along with the Downtown Detroit Partner ship , D e t r o i t E c o n o m i c G r o w t h Corp. and other high-profile foundations and businesses. The initiative brought back more than 150 high-profile former Detroiters, including Dan Doctoroff, former deputy mayor of New York City, and Ron Fournier, editorial director of the National Journal. â&#x20AC;&#x153;We discovered in the Homecoming that thousands of people who grew up in the metro area but now live and work elsewhere still â&#x20AC;&#x2DC;carry the Dâ&#x20AC;&#x2122; in their hearts,â&#x20AC;? said Crainâ&#x20AC;&#x2122;s Publisher Mary Kramer. â&#x20AC;&#x153;We can build a community around that affection that can be an economic force for Detroit.â&#x20AC;? Homecoming will repeat this fall, and the grant will be used to keep expats in touch with news about the city, career opportunities and each other. Already, a twice-monthly email newsletter goes to more than 30,000 people, and the funding will help the project expand. The other local proposals are: äĄ˛ Brand Detroit: Innovating Detroit Neighborhoods Funding: $164,810

Hajj Flemings, owner of Brand Camp University, will use his funds to help startups and entrepreneurs in underserved areas brand their companies and ideas. He envisions a training and mentoring program that helps them tell their stories and create a digital presence. äĄ˛ Brick + Beam Detroit Funding: $87,424 Emilie Evans of the Michigan Historic Preservation Network plans to create a community of Detroit rehabbers who can work together to combat blight and reactivate vacant buildings. She intends to provide training, social events and forums to help people of all skill levels. äĄ˛ The Buzz Funding: $84,055 Erin Kelly of Detroit Future City intends to pair barbers with landscape contractors to transform overgrown

vacant lots. There will be workshops that teach mowing and patternmaking techniques. äĄ˛ LIVE Detroit Funding: $40,000 Rachel Perschetz wants to create a one-stop shop for information about neighborhoods and living in the city. äĄ˛ The Urban Consulate (shared with New Orleans) Funding: $150,000 Claire Nelson of the Urban Innovation Exchange plans to promote cross-city cultural and civic exchange by setting up a network of new â&#x20AC;&#x153;consulatesâ&#x20AC;? for American cities instead of countries. Initially, they will be in Detroit, Philadelphia and New Orleans and offer events and entrĂŠe into local culture. äĄ˛ Amy Haimerl: (313) 446-0416 Twitter: @haimeralad

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BLUE CROSS, from Page 1: Blue Cross HMO needed $30 million infusion from parent Last June, Blue Care Network sold a surplus note to Blue Cross Complete for $30 million at a 1.51 percent interest rate to cover losses, DIFS said. Blue Care is a subsidiary of Blue Cross Blue Shield of Michigan, which provides care to about 4.4 million people through its various insurance operations. A surplus note is a subordinated security issued primarily by a mutual insurance company that pays interest at the end of a designated period. In the past two years, Blue Care has also contributed another $19 million in capital to Blue Cross Complete, which includes a $2 million capital infusion last December and another $17 million in 2013, DIFS said. In an email statement, Andrea Miller, a DIFS spokesman, said it is not unusual for companies to receive additional surplus from a parent company when premiums or business growth is significant. “Companies are expected to have sufficient capital and surplus to support premium (and) business growth,” she said. CEO Kevin Klobucar of Blue Care Network said Blue Cross Complete’s financial losses and $50 million capital transfers were expected and necessary to support planned growth in the company. “The way I view Blue Care Complete is this is almost like a startup company. We are really focused on growth strategy at this point in time,” said Klobucar. “The growth came from the Healthy Michigan population. We are focused on working with the state to reduce the uninsured.” Growth plan Blue Care acquired Blue Cross Complete, formerly called M-Caid, in 2006 from the University of Michigan . Its membership hovered at about 20,000 until 2012, when Blue Cross decided to embark on a Medicaid growth strategy. Jay Rosen, president of Lansingbased Health Management Associ ates, said he isn’t surprised a small and growing Medicaid HMO like Blue Cross Complete would require

Largest plans According to the Michigan Department of Insurance and Financial Services, the state’s largest Medicaid HMO plans in terms of enrollment are: 䡲 Meridian Health Plan of Michigan, with about 379,000 members and a 0.5 percent profit margin. 䡲 United Healthcare Community Plan, with about 275,000 members and a 1.4 percent margin. 䡲 Molina Healthcare of Michigan, with about 242,000 members and a 0.8 percent margin. — Jay Greene

infusion of capital from its parent. “What I think is most interesting is, not the details about the insurance filings, but Blue Cross’ new commitment through the HMO to be a major player in the Medicaid managed care program” in Michigan, said Rosen, adding: “I expect they will go from 20,000 to several hundred thousand members.” Rosen believes Blue Cross is preparing for a dramatic expansion in its membership. “If they pursue statewide presence, they will be a major new competitor in every community,” he said. During 2015, DIFS is taking applications from Medicaid HMOs to do business in the state’s 83 counties starting Jan. 1. Klobucar confirmed that Blue Cross Complete will apply to expand into additional counties. He declined to specify how many and which ones. But Allan Baumgarten, a Minneapolis-based health care consultant who also publishes the Michigan Health Market Review , said the financial losses and capital infusion needs may work against Blue Cross’ application to grow very fast in Michigan Medicaid. “One criteria the state looks at is the financial stability of the organization. I would think they would get docked some points because of the losses and the rapid growth and how they handled it, which is not so

Financials ofstate Medicaid HMOs NAME Meridian Health Plan United Healthcare Community Plan Molina Health Plan McLaren Health Plan Community HAP Midwest Priority Health Choice HealthPlus Partners Total Health Blue Cross Complete Aetna Better Upper Peninsula Health Plan PHP Family Care Harbor Health Plan

2014 REVENUE $1.4 billion $1.1 billion $1.1 billion $722.6 million $381.7 million $341.1 million $295.9 million $272.3 million $259.3 million $187.5 million $150.4 million $67.5 million $21.9 million

2014 NET INCOME $3.4 million $30.4 million $26.8 million $12.2 million $19.1 million $203,306 ($8.9 million) $5 million ($13.7 million) $6.2 million $4.6 million $853,304 $422,656

MARGIN 0.23% 2.8% 2.5% 1.7% 5.0% 0.06% (3%) 1.85% (5.3%) 3.3% 3.0% 1.3% 1.9%

Source: Michigan Deparment of Community Health, 2014

well,” he said. Last year, despite the $50 million in capital infusion, Blue Cross Complete’s surplus dropped to $12.8 million from $30.7 million in 2013. Moreover, Blue Cross Complete’s administrative expense ratio — which measures the amount of overhead costs to revenue — ballooned to 17 percent last year from about 9 percent in 2013, DIFS said. Typical administrative expense ratios in Michigan range from about 10 percent to 12 percent. Klobucar said the administrative expense increase was caused by hiring additional employees, case management nurses and managers to support Medicaid expansion; negotiating provider contracts; investing in member web portals; and onetime costs associated with transferring some administrative service functions to AmeriHealth Caritas. “We are planning for growth” and hired staff and built infrastructure to prepare for membership expansion, he said. In 2011, Blue Cross began its strategic growth in Medicaid by investing $215 million for a minority interest in AmeriHealth, a national Medicaid HMO also co-owned by

two other Blue Cross plans with more than 800,000 members in three states. “This year we will see some improvement” in administrative expense costs on a per-member permonth basis and “expect any loss will be significantly reduced and approaching break-even,” he said. The other 12 Medicaid HMOs operating in Michigan have margins that range from 1 percent to about 6 percent, according to the 2014 Michigan Health Market Review. Overall, HMOs average margins were 1.2 percent for the first six months of 2014, down from 1.8 percent in 2013, Michigan Market said. Baumgarten said Michigan Medicaid HMOs are doing more poorly financially than in Wisconsin and Minnesota, two other states he has studied. The problem, he said, is Michigan’s relatively low reimbursement model. “Medicaid over the last five years has become a thin margin line of business for Michigan HMOs, and that margin is getting thinner looking at 2014,” Baumgarten said. “Some HMOs are doing better than others.” Baumgarten called Blue Cross Complete’s financial issues “grow-

ing pains. “The fact they had to add $50 million in capital is not that surprising because of their growth. The financial losses are surprising.” Baumgarten said Blue Cross Complete’s medical expenses were about 2 percent higher than other HMOs and its medical loss ratio was 88.2 percent, slightly higher than the approximate 85 percent statewide average. While Klobucar said the new Healthy Michigan Medicaid enrollees aren’t sicker than the general Medicaid population, the 30,000 new members last year had pentup demand for primary care services that increased medical costs and led to some of the financial losses. While not a Medicaid HMO, HealthPlus of Michigan last month was placed under state supervision after mounting losses over two years lowered its reserves below the required state minimum. HealthPlus, which has lost more than $24 million since 2013, was ordered to find a financial partner. Miller said HealthPlus is continuing to negotiate with several interested financial partners. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

MARQUETTE, from Page 1: Real estate community watching Mexican mogul’s moves Near Mexico City, Helú bankrolled the first phase of the sprawling Plaza Carso mixed-use development with retail space and an art museum, built on a former glass factory, to the tune of about $650 million. His Inmuebles Carso SAB de CV development built the project. Nico Gatzaros, managing partner of Detroit-based 400 Monroe Asso ciates LLC and son of the late Greektown Casino-Hotel developer Ted Gatzaros, whose estate sold the building to Helú, said offers from “all over the world” were made on the building. “We were getting offers from Russians, Chinese,” he said. A warranty deed filed in Wayne

County dated Dec. 10 lists an address for 243 Congress LLC in Mexico that is the same as Impulsora del Desarrollo y el Empleo en America Latina SAB de CV (Driving Development and Employment in Latin America), or IDEAL, of which Helú is the chairman of the board. A listing by New York City-based property research firm Real Capital Analyt ics Inc. names Carlos Facha Lara, director of legal affairs and nonmember assistant secretary of the IDEAL board, as the buyer. The Mexico address is also listed in U.S. Securities and Exchange Commission documents as being for Grupo Financiero Inbursa SA de CV, a group of financial companies controlled by Helú, and some of its sub-

sidiaries. The address also appears for Helú in this year’s proxy statement for The New York Times, of which he became the largest shareholder in January with an ownership of 27.8 million shares. The 75-year-old Helú’s Grupo Carso SA de CV is a holding company with interests in construction, retail and industrial materials industries. His holdings are also in telecommunications through America Movil SAB de CV and mining through Minera Frisco SAB de CV. It’s not known whether Helú already has ties to any other real estate purchases in metro Detroit, but he does own real estate elsewhere. For example, he purchased the Duke-Semans mansion in New York City

across the street from the Metropolitan Museum of Art for $44 million in 2010, Forbes reported at the time. Attempts to reach Helú or a representative Thursday and Friday through his personal website, the IDEAL website, and the New York Times were unsuccessful. Attempts were also made through the media relations office of Philip Morris International Inc. , of which Helú is a member of the board of directors, and legal counsel. Bunia Parker, principal of Detroitbased Summit Commercial LLC, which represented 243 West Congress in the purchase, said he could not confirm Helú was the buyer. He also declined to provide a direct contact for 243 West Congress LLC.

A statement Parker provided at the time of the sale only identified the buyer as “an out-of-state investor.” The statement said renovations are planned and the building will remain as office space, but exactly what the renovations include, how much they will cost and when they will be complete has not yet been determined. Summit Commercial is responsible for managing and leasing the building, which is currently vacant, according to CoStar Group Inc. , a Washington, D.C.-based real estate information service. Detroit-based Exclusive Realty represented 400 Monroe in the sale. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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PROPOSAL 1, from Page 1: Road tax ad push hitting potholes Supporters include the Detroit referendum to voters as both a Chamber of Commerce , Business roads and schools measure. Leaders for Michigan , Michigan AFLJohn Truscott, president of TrCIO and Small Business Association uscott Rossman, said the firm of Michigan. The Michigan Chamber walked away from the campaign of Commerce said last month said it due to a disagreement over the conwill remain neutral on the referen- cept for the campaign with the Snydum. der administration. The pro-Prop 1 campaign con“We do things a certain way,” Trcentrates on the road repair funding uscott said. “If we couldn’t run it the aspect of the ballot measure rather way we know how, it was best they than explaining the complex related went with someone else.” package of changes, including inWWP Strategies stepped in to creases to funding for schools and make the pitch to voters and settled local government. on running three different 30-sec“The message that resonates ond TV commercials on cable and with everyone is safer roads,” Gov. network channels in all state marRick Snyder told Crain’s in March. kets, along with radio spots in some However, voters are lacking the markets, Roger Martin, partner at concrete facts needed to make the Martin Waymire, told Crain’s last decision, said Ed Sarpolus, execu- month. tive director of Lansing-based marA 30-second TV ad part of the ket research firm Target-Insyght. Safe Roads Yes campaign stars a “All the institutional polling says Michigan family concerned with safety is the issue, but jobs and the concrete falling from overpasses on economic impact state highways. on all of us is more “All the “Nobody likes important,” Sarpo- insitutional paying more, but lus said. “The ads we’re voting yes for don’t tell the voters polling says safer roads,” the how it affects their safety is the mother says. “We’ll pay more for roads pocketbooks down that are safer for our the road; most peo- issue, but jobs family.” ple haven’t had a and the Other ads feature damaged tire or a more concerned chunk of concrete economic through their wind- impact on all of families along with police, fire and shield, so does an other emergency emotional ad about us is more services commentsafety really res- important.” ing on the dangers onate?” of Michigan roads. For example, the Ed Sarpolus,Target-Insyght Tim Smith, CEO ballot measure of Detroit-based adwould fundamentally reinvent the way K-12 school vertising and design agency Skid aid funding is administered, an as- more Studios, said playing on emopect of the plan that was initially tions is a widely used and effective planned as part of the advertising strategy, but he still questions the effectiveness of the Safe Roads Yes blitz, but then removed. The original campaign, led by campaign. “Moving people to make a deciLansing-based public relations and nonpartisan political consulting sion using emotion is a good driver firm Truscott Rossman LLC , had a for decision-making,” Smith said. two-pronged strategy of selling the “Using facts and figures is rarely a

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Advancing Macomb ........................................ 7 Ally Financial .................................................... 11 Amson Dembs ................................................ 14 Ashley Capital ................................................ 14 Avison Young.................................................... 11 Axis Advisors .................................................... 1 Bedrock Real Estate Services........................ 11 Bernard Financial Group ................................ 11 Blue Care Network ............................................ 1 Blue Cross Blue Shield of Michigan ............ 28 Blue Cross Complete ........................................ 1 Colliers International.................................. 1, 12

Health Management Associates ................ 28 Laurel Park Place............................................ 18 Macomb County Comm. Mental Health .... 10 Martin Waymire ................................................ 1 Meridian Health .............................................. 11 Mich. Dept. of Insurance Financial Services .... 1 Michigan Venture Capital Association .......... 25 MiQuest ............................................................ 5 Newmark Grubb Knight Frank ................ 11, 14 Oakland County Comm. Mental Health...... 10 Olympia Development of Michigan ............ 19 Plante Moran Cresa........................................ 12 Rock Ventures ................................................ 19

Compuware...................................................... 11

Signature Associates .................................... 14

Cranbrook Institute of Science .................. 20

Skidmore Studios .......................................... 29

Detroit Economic Growth ............................ 25

Stuart Frankel Development ........................ 14

Detroit News .................................................... 6

Summit Commercial .................................... 28

Detroit Tigers ............................................ 3, 26

Target-Insyght................................................ 29

Detroit Wayne Mental Health Authority .... 10

Truscott Rossman ........................................ 29

DuCharme Place ............................................ 18

University of Michigan .................................. 20

General Development.................................... 14

WWP Strategies................................................ 1

What Proposal 1 is intended to do Proposal 1, and legislation tied to its passing, is a complex set of packaged bills designed to fix Michigan roads. The measure would drop the sales tax on fuel and ensure that school aid fund revenue goes only to K-12 districts or community colleges — not universities. Transportation funding would rise by about $1.2 billion a year, giving a big boost to the $2 billion now collected through fuel taxes and license plate fees. And $11.8 billion in annual school funding would jump by at least $300 million, the equivalent of $200 per student. The proposal would also yield an additional $95 million from yearly registration fees on cars and heavy trucks, with fees for heavy trucks making up about half of that total. Proposal 1 would: Remove the sales tax on gasoline and diesel fuel. Increase the state sales tax to 7 percent from 6 percent.

Accompanying legislation Legislation tied to the passing of the proposal would recoup the costs lost from the removal of the gas tax through series of measures, including: Increase the wholesale fuel tax to 41.7 cents per gallon from 19 cents per gallon for gasoline and 15 cents per gallon for diesel. Create a $75 annual surcharge for electric vehicles and a $25 annual surcharge for hybrid vehicles. Remove the three-year depreciation discount for new car registration fees. Dedicate 60 percent of 5 percent of the raised sales tax to the School Aid Fund. Currently, 60 percent of 4 percent of the tax goes to the fund. Guarantee that the School Aid fund is used exclusively for community colleges, technical career programs and K-12 districts. Dedicate 15 percent of 5 percent of the sales tax to revenue sharing with townships, villages and cities, up from 15 percent of 4 percent of the tax. Allow municipalities to require competitive bidding on projects at least 50 percent funded by the community. Source: Ballotpedia.org; House Fiscal Agency

good strategy to change minds, but the TV ad I’ve seen is just not very well executed from an emotional standpoint.” Fred Wszolek, partner for WWP Strategies, said it is a fact that the roads are unsafe and believes the ad campaign is having an effect. “We needed to start the conversation where we did. … It’s a fact that the roads are dangerous,” Wszolek said. “People need to think of the roads as part of their safety because it is.” There are a number of antiballot measure efforts organized around the state, but none have spent much money to combat the referendum. One group, Citi zens Against Middle Class Tax In c r e a s e s , is organized by former Snyder adviser John Yob, now CEO of Strategic National Consult ing in Grand Rapids. Yob’s anti-Prop 1 petition calls the ballot measure “an unaffordable tax increase on struggling families.” And a multimedia campaign opposing the proposal created by the Coalition Against Higher Taxes and Special Interest Deals is backed by Saginaw Township businessman Paul Mitchell. So far, the pro-Prop 1 ads haven’t been swaying voters, according to recent polling. Sarpolus’ Target-Insyght conducted a poll earlier this month commissioned by the Lansing political news service M I R S . In that poll, 55 percent of voters said they’d vote no on Proposal 1. That figure jumped to 65 per-

cent when those polled actually read the proposal language, Sarpolus said. “We do a cold vote without the ballot language so we can gauge what voters are against in the proposal,” Sarpolus said. “Clearly the ballot language is too confusing or too complex.” When asked about the polling, Wszolek said, “It’s complicated. The more you try to explain the features, the more confused (voters) get, but that’s how the Legislature wrote it. The fact is that this is a good proposal overall and there’s no alternative out there.” But Wszolek said Safe Roads Yes will begin to air ads explaining other aspects of the proposal, including a guarantee that funds have to be spent on transportation and the road repair warranties. The campaign has a month to air new ads that will convince voters. Under the proposal, all road work must be guaranteed by the road and highway construction companies, which exists in other states, but not Michigan. Truscott said the campaign was going to be a tough sell to voters from the start, but now he believes it’s doomed to fail. “I don’t know if the campaign can recover,” Truscott said. “Everyone knows the roads are bad. It’s time to move to the next point, but I don’t know if there’s enough time to make it work.” Crain’s reporter Bill Shea contributed to this report. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Marla Wise, (313) 446-6032 or mwise@crain.com Executive Editor Cindy Goodaker, (313) 446-0460 or cgoodaker@crain.com Managing Editor Jennette Smith,(313) 446-1622 or jhsmith@crain.com Director, Digital Strategy Nancy Hanus,(313) 446-1621 or nhanus@crain.com Managing Editor/Custom and Special Projects Daniel Duggan,(313) 446-0414 or dduggan@crain.com Senior Editor/Design Bob Allen,(313) 446-0344 or ballen@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Web Editor Kristin Bull, (313) 446-1608 or kbull@crain.com Research and Data Editor Sonya Hill,(313) 446-0402 or shill@crain.com Web Producer Norman Witte III, (313) 446-6059, nwitte@crain.com Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766 REPORTERS Jay Greene, senior reporter Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor Covers entrepreneurship and city of Detroit. (313) 446-0416 or ahaimerl@crain.com Chad Halcom Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6052; FAX (313) 393-0997 Sales Manager Tammy Rokowski Senior Account Executive Matthew J. Langan Advertising Sales Christine Galasso, Joe Miller, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Audience Development Director Eric Cedo Events Manager Kacey Anderson Creative Services Director Pierrette Dagg Senior Art Director Sylvia Kolaski Marketing Coordinator Ariel Black Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik,YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Alicia Samuel at asamuel@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Office Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of October, and no issue the fourth week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2015 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

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CRAIN’S DETROIT BUSINESS // April 6, 2015

WEEK ON THE WEB/March 28-April 3

RUMBLINGS

WXYZ, WMYD announce Murri as new GM

Ex-D.C. mayor to speak at DDP annual meeting

ON THE MOVE 䡲 Susan Martin announced she plans to resign in July as Eastern Michigan University president, then take a one-year sabbatical before teaching as a professor at the school she has led since 2008. 䡲 Simon Boag was named by founder Tom LaSorda as his replacement as CEO of Birmingham-based IncWell LLC. Boag had been a partner in the early-stage venture capital firm. 䡲 RickLoewenstein, CEO of Farmington Hills-based nonprofit Jarc for the past seven years, plans to step down May 1 from the agency for the developmentally disabled. Chief Development Officer Rena Friedberg, 63, is interim replacement for Loewenstein, 54.

COMPANY NEWS 䡲 Detroit Bikes LLC will produce 2,415 custom-designed fat tire bicycles to promote a Coloradobased beer. The manufacturer will make the bikes for NewBelgium Brewing Co., brewer of Fat Tire AmberAle, for shipment next year. 䡲 Sterling Heights-based Rizzo Environmental Services Inc. added Canton Township to its 38 other waste hauler communities in metro Detroit through a deal to acquire Canton Waste Recycling Inc.Terms were not disclosed. 䡲 For the sixth year in a row, the U.S.Small Business Administration’s Michigan district office named Huntington Bank as Michigan Lender of the Year for 2014. Farmington Hills-based Level One Bank was named Community Lender of the Year and Export Lender of the Year. Huntington Bancshares Inc.. is based in Columbus, Ohio. 䡲 Dearborn-based Energy Development Associates LLC, an electric vehicle, solar and power electronics engineering company, was acquired by San Diego-based Rhombus Energy Solutions Inc. for an undisclosed price. 䡲 Ontario-based Magna International Inc., North America’s biggest auto-parts maker, is in talks to sell its car-interior business, Magna Interiors, to Spain’s Grupo Antolin, Bloomberg reported. Magna Interiors operates a

ormer Washington, D.C., Mayor Anthony Williams will deliver the keynote address at the Downtown Detroit Partnership’s annual meeting April 17. Williams, who served two terms as mayor from 1999 to 2007 after serving as the district’s CFO, will share his perspective on Detroit based on his experience in the nation’s capital during its financial crisis in AnthonyWilliams: the mid-1990s, Slated to speak. said Eric Larson, CEO of the DDP and founder, president and CEO of Bloomfield Hills-based Larson Realty Group. “He’ll talk a little bit about his views and his experiences as they relate to where Detroit is and where the future lays,” Larson said. About 1,000 people are expected to attend the lunchtime event in Cobo Center’s Grand Ballroom B, Larson said. “We will be illustrating how not only the activity and the strength of the downtown core helps support the overall city, but DDP programs and initiatives that started in the core and are finding their way into and having success in the neighborhoods,” Larson said. Tickets are $100 per person or $1,000 for a table of 10. Tickets are available at downtowndetroit.org or by calling (313) 566-8250 or emailing julie.galvan@downtowndetroit.org.

ike Murri was promoted to vice president and general manager of Southfield-based ABC affiliate WXYZChannel 7 and WMYD-Channel 20, the stations announced. Murri, 55, who was WXYZ station manager, replaces Ed Fernandez, who becomes a divisional general manager for Cincinnati-based station owner E.W.Scripps Co.

[ARA HOWRANI]

Zak Pashak,founder and president of Detroit Bikes,will make bicycles to promote Fat Tire AmberAle. plant in Howell and has engineering and testing programs at its Troy technical center. 䡲 PlastipakPackaging Inc., a subsidiary of Plymouth plastic containers maker PlastipakHoldings Inc., expects to close this summer on a $300 million-plus deal to buy Wales-based APPE Packaging from La Seda de Barcelona SA. 䡲 Detroit-based Huron Capital Partners LLC acquired New York City-based SkyTechnologies Inc. for one of its platform companies, Albireo Energy LLC. Sky Technologies installs and manages energy systems for large data centers. 䡲 Algal Scientific Corp., a Plymouth-based maker of algaebased chemicals for the food and beverage industries, closed on a Series B funding round of $7 million. 䡲 Ann Arbor-based Arborlight LLC closed on a $1.7 million funding round to commercialize its indoor LED-based lighting system. 䡲 The Ann Arbor-based nonprofit FairFood Network is getting nearly $5.2 million from the U.S. Department ofAgriculture to help boost the availability of fresh fruits and vegetables to people receiving food assistance. 䡲 Lynn Tilton, CEO of Auburn Hills-based Dura Automotive Systems, sued the U.S.Securities and Exchange Commission, claiming the agency’s filing of fraud charges against her and her New York Citybased private equity firm Patriarch Partners violated the U.S. Constitution, Bloomberg reported. 䡲 German auto parts giant Robert Bosch GmbH agreed to plead guilty to price-fixing and pay a $57.8 million fine for its role in conspiring to rig bids for spark plugs, oxygen sensors and starter motors sold to the Detroit 3 automakers, said the U.S.Department ofJustice. 䡲 Detroit-based Automotive News, sister publication to Crain’s Detroit Business, won the Grand Neal Award, the highest award in national business-to-business media, for its coverage of the General Motors ignition switch recall crisis.

OTHER NEWS 䡲 The Troy-based Kresge Foundation awarded $1.6 million for 18 projects run by nonprofits working to strengthen Detroit neighborhoods, among them a new youth

boxing gym, a market garden in Chaldean Town and an artists market in Southwest Detroit. 䡲 A report by the new Coalition forthe Future ofDetroit Schoolchildren says the state should remove Detroit Public Schools from emergency-manager control and assume the district’s debt. The report calls for more transparency, more emphasis on charter schools quality, creating a city education commission and dissolving the Education Achievement Authority. 䡲 County Executive Warren Evans proposed eliminating the Wayne County Economic Development Growth Engine program and folding its work into the county’s economic development corporation, a move expected to save the financially troubled county’s general fund $550,000 per year. 䡲 An economic impact study shows Willow Run Airport generates more than 950 jobs and $123 million in total economic impact in Michigan. The study, conducted by University of Michigan-Dearborn associate business professor Lee Redding, was commissioned by the Wayne County Airport Authority. 䡲 The Detroit Elected Officials Compensation Commission approved 2.5 percent pay increases for Detroit City Council members and the city clerk. 䡲 The Southeast Michigan Purchasing Managers Index rose sharply in March to 64.5, 8.5 points above February’s level; values above 50 indicate economic growth. Meanwhile, the Michigan Economic Activity Index was up slightly in January, growing 0.3 percentage points to 120.6. 䡲 A federal court jury in Pittsburgh rejected the claims of David Wawrzynski, owner of the metro Detroit-based Wokto You food delivery service, that a condiment package he patented in 1997 led H.J.HeinzCo. to develop its Dip & Squeeze ketchup packets in 2010.

OBITUARIES 䡲 Mike Fezzey, president of the Eastern Michigan region for Huntington Bank and longtime former president and general manager of WJR 760 AM, died of an apparent heart attack in Florida. He was 57.

J.K. Simmons to headline NSO benefit in Detroit Actor J.K. Simmons is scheduled to headline a fundraiser benefiting the Neighborhood Service Organization in Detroit. The event will include a question-and-answer session and meetand-greet Monday morning at the Sound Board in the MotorCity Casino Hotel. Simmons is a Detroit native. He will throw out the ceremonial first J.K. Simmons: pitch Monday afBaseball, benefit. ternoon at Comerica Park for the Detroit Tigers’ opener. Simmons received an Academy Award this year for best supporting actor for his role in “Whiplash.” He also played the Tigers’ manager in the 1999 film “For Love of the Game.” Sheilah Clay, NSO president and CEO, said Simmons has been a longtime supporter of the nonprofit, which offers homeless recovery, mental health services and other

programs in Wayne and Oakland counties. Tickets are $50 and must be purchased in advance. For more information, visit nso-mi.org.

Anti-discrimination isn’t just for religion, Snyder says Gov. Rick Snyder made it clear last week that he doesn’t want Michigan to become Indiana. Snyder said Thursday that he would veto religious objections legislation unless lawmakers also send him a bill extending anti-discrimination protections to gays, The Republican for months has expressed skepticism with a proposed Rick Snyder: Vow state-level Relito veto. gious Freedom Restoration Act if there is no accompanying measure to amend Michigan’s civil rights law by prohibiting discrimination against lesbian, gay, bisexual and transgender residents in employment, housing and public places. On Thursday, as Indiana and Arkansas scrambled amid criticism over religious objections bills, Snyder went further and told the Detroit Free Press he would veto such a bill if it came to his desk as standalone legislation. In the meantime, Indiana Gov. Mike Pence on Thursday signed a bill intended to rectify problems with a law he had signed just the week before. The new law bars businesses from refusing to serve gays and lesbians on religious grounds.

Shinola goes to Brooklyn Shinola/Detroit LLC is opening a store in Brooklyn on the Dumbo neighborhood waterfront. The company is taking nearly 5,000 square feet at Empire Stores, a former coffee warehouse that is in the process of being converted into a state-of-the-art office building with ground-floor retail space. The new location will be Shinola’s second in the city and its first in Brooklyn. In addition to its flagship store in Midtown, Shinola has shops in Chicago; Washington, D.C.; Los Angeles; Minneapolis; and London.

BITS & PIECES 䡲 Likely 2016 presidential candidate Jeb Bush will be the keynote speaker at the Lincoln Day dinner of the Clinton County and Ingham County Republican parties on May 28. Details will be announced later. Wisconsin Gov. Scott Walker will attend the Oakland County Republican Party’s Lincoln dinner May 4.

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