Crain's Detroit Business, July 20, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS JULY 20-26, 2015

The proposed fees — $30 for hybrids and $100 for electric vehicles — are considered a tax fairness measure since alternative-fuel vehicles use less gasoline and so their owners pay fewer gas taxes.

For filmmakerturnedhousing investor, Detroit is like Wild West

As IAC CEO says goodbye, supplier may seek a good buy ... or buyer

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Automakers balk at EV fees Alternative: Lawmakers should offer incentives to buyers By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

LANSING — Automakers are pushing back against proposed higher state registration fees for alternative-fuel powered cars. The extra fees — $30 for hybrids and $100 for electric vehicles — would go toward a nearly $1.5 billion road funding plan and are con-

sidered a tax fairness measure since alternative-fuel vehicles use less gasoline and so their owners pay fewer gas taxes. But automakers, racing to meet more rigorous federal fuel-economy standards, have concerns the fees will discourage would-be buyers of the fuel-efficient vehicles in a still-developing market.

In a letter last month to Senate Majority Leader Arlan Meekhof, the Washington, D.C.-based Alliance of Automobile Manufacturers said lawmakers should be offering incentives to buyers rather than raising fees. The alliance represents a dozen global automakers, including the Detroit 3. “Public policies that negatively

MIS drives toward sound investment

differentiate advanced technology vehicles — such as electric and hybrid vehicles — discourage consumers from adopting these new technologies,” wrote Wayne Weikel, the alliance’s state government affairs director. “Consumer choice is the key factor in driving competitiveness in the marketplace, and state policy should not penalize residents of SEE FEES, PAGE 16

Fata’s civil cases: Who will share the blame? By Chad Halcom chalcom@crain.com

COURTESY OF LIVE NATION

The success of the FasterHorses country music festival has Michigan International Speedway looking at concerts as a source of revenue that’s not from auto racing. By Bill Shea bshea@crain.com

he success of the three-day Faster Horses country music festival at Michigan International Speedway has prompted the track and the concert promoter to begin plans for a rock festival that could be akin to Lollapalooza, Coachella and Bonnaroo. The idea is still in the talking stage, but it represents the track’s latest effort to boost revenue outside of auto racing. MIS, which opened in 1968 in the Irish Hills area of Brooklyn, south of Jackson, is best known for its two NASCAR Sprint Cup races, the Quicken Loans 400 in June and the upcoming

Track president wants music festivals to be part of a more diverse – and lucrative – lineup Pure Michigan 400 on Aug 14-16.

Attendance at the races has fallen since the recession. It used to top 80,000 yearly. “It kind of dawned on us we’ve got a great facility, we’ve got a great team here, let’s start to expand our portfolio and look at becoming an entertainment destination,” MIS President Roger Curtis said.

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Music festivals, beer and wine tastings, driving schools, vehicle testing, obstacle course runs and private events such as weddings are elements of the 1,180-acre track’s expanding nonrace calendar that helps it generate revenue. The corporate business hurt by the recession also has started to rebound. “Entertainment, hospitality, suites and corporate sponsorships have been very strong,” said Curtis, who began working in motorsports in 1991 and became MIS president in 2006. What all that adds up to in revenue, track executives will not say, but Crain’s estimates it at SEE MIS, PAGE 17

Former oncologist Farid Fata may have taken responsibility at sentencing for an excessive chemotherapy treatment scheme that afflicted cancer patients for years, but who will share blame with him in upcoming civil court hearings is unclear. Federal officials have collected about $10 million in various cash and asset seizures since Fata’s 2013 arrest to go toward satisfying a $17.6 million criminal judgment that was part of his July 10 sentencing. U.S. DisFarid Fata: trict Judge Paul $10 million seized to Borman will depay $17.6 million cide at a restitucriminal judgment. tion hearing within 90 days how much of the judgment will go to the government — because Medicare and Medicaid paid millions for his fraudulent treatments — or to benefit his victims. But Fata also faces 27 pending civil lawsuits from victimized patients and their families before Oakland County Circuit Judge Rudy Nichols, plus a whistleblower lawsuit in federal court from his former SEE FATA, PAGE 18

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MICHIGAN

BRIEFS Shepler’s adds 1st boat in 30 years; demand on rise Chris Shepler and his family are celebrating the 70th anniversary of their Mackinac Island ferry company with their first new boat in nearly three decades. Shepler’s Mackinac Is land Ferry has seen as much as 25 percent higher passenger demand for ferry service to the island in the past three years. With the christening July 12 of the new Miss Margy — a $3.8 million, 85-foot vessel that will reach top speeds of 42 mph and carry up to 281 passengers — Shepler’s will have a fleet of six boats ferrying people between the island, Mackinaw City and St. Ignace. The Miss Margy may not be ready for its first voyage until Labor Day as crews finish the last of the painting, sanding and welding. The U.S. Coast Guard also has to run the boat through a series of safety tests before it can carry people. The family started serious discussions about construction two years ago, Shepler said. Eventually, “it was quite evident that we needed to do this now,” he said. That was due in part to a “huge

increase” in business during the past three years, something Shepler attributes in part to the state’s Pure Michigan tourism campaign. The company also won business from the Grand Hotel , which uses Shepler’s as its official ferry service. The contract for the Miss Margy was given to Onaway-based Moran Iron Works Inc. The boat is named for Margaret Shepler, wife of Shepler’s founder William Shepler. She died in 2004. Lindsay VanHulle

Strait talk from state: No heavy oil in Great Lake pipe The state will ban heavy crude oil from being transported along a pipeline running beneath the Straits of Mackinac, The Associated Press reported. Attorney General Bill Schuette and Dan Wyant, director of the Michigan Department of Environmental Quality , said carrying heavier oil would “unreasonably” put the Great Lakes at risk. Calgary, Alberta-based Enbridge Energy Partners LP said only light crude currently moves through its two side-by-side pipes beneath the straits.

Michigan officials also recommend requiring an independent analysis of alternatives to the pipelines and ensuring Enbridge has adequate liability coverage in the case of a “worst-case-scenario spill.” Many environmental groups want the pipelines shut down, fearing a spill similar to one from another Enbridge pipeline that severely polluted the Kalamazoo River in 2010.

Davenport restructuring campuses across Michigan Davenport University is restructur-

ing several campuses across Michigan, The Grand Rapids Press reported. The changes will see locations in Flint and Kalamazoo close and then reopen as part of community colleges in those cities. In addition, the private, nonprofit school said its Battle Creek campus will close and the Saginaw campus will merge with its Midland campus. The university said it will look at creating a new campus to serve the Midland, Bay City and Saginaw region. President Richard Pappas said that in recent years enrollment has dropped or shifted online at some campuses — especially among adult students. Enrollment has grown at its Lettinga campus in Caledonia Township near Grand Rapids.

MICH-CELLANEOUS

䡲 The state of Michigan terminat-

ed a three-year, $145 million contract with Philadelphia-based Aramark Cor-

rectional Services a year after the company, hired to feed state prisoners, came under scrutiny for lack of cleanliness, unapproved menu substitutions and other issues, The Associated Press reported. Oldsmar, Fla.based Trinity Services Group will transition to becoming the new vendor under a three-year, $158 million contract. 䡲 The construction project to build Michigan State University ’s Grand Rapids Research Center will create 728 jobs, generate $55 million in wages and create an economic impact of $95.6 million, MLive.com reported, citing research conducted for MSU by An -

derson Economic Group. 䡲 Niles-based Delta Industrial Valves Inc. , a manufacturer of knife

gate valves for the mining, oil sands and other industries, was acquired by the global engineering firm Weir Group PLC of Glasgow, Scotland, for $47 million, MiBiz reported. Delta employs 70. Birmingham-based Quarton Partners LLC was the financial adviser for Delta. 䡲 After 31 years, the U.S. Environmental Protection Agency removed Burrows Sanitation, a former waste disposal site about 15 miles from South Haven, from the Superfund list of the nation’s most polluted places, The Associated Press reported.

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . 17 BUSINESS DIARY . . . . . . . . . . . . . . . . 14 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 14 CAPITOL BRIEFINGS . . . . . . . . . . . . . . 7 CLASSIFIED ADS . . . . . . . . . . . . . . . . 15 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 OTHER VOICES . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 14 RUMBLINGS . . . . . . . . . . . . . . . . . . . . . 19 WEEK ON THE WEB . . . . . . . . . . . . . . 19

COMPANY INDEX: SEE PAGE 17 䡲 Grand Rapids-based Kindel Furniture Co. , which makes niche, designer furniture, acquired the assets of Denton, N.C.-based Councill Co. LLC, a luxury-brand residential and contract furniture manufacturer, MiBiz reported. 䡲 Kalamazoo-based Zeigler Auto Group Inc. acquired M&M Motorsports Inc., also of Kalamazoo, MiBiz reported. Zeigler now has more than 20 dealerships in West Michigan, Illinois, Indiana and New York. 䡲 Authorities are looking for a man who robbed the Sturgis Party Store while wearing trash bags to disguise his identity. It was not clear whether the man was hefty. 䡲

CORRECTION 䡲 On Page 30 of the July 13 issue, a Rumblings item about an Automation Alley event misspelled the last name of Ronald Staley , senior vice president of the Lansing-based Christman Co.

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IAC’s next play: Buy or sell? CEO change may be pointing to new strategy for supplier By Dustin Walsh dwalsh@crain.com

With the exit of CEO James Kamsickas to Dana Holding Corp., International Automotive Components Group may be seeking a new direction.

IAC, with its corporate headquarters in Southfield and incorporation in Luxembourg, hired Robert “Steve” Miller to replace Kamsickas, effective Aug. 7. Miller, former executive chairman and CEO of Delphi Automotive plc during its Chapter 11 bankruptcy last decade and board member at Federal-Mogul Corp. , is known for restructuring struggling suppliers.

But is the Wilbur Ross-controlled IAC in trouble? Is it a buyer or seller? Sales don’t indicate struggles — IAC reported revenue of $5.9 billion in 2014, up from $5.2 billion in 2013 — but experts say the low-margin interiors business is ripe for consolidation and Ross needs a play to improve returns. “Interiors has been on the M&A front for some time,” said Alicia Masse, managing partner at Southfield-based advisory firm Alderney Advisors LLC. “In interiors, companies are deciding to get out of the business, and who sits in that CEO’s chair can make the difference.” Milwaukee-based Johnson Controls Inc. exited

the automotive interiors business in 2014 after it spun off its $3 billion unit into a joint venture with Shanghai-based Yanfeng Automotive Trim Systems Co. JCI holds a 30 percent stake. The supplier also said earliSteve Miller: er this year it was seeking Brings restructuring options to ditch its seating experience to IAC. business, exiting automotive all together due to the capital-intensive nature of the industry. IAC maintains it’s in grow mode. SEE IAC, PAGE 18

Special Report Leslie Rocher, M.D. , says payments from federal, state and health insurance sources barely cover the cost of Beaumont Health’s residency program. Other hospitals say they subsidize their programs, Page 9

State to hospitals: Training data – stat By Jay Greene jgreene@crain.com

LARRY PEPLIN

Robin Scovill owns or manages about 40 units throughout Detroit,has started a multifamily redevelopment in Midtown and has under contract this warehouse on Custer Street.

Housing investor: City is Wild West ‘Ragtag bunch’ sets its sights on affordable developments By Kirk Pinho kpinho@crain.com

ursing a beer at the Cutter’s Bar and Grill rail on Orleans Street in Eastern Market, Robin Scovill looks nothing like the wave of out-of-state investors purchasing Detroit real estate on the cheap. The Los Angeles filmmaker by trade has chin-length hair, a flowing beard and sports a tight black T-shirt as Kid Rock’s “Cowboy” plays over the jukebox. In some ways, the 46-year-old epitomizes

the song’s title as he acquires low-income rental properties and expands into other types of real estate throughout the city that he has come to love in the past eight years. As investors and developers scour downtown and Midtown for market rate multifamily deals, Scovill is keeping his eyes focused largely on affordable housing units for city residents. He has about 40 units in single-family homes, duplexes and fourplexes in his ownership and management portfolio spread

out in neighborhoods like Corktown, East English Village, Morningside and Southwest Detroit. But he expects to grow that number as he embarks on his first multifamily redevelopment: the Traymore Building on Brainard Street west of Cass Avenue in Midtown, a $6.2 million project now under construction that is expected to morph the vacant 43-unit building into 28 low-income units in 12 months. And he is also turning his sights to the SEE HOUSING, PAGE 16

MUST READS OF THE WEEK Crain’s has a navy ... sort of Despite boom,Detroit still needs rooms at the inn LOOKING BACK: A graphical view of how the hotel scene has changed since 1985, PAGE 5

Freelance writer Gary Anglebrandt took a 27-mile kayak trip on the Rouge River — and into the heart of metro Detroit’s industrial economy. Read and see what he saw on his 14-hour tour, crainsdetroit.com/kayak

Michigan’s 60 teaching hospitals dodged a financial bullet in June when the state Legislature passed the 2015-2016 budget that included continued funding for graduate medical education training programs. It wasn’t easy, though. Gov. Rick Snyder’s four-year effort to end state funding for graduate medical education — commonly known as GME — nearly became reality before a compromise was reached between legislators and the Michigan Health & Hospital Association. The compromise, which required hospitals to pay an additional $93 million in provider taxes upfront to garner federal matching dollars for the Medicaid program, will help preserve more than 5,200 medical residents and fellows at the teaching hospitals. But, at the last minute, hospitals also had to swallow another bitter pill. Boilerplate language, inserted into the budget by Sen. Mike Shirkey, R-Clarklake, chairman of the Senate SEE TRAINING, PAGE 15

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UAW, Detroit 3 to talk about wages, not jobs, this time By David Barkholz Crain News Service

With stable auto production and flat factory employment predicted through 2018, jobs and future product commitments will assume a secondary role, industry experts say. “Job security was a big deal in prior years,” said Dave Cole, chairman emeritus of the Center for Automotive Research. “Not so much this year.” So the UAW will use its negotiating muscle to press for higher wages. But that will collide head-on with the Detroit 3’s desire to keep labor costs at the inflation rate. A key friction point will involve socalled tier-two entry-level employees, who earn about half what veteran UAW members make, experts say. Over the previous two contract cycles, job and product promises were crucial to winning rank-and-file approval for concessionary contracts. In 2007, for instance, General Motors ended a 40-hour UAW strike called over the off-loading of retiree health care into an independent trust and other concessions by promising in its UAW contract a detailed laundry list of job and future products. Many of those job prospects were lost when the Great Recession hit in 2008. But neither side knew that in 2007. In the approach to this year’s negotiations, the Ann Arbor-based Center for Automotive Research estimated the Detroit 3 won’t create net new jobs. Total hourly employment will drift down slightly from 147,000 later this year to 145,000 by

2017, the center estimated. The combined UAW workforce in 2011 was 114,000, CAR said. The new jobs since went to lower-paid tier-two workers. Now, the UAW and Detroit 3 will spend a good portion of this year’s talks bargaining about whether to equalize pay. That means jobs, a key bargaining chip in prior negotiations, will take a back seat to pressing wage demands, Cole said. Also, Detroit 3 assembly plants are running above 90 percent of capacity, so there isn’t much room for new workers. And many future product plans through 2018 have already been announced. A notable exception is what will be produced at Ford Motor Co. ’s Michigan Assembly plant in Wayne. Ford announced on the eve of the negotiations that it will move the next-generation Focus compact and C-Max out of Michigan in 2018. The UAW said production could move outside the U.S. Last week, GM CEO Mary Barra went out of her way to assure the union that GM has no plans to move production of the Chevrolet Sonic out of its Orion Assembly plant. In fact, GM has announced $5.4 billion in new U.S. plant investment over the next three years, much of which already has been detailed by factory. In other words, GM has already laid out its future product plans outside the UAW negotiations.

CEO Sergio Marchionne said last week that Fiat Chrysler is open to bringing additional jobs in-house that are now being done by suppliers. But the number of jobs for sequencing parts arriving from suppliers, subassembly and, perhaps, maintenance are modest, said Art Schwartz, a former GM labor negotiator and president of Labor and Economics Associates in Ann Arbor. “Companies can’t promise jobs growth independent of industry growth,” Schwartz said. Marchionne said last week that FCA US would attack the pay disparity between longtime and entrylevel workers. He said there’s better than a 50 percent chance tier two can be ended in the current round of bargaining. Entry-level workers today start at $16 an hour and top out at a little more than $19. Tier-one workers earn wages of $28.50. The Detroit 3’s current fouryear contracts with the UAW expire Sept. 14. But Marchionne did not say how the two sides could end the pay disparity and not trample a company goal of keeping raises pegged to profit-sharing and other flexible compensation rather than straight wage increases. His counterpart, UAW President Dennis Williams, repeated that tierone workers, who haven’t had a wage increase in 10 years, should share in the newfound prosperity of FCA, Ford and GM. 䡲 From Automotive News

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This week marks the launch of a new resource for hiring in metro Detroit — Crain’s Job Connect. This is not just another job board. The data-driven approach created by Detroit-based Digerati Inc. to support Job Connect uses algorithms to match candidates to jobs. Think Match.com meets Monster.com. In short: employers and job candidates fill out profiles, and if they are compatible, they are introduced. “Almost every growing company in this region is having the same problem: finding talented people,” said Mary Kramer, publisher of Crain’s Detroit Business. “We saw this as a unique approach to a hiring process that’s clearly broken.” Job Connect’s platform is powered by WorkFountain, a product that’s the end result of six years of research by Digerati. The project is based on a clear need by business, said Digerati CEO Brian Balasia. Most companies are relying on

Need a worker? A job? Go to: crainsdetroit.com/JobConnect Cost for employers is $39 to post a job opening. For job candidates, it’s free.

references from employees’ networks of friends and family, he said, because job boards have become increasingly difficult for employers to wade through. Overall, just 20 percent of all jobs are posted on job boards, Balasia said. “The end result is that most of the jobs in America are practically invisible to the labor market,” he said.” WorkFountain is the continuation of a Digerati project called Intern in Michigan that matched interns with employers. The project was funded by the New Economy Initiative, the Commu-

nity Foundation for Southeast Michigan and the W.K. Kellogg Foundation. In the process of working on Intern in Michigan, Balasia said it became apparent that the process of matching profiles can also fill a need in the overall labor market. The key to the system is blind matching. Employers fill out a profile about the traits they seek,with questions tailored to the industry and job category. Job-seekers fill out a profile tailored to work they seek. Both see only the seven best matches. “It’s taking biases out of the process,” Balasia said. “It’s exposing companies to the candidates that they might overlook otherwise.” So far, 6,000 companies are posting and the system has 3,000 active job-seeker profiles, growing by 25 new users a day. The cost to employers is $39 to post a position; it’s free to post an internship. For job candidates, it’s free. To sign up, go to the website crainsdetroit.com/JobConnect. 䡲

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More firms misclassify workers to cut costs, feds say By Judy Greenwald Crain News Service

An increasing number of workplaces are misclassifying employees as independent contractors, says the U.S. Department of Labor in guidance issued last week that is generating significant concern among employer representatives. The guidance issued by David Weil, administrator of the DOL’s wage and hour division, says some employees are being intentionally misclassified as a means to cut costs and avoid compliance with labor laws. The guidance says employers should use the Fair Labor Standards Act’s definition of employ as “to suffer or permit to work” in applying an “economic realities test” in determining whether workers are employees. Factors to be considered under this test, which is now being used by courts to evaluate this issue, are: the extent to which the work performance is an integral part of the employer’s business; the worker’s opportunity for profit or loss depending on his or her managerial skill; the extent of the relative investments of the employer and the worker; whether the work performed requires special skills and initiatives; the permanency of the relationship; and the degree of control exercised or retained by the employee. “In undertaking this analysis, each factor is examined and analyzed in relation to one another, and no single factor is determinative,” says the guidance. “The guidance can be categorized as not necessarily totally new, but pushing the interpretation of court decisions to the broadest extent possible in order to obtain coverage for more workers under federal wage and hour laws,” said Matthew Disbrow, a partner with Honigman Miller Schwartz and Cohn LLP in Detroit. “The guidance has gone about as far as you take it when relying on court decisions.” “The DOL believes most work should be performed by employees, so business should be cautioned to use independent contractors sparingly,” Disbrow said. The 7th U.S. Circuit Court of Appeals in Chicago held in a ruling earlier this month that FedEx Corp. drivers in Kansas are employees, not independent contractors. On a related issue, observers say the DOL may issue a final proposal that will change the highly litigated, so-called “white-collar exemptions” for overtime without giving employers the opportunity to comment. From Business Insurance

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CRAIN’S DETROIT BUSINESS

Group effort changing the face of Pontiac

OPINION Community colleges’ degree reach too far? T

he movement to allow community colleges to offer four-year degrees in nursing is getting another shot through Senate Bill 98, now pending in that chamber. And with that arises the public policy discussion of where the proper dividing line is between community colleges and Michigan’s 15 fouryear public universities. The topic has been much discussed over the past several years as community colleges have lobbied to offer more and more four-year degrees. That can make sense in cases where there is a workforce need for baccalaureate degrees that aren’t offered by Michigan universities. But nursing doesn’t fall under that umbrella. Baccalaureate programs are offered at most of the state’s public universities, and agreements that allow community college students to earn associate degrees and finish their final two years at four-year universities are also available. So is there a gap in availability and need that can best be filled by community colleges? That question needs to be decided on the basis of what’s best for the state as a whole. That discussion needs to include research that defines the need for more nursing baccalaureate degrees and the most cost-effective way to provide them. It also includes evaluating the costs of starting new programs versus expanding existing ones, opportunities for distance learning and ways of controlling student costs to obtain degrees. Community colleges and state universities were designed to be complementary parts of the public higher education system. Mission drift or internecine competition for students and dollars is not likely to serve the state well.

Show caution on toxin rules The Michigan Department of Environmental Quality is considering a plan to reduce the number of automatically regulated pollutants by more than a third when companies seek air-pollution permits. The goal is to reduce the proverbial red tape by defining fewer substances as toxins. The department says the substances in question are low in toxicity and Michigan’s regulations still will be more rigorous than federal rules. While we agree that regulation can go overboard and sometimes scaling back is needed, we still would advise careful consideration and caution. Environmental and public health implications should be thoroughly evaluated before making the move.

OTHER VOICES: Bill Pulte

Bill Pulte is the founder of the Detroit Blight Authority. He is also the managing partner of Bloomfield Hillsbased Pulte Capital Partners LLC.

does an eclectic mix of What Oakland County politicians, private investors and community advocates have in common? They are all working together to fundamentally transform Pontiac into a blight-free, prosperous community once again. Evoking substantive change and transforming neighborhood communities takes more than just dollars — it takes putting aside individual interests and political careers to focus on what is best for the greater good. Property values across Pontiac’s worst neighborhoods have grown remarkably because of this selfless culture, led by Mayor Deirdre Waterman and Deirdre Waterman: many other comMayor of Pontiac munity and busihelps lead recovery. ness leaders. Today, mortgage loans are much more readily available in Pontiac because there is a real element of collateral in the city’s housing stock. In the last year alone, Pontiac’s housing stock has appreciated 9 percent in value. I have been invited to visit great cities, large and small, across the United States to present time-tested experience, guidance and solutions for their blight challenges. When I am there, I always share the Detroit success stories from the original pilots, but the story that I tell most is

KIRK PINHO/CDB

The city of Pontiac is working to eradicate scenes like this. that of Pontiac’s politicians and leaders working together to solve the problem and put the credit aside. From the beginning, the question in Pontiac has been: How do we quickly and completely remove all blight from our neighborhoods and our city to create a blight-free, truly prosperous city? The mayor and her team have found a way to get the most out of every dollar while remaining focused on the end game — a blight-free Pontiac. With support from key state and county leaders, Pontiac has removed 320 of the 905 homes deemed blighted from the citywide blexting effort conducted in 2014 and is expected to achieve total blight elimination by the end of 2016, according to the city’s July report. According to MLS/Realcomp data, when strategic blight removal work started in Pontiac in early 2014, Pontiac’s median home price was $20,126, with an average of 99 days on the market. In April 2015, with a significant amount of blighted buildings down, the data showed the median home price was $36,000, with an average of just 33 days on the market. That’s $16,000 more per home and 60 days less of being stuck on the market. This is what real change looks

like — fundamentally removing all of the blight and working together to produce value, not just demo numbers. Not only are neighborhoods rebounding, Pontiac’s business community is responding as well. Within the past 18 months, 95 commercial properties have changed hands, according to CoStar Group Inc. And many of those properties will undergo redevelopment, some of which is a radical reinvention of the city. The Strand Theatre’s $20 million renovation has Slow’s Bar BQ as an anchor tenant. Wessen Tennis Club has transformed 38 acres of blight. The M1 Concourse will replace 87 acres of barren gateway property, which was once an auto plant. More than 100 new loft apartments and condos are replacing empty office space downtown. Dozens of new companies have committed to join the downtown business community. All of these significant signs of recovery and rebirth are seeded by the removal of blight. Pontiac’s public and private stakeholders may be fighting a tough, uphill battle, but the future is bright for any team that is selfless, has momentum and has one goal in mind: a blight-free, universally prosperous city. 䡲

Price-fixing probe of auto suppliers may be on the wane scouring metro Detroit in a A fter five-year crackdown on pricefixing in the auto supply chain, has the U.S. Department of Justice found something else to do? It’s probably not that simple, but some local legal experts think recent reports of a new Antitrust Division investigation into commercial airlines is another sign its automotive price-fixing prosecution may be nearly over. Published reports earlier this month revealed the division launched a new investigation about two months ago into possible unlawful coordination among domestic passenger airline companies to artificially keep airfares high, including keeping a tight hold on capacity or seat-miles flown each year. United Airlines Inc., American Air-

CHAD HALCOM chalcom@crain.com

TWITTER: @chadhalcom

lines Group Inc., Southwest Airlines Co. and Delta Air Lines Inc. have confirmed receiving subpoenas. A longtime antitrust attorney who practices in the automotive industry and asked not to be identified, told Crain’s last week the airline investigation and the historical trend in prosecutions is a sign the

division is shifting focus. But that’s not to say some new discoveries or straggling reviews of single companies couldn’t ramp up the automotive prosecution again, before the case is completely over. “Auto parts is probably on the wane. I don’t think you will see many new proceedings, and you might not see any all-new parts segments or conspiracies being alleged,” he said. “There will be some cleanup to do, with companies that did not originally settle, but overall it is winding down.” If so, that would track with the government’s historical pattern. Justice’s largest single-industry prosecution for collusion was previously in air cargo transportation and freight companies, with about

$1.9 billion in fines collected as of late 2013 — but the auto industry prosecution that began in 2011 officially overtook it in size by early 2014. To date, 35 auto supplier companies and 29 executives have pleaded guilty or agreed to do so and have accepted more than $2.5 billion in combined criminal fines. But nearly all of the more than 22 air transportation and freight companies and 20-plus executives to become defendants since 2007 were convicted before the automotive prosecution got its formal start in September 2011. And the automotive case is showing signs of deceleration in court, with just four new charges brought in courts nationwide against auto companies thus far in 2015, com-

pared with 10 companies charged in 2014 and 14 in 2013. While there’s usually some overlap in prosecutions, it’s very typical for one industry review to wind down as another antitrust case gets started, attorneys have said of the price-fixing cases. But in passenger airlines, where four companies control about 80 percent of all seats flown in the domestic market, it’s possible the new investigation won’t be as time-consuming for Justice. “Not nearly as many people are going to be involved in this case, because you have a lot fewer companies involved and only so many ways to collude,” the antitrust expert said. “But it’ll still be a full-time job for lots of antitrust lawyers in Justice for weeks or months, if not for years.” 䡲

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Community colleges seek state OK to give bachelor’s degrees LANSING — Two metro Detroit community colleges say they are ready to offer bachelor’s degrees in nursing. All they need is permission.

He doesn’t plan to ciate degrees to roughly 240 nursing Even with a small tuition bump, Ross Abraham has been promoted to raise tuition, which students each year, could increase Jensen said, a nursing bachelor’s de- digital director at the Michigan Re this fall will be $96 tuition slightly for upper-level gree at Henry Ford would cost less publican Party. Anderson, 35, was the party’s reper credit hour for courses because of the need for than at a university. search and communications direcresidents of the Livo- more doctorate-qualified instructor from 2005 to 2007. She also has nia, Clarenceville, tors, President Stan Jensen said. Comings and goings been research director for the state Garden City, PlyThe college this fall will charge Schoolcraft College LINDSAY 䡲 Ashley Ligon has been hired at H o u s e R e p u b l i c a n C a u c u s and the mouth-Canton and $92 per credit hour to residents of in Livonia and Henry Northville school the Dearborn school district and a Detroit-based Clark Hill PLC’s Lans- H o u s e R e p u b l i c a n C a m p a i g n C o m Ford College in Dear- VANHULLE districts and a por- portion of the Dearborn Heights ing office as a government rela- mittee. born are among the Capitol Briefings Abraham, 28, joined the tion of the Novi district. More than 70 percent of tions consultant. Ligon, 28, previleaders championing lvanhulle@crain.com school district. Henry Ford’s students come from ously worked as legislative affairs statewide GOP for the 2014 election an effort in Lansing to TWITTER: @LindsayVanHulle Nonresident stu- outside the district — namely De- coordinator for the Lansing-based and was the Michigan digital direcallow Michigan’s twotor for the 2012 campaign of former dents will pay $139 troit or Downriver communities, Michigan Credit Union League. 䡲 Sarah Anderson has been hired Republican presidential candidate year schools to award bachelor’s de- per credit hour. Jensen said — and they will pay as communications director and Mitt Romney. 䡲 grees in more fields, something now Henry Ford, which awards asso- $158 per credit hour. limited to four-year universities. Both schools support Senate Bill 98, which is pending in that chamber and would authorize community colleges to award bachelor’s degrees in nursing and four other technical fields. “If this happened this afternoon, I’d be ready tomorrow,” Schoolcraft President Conway Jeffress said. Should legislation be approved, he said, it would take at least a year before the program could start because of accreditation requirements and other preparations. Colleges say their bachelor’s degrees in nursing would target students who have earned enough credits for an associate degree and want to finish their four-year degree at home, inDTE Energy wants to help your business manage your energy usage to save money. We cluding those who want to work offer all kinds of energy efficiency information and tools, plus easy tips to help you be more full time or can’t move for classes or afford university tuition. efficient. For instance, you’ll cut heating and cooling costs by simply adding insulation More than that, however, propowhere there isn’t any, especially along piping and ductwork. Install a programmable nents of the bill say they’re motivatthermostat to automatically lower heating and raise air conditioning temperatures during ed by a health care industry that increasingly desires nurses with off hours. Seal doors and windows to prevent air leaks. You’ll find even more ways to save four-year credentials. using our Interactive Business tool. And you can find a certified contractor with our Energy “We wouldn’t be interested in the Efficiency Directory. It’s easy. Just go to dteenergy.com/savenow and start saving today. baccalaureate if the nursing profession hadn’t changed,” Jeffress said. “It’s so inevitable, you know, that whether it happens this season, ConwayJeffress: next season or Four-year nursing two seasons degree “inevitable.” down the road, it’s coming. The question is whether Michigan is going to be a leader or a follower or an also-ran in the pack.” Universities are their main challengers, arguing that new programs would cost taxpayers more and that existing agreements with community colleges to allow students to transfer credits to complete their degrees would be threatened. Most community colleges say that they would offer completion programs for students who earn enough credits for an associate degree and that upper-level classes are mostly lecture-based rather than clinical practice. Start saving today, visit: At Schoolcraft, Jeffress said he would expect to hire at least one dteenergy.com/savenow full-time faculty member to teach upper-level classes, while the rest could be filled with part-time instructors.

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PEOPLE IN HEALTH CARE

SPECIAL REPORT:

Send news items and photos to cdbdepartments@crain.com

HEALTH CARE

Marya Drygalski,

L.M.S.W., has joined Care of Southeastern Michigan in Fraser

as clinical director.

Drygalski

Kongkrit Chaiyasate, M.D., a reconstructive microsurgeon at

Leslie Rocher,M.D.(center),chief academic officer of Beaumont Health,with residents Aaron Fisher and Sara Karnib.Money that Beaumont Royal Oak received in 2013 from federal,state and health insurance sources barely covers costs for the residency program,Rocher said.

Beaumont Children’s Hospital in Royal

Chaiyasate

Oak, has been awarded the Best Case of the Year Award by the

American Society for Reconstructive Microsurgery.

Reyna Colombo, M.A., P.T., director of rehabilitation services at Beaumont Hospital in Troy, received the spring 2015 Scholar Award from the World Confederation of Physical Therapy. Barry Rosen, M.D., head of the division of gynecologic oncology at University Health Network and a

professor of obstetrics and Rosen gynecology at the University of Toronto, has been appointed section head for gynecologic oncology at Beaumont Hospital in Royal Oak.

Linda

Fitzgerald-Mays

Fitzgerald-Mays, R.N., has been promoted to vice president of quality and clinical outcomes at Botsford Hospital, Farmington Hills.

Nancy Schlichting, CEO of Henry Ford Health System, has been appointed chairperson of the Commission on Care, established by Congress to

examine how to best deliver health care to military veterans.

Theodore Schreiber, M.D.,

has been appointed chief of the Wayne State University Physician Group’s

Schreiber

division of cardiology.

Gloria Kuhn, D.O., Ph.D., a professor of emergency medicine at the Wayne State University School of Medicine, has

received the Advancement of Women in Academic Emergency Medicine Award from the Society for Academic Emergency Medicine .

Kuhn

GLENN TRIEST

Hospitals say they subsidize graduate medical training, but the overall cost-benefit accounting has yet to be done By Jay Greene jgreene@crain.com

raduate medical education at teaching hospitals traditionally has fulfilled two goals: training thousands of young doctors and providing lower-cost, front-line daily patient care as part of a medical team that includes higher-paid practicing physicians and nurses. The goals are still important, but despite more than $1 billion annually in graduate medical education funds supporting those programs, some of the state’s 50 teaching hospitals say they’re subsidizing the programs. Changes in accreditation regulations over the past 15 years have reduced work hours for residents, increased their outpatient training opportunities, increased supervision by teaching physicians and added higher osteopathic accreditation costs. Whether the programs are ultimately costs or moneymakers for hospitals is mostly unknown. Expenses tied directly to the programs are tracked, but overall cost-benefit accounting that would take into ac-

count such things as savings or lower medical bills for patients from the use of lower-paid residents instead of practicing physicians isn’t done.

Barely covers costs Leslie Rocher, M.D., chief academic officer of Southfield-based Beaumont Health , said the $57 million Beaumont Hospital in Royal Oak received in 2013 for its 395 residents from federal, state and health insurance sources barely covers the costs of maintaining its residency programs. “It is pretty close; sometimes we are a little shy,” Rocher said. Of Beaumont Hospital’s 395 residents, 91 are not covered by Medicare and so are paid for by Beaumont. The $57 million for GME represents 4.73 percent of Beaumont’s net patient revenue in 2013, or about $189,368 per resident. Medicare is the main source of GME funding, about $853 million for Michigan in 2013, and comes in two pots. The smaller portion, about 30 percent, is direct payments to cover resi-

ceived about $96 million from feddents’ salaries, benefits, medical eral, state and health plan sources malpractice premiums, administrafor its 569 residents funded by tive costs and stipends for supervisMedicare. The hospital paid for an ing physicians. The remainder conadditional 12 residents to cover sists of indirect payments to cover service demands. teaching hospitals’ higher costs to “We have to pay for faculty, protreat the sicker patients they typically gram directors, resident salaries. have. Everything is going up. The benefits Hospitals are limited in the numdon’t remain flat, but Medicare ber of residents they can have, doesn’t recognize that,” Scher said. based on the 1996 Balanced Budget Steven Minnick, M.D., a residenAmendment. Michigan hospitals also receive cy program official at St. John Hospital and Medical Center in De$163 million annually from troit, said GME funding still state general funds and covers his costs, but inMedicaid and another creasing regulations have $100 million from Mediccut into margins the past aid health plans. (See story, Page 11.) decade. The hospital also At Henry Ford Health Sys pays for 75 residents over tem , Eric Scher, M.D., vice and above the 158 paid for president of medical eduby Medicare to help cover cation and chairman of in- Steven Minnick: patient care and increase ternal medicine, said direct Regulations have the number of practicing GME funding does not trimmed margins. physicians. support the 687 residents “Whatever the numbers across all of its hospitals. (GME funding) are, they will be dif“For more than 10 years, I have ferent next year,” he said. “We need been dipping into (indirect pay- to maintain quality, and it becomes ments) to cover” GME programs, more difficult.” Scher said. SEE GME, PAGE 10 In 2013, Henry Ford Hospital re-

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SPECIAL REPORT: HEALTH CARE

GME

FROM PAGE 9

GME programs: Profit or loss? But do GME programs make money for hospitals? The short answer is nobody knows. That is because a complete accounting of total payments received by and expended by teaching hospitals from federal, state and insurance sources has never been conducted, said Patrick McGuire, CFO of St. John Providence Health System. McGuire said direct payments can be tracked within a hospital to show expenses paid to residents, teaching physicians and benefits. But indirect payments have not been accounted for because they freely flow through the entire hospital, he said. “We don’t do a profit and loss (statement) on our residency programs,” McGuire said. “Our mission (for residency programs) is to provide good patient care and to offer the community” fully trained doctors. However, the Medicare Payment Advisory Commission, or MedPAC, which advises Congress, has estimated in-

“We don’t do a profit and loss (statement) on our residency programs. ... It will be relatively difficult.” Patrick McGuire, CFO, St.John Providence Health System

direct payments may be $3.5 billion higher than actual indirect costs. Overall, federal spending for GME has been increasing for decades and now is at about $10 billion for direct and indirect payments. But McGuire is concerned about a pending state regulation in 2016 that will require teaching hospitals that accept GME state general funds to conduct cost-accounting of revenue and expenses of residency programs. (See story, Page 1.) “It will be relatively difficult, depending on what the state is looking for,” he said. “It is producible, but will be more difficult on the indirect side because our residents (and teaching doctors) provide whatever care is necessary” without concern for billing or tracking expenses. Atul Grover, chief public policy officer for the Association of American

Medical Colleges, said there is a feeling by some policymakers that hospitals make money on GME. “They don’t. We don’t do a good job to show that the services residents provide, that are getting billed for, would cost more if hospitals had to replace them with someone else to do that service,” Grover said. The AAMC, which represents 129 U.S. and Canadian allopathic medical schools and dozens of large teaching hospitals, has called for GME programs to provide greater financial transparency and for the adjusting of the GME payment formula to include performance-based measures. In exchange, AAMC wants Congress to increase Medicare GME funding to add 3,000 residents at a cost of $1 billion to help future physician supply and care for new Medicaid and insured patients under Obamacare.

GLENN TRIEST

Eric Scher, M.D., vice president of medical education and chairman of internal medicine at Henry Ford Health System, said large academic medical centers depend heavily on residents for daily care, particularly the “very vulnerable patient populations” who probably would not be treated under current hospital staffing levels. Overall, teaching hospitals receive about $125,000 to $200,000 from state and federal sources for GME programs, said Leah Gassett, a consultant with ECG Management Consultants in Boston. With average resident salaries at $50,000, benefits and perks averaging another $50,000 and administrative expenses adding another $25,000 to $50,000 per resident, the average cost to train a single resident is $120,000 to $145,000, Gassett said. Medicare direct payments “absolutely do not cover the costs,” Gassett said. “What we find is some hospitals do not account for all faculty and other costs.” But Gassett acknowledged that if indirect payments are added, some hospitals are close to breaking even or making money, Gassett said. “We see lot more people getting into the GME than not,” she said. “They believe there is a strategic benefit with or without” positive GME profit margins.

Reliant on residents Scher said large academic medical centers like Henry Ford and Detroit Medical Center are heavily reliant on residents for daily patient care. “Much of that (resident work) is taking care of very vulnerable patient populations that wouldn’t really be possible to do” based on current hospital staffing levels, said Scher. Depending on the hospital service, residents contribute 40 percent to 60 percent of direct care of patients, estimated Tom Gentile, a residency program consultant and former hospital GME official based in Southeast Michigan. Minnick said residents are a major part of medical safety nets for underprivileged populations at teaching hospitals. “If you start to cut those, you will weaken those programs,” Minnick said. “As part of the team, they interact with nurses and allied health professionals.” If residents were reduced or removed from the patient care equation, hospitals would have to hire additional hospitalist physicians, nurses, physician assistants, nurse practitioners and licensed practical nurses, which would increase costs, Minnick said. In a larger sense, Scher said, hospital residency programs also are used to recruit top physicians for teaching, patient care and research. Another practical benefit of training residents at hospitals is the challenge “to stay on top of your game,” Scher said. “You have residents or fellows question you every day.” “My dilemma is how you replace (residents’) curiosity, their intuition and the extra things they do with great patient care,” Minnick said. The bottom line, said Rocher, is residents are “core parts of the medical team.” 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: HEALTH CARE

Medicare provides most funding for grad medical education By Jay Greene jgreene@crain.com

Graduate medical education financing for Michigan’s 60 teaching hospitals and residency training programs is a complicated mix of federal, state and health insurance payments. Medicare accounts for the bulk of GME funding — 73 percent — received by the top 15 Southeast Michigan teaching hospitals that were reviewed by Crain’s in this report. Overall, the state’s 60 teaching hospitals received more than $850 million from Medicare — about 8.5 percent of the $10 billion paid to 1,100 teaching hospitals nationwide. But Michigan’s teaching hospitals also receive another $263 million from the state’s Medicaid program, including federal matching shares, and from the state’s 13 Medicaid HMOs. Overall, GME payments to teaching hospitals in Michigan totaled about $1.1 billion in 2013. “Michigan does well nationally compared with other states” in GME payments, said Leah Gassett, a consultant with ECG Management Consultants in Boston. Michigan has the seventh-highest number of residents with 4,438 and receives the fourth-highest amount in Medicare GME payments.

Michigan has the seventhhighest number of residents with 4,438 and receives the fourth-highest amount in Medicare GME payments. Here’s how the money breaks down:

Medicare Medicare payments come in two streams. First, there are indirect payments that reimburse for the sicker patients and additional tests associated with resident physician training and teaching hospitals. They represent about 70 percent of Medicare funding. The remaining 30 percent comes from direct payments, which are to pay residents salaries, stipends and malpractice insurance, and contributes to the costs of hiring supervising physicians and staff to administer the programs. Tom Gentile, a residency program consultant and former hospital GME executive in Southeast

Michigan, said the payments are based on a formula that includes the number of residents, beds and Medicare patients treated.

State of Michigan The state supplies GME payments through the general fund and federal Medicaid matching payments. In 2013, Michigan provided $57 million in general funds, an amount that has been slowly declining over the years as legislators seek to trim state budgets. However, state dollars are multiplied nearly three-fold by federal Medicaid matching funds.

Medicaid HMO revenue Another source of revenue comes from the state’s 13 Medicaid health maintenance organizations, which annually contribute $100 million. Some $61 million goes to

the 15 hospitals in Southeast Michigan based on the number of Medicaid patients each hospital treats.

Other revenue, financial benefits While private insurance payments are not tracked, Michigan’s teaching hospitals also generate some revenue from inpatient care services provided by residents and fellows and billed by supervising physicians, said Maria Abrahamsen, a health care attorney at Dykema Gossett PLLC in Bloomfield Hills. The hospital billings, which several hospitals said they could not provide to Crain’s, are tightly regulated and charged to payers only by supervising physicians for patients they see face-to-face, Abrahamsen said. Besides GME reimbursement, Abrahamsen said, the economic benefit to hospitals from residents also should include savings by not having to hire hospitalists and other higherpaid physicians or midlevel support staff to provide direct patient care. But over the years, Gassett said, teaching hospitals also have absorbed more costs for GME programs because an increasing number of physicians have reduced the amount of volunteer hours they offer to train residents.

Online: A searchable database of graduate medical education payments for hospitals throughout Michigan: crainsdetroit.com/gme

Outdated formula? Experts like Gentile and Gassett have noted that GME funding formulas are outdated and should be linked more closely to actual costs of training residents and the needs of states to increase physician supply. For example, New York receives $2 billion of Medicare’s $10 billion in annual GME payments, which amounts to $103.63 per person for New York compared with $1.94 for Wyoming. Average payments per medical resident are, for example, $63,811 in Louisiana compared with $155,135 in Connecticut. Several proposals have been made to lower federal contributions to GME. In 2010 the National Commission on Fiscal Responsibility and Reform, or the Simpson-Bowles Commission, recommended reducing both direct and indirect GME payments. The commission recommended direct GME payments be reduced to equal 120 percent of the national average of a resident’s salary. Indirect GME payments would be cut to reflect actual costs more accurately. Total savings in direct and indirect GME costs would be $6 billion in 2015 and up to $60 billion by 2020. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: HEALTH CARE

Residents form the ‘front line’ of hospital care By Jay Greene jgreene@crain.com

The usual workday starts before 7 a.m. for internal medicine residents Ali Hassan and Justin Di Rezze and emergency medicine resident Dan LaLonde at St. John Hospital and Medical Center in Detroit.

Hassan and Di Rezze start out with a good breakfast and coffee, then they review any overnight admits and begin the day’s first round of their patients on the wards. Emergency medicine residents like LaLonde, who just completed his third and final year last month,

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have more regular eight- to 12-hour shifts because of the fast pace of ERs. Each resident has several patients he is responsible for during his stay. But they are not alone. Besides nurses and specialists, supervising doctors, such as internist Oliver Dimitrijevic, are always close by to answer questions, provide advice and monitor their training. For Di Rezze, who is just starting his second year, a 66-year-old African-American female patient he has seen before was admitted over the weekend suffering from shortness of breath, dizziness and abdominal pain. Presenting her case in the hallway just outside her door to Hassan and Dimitrijevic, Di Rezze methodiMARIA ESQUINCA/CDB cally goes over her medical history, symptoms, lab work, family support Internal medicine residents Ali Hassan (left) and Justin Di Rezze (right) are supervised by internist OliverDimitrijevic at St.John Hospital and Medical Center in Detroit. and probable diagnosis. “She has rapidly progressing end-stage renal failure and will loved it. It is a friendly environment. solve the puzzle of their treatment.” LaLonde, the son of Tom need dialysis in the hospital and We all wanted to be like them (senthen outpatient dialysis” for the rest ior residents and attending physi- LaLonde, a cardiologist at St. John, was born in Grosse Pointe, went to of her life, Di Rezze said. Dimitrije- cians),” Hassan said. Dimitrijevic said the work hour medical school at Wayne State and vic and Hassan concurred as they also have reviewed the latest reports rules — which limit residents to 80 did clinical clerkships at St. John hours a week averaged over a Hospital. on her medical chart. month instead of After he applied to 15 hospitals Dimitrijevic, the previous and went on 12 interviews, his ex39, who has been In their own words near-unlimited periences at St. John Hospital made at St. John since See and hear Justin Di Rezze and Ali hours — require it his first residency choice. 2007, said he has Hassan go about their rounds at hospitals to have “We serve the underserved comto be “at the top www.crainsdetroit.com/video nearly twice as munity, and some have no insurof our game” many residents ance. We give many primary care when making rounds with residents because they on staff to complete all necessary and hand them over to resident-run clinics,” said LaLonde, 29, who ask so many questions. Residents patient care duties. Di Rezze said he doesn’t feel over- plans to join Detroit-based Indepenalso are there more hours than most worked with the 80-hour rule, but dent Emergency Physicians PC and practicing physicians. “It’s good we have residents to residents are asked to go home after work primarily at St. John Providence follow up for care if patients don’t their shifts, even if they wish to stay Hospital in Southfield. LaLonde said he is always busy have a primary care physician,” said and help out. “The mind only takes in so much and works eight- to 12-hour shifts. Dimitrijevic, who graduated from the University of Nis Medical School in in terms of mental exhaustion,” said ER residents are divided into zones, Serbia. Di Rezze, noting what could hap- with one attending ER physician Di Rezze, 27, was born in Detroit, pen if residents work longer than a monitoring care in two zones. graduated from Wayne State Univer - 16-hour shift. “It is a benefit to us “My hours are very strict. I have sity ’s School of Medicine and spent and also for patients. We need ade- 10 hours in between shifts to sleep,” two years as a medical student at St. quate rest. More mistakes are made he said. “We work our butts off. It is John Hospital in clinical rotations. very hard training, hard on your when residents are tired.” “I wanted a good patient populaHassan said residents are expect- wife and family. There is a sacrifice tion with lots of different condi- ed to provide good handoffs, or you make.” tions,” said Di Rezze. Like most residents and hospital transitions in care. “We are the front line, the first “We can’t be here all the time. physicians, LaLonde said he uses person to see the patient. We have a Things get missed if you don’t have his laptop computer to check on senior resident to guide us, make good handoffs,” he said. “We are con- patients he admitted to the hospital sure we don’t miss anything or stantly working on communication or are still waiting in the ER. make mistakes.” “I have made a lot of decisions and because you don’t want mistakes to never had a grave mistake. We deal happen on the next shift.” ‘Huge transition’ in year 2 Hassan said the electronic com- with life and death all the time. If we Hassan, who is starting his third munication system is still evolving, have questions, attendings are always year, has reviewed hundreds of lab using wireless computer tablets a phone call away,”LaLonde said. tests, analyzed variations in patients’ linked to hospital electronic health One memorable case LaLonde revital signs, diagnosed symptoms and records. calls involved a 17-year-old who rendered treatment decisions over overdosed in a car and was transEmergency rounds his previous two years as an intern ported to the St. John ER. He was one Gunshot wounds, auto accidents of a 15-member treatment team. and then as a senior resident. “There is a huge transition in the and overdoses are common for an “He presented DOA. It is hard to second year,” Hassan said. “You have inner-city hospital like St. John, bring someone back from that conadditional responsibilities, but you which has an emergency depart- dition, maybe a 1 percent chance. always have support of senior resi- ment with 130,000 visits each year. We brought him back and he ended LaLonde has treated many such up walking out of the hospital with dents and (attending physicians).” Hassan, 30, was born in Dear- emergency cases. full brain power,” LaLonde said. “I have to figure it out within secborn, graduated from St. Georges It is those kinds of cases that keep University Medical School in Grenada onds. I enjoy that aspect of the job,” LaLonde, Hassan, Di Rezze and and also spent two years as a med- he said. “I love seeing someone in Dimitrijevic going. 䡲 ical student at St. John’s. Jay Greene: (313) 446-0325 their sickest moments and to help Twitter: @jaybgreene “I came here as a student and them, talk with their families, and

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CRAIN'S LIST: LARGEST MICHIGAN BIOTECH COMPANIES Ranked by 2014 revenue Company Address Phone; website

Top local executive

Stryker Corp. 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.com

Kevin Lobo chairman and CEO

$9,675.0

$9,021.0

Manufactures medical devices and equipment

3,539.8

Pharmaceuticals

Diplomat Pharmacy Inc. 4100 S. Saginaw St., Flint 48507 (888) 720-4450; diplomatpharmacy.com

Joseph Papa chairman, president and CEO Phil Hagerman CEO

4,061.0

Perrigo Co. plc 515 Eastern Ave., Allegan 49010 (269) 673-8451; www.perrigo.com

Neogen Corp. 620 Lesher Place, Lansing 48912 (517) 372-9200; www.neogen.com

James Herbert chairman and CEO

247.0

207.0

Develops and markets products dedicated to food and animal safety

John Kennedy president and CEO

82.0

43.0

Autocam Medical 4152 East Paris Ave SE, Kentwood 49512 (616) 541-8080; www.autocammedical.com

Manufacturer of engineered implants and instruments for surgical applications

Eddie Abueida and Ed Saleh co-CEOs

73.0

52.0

Specialty pharmacy services

Medcart Specialty Pharmacy 32131 Industrial Road, Livonia 48150 (877) 770-4633; www.medcartpharmacy.com

Eric Steen CEO

66.5

62.3

InfuSystem Holdings Inc. 31700 Research Park Drive, Madison Heights 48071-4627 (800) 962-9656; www.infusystem.com

Supplier of infusion services to oncologists and other outpatient treatment settings

Rockwell Medical Inc. 30142 Wixom Road, Wixom 48393 (248) 960-9009; www.rockwellmed.com

54.2

52.4

Biopharmaceutical company targeting end-stage renal disease and chronic kidney disease

Cayman Chemical Co. 1180 E. Ellsworth Road, Ann Arbor 48108 (734) 971-3335; www.caymanchem.com

Rob Chioini founder, chairman, president and CEO Kirk Maxey, M.D. president and CEO

43.0

40.8

Manufacturer of biomedical research chemicals

Ash Stevens Inc. 18655 Krause St., Riverview 48193 (734) 282-3370; www.ashstevens.com

Stephen Munk president and CEO

20.4

22.7

Makes active pharmaceutical ingredients

John Canepa, Asterand Bioscience Tech One Suite 501, 440 Burroughs, Detroit CFO; Peter Ferrigno, CCO 48202-3420 (313) 263-0960; www.asterand.com Jerry Singh RTI Laboratories Inc. president and 33080 Industrial Road, Livonia 48150 CEO (734) 422-8000; www.rtilab.com

20.0

Supplier of human tissue and human tissue-based research services to drug discovery scientists

7.1

5.4

Specializing in chemical, materials and environmental testing

John Brothers Custom Biogenic Systems Inc. president and 74100 Van Dyke Road, Bruce Township CEO 48065 (586) 331-2600; www.custombiogenics.com David Kalexsyn Inc. Zimmermann, 4502 Campus Drive, Kalamazoo 49008 CEO; Robert (269) 488-8488; www.kalexsyn.com Gadwood, president and chief scientific officer H. David Humes Innovative BioTherapies Inc. 650 Avis Drive, Suite 300, Ann Arbor 48108 president and chief science (734) 997-7055; innbio.com officer Denis Callewaert Oxford Biomedical Research Inc. 2165 Avon Industrial Drive, Rochester Hills president 48309-3611 (800) 692-4633; www.oxfordbiomed.com Hyesook Kim Detroit R & D Inc. president and 2727 Second Ave. MCHT Building, Suite CEO 4113, Detroit 48201 (313) 961-1606; www.detroitrandd.com Nalini Motwani BioSavita Inc. (formerly ApoLife) president and Michigan Life Science & Innovation Corridor, 46701 Commerce Center Drive, founding scientist Plymouth 48170 (734) 233-3146; www.biosavita.com Christie Coplen, Versicor LLC president;Tom 628 E. Parent Ave., Suite 600, Royal Oak Sawarynski, CTO 48067 (248) 219-5450; goversicor.com

7.0

Life science equipment manufacturer

5.4

5.2

Provides medicinal chemistry services to pharmaceutical and biotech companies worldwide

1.7

2.8

1.0

1.3

Develops implantable/ extracorporeal devices in field of regenerative medicine Biotechnology

0.6

0.4

Specializes in environmental health, hypertension and cancer-related research

0.3

0.2

Biotechnology, R&D developing cost-effective manufacturing platform for Ebola antibodies and Ebola vaccine

0.2

0.7

Electronics, controls, and software development for medical device manufacturers

Rank

8 9 10 11 12 13 14 15 16 17 18 19

Revenue Revenue ($000,000) ($000,000) 2014 2013 Type of business

2,215.0

1,515.1 B Specialty pharmacy

This list of Michigan biotech companies is an approximate compilation of the largest companies involved in the research and development or manufacture of products designed to improve the health and well-being of humans. 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 Michigan office.

B Inc. LIST RESEARCHED BY SONYA D. HILL

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PEOPLE

SPOTLIGHT KATHERINE COCKREL, associate vice president, Finn Partners

ON THE MOVE ENGINEERING

Derek Adolf to

Rob Wagner to

Dean & Fulkerson PC, Troy, from

partner, Adolf & Swoish PLLC, Farmington Hills.

ern Consulting LLC, Ann Arbor,

Wagner

agency as associate vice president of its Detroit office. Cockrel, 29, will work Cockrel closely with Finn Partners’ Detroit-based and national clients, providing public and community relations counsel. Cockrel, a native Detroiter, previously worked at Ignition Media Group. She also has held public relations and marketing positions at Intermix, the Detroit Regional Chamber, and Duffey Petrosky. In addition, Cockrel is the volunteer PR director for the Detroit-based voter awareness initiative Vote Detroit and a member of the Detroit Riverfront Conservancy’s active professionals committee, Riviere 28; and the advisory board of Detroit Soup, a micro-granting dinner that funds creative projects. In June 2015, Cockrel was recognized as a Crain’s Detroit Business 20 in their 20s winner. She earned a bachelor’s degree in public relations and political science from Wayne State University in 2007.

shareholder,

project manager, land development, Midwest-

from project manager, Engineering Associates Inc., Howell.

Katherine “Katy” Cockrel has joined the Finn Partners

Adolf

MANUFACTURING Michael Koltuniak to manufactur-

FINANCE

ing operations manager, Milco

Sandra Staffne to regional manager, Lakeside Region, Fifth Third Bank, Eastern Michigan, Shelby Town-

Manufacturing

and Welform

ship, from retail sales coach, Grand Blanc.

LAW Francyne Stacey to member, Hooper Hathaway PC, Ann Arbor,

from shareholder, Butzel Long PC, Ann Arbor. People on the Move announcements are limited to management positions. Email cdbdepartments@crain.com. Include person’s name, new title, company, city in which the person will work, former title, former company (if not promoted from within) and former city in which the person worked. Photos are welcome, but we cannot guarantee they will be used.

Koltuniak

Electrodes Inc., Warren, from product line manager-weld guns, Comau Inc., Southfield.

REAL ESTATE Ashley Lanagan to marketing coordinator, Lutz Real Estate Investments, Birming-

ham, from director of marketing and communications, Campus Village Communities, Rochester. Also, Jacob Timmis to Lanagan analyst, from intern, ValStone Partners LLC, Birmingham.

DEALS & DETAILS ACQUISITIONS & MERGERS Superior Capital Partners LLC, Detroit, a private equity firm, has completed an add-on acquisition for its Rostra Precision Controls platform. Vehicle Safety Manufacturing LLC, Newark, N.J., a division of Rostra Precision Controls Inc., Laurinburg, N.C., has acquired the turn signal switch product line from Grote Industries Inc., Madison, Ind. Websites: superiorfund.com, rostra.com, vehiclesafetymfg.com, grote.com.

CONTRACTS Jervis B. Webb Co., a Farmington Hills subsidiary of Daifuku North America Holding Co. and a provider

of airport baggage handling systems, announced a $17 million contract with the Greater Toronto Airports Authority, Toronto. Webb will modify and add to the baggage handling system to reduce transfer time and congestion. Website: daifukuna.com. Maxion Wheels, Novi, and ThyssenKrupp Carbon Components GmbH, Kesselsdorf, Germany,

agree to develop and market new ultra-lightweight aluminum and carbon fiber hybrid wheels for the premium vehicle OEM market. Websites: maxionwheels.com, thyssenkrupp-carboncomponents.com. Toggled, Troy, developer and producer of next-generation solid state lighting technology and a subsidiary of Altair Engineering Inc., has added key sellers of LED lighting products to its roster of licensees in the first half of 2015, including Light Engine Limited, Hong Kong; ELB Electronics Inc., Arcadia, Calif.; 1Source LED Inc., Livermore, Calif.; Espen Technology Inc., Santa

Fe Springs, Calif.; Kimberly LED Lighting LLC, Clarkston; Nextek Power Systems Inc., Detroit; and RemPhos Technologies LLC, Danvers, Mass. Website: toggled.com.

EXPANSIONS GKN Automotive, part of GKN plc,

opened its new regional headquarters for the Americas at 2200 N. Opdyke Road, Auburn Hills. The facility is home to the company’s GKN Driveline and GKN Sinter Metals divisions, as well as employees for GKN’s Land Systems and North American Services groups. Website: gkn.com. Re/Max of Southeastern Michigan, Troy, and Re/Max Defined, Rochester, owned and managed by broker/owner Andrea Esse, has opened a Re/Max Defined office at 1301 W. Long Lake Road, Suite 195, Troy. Websites: definedrealtors.com, remax-semichigan.com. All Seasons of Birmingham, independent senior living apartments, developed by Beztak Cos., Farmington Hills, with Etkin LLC, Southfield, opened at 111 Elm St., Birmingham. Telephone: (248) 737-6123. Website: allseasonsbirmingham.com.

MOVES Garan Lucow Miller PC, has moved

from 1000 Woodbridge St., Detroit, to 1155 Gratiot Ave., Suite 200, Detroit. Website: garanlucow.com. Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

Nominate best-managed nonprofits Crain’s Best Managed Nonprofit Contest this year will focus on actions local nonprofits are taking to execute and/or adapt their missions and operations to the trends they foresee for their own sectors.

Examples include, but are not limited to, greater ethnic diversity, new generations of leadership, rapid technology change, and social and new models for organizing around projects and causes.

Possible is everything.

Applications are due Aug. 24. Finalists will be interviewed by judges the morning of Nov. 10.

Today, more than ever, global competition, new technologies, and corporate streamlining require innovative thinking and leadership abilities. Continuing your education can be key to your success. From biomedical and robotics engineering to LTU ranks fifth among U.S. premedical programs and psychology, Lawrence Technological University colleges and universities for boosting graduates’ earning offers innovative degrees and fast-track certificate programs to prepare power. – Brookings Institution you for the careers of the future. Architecture and Design | Arts and Sciences | Engineering | Management 2015

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Applicants for the award must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. Applications must include an entry form, a copy of the organization’s code of ethics, a copy of the most recent audited financial statement and a copy of the most recent IRS 990 form. Previous first-place winners are not eligible; neither are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. The winners will be profiled in the Dec. 7 issue, receive a “best-managed” logo from Crain’s for use in promotional material and will be recognized at Crain’s Newsmaker of the Year lunch early next year. For an application form, please email YahNica Crawford at ycrawford@crain.com or visit www.crainsdetroit.com/nonprofitcontest. For information about the contest itself, email Executive Editor Cindy Goodaker at cgoodaker@crain.com or call (313) 446-0460.

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health policy committee, requires hospitals that accept state general funds to conduct cost accounting on their GME programs to show legislators how total dollars are spent. Hospitals that fail to submit the reports will have their fourth-quarter state GME funds withheld. One of the problems, say hospital officials, is no one had ever asked or required them to account for all dollars coming into teaching hospitals from Medicare, Medicaid, state general funds and insurer payments. Shirkey told Crain’s the reporting requirement will give hospitals latitude in how they report GME revenue and expenses. He said if the data is insufficient to conduct an analysis on return on investment of taxpayer dollars for GME, report requirements will become more specific. “This is primarily related to transparency. Taxpayer spending for GME funding has become expected” by hospitals without direct information on how Michigan taxpayers benefit from helping to financially support residents, Shirkey said. “We ask (hospital officials) for taxpayer accountability and get blank stares,” he said. Sen. Jim Marleau, R-Lake Orion,

REAL ESTATE

chairman of the Senate appropriations subcommittee on community health, also supports requiring hospitals to provide for fiMike Shirkey: “We nancial transask for taxpayer parency for GME. accountability and “With the get blank stares.” amount of money we spend on GME, we need to ensure that hospitals are accountable for a high quality training program,” said Marleau, former chairman of Senate health policy. “How can we have good physicians if they are trained in a low-quality environment?”

How many stay? The legislators also want more information on how many residents stay in Michigan after their three or four years of training. National statistics show half of all doctors stay within 50-100 miles of their residency program. “There is no reason to spend Michigan taxpayer dollars to train doctors only to have them leave in a few years to practice elsewhere,” Marleau said. Patrick McGuire, CFO of fivehospital St. John Providence Health

System in Warren, said hospitals historically have not accounted for all GME funding because funds freely flow through hospital departments as residents and faculty take care of patients, many times without billing for services. Shirkey said, “Just because it is hard doesn’t mean it can’t be done.” He added that hospitals once complained they couldn’t define or measure quality. “Now we have many quality metrics,” he said. But Shirkey said he hasn’t made up his mind yet if state general funds should be cut to teaching hospitals in the future, as Snyder wants. “If GME is a significant part of how hospitals maintain positive margins, they shouldn’t be ashamed of it. We should know about it to make decisions (on state spending) in the future,” Shirkey said. Janis Orlowski, M.D., chief health care officer with the Association of American Medical Colleges , said 40 states now fund GME programs. States dropping out include Alabama, California, Illinois, New Hampshire, New York, Wyoming and Massachusetts. “States are looking for opportunities to cut their budgets. These are short-sighted decisions,” Orlowski said. “Academic medical centers and medical schools bring new in-

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River House Cooperative, Inc. is a residential cooperative in the City of Detroit. Soils and Materials Engineers, Inc. prepared a report dated November 8, 2013 that identifies problems with the steel lintels and windows systems on the 15th floor and provides recommendations for corrective actions. We are requesting proposals to provide River House with architectural services for this project as follows: Phase I - Design & Bidding: Prepare appropriate construction drawings/ specifications and bidding documents based on the SME Report, professional experience and any required site visits. Solicit/Advertise Request for Bid and respond to bidders questions. A minimum of three (3) competitive bids must be received. Schedule with Owner and conduct one (1) on-site pre-bid meeting for prospective bidders if needed. Prepare and issue any addendums necessary. Evaluate bids and provide Owner a recommendation for award. Subsequent to an award, prepare and assist in execution of appropriate AIA Contract between Owner and successful bidder. Phase II - Construction Administration: Provide Owner with construction administration services for duration of the project. Services included, but not limited to: Review and approval of project submittals, review and approval of contractor’s applications for payment, site visits to observe contractor progress and conformance to specifications as deemed appropriate, frequent coordination and communication with Owner’s Board of Directors once per month during construction to provide updates, review any contractor requests for extra and provide recommendation to the Owner, and recommend any additional work or contract modifications based upon conditions discovered during construction. Detailed invoicing to be submitted monthly based upon personnel hourly rates. Please submit signed proposals by close of business on July 31, 2015. We request proposals also include a list of hourly rates to be used in Phase II, a list of references for restoration/repair work of similar nature and resumes of personnel that will be associated with the project should your firm be selected. If you wish to visit the site prior to submitting a proposal and receive a copy of the SME report, please contact the General Manager at (313) 821-2700 to schedule.

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novation and talent to states.” But did Massachusetts’ elimination of state GME payments in 2010 hurt those teaching hospitals? “No, the hospital members are doing OK,” said Atul Grover, M.D., chief public policy officer with the AAMC. “They are able to plow clinical revenue back into education and research.” Leslie Rocher, chief academic officer of Beaumont Health , said Beaumont is working to devise an accounting system to track residency costs. Rocher said Beaumont Royal Oak pays for 91 residents that Medicare doesn’t fund. But if state GME funding were cut, would Beaumont reduce the number of residents? Rocher said Beaumont would not save money by cutting residents. State payments to support Beaumont residents amounted to $3.8 million in 2013. “Patients still need to be served. Who would you hire to do the work? … It would be more expensive to backfill.” Rocher said losing residents also would diminish the quality of care. “Residents save lives. They are part of the team,” he said. “Fewer residents would jeopardize patient care.” Eric Scher, M.D., vice president of medical education and chairman of internal medicine at Henry Ford

Health System, has testified in Lansing before the Senate health policy committee. “They have grilled us about our margin,” Scher said. “They want to follow the money. It is not easy to do. It is all lumped into different things. The money goes to the hospitals, the sponsors of the institutions, and it is difficult to separate out.” Scher said legislators asked him and other GME directors how much money hospitals make on teaching programs. “(State) funding is small compared with Medicare, but it is not small when it comes to a hospital margin. You can’t take that margin away and expect no impact to other services,” Scher said. “It would mean expense reductions. There is only so much that can be done with top-line revenue.” Steven Minnick, the residency overseer for St. John Hospital and Medical Center in Detroit, said potential GME funding changes force physician and hospital GME leaders to look closely at their programs. “Unless we keep GME healthy and if the physician shortage hits, we aren’t going to have enough doctors and we aren’t going to be able to turn that aircraft carrier around in time,” Minnick said. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Michigan who purchase one vehicle over another.”

What’s fair? The argument in some ways is over a relatively small amount of potential revenue — up to about $2.5 million annually, at least initially. But Rep. Eric Leutheuser, R-Hillsdale, sponsor of House Bill 4612, said the fees are a way to ensure fairness in a system in which everyone would have to pay more. “You don’t want to discourage innovation. You don’t want to discourage early adopters,” said Leutheuser, who owns Buick and GMC dealerships in Hillsdale. “I just circle back to the notion that even though those are true statements, we pay for our roads with two things — (fuel taxes and registration fees),” he added. “I want to make sure I’m applying those as fairly as possible.” HB 4612 is pending in the House after being returned from the Senate this month. The Senate’s version added higher registration fees for commercial vehicles that weigh more than 8,000 pounds, should they adopt alternative fuel technology — $100 for hybrids and $200 for electric. Other pieces of the Senate plan include raising diesel and gasoline taxes from 19 cents to 34 cents per gallon by 2017 and tying them to inflation, as well as cutting $700 million from unspecified state departments.

HOUSING FROM PAGE 3

Milwaukee Junction area, where last week, on top of a 45,000-squarefoot warehouse building on Custer Street he has under contract, he looked across the city that he is considering making his permanent home after he marries next month and his son graduates from high school next year. If the deal closes in September as expected, the building, he says, with $1 million or $2 million in renovations, could turn into workspace for people like high-end furniture artisans as well as space for such events as weddings and corporate parties. And a 1-acre Horton Street lot next to the building could become the site of another new endeavor for Scovill — a ground-up development with 60 to 80 residential units on two-thirds of the site, with the rest of it possibly being used for urban farming. “Detroit is the most desirable city in the country right now for the right people,” he said. “It’s the Wild West, man. If you’re a young entrepreneur with very little experience, you can come here and hustle and work your way through it and find a way. If you’re a Japanese rock band that wants to own your own studio, come here. If you’re a young family looking to start over in a way that feels more meaningful, you’re surrounded by people creating meaning. I don’t

If the bill is adopted, the nonpartisan House Fiscal Agency estimates the extra fees on alternative-fuel vehicles could annually generate between $764,000 and $2.5 million — a wide gap explained in part because the Michigan Department of State doesn’t know how many passenger vehicles would be covered. As of April 2014, the state department counted more than 25,000 vehicles powered at least in part by electricity by searching model names such as the Honda Insight, Nissan Leaf, Toyota Prius or Chevrolet Volt, the agency said. If all of those were considered passenger hybrids, that would raise $764,000, compared to $2.5 million if all were electric, the agency estimated.

Call for lower fees The automakers’ alliance, in the letter to Meekhof, recommended a lower fee structure of an additional $25 for plug-in hybrids and $75 for battery-powered electric vehicles, should the Legislature move forward with the plan. It also urged that the higher fees be paid when renewing a vehicle yearly, not at the time of purchase. “The Senate should carefully consider whether increased fees paid by the purchaser of a vehicle at the time of sale will act as an obstacle to that sale,” Weikel wrote. “The more upfront costs that state policy adds to a vehicle purchase, the more money that consumers will need to have in hand to make that purchase.” In 2014, Michigan registered 337 new electric vehicles and nearly 12,400 hybrids, according to data

think anybody has anything to bring to Detroit because everything is already here.”

The beginning Scovill’s journey into real estate began with conversations about money he had with his late wife, Christine Maggiore, beginning in 2005. For Scovill — a graduate of the California Institute of Arts whose 2004 documentary, “The Other Side of AIDS,” won the Special Jury Prize at the American Film Institute ’s Los Angeles International Film Festival — money was something he didn’t particularly see as a high priority. For Maggiore, an activist and author, it was something that wasn’t discussed openly during her childhood. “It’s almost like sex in this culture,” Scovill said. “And we came to the conclusion that we were financially illiterate.” So Scovill started reading about how to accumulate personal wealth and talking with people well-versed in the subject. The common denominator? That real estate investment is a way to build and maintain wealth. Scovill had his answer. Aside from Detroit, he looked for investment opportunities in Kansas City; Charlotte, N.C.; Indianapolis; and Atlanta. But it was while midair in a cross-continental flight from Los Angeles to the Motor City that his attorney closed on his first low-income rental house

from Southfield-based IHS Automotive. But Michigan pales in comparison to nation-leading California, which registered more than 29,500 new electric vehicles and nearly 145,500 hybrids last year, according to IHS. California also offers incentives to encourage buyers to consider hybrids or electric cars, according to the U.S. Department of Energy’s Alternative Fuels Data Center. The federal government also offers income tax credits of up to $7,500 for the purchase of electric or plug-in hybrid vehicles. Michigan does not offer any such credits, although some utilities, including Detroit-based DTE Energy Co. , offer incentives to residential customers who charge plug-in elec-

here, a 1,200-square-foot bungalow on Fairmount Drive northeast of Gratiot and East State Fair avenues in the city’s northeast corner. That was Halloween 2007. But just 14 months later, Maggiore died of what a coroner deemed as AIDS-related pneumonia, although there was no autopsy. She had been a key figure in a small but vocal group of people who questioned whether the human immunodeficiency virus, or HIV, causes AIDS. Those questions were the focus of “The Other Side of AIDS.”

Investment money To build a real estate portfolio and thereby personal wealth, however, Scovill needed money. Enter Robert Leppo. Now 71, he had built a successful venture capital career targeting startup and early-stage companies, primarily those focused on the Internet. And he was sympathetic to Maggiore’s work as an activist and author. He bankrolled the production of and was executive producer of the AIDS documentary. And he is now largely financing Scovill’s real estate deals. The investments are made through Paradise Valley Investment Group LLC , of which Leppo owns about 70 percent. Scovill is a minority partner. Others partners in Scovill’s real estate developments are Eric Novack, the senior project manager for Den-

tric vehicles at home. Automakers like incentives because they can boost demand for hybrid and electric vehicles at a time when many customers still question their range and the availability of charging stations, among other infrastructure hurdles, said Stephanie Brinley, a senior analyst with IHS. Gas prices also have been lower, sending buyers back to trucks and SUVs in greater numbers. And manufacturers need people to buy the new technology to help them comply with federal average fuel economy standards that will reach 54.5 mpg fleetwide by 2020. Higher registration fees won’t dissuade serious customers, Brinley said. But if adopted everywhere, it could become a disincentive to purchase. “(In) trying to address it through this road bill, we’re trying to answer a question legislatively that hasn’t been handled in the market yet,” Brinley said, adding that lawmakers should wait at least five years for the market to settle. “I would almost say any answer is wrong right now. We just don’t know how it’s going to play out yet.” Add the fact that Michigan has such a small fleet of hybrids and electric cars on the road that any revenue generated will be small, she said, and “it’s also a nice little political throwaway.” Leutheuser said he intentionally proposed conservative fee increases based on the average number of miles driven in Michigan per year and the average fuel economy of vehicles that would be considered hybrid or electric under the bill. The idea, he said, is that drivers of hybrids or electric cars will save

more in fuel than they will pay in higher fees. But he said the state should not arbitrarily determine buyer behavior. “We are the car capital. We want to be pro-innovation and we want to be pro-technology,” Leutheuser said. “We don’t want to be known for having the highest fees in the country.” Other states have taken similar steps. For example, Idaho charges owners of plug-in electric and hybrid vehicles annual fees of $150 and $100, respectively, on top of standard registration fees, according to the federal energy department. Georgia, which eliminated its purchase incentives for plug-in electric vehicles, added an annual license fee of $200 for passenger EVs and $300 for commercial vehicles. Toyota, in submitted testimony to the House, proposed an “access fee” that would replace the state’s gas tax with a flat fee determined by the state. That could be an average of $140 per vehicle. Toyota said the fee would be technology-neutral, wouldn’t punish adopters of new technology and doesn’t raise privacy concerns the way a vehicle-miles-traveled fee would. Leutheuser said he understands the industry’s position. But, he added, states have to do something to combat lower fuel tax revenue that is an offshoot of better fuel efficiency reducing gasoline use. “We do our roads with fuel taxes and registration fees. It may not be the best system, but it’s the one we’ve got,” he said. 䡲

nis Kefallinos’ Detroit-based Boydell Development Co., who is one of Paradise Valley’s property managers, along with Evelyn Harris, another Paradise Valley property manager who is also CEO of Detroit-based Ear

without its challenges. Just one of those is tenant turnover. “That costs money,” said Scovill, adding that his rental units are more than 90 percent occupied. “Then you’re turning properties and things tend to be damaged. People, when their hope is lower, they treat things differently.” Another challenge in the affordable housing market is finding the right property and project to work on, said Andy Daitch, executive director of Southfieldbased Affordable Housing Advisors , a subsidiary of

Housing Property Management Inc.

Sitting outside the Custer Street building last week, Novack said he manages Scovill’s properties in Corktown and southwest Detroit, while Harris manages those in the remaining Detroit neighborhoods. Both have small ownership interests in Paradise Valley. Robert Zinser, housing consultant for the Cass Corridor Neighborhood Development Corp. , is consulting on the Traymore Building project. He is also one of the consultants on a $16.7 million plan to redevelop greater downtown buildings at 3350 Cass Ave. and 149 Davenport St. into 47 low-income housing units. “We are kind of a ragtag bunch,” Scovill said. “I’m here to make money. I really am. I have obligations, desires and things I want to do, but I guess I’m sort of discovering that I want to make money in ways that are really … fulfilling and fun and to work with people who are good people.”

The affordable challenge Scovill said Paradise Valley had about $1.8 million in revenue — coming from rental cash flow and property sales — last year, but affordable housing investment is not

Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

Marcus lichap.

Mil -

Andy Daitch: But beyond Think long term those ordinary about real estate in challenges of the Detroit. sector, Novack said, Detroit real estate investment isn’t for the faint of heart. “It isn’t short term. It’s long term,” he said. “You have to invest time, energy and money, and in the long term, it pays off. But you have to be ready to take it on. If you’re on Wall Street flipping stocks, stay flipping stocks. If you’re looking for assets in the long term, though, Detroit is the place to be.” 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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MIS

The FasterHorses festival has had a greater economic impact on the area surrounding Michigan International Speedway than NASCAR races because the millennial audience buys stuff instead of bringing it, says MIS President RogerCurtis.

FROM PAGE 1

between $40 million and $50 million. MIS is one of 13 speedways owned nationwide by Daytona Beach, Fla.based International Speedway Corp. MIS’ June and August NASCAR races, which are three-day weekends, account for 85 to 90 percent of the track’s annual revenue, Curtis said. Before Faster Horses, the races were 99 percent of business. The race percentage could further shrink with a successful rock festival using the Faster Horses template because music festivals have exploded in popularity in the past couple of decades.

Taming horses Faster Horses attracts about 40,000 attendees each day, and this year’s event was this past weekend. Beverly Hills, Calif.-based Live Na tion Entertainment is the event’s organizer and promoter, and leases the track for the festival. How much it spends to rent the track hasn’t been disclosed. Curtis said fees can range from a few hundred dollars for a wedding to nearing $1 million for a longer lease of the entire facility. Live Nation is using all of MIS except for the media facilities and suites. MIS offers a variety of on-site services, from concessions to signmaking to website creation, and those options increase the rental fee, Curtis said. The track and Live Nation have a revenue sharing deal for the festival, he said, that is based on all the revenue streams. Live Nation also will retain the majority of any future festival at MIS, but the track will get a nice payday. Faster Horses was born of the MI Fest festival, which featured Mitch Ryder, Jeff Daniels, the Romantics, Sheryl Crow and the Raconteurs, and was locally produced by a third party, Curtis said. The organizer got in over his head, he said, and MIS stepped in to ensure the event would go on. Word circulated through the concert industry that MIS was able to handle such an event, and Live Nation eventually approached the track about creating a festival, Curtis said. Faster Horses debuted in 2013 and has had a greater economic impact on the surrounding area than NASCAR races, Curtis said, because the primarily millennial audience doesn’t do events like race fans do. “They pack nothing, so they go out and buy everything. Underwear and phone chargers. They don’t cook, either. They’re not grilling out. They

COURTESY OF LIVE NATION

head to town for breakfast and lunch. From Jackson to Ann Arbor to Adrian, the restaurants are packed,” he said. This year’s three-day pass was $185, and sold out. So did $335 and $785 premium passes. The event, with nearly 40 acts, featured stars RogerCurtis: such as Brad Making tracks to Paisley, Carrie attract millennials. Underwood, Dwight Yoakam and Florida Georgia Line.

Festival growth Multiday music festivals with major headliners trace their roots to events such as the Monterey International Pop Music Festival in 1967 and Woodstock in 1969, and their modern incarnations that feature significant corporate and music industry backing stem from the launch of Lollapalooza in 1991. Lollapalooza is in Chicago’s Grant Park on July 31-Aug. 2 this year. Among other notable festivals, either fixed or traveling, are the Bonnaroo Music and Arts Festival in Tennessee and the Coachella Valley Music and Arts Festival in California. “People have understood the power of live music, but it has been very fragmented,” Live Nation Chairman Greg Maffei told Reuters in October. “The common experience of the new album release has disappeared. But the shared experience of concerts has only grown in power and scale. This is the best place in music to be.” A local entertainment executive echoed that. “Festivals provide amazing value and target very specific demographics, offering extended opportunities to bond within a mini community and listen to genre-specific music,” said Dennis Mannion, CEO

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Affordable Housing Advisors ........................ 16 Alderney Advisors .............................................. 3 AlixPartners ...................................................... 18 Beaumont Health ........................................ 9, 15 Beaumont Hospital .......................................... 9 Center for Automotive Research .................... 4 Conway Mackenzie .......................................... 18 Dykema Gossett ................................................ 11 Fiat Chrysler ...................................................... 4 Foley, Metzger, Baron & Juip .......................... 18 Ford Motor .......................................................... 4 General Motors .................................................. 4 Henry Ford College ............................................ 7 Henry Ford Health System ........................ 9, 15 Henry Ford Hospital .......................................... 9

Honigman Miller Schwartz and Cohn ............ 5 IAC Group ............................................................ 3 IHS Automotive .............................................. 16 Labor and Economics Associates .................. 4 McKeen & Associates .................................... 18 Michigan Health & Hospital Association ...... 3 Michigan Hematology-Oncology .................. 18 Michigan International Speedway .................. 1 Olsman, MacKenzie and Wallace .................. 18 Paradise Valley Investment Group ................ 16 St. John Hospital and Medical Center .. 9, 12, 15 St. John Providence Health System ........ 10, 15 Schoolcraft College .......................................... 7

of Palace Sports & Entertainment LLC in Auburn Hills. Promoters like festivals because they can be cash cows: The Coachella festival, which has expanded to consecutive three-day weekends with 150 acts, last year drew 579,000 attendees and grossed $78.3 million, according to Billboard.com. Such numbers are why Live Nation and MIS want a second event at the track. “I think there’s definitely a market for it. I think there’s pent-up demand,” Curtis said. One bonus not available at every festival venue: MIS has 8,500 campsites available, which range from $155 to $320 for the NASCAR races.

Chasing millennials The track hasn’t sold out either NASCAR weekend since 2006, a phenomenon blamed on weather and the recession, but also on a failure to market racing to millennials. “In NASCAR, we lost a generation. With all the growth through the ’90s and early 2000s, the sport didn’t reach out to millennials. We just thought dad brought the kids, and it got passed down. There were changes in society, and we didn’t adapt, didn’t notice. Now, we’re backtracking,” Curtis said. “To get a millennial interested in NASCAR, we can’t go out and market Jeff Gordon and green flag changes,” he said. “That’s not even in their vocabulary.” NASCAR and its tracks have been experimenting with ways to attract younger fans. As part of that effort, MIS launched the Coachella-style “Keloorah” at the Quicken Loans 400 race in June. Keloorah — the phonetic spelling of a Celtic word for celebration, Curtis said — is a mini-live music festival featuring rock, alternative and country acts in a branded area at the track set aside Friday and Saturday for food and drinks, games and parties. A nearby Keloorah-only camping area allows partying until 3 a.m. rather than the midnight “quiet hours” curfew. Entrance to Keloorah requires

purchasing race tickets. “We took that insight from Faster Horses, to replicate that on a small scale on a NASCAR weekend to convert some of these kids right then,” Curtis said. “We can market that music festival completely independently of NASCAR.” Curtis said there’s been some skepticism within the racing industry about MIS’ decision to devote resources to the event, but there’s been a much larger positive reaction. “I think everyone is watching to see how ours goes,” he said. The first Keloorah suffered because of rain that plagued the entire Quicken Loans 400 weekend, Curtis said. Still, he counts it as a success. “We had 12,000 on Saturday night, the vast majority who would not otherwise have been at a NASCAR weekend,” he said.

Other efforts The track is investing in technology upgrades, such as bolstering wireless Internet access and cellular connectivity, Curtis said. It was the first NASCAR track to offer free Wi-Fi. MIS also offers FanVision handheld devices that rent for $54.99 for the NASCAR weekend. The small devices, which come with headsets, have a screen with multiple channels that show live race feeds, in-car cameras, real-time statistics, replays and other race content. Additionally, MIS’ August race will be a trial run for FanVision’s latest offering, a small device that clips onto a fan’s smartphone to turn it into a wireless FanVision device. The track also generates revenue by renting out all or some of the site for vehicle testing by OEMs (often competitors), government agencies and the military, Curtis said. Connected cars and autonomous vehicle testing are increasingly common at the track, he added. “We’ve been a nice, neutral sandbox where everyone can come play at the same time,” Curtis said. The track and its grounds also are rented for a Tough Mudder skills contest, the state high school cross country championships, the annual Michigan Wine and Beer Fest , driving schools from racers such as Rusty Wallace, and the Big Mitten Fair, which is a nonagricultural, tech-focused spinoff of the state fair, Curtis said. The track’s rural location hasn’t hurt MIS. “Detroit is still our largest market for everything we do,” he said. “We’re just a facility, we’re not a team, but we’re trying to get people to think of us like a fifth hometown team. It’s not that far to come out to really big events.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit July 10-16. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.

Extreme Fun Family Entertain ment LLC , 1686 Sanctuary Circle,

Howell, voluntary Chapter 7. Assets and liabilities not available.

Fame Industries Inc., 51100 Grand River Ave., Wixom, voluntary Chapter 11. Assets: $187,317.15; liabilities: $1,797,938.43. Integrated Health Group PC , 11650 Belleville Road, Suite 105, Belleville, voluntary Chapter 7. Assets and liabilities not available. Natalie Broda

CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher and Editor 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) 4461621 or nhanus@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@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 Research and Data Editor Sonya Hill,(313) 446-0402 orshill@crain.com Web Producer Norman Witte III, (313) 446-6059 or 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 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 Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@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

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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 Lauren Melesio at lmelesio@crain.com To find a date a story was published (313) 4460406 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 Officer 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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FATA FROM PAGE 1

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MEASURE UP? Advertise in our Aug. 3 issue (Real Estate special feature) to take part in Crain’s annual Signet AdStudy® to measure the effectiveness of your marketing -

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Wilbur Ross

IAC FROM PAGE 3

“Miller, the consummate deal guy, is coming in to make a deal, … look for a sale or look for a merger, trying to find a way for Wilbur (Ross, who controls IAC) to exit this investment the best way he can.”

“We have been described as a consolidator in the interiors segment with a total of 17 acquisitions since we were established in 2006,” David Ladd, executive director of marketing and communications at IAC, said in an email. “The role we play going forward will be determined by Mr. Miller in the months ahead.” Ross even sought to quell the idea that IAC might be in turnaround mode. “Steve’s corporate roles often have drawn upon his turnaround experience, but that is not the case here,” Ross said in a written statement last Fred Hubacker, week. “Our interest is in his automoConway Mackenzie Inc. tive experience and relationships.” Last week, Auburn Hills-based IAC failed to launch a planned $115 million initial public offering BorgWarner Inc. said it entered a dein 2011 and delayed it again in 2013 finitive agreement to acquire during market turmoil in Europe. Pendleton, Ind.-based Remy InternaThe supplier planned to relaunch tional Inc. for $29.50 a share, or the IPO last year, but never followed roughly $950 million. Magna also announced last week through. Fred Hubacker, executive direc- it would buy Germany’s Getrag tor of Birmingham-based turn- Group, the world’s largest supplier of around and advisory firm Conway transmission systems, for $1.9 bilMackenzie Inc., said Ross is looking at lion. Getrag operates its North all strategies to exit the auto busi- American headquarters in Sterling Heights and also operates a joint ness. “Wilbur is frustrated that he venture with Ford Motor Co. Kamsickas, as the incoming CEO couldn’t launch that IPO or otherwise cash out of IAC since margins of Maumee, Ohio-based Dana, has a haven’t gotten better,” Hubacker clear mandate from the board to said. “Miller, the consummate deal boost revenue and make acquisitions. In a July 13 statement, company guy, is coming in to make a deal, … Chairman Joseph Muscari look for a sale or look for a approvingly noted his new merger, trying to find a way CEO’s “successful integrafor Wilbur to exit this investtion of a number of stratement the best way he can.” gic acquisitions” in his job IAC made its last acquisias president and CEO of tion in July 2013, when it IAC. took a stake in South African “We’re seeing consolidajoint venture IAC-Feltex (Pty) Ltd. , a maker of autotion in the supply space,” motive flooring, acoustics James Kamsickas: Masse said. “There have and trim components. Departing IAC been several deals lately Under Kamsickas, IAC CEO passed on where companies are fillpassed up opportunities to making acquisitions. ing gaps in their lineup and acquire interior trim operasaving on significant develtions sold by Magna International Inc., opment costs.” Visteon Corp. and JCI. While it remains unclear what diIf IAC is now looking for deals, it’s rection Miller will take IAC, a new a good time to do it, Mark Wake- strategy will be taken, Masse said. field, a managing director of con“(Ross) clearly made a move to sulting firm A l i x P a r t n e r s LLP in find someone with incredible expeSouthfield, told Crain’s sibling pub- rience,” Masse said. “He wants lication Automotive News. someone that will devise a very “Money is cheap, and (investors) strategic end game … and that are interested in autos,” Wakefield could make all the difference.” 䡲 Dustin Walsh: (313) 446-6042 said. “Companies are getting pretty Twitter: @dustinpwalsh good cash flow.” Crain’s sibling publication Automotive If recent deals are any indication, News contributed to this report. the market is ripe.

BLOOMBERG

practice business manager, George Karadsheh, and a dispute with creditors against his Michigan Hem a t o l o g y - O n c o l o g y P C practice centers. The victim suits were put under a stay last month pending an outof-court facilitation that has yet to begin, but attorneys hope to know by late August if it will yield any results. Those cases from various law firms also name several co-defendants, including Crittenton Cancer Center , S t . J o s e p h M e r c y H e a l t h S y s tem and McLaren Regional Medical Center and several physicians who allegedly made referrals to Fata’s cancer centers or collaborated with him on treatment. Fata leased office space from McLaren in Clarkston and Crittenton in Rochester Hills. Fata, 50, pleaded guilty last September to 16 of more than 20 criminal charges including fraud, money laundering and conspiracy in a federal indictment alleging he administered medically unnecessary chemotherapy and other cancer treatments and billed Medicare and private insurers for tens of millions of dollars. The government identified 553 victims, along with insurance companies, in treatments going back to at least 2007. Donna MacKenzie, partner at Berkley-based Olsman, MacKenzie & Wallace PC , which is handling 13 victim lawsuits, said the firm is trying to pursue the malpractice in-

surance carrier for Fata as ment will waive its claims, well as McLaren and Crittake part in the facilitation tenton as hospitals that process or try to resolve its had an association with own claims via the crimihim. nal restitution hearing be“There’s been some infore Borman. dication as we’ve been Randall Juip, partner at preparing that the insurLivonia-based Foley, Baron, Metzger & Juip PLLC and atance carrier may try to torney for Michigan Hemaclaim an exemption from Brian McKeen: tology in the civil suits, said covering (Fata) because Fata’s insurance all sides in the lawsuits have this is outside the scope of carrier may seek agreed on a facilitator and malpractice coverage, be- coverage are working on a schedule cause it’s fraud or another exemption. to discuss settling the cases. kind of (mis)conduct,” “Nearly everyone wants to get said Brian McKeen, president of Detroit-based McKeen & Associates started as soon as possible, and I’m PC , which is handling about eight pleased that we were able to agree other victim suits. to get all these cases on hold to “But he’s covered for claims of allow us to productively discuss a malpractice, and we allege mal- reasonable settlement,” he said. practice. This is treatment well “But there is a good deal of comoutside the standard of care. Is an plexity built into the process.” insurer allowed to simply recharJuip also said all the health care acterize our allegations? I don’t companies and the government are think so.” “aware of the facilitation MacKenzie also told and can use that process in Crain’s via email last week resolution of their own that the facilitation process concerns,” but would not could take up to three be specific on who has months, and if it succeeds, agreed to participate or an arbitrator would detergive any further details mine how a court award about it. gets divided among the varJohn Toth, partner at ious victims. If those talks Donna MacKenzie: Sullivan, Ward, Asher & Patbreak down, however, the Herfirm is handling ton PC in Southfield and an attorney for Fata in the 13 victim lawsuits. cases will return to court. victim cases, and attorney The federal government and state of Michigan have Bruce Bigler, of Giarmarco Mullins & previously asserted liens on several Horton PC in Troy representing Critof the victim lawsuits, where tenton, did not return phone calls Medicare or Medicaid was a payer seeking comment. 䡲 Chad Halcom: (313) 446-6796 for the patient — but attorneys Twitter: @chadhalcom said it is not yet clear if the govern-

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WEEK Huntington microloan program comes to Pontiac with $5M

he $25 million Pure Michigan Micro Lending Initiative, unveiled in

November 2013 with $5 million for Detroit small businesses, is expanding to the Oakland County seat. Huntington Bank and the Michigan Economic Development Corp. are offering microloans

ranging from $1,000 to $250,000 to small businesses in Pontiac. More details on the program are available at the Small Business Development Center at the Oakland County’s One-Stop Shop Business Center.

ON THE MOVE 䡲 Domino’s Pizza Inc. announced the appointment of Jeffrey Lawrence as CFO, replacing Michael Lawton, who will retire from the Ann Arbor-based company. Lawrence, 41, is treasurer and will become CFO at the end of August. 䡲 The Methodist Children’s Home Society in Redford Township named Kevin Roach CEO, effective Aug. 17. Roach, who will succeed the retiring Beth Tarquinio, has been president and CEO of Whaley Children’s Center in Flint for five years.

COMPANY NEWS 䡲 A $10.3 million plan to turn a vacant Capitol Park building owned by Dan Gilbert into 5,500 square feet of first-floor retail space and 25 residential units on the top five floors was approved for $1 million in financing in a Michigan Community Revitalization Program grant announced by the Michigan Strategic Fund. Gilbert’s Bedrock Real Estate Services LLC will provide upfront financing; construction of the building, at 1215 Griswold St., is set to be complete by fall. 䡲 Auburn Hills-based auto supplier BorgWarner Inc. announced it had entered into a definitive agreement to acquire Pendleton, Ind.-based alternator and starter supplier Remy International Inc. for $950 million. 䡲 Auburn Hills-based De-StaCo, which makes clamps and assembly line products for the automotive, aerospace and food processing industries, said it will move manufacturing operations from Auburn Hills, Charlevoix and Wheeling, Ill., to Mt. Juliet, Tenn. Corporate offices for the Dover Corp. subsidiary will not move; roughly 50 jobs in Auburn Hills will be affected. 䡲 The Chicago-based Zell Family Foundation made a $60 million grant to the University of Michigan to support entrepreneurial efforts. Of the amount, $50 million will provide endowed support for the student and alumni entrepreneurship

ON THE WEB JULY 13-17

programs at the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies at the Stephen M. Ross School of Business. The remaining

$10 million will support a new fund to invest in new student business ventures. 䡲 Thirteen staffers were laid off at CBS Radio Inc.’s Detroit stations as part of the company’s 200 job cuts nationwide, according to industry reports. CBS owns oldies station WOMC 104.3 FM, sports station WXYT 97.1 FM, news-talk WWJ 950, country station WYCD 99.5 FM and top 40 station WDZH 98.7 FM. 䡲 Ford Motor Co. and MGM Grand Detroit have each signed three-year sponsorship deals with Freedom Hill Amphitheatre in Sterling Heights, amphitheatre officials announced. Terms were not disclosed. 䡲 General Motors Co. said it will continue sponsorship of Kid Rock’s summer concert tour despite a request by a Detroit activist group that the automaker cut financial ties with the musician if he displays the Confederate flag onstage, AP reported. Kid Rock said he hasn’t used the flag for several years.

OTHER NEWS 䡲 The Michigan State Housing Development Authority awarded more than $3.3 million to six affordablehousing development projects in Oakland and Wayne counties, AP reported. Detroit projects include Ryan Court Apartments, the Architects Building project, the Bonita Lofts project and another affordable-apartment complex. Others are the Adams Senior Village rehabilitation in Westland and the Unity Park Phase III construction in Oakland County. 䡲 Graffiti artist Shepard Fairey was arraigned after turning himself in on charges that he tagged buildings in Detroit, AP reported. Fairey was charged in a warrant last month with malicious destruction of property after police said he caused about $9,000 in damage to buildings while completing commissioned works on other structures. 䡲 Plans to restore the Highland Park Ford Plant have been given a boost with a new mural at the nearby Michigan Department of Transportation building. The nonprofit Woodward Avenue Action Association

spearheaded the online competition for a mural design that will cover the building. 䡲 The Detroit Sound Conservancy and Detroit Historical Society are trying to salvage items belonging to the former Graystone International Jazz Museum collection left abandoned inside the vacant downtown Book Building since 2009, AP reported. 䡲 The University of Michigan will officially open Mcity, its new 32acre testing site for connected and driverless cars, on Monday. Meanwhile, UM said it has halted football season ticket sales after reaching nearly 90,000 — the most in

Detroit Digits A numbers-focused look at the week’s headlines:

$169M The value of the University of Michigan athletic department’s 15year contract with Nike Inc. The deal includes cash payments and the value of apparel and equipment, which total $80.2 million.

4,225 The number of manufacturing jobs Wayne County added in 2014, according to a report by Headlight Data. The researcher ranked the county as the top manufacturing economy in the country.

$825M The value of Oakland County’s proposed budget for the upcoming fiscal year — a figure that calls for a property tax cut. The 0.05-mill cut and levy reduction would save taxpayers $75 million over the next decade, County Executive L. Brooks Patterson said.

three years — for the upcoming seven-game schedule. 䡲 Paul Mitchell, a Republican businessman from Dryden Township who spent about $3.5 million of his own money in a failed congressional bid last year, announced he is running to fill the 10th Congressional District seat open for 2016 after Rep. Candice Miller decided not to seek re-election, AP reported. 䡲 Canton Township-based pharmacist Dineshkumar Babulal Patel lost his license to practice after fraud and conspiracy convictions in federal court in Detroit, the Michigan Department of Licensing and Regulatory Affairs said. Patel was

sentenced to 30 months in prison and ordered to pay $4.85 million in restitution with other convicted co-defendants. 䡲 State Democrats proposed a $530 million business tax increase as part of a new road repair plan, while House Republicans huddled to consider a Senate-passed proposal with a 15-cent-a-gallon gasoline tax increase, AP reported. 䡲 Michigan’s unemployment rate held steady in June at 5.5 percent, 1.6 points lower than a year earlier.

OBITUARIES 䡲 Claudia Alexander, a pioneering scientist who helped direct NASA’s Galileo mission to Jupiter and the international Rosetta space exploration project, died July 11. The University of Michigan graduate was 56.

RUMBLINGS Work on Rouge River bridge moves a smidge

or two years, businesses in southwest Detroit and environs have complained about the slow, or nonexistent, pace of bridge repairs on the Rouge River. Some sign of hope came last week as the Wayne County Commission unanimously approved a $16.7 million contract for Anlaan Corp., a bridge repair company based in Grand Haven, to fix the drawbridge at West Jefferson Avenue. Work is set to begin in August. Anlaan has one year to complete the project. The bridge has been out of service since May 2013 when an operator, later fired amid allegations of having been intoxicated, lowered it onto a passing freighter. For the past two years, local businesses have been cut off from a major artery. Few signs of work prompted them to form a group that has rallied behind the slogan “Fix the damn bridge!” The lack of a cross-river path has been compounded by the needed replacement of the bridge at Fort Street one mile upstream, leaving the I-75 bridge as the only option for street vehicle passage over the Rouge in the immediate area. The Fort Street bridge also has been out of commission since 2013. The Michigan Department of Transportation said the completion date has been pushed back again, this time to September or October.

mation session July 27 at Automation Alley. For members, the cost is $20 in advance and $30 at the door; $40 and $50 for nonmembers. Last year, Hannover Messe attracted more than 6,500 exhibitors from 70 countries and was attended by 200,000 visitors. For the first time since the fair opened in 1947, the U.S. has been designated as a partner country, meaning greater display and promotion of U.S. products.

Discount Days on tap in northwest Detroit

Former Ford collaborator sues company for $1B

A bridge too far: The Rouge River crossing at Jefferson Avenue has been at a virtual standstill for two years. GARY ANGLEBRANDT

More than 60 businesses in An Austin, Texas-based company northwest Detroit have agreed to has launched a public campaign to offer discounts July 24-26 go with its $1 billion lawas part of the second annusuit against Ford Motor Co. Versata Software claims al D1 Discount Days event. Ford stole its trade secrets That’s up from 22 busiby creating a copycat vernesses that participated sion of a proprietary vehilast year, said James Tate, a Detroit City Council member cle development program. Mike Richards, a Ford emwho represents District 1 ployee of 27 years before and organizes the event. James Tate: Even being let go in 2008, told The event is meant to Crain’s sister publication locals forget to raise awareness of busiAutomotive News that Vershop locally. nesses in the district. sata’s software helped Even for local residents, boost Ford profits after the two it’s easy to overlook nearby businesscompanies began working together es, Tate said. “We talk to entrepreneurs who say, in 1998. Richards now is president of ‘You know what? We’re not getting global automotive business for Verany love from anybody,’ ” he said. sata’s parent company, Trilogy. More information is available at facebook.com/districtonedetroit. Ford denies the claim, saying it has a license “to create derivative works” of the software. Automation Alley seeks Versata has hired Lanny Davis, a former White House special countrade mission travelers sel to President Bill Clinton, to publiTroy-based Automation Alley is cize the allegations. looking for companies to take on a Davis said the battle could drag trade mission to the world’s largest on for a couple of years and that industrial fair, Hannover Messe, next Versata intends to take it to trial, April in Germany. though he didn’t rule out the possiBusinesses can attend an inforbility of a settlement.

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