Crain's Detroit Business, August 24, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS

With football safety under examination, supplier seeks to make impact

Detroit’s boom in home sale prices isn’t being felt in all neighborhoods

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AUGUST 24-30, 2015

Online state games spark feud over funds Gun Lake revenue-sharing dispute exposes MEDC funding risk By Lindsay VanHulle Crain’s Detroit Business/ Bridge Magazine

ANSING — A dispute between an American Indian tribe and the state over online lottery games has put a 21st-century twist on a decades-old debate over how much casino revenue tribes should share with the state. How it’s resolved will have financial consequences for Michigan, which has depended on tribal dollars to fund almost $60 million of statewide economic development efforts annually. What’s murky in making financial projections is whether the state can preserve revenue-sharing agreements with tribes in the long term; some tribes believe the expansion of Internet lotteries negates their obligation to share their gaming proceeds. And one Michigan tribe has already discontinued payments in protest.

Budget uncertainty Attorneys who specialize in tribal law say there’s no precedent to determine whether states or tribes are right in their interpretation of how online lotteries influence a key provision of gaming compacts that offers tribes exclusivity. In practice, that means allowing tribes to be the sole casino operator in a specified geographic area. That exclusivity is provided in exchange for paying a portion of electronic gaming revenue to the state. At stake is $7 million up to $60 million in funding toward state economic development efforts, depending on whether other tribes follow suit to the protest initiated by the Gun Lake Tribe. Gun Lake SEE MEDC, PAGE 18

Overtime: Nervous ticks How overtime is paid and employees are classified — already top topics in HR departments — are only going to get more involved thanks to two directives from the feds. Learn what it might mean for your business in this week’s special report on employment law, Page 9

Tax collection plan riles outside cities Some blame Detroit-centric legislation on politics

Michigan has depended on tribal dollars to fund almost $60 million of economic development efforts annually

cluded,” said Joseph Sobota, Pontiac city administrator. “We want to be alCrain’s Detroit Business lowed to collect city income taxes from people who live in A new bill in Lansing Pontiac but work in another would solve part of the ancommunity. nual collections conun“I can’t understand why drum for the city of Detroit other local communities by enforcing a mandate on — similar to Detroit in suburban employers that terms of financial chalthey collect city income lenges — would not be intaxes from workers who cluded in the legislation.” live in Detroit. The Republican-led But in an unexpected George Heartwell: Policy CommitHouse Tax Grand Rapids twist, the legislation that retee in Lansing on Wednesmayor “flummoxed” ceived a nod from a House day approved the bill that tax committee last week that bill would would require suburban was Detroit-centric. That’s collect taxes for employers to withhold DeDetroit but not in contrast to an anticipattroit city income taxes other cities. ed statewide plan that from residents’ paychecks. would have required income tax Grand Rapids Mayor George collections and distribution to all 22 Heartwell said Friday he was “flumcities in Michigan that levy such a moxed” that the other 21 commutax. “We are disappointed not to be inSEE INCOME TAX, PAGE 16 By Marti Benedetti and Dustin Walsh

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MICHIGAN

BRIEFS Cooley Law School reports sharp drop in enrollment Enrollment at the Western Michi gan University Thomas M. Cooley Law School dropped to 1,880 students in the past academic school year from about 4,000 in 2010. According to the American Bar Association , law school enrollment has declined by 17.5 percent since 2010. Alfred Brophy, a professor at the University of North Carolina School of Law , told Michigan Radio that law

schools have been seeing enrollments decline, but it’s more dramatic for Cooley because it’s a low-ranking school. “As people are deciding not to go to law school, schools that are better ranked are taking students that used to go to Cooley,” Brophy said. However, he said, enrollment is starting to stabilize. The law school has three campuses in Michigan. Last year, Cooley shut down its Ann Arbor campus.

Wis. officials investigate Meijer for (no joke) low prices Meijer Inc.’s recent opening of two stores in Wisconsin has prompted

state officials there to investigate whether the Walker-based retailer violated a Depression-era law that keeps products from being sold below cost, MLive.com reported. According to documents provided under the Freedom of Information Act, products reported to be priced too low ranged from 28-cent-apound bananas to $1.99 for a gallon of milk. The alleged violation comes as Meijer is investing $750 million to expand into Wisconsin. The law, which has been in effect since 1939, was intended to protect smaller companies from bigger competitors trying to drive them out of the market and creating a monopoly.

Herman Miller: Retailer sells used stuff but doesn’t say so Zeeland-based Herman Miller Inc. filed legal action against New York City-based Madison Seating LLC , claiming the retailer made unauthorized use of Herman Miller trademarks in selling used office furniture, MiBiz reported. The action stems from Madison Seating’s apparent failure to clearly indicate that the Herman Miller prod-

ucts for sale were used or pre-owned. Madison Seating is not an authorized retailer of Herman Miller products and so is unable to sell new products. Herman Miller signed a consent agreement in 2005 with Luxury Chair.com, Madison Seating’s predecessor, that prohibited selling used Herman Miller products without identifying them as being used.

MICH-CELLANEOUS 䡲 In a ranking of the best Minor League Markets by Street and Smith’s Sports Business Daily, Grand Rapids ranks No. 10, thanks to the West Michigan Whitecaps in baseball, Grand Rapids Griffins in hockey and Grand Rapids Drive in basketball. Grand Rapids has risen more than 150 spots in the rankings since 2011. The results were ranked based on tenure, attendance rank and economic rank. Other Michigan cities: Kalamazoo, 68th; Lansing, 79th; Midland, 92nd; Traverse City, 143th; and Port Huron, 194th. 䡲 Judge Archie Hayman of Genesee County Circuit Court signed an order that would cut water rates in Flint by 35 percent and stop service disconnections for people with unpaid bills, The Flint Journal reported. Hayman said the 2011 increase was unlawful because it needed to be phased in, not immediately enforced. City officials have said Hayman’s order could lead to bankruptcy for Flint, and city attorney

Peter Bade said Flint will file an appeal and seek a stay in the order. 䡲 Kellogg Community College in Battle Creek plans a $2.75 million expansion to its Regional Manufac turing Technology Center , MiBiz reported. Work is projected to be completed in July 2016. 䡲 East Lansing-based Medical A d v a n t a g e G r o u p , a provider of health care consulting services for physicians, has acquired Grand Rapids-based H e a l t h C a r e M a n a g e ment , MiBiz reported. Terms were not disclosed. Medical Advantage serves about 2,000 physician clients and is a wholly owned subsidiary of T h e D o c t o r s C o . , a provider of physician medical malpractice insurance. 䡲 The board of trustees of Mus kegon C ommunity College approved the acquisition of the Muskegon YMCA building for a new Health and Wellness facility at a cost of $1.17 million, MiBiz reported. As a part of the deal, the college will pay off the YMCA’s outstanding debt to Muskegon-based Communi-

COMPANY INDEX: SEE PAGE 17 ty Shores Bank and repay a loan from the Muskegon Community Foundation. 䡲 Officials with Portland, Ore.based Alpha Media recently entered into a definitive agreement to purchase WSGW and other radio stations in Saginaw County from Digity LLC , MLive.com reported. Digityowned stations in the Saginaw area include WCEN-FM, WGER-FM, WSGWAM, WSGW-FM and WTLZ-FM. 䡲

䡲 United Shore Financial Services LLC should have been included in Crain’s Fast 50 list, which published Aug. 10. The company was inadvertently omitted; its combined revenue growth ranking of 41 would have put it at No. 3. Its revenue rose from $90.9 million in 2011 to $355.6 million in 2014. A corrected version of the list is at crainsdetroit.com/lists, and a corrected company profile is at crainsdetroit.com/awards/fast_50/2015. 䡲 The name of the winner and company in the Advancements in Health Care category of the Health Care Heroes on Aug. 17 should have been Don Powell of American Institute for Preventive Medicine.

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BANKRUPTCIES . . . . . . . . . . . . . . . . . . 5 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 13 CLASSIFIED ADS . . . . . . . . . . . . . . . . 15 DEALS & DETAILS . . . . . . . . . . . . . . . 13 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 OTHER VOICES . . . . . . . . . . . . . . . . . . . 7 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 14 RUMBLINGS . . . . . . . . . . . . . . . . . . . . . 19 WEEK ON THE WEB . . . . . . . . . . . . . . 19

CORRECTION

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INSIDE THIS ISSUE

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Index shows gap in Detroit home prices Some areas in city nearly double, others tumble By Kirk Pinho kpinho@crain.com

LISA SAWYER/CDB

Head start: Auto supplier seeks new play in sports Oakwood Group designs energy-absorbing tech for NFL application on its head. In this case, it’s turning the technology application to thin piece of engineered plastic protecting athlete’s heads — and more. can be the difference between life This month, the supplier turned over its and death. research study on how its core technology can For the past 15 years, The Oakwood Group prevent injuries in the National Football League. At stake is a $1 million development contract has been supplying engineered with America’s favorite professional sports thermoplastic components for doors and league. headliners. The parts are designed to Oakwood’s plan is to reduce its reliance on reduce the energy impact caused during a J.B.Audi: Seeks the automotive industry from 95 percent of its car crash. The Dearborn-based company’s revenue beyond auto industry. projected $80 million in revenue this year to patented safety product distributes the less than 75 percent by 2018, said J.B. Audi, energy from the impact across the vice president and third-generation owner of the 70component — reducing violence in the cockpit. year-old family business. Oakwood is hoping the same energy-absorbing “Four years ago, coming out of the recession, we technology used by nearly every major automaker decided to draw a line in the sand and make a significan absorb the impacts of another auto industry downturn. Sometimes, diversification can come in the form of turning a traditional technology SEE FOOTBALL, PAGE 17 By Dustin Walsh dwalsh@crain.com

Travel along the Woodward corridor and along the Detroit riverfront, and it’s easy to see the infusion of hundreds of millions of dollars in economic development. Not as easily visually trackable in those two areas are the large increases in average home sale prices, driven in part by new development and renewed interest from investors, during the past 10 years. But while average home sale prices have nearly doubled on and around Woodward Avenue stretching from Jefferson Avenue north to Eight Mile Road — and have increased nearly two-thirds near the east Detroit riverfront — large pockets of the city have seen significant declines in home sale values during the same period. And there is this sobering statistic: The average home sale price has fallen nearly 28 percent across the city since 2006. Why the disparity? It all has to do with hyper-local economics. According to an analysis of 10 years of data from Farmington Hills-based Realcomp Ltd. II by the Detroit branch of the Federal Reserve Bank of Chicago , citywide, the average home and condominium sold

Higher home sale prices around Woodward and Jefferson avenues have helped nearby neighborhoods such as Corktown.But areas such as the west and southwest sides of Detroit have not benefited. for $65,600 in 2006 but just $47,500 this year, a 27.6 percent drop. Weighing down the average home sale price are sales on the city’s west, northeast and southwest sides, where sale prices have fallen 46.3, 56.8 and 75.3 percent, respectively. In contrast, homes and condos in and around Woodward are selling for an average of $137,300 so far this year, up 95 percent from $70,400 in 2006. The east riverfront area’s sale prices on average have increased from $76,900 to $126,500, or 64.5 percent. “It’s in line with what one would expect to happen,” said Paul Traub, the senior business analyst who SEE INDEX, PAGE 16

Molina eyes growth in revenue, members with HealthPlus deal By Jay Greene jgreene@crain.com

Seeing a perfect opportunity for growth, Molina Healthcare of Michigan, the state’s second-largest Medicaid HMO, is expected to add $300 million in annual revenue as it absorbs the Medicaid business of financially troubled HealthPlus of Michigan in a deal expected to close Sept. 1. By adding 96,000 members from HealthPlus’ Medicaid and MIChild business, Troy-based Molina is projected to

grow to 352,000 members in Michigan. In 2014, Molina recorded $1.06 billion in revenue, earning $26.7 million in net income. Molina still remains far behind in membership to Detroit-based Meridian Health Plan of Michigan , which also has been experiencing double-digit growth and now stands at 420,000 Medicaid members. But Molina, a for-profit subsidiary of Long Beach, Calif.-based Molina Health care Inc. , also began participating this

May in a demonstration program to integrate care of 13,000 Medicaid and Medicare beneficiaries in Southeast Michigan and other parts of Michigan. Adding HealthPlus “was an opportunity to serve the Medicaid population and expand that into Genesee County, Saginaw and the bay area,” said Christine Surdock, Molina’s COO in its Troy office. Surdock said Molina’s experience in Medicare’s special needs plan will help it manage the dual-eligible population,

which historically is a sicker patient group. “The new program is more care coordination, more member touches and long-term care and support,” she said. Flint-based HealthPlus, meanwhile, is re-forming this year into a “flatter and leaner organization,” said incoming CEO Mike Genord, M.D., in an interview with Crain’s last week. SEE MOLINA, PAGE 16

MUST READS OF THE WEEK Incentives: The cost of good intentions

The trail to better health

In this week’s Looking Back feature commemorating Crain’s 30th anniversary, we look at how tax incentives have evolved to encourage projects such as expansion of the GM Tech Center (right), with help from the city of Warren. But the incentive doesn’t always live up to its billing, Page 4

Thinking it also can improve people’s health outside the walls of its hospitals, St. Joseph Mercy Health System has boosted its budget for improvement projects such as bicycling trails, Page 12

Christine Surdock: Adding HealthPlus an opportunityto expand.

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Municipalities learn tough lessons on tax incentives By Lindsay VanHulle Crain’s Detroit Business/ Bridge Magazine

LANSING — Tax incentives are the double-edged sword of economic development. Michigan cities have become more flexible with companies when awarding tax incentives but face greater scrutiny and accountability over these programs than ever before. Those are two of the big changes in the municipal tax incentive arena during the past few decades, some veteran industry professionals say. Michigan’s reputation for being welcoming to business has changed a lot in 30 years; the state’s tax structure is now on par with competitor states. And in some local communities, local officials have learned the hard way that intentions with incentives don’t al-

ways pan out. Thirty years ago, cities in Michigan were more likely to offer business tax incentives than elsewhere in the U.S., according to a story in the Aug. 26, 1985, edition of Crain’s. That was based on a survey of more than 800 mayors in cities with at least 30,000 residents by New Yorkbased Touche Ross & Co ., an accounting and consulting firm that merged with Deloitte LLP in the late 1980s. These days, local and state governments continue to put together incentive packages to lure jobs and investment. But state programs have received a reboot during Gov. Rick Snyder’s administration — and the state’s business tax structure was revamped in 2011. Beginning in 2014, the state also phased out the taxes corporations pay on personal property purchases such as equip-

LOOKING BACK: According to a Crain’s article from Aug. 26, 1985, cities were more likely to offer business tax incentives in Michigan than anywhere else in the country. Since then, some municipalities have learned that such strategies don’t always succeed. More at crainsdetroit.com/30 ment or machinery. And while the state still issues regular state-led incentives and grants, the pot of money available each year is much smaller, and several incentive programs were eliminated, including brownfield redevelopment credits. Snyder spokesman Dave Murray said the governor believes state policymakers should focus on talent and workforce development, rather than incentives, as a way to attract business to Michigan. Snyder has not taken a position on local incentives, Murray said, instead choosing to leave decisions to local leaders.

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Locally, some Detroit-area municipal leaders laud incentives as a way to tip the scale in their favor when companies are considering where to build facilities. They say the long-term benefit to a city’s tax rolls outweighs the immediate loss of new revenue from slashing a company’s property taxes, often in half. “Frankly, if we don’t give Jim Fouts: If we inducements, don’t give induce- there will be anments, others will. other city in some other state or area that will,” Warren Mayor Jim Fouts said. “We don’t give them out willy-nilly. The most important thing is a commitment to jobs.” In 1985, nearly nine in 10 Michigan mayors who responded to the Touche Ross survey said they offered tax credits to spur small businesses in their cities. Nationally, just 43 percent of mayors did. Seven in 10 of the state’s mayors also believed Michigan needed to overhaul its tax structure to help business. A comparable survey today isn’t available. Deloitte doesn’t know when the last such poll was taken. But anecdotally, “Michigan is still viewed as a favorable place to do business,” said Greg Ripley, a senior manager with Deloitte Tax LLP who is based in Detroit. “Most of the local communities have the ability to award some type of an incentive.” Tax incentives last for a specified number of years — in some cases, up to 12 — and can include waiving some property taxes on new construction projects and capturing new taxes to reimburse developers for the cost of work on brownfield sites. In exchange for an incentive, companies and developers promise to spend a certain dollar amount and create or retain a set number of jobs.

One of the most commonly used is the industrial facilities exemption, allowed through Michigan’s Public Act 198 of 1974. It can reduce property taxes on new buildings by half for up to 12 years. These types of incentive can offset the higher cost of relocating, especially if all other factors are equal — workforce, utilities and property costs among them, said Linda Bonelli, a partner with Deloitte’s U.S. incentives practice in Chicago. In Livonia, McLaren Performance Technologies Inc., a division of Canadian auto supplier Linamar Inc ., is consolidating its Livonia engineering and Southfield sales facilities into one building on Eight Mile Road, said Mark Taormina, the city’s planning and economic development director. McLaren, which supplies engine testing services and develops driveline systems, had considered moving to Windsor, Ontario, according to the Michigan Economic Develop ment Corp. It will spend $22 million on the project and create at least 75 jobs, the state said. Livonia offered McLaren an industrial facilities credit on $16 million of real property investment that will save the company about $200,000 a year in total taxes, Taormina said. The city still will take in about $56,000 a year in new tax revenue for the 12-year duration of the incentive. The project is now under construction on Eight Mile at Hubbard Street.

Adding value City administrators say their cities benefit financially even with smaller tax revenue because the new construction ultimately adds more value to the tax rolls during the lifetime of the incentive. Fouts said he estimates the city of Warren will take in an estimated $3 million to $6 million per year when its largest taxpayer, General Motors Co., invests $1 billion to upgrade its Warren Technical Center with new design studios and an informationtechnology hub. That would be about half of the tax revenue expected due to an incentive from the city that reduces GM’s taxes on new construction by up to 50 percent for a maximum 12 years. Said Fouts: “We may lose revenues in the short run, but not in the long run.” Tax credits, however, have come under increasing scrutiny in recent years. Some of it has been a shift in policy. Some, like state incentives for brownfield or historic preservation credits, have gone away altogether. The Legislature also recently killed Michigan’s film incentives program,

which offered tax breaks to production companies that worked in the state. “Every community in Michigan is doing everything they can to bring jobs in and using whatever tools that are available,” said Chris Hackbarth, state affairs director for the Michigan Municipal League. “Unfortunately, the tools are more limited today than they were 30 years ago, and what they’ve got to play with is more limited because their tax base and their revenue streams have shrunk.”

Ill-fated bonds But the offering of financial incentives carries inherent risk. Van Buren Township sued its largest corporate resident, Visteon Corp., in May after the municipality found it would fall $36.4 million short on bond payments by 2018 that were issued to build Visteon’s 263-acre campus in 2004. In exchange for the bonds, Visteon agreed to spend $270 million toward the campus, but as property values plummeted throughout the Great Recession, Van Buren Township was left holding the bag as tax revenue dropped lower than the bond payments. On its end, Visteon says the wording of the contract allows it to pass on helping the township meet the bond payments. The shortfall has the potential to bankrupt the community. Allen Park also lost out in a bond incentive plan for an upstart movie studio in the city. Allen Park issued $28.3 million in limited tax bonds in November 2009 for the project and another $2.7 million of general obligation limited tax bonds in June 2010 toward the build-out of Unity Studios. Bond payments were to be covered by rental fees for the studio, which the city owned, but the development never fully materialized and the city was stuck with $2.6 million in annual bond payments. Case studies on incentive packages gone awry and more attention paid to ROI have pushed the pendulum toward more transparency and oversight of the way incentives are awarded. For example, cities do more follow-up checks to see if companies keep their promises on spending and jobs. Fouts, of Warren, said his city’s assessor has rescinded incentives in the past because companies did not add the number of jobs they promised. “We check, we follow through and, if not, they lose,” he said. “It’s not a blank check. It’s a check with strings.” 䡲 Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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Demand sparks plan for high-end apartments in Plymouth By Kirk Pinho

“Because it’s been a decade, things have changed in terms of who the demographic is, and what they are looking for is different than 15 years ago.”

kpinho@crain.com

It’s been more than a decade since the last new apartment development in Plymouth, but pent-up demand for high-end rental housing is causing developers to end that skid. Deferred demand for high-quality new rental housing in western Wayne County, following a long construction drought, has spurred the first all-new apartment complex there since 2004, with 93 luxury units expected to land in Plymouth, at 333 Plymouth Road near Holbrook, via Starkweather Lofts by next August. Targeting millennials and baby boomers as prime tenants, project co-developers DevMar Development LLC and Burton-Katzman LLC of Bingham Farms say higher incomes in Plymouth, Northville and Livonia now support rental rates topping $2 per square foot, which makes traditional lenders more willing to finance projects. That would usher in new construction for the first time since the 111-unit Hidden Cove Estates project wrapped in 2004 as the latest highoccupancy residential development in those communities. Renters both young and old are in the market for high ceilings, wood floors, granite countertops and other features. The appeal lies in offering an urban-living feel without some of the pitfalls of big-city living like crime or struggling school districts, said Larry Goss, partner of BurtonKatzman and executive vice president at Core Construction Services LLC, also in Bingham Farms. Most apartment complexes on the local market don’t fit that bill, he said. “This is … the next generation of residential units for lease,” Goss said. “Because it’s been a decade, things have changed in terms of who the demographic is, and what they are looking for is different than 15 years ago.” Millennials and boomers also are willing to pay a premium for those amenities, Goss said. That, in turn, justifies construction on high-end units, which can cost more than $200 per square foot to build. Lower-end apartments, by comparison, cost $130 to $150 per square foot. Starkweather Lofts units will likely range from 703 to 1,309 square feet and command $1,500 to $2,800 per month in rent — or $2.14 per square foot. Units are expected to become

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Aug. 14-20. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. 䡲 Barden Development Inc., 2000 Town Center, Suite 1900, Southfield, voluntary Chapter 7. Assets and liabilities not available. Natalie Broda

Larry Goss, Burton-Katzman LLC

COURTESY OF DEVMAR DEVELOPMENT

StarkweatherLofts, a Plymouth development with 93 luxury units, will be the first all-new apartment complex in western Wayne County since 2004. available starting next August. “They are going to have to pull that business in because there is nothing like that in that area and at that price point,” said Samuel Beznos, CEO of Farmington Hillsbased Beztak Cos., which owns and manages the 319-unit Uptown in Canton apartments that is undergoing the first phase of a 180-unit ex-

pansion at Cherry Hill and Ridge roads. “The quality of the construction and amenities are going to dictate whether they can get that type of rent. If they want something new and walkable, they are going to pay top dollar for it.” And new is in demand. The average apartment building in Livonia,

$1 Billion

Plymouth and Northville dates to the early 1970s, according to data in CoStar , the online commercial real estate database. The vacancy rate is under 5 percent in that area across 5,600-plus units in 62 apartment complexes and buildings. Mark DeMaria, who founded DevMar in 2012, developed the Metro Lofts in 2006 on East Harrison

Street in Royal Oak. The first 30 units there sold out in five months. “Young professionals and emptynesters are looking for alternatives to the older apartment structures in Plymouth. They want new construction with high-end features,” he said. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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CRAIN’S DETROIT BUSINESS

OPINION Indian-state gaming rift must be resolved M

ichigan has grown to rely on payments from Indian gaming operations to fund economic development programs. So when a tribe turns off the tap because of a contract dispute, it’s a problem. As Lindsay VanHulle reports on Page 1, the latest dispute has created a budget hole in the Michigan Economic Development Corp. that can result in layoffs. For the MEDC, the Indian compact dollars have the advantage of going directly to its coffers, bypassing allocations by the Legislature (which occasionMichigan ally cuts funding for key MEDC promust press grams). But there may be a solution. hard for a Online Michigan Lottery sales — legal case to which is what the American Indian resolve the tribes say violates their compacts gamingwith the state — have brought in revenue issue millions to Michigan coffers. The once and for state projects online sales will have netted the state an additional $480 all. million in revenue by 2022. Two options: First, explore allowing tribes to create their own online lotteries and keep that revenue but reinstate the payments to the state. Or, consider allocating some of the online lottery dollars to MEDC to replace the tribal dollars lost in the current dispute. Either way, Michigan needs to press hard for a legal case that would set a precedent and resolve this issue once and for all.

Close loophole in city taxes It’s about time that Michigan closes loopholes that allow residents to evade paying income tax in the cities where they live. A bill to require suburban employers to make those deductions for employees who live in Detroit is traveling through the Michigan Legislature. Our question: Why limit it to Detroit? Michigan has 22 cities with income taxes on residents and nonresidents who work within the borders. Employers must deduct those taxes in the cities where they are based, both for residents of that city or nonresidents (if a tax is imposed on them). But if a resident of a city works in another town, it’s largely an honor system. Employers aren’t required to deduct the tax — even though they clearly know all employees’ legal addresses. Suburban employers in metro Detroit aren’t protesting the prospect of making those deductions. With modern payroll systems, a few key inputs will make the deductions automatic. And small businesses, with fewer than 10 employees, would be exempt. The bills should cover all 22 cities, not just Detroit. Beyond the basic fairness, it’s an opportunity for cities whose property values have not yet recovered to generate additional dollars to fund basic programs, like fixing city streets.

LETTERS

State must preserve energy efficiency standard Editor: In a Crain’s Other Voices column Aug. 10, Rep. Jason Sheppard, R-Temperance, ironically calls for repealing Michigan’s energy efficiency standard while advocating for an “all of the above” approach (“End them: ‘All of the above’ is key to energy future”). Prior to passing that standard in 2008, Michigan utilities failed to provide any energy efficiency programs to their customers. They also remained dangerously over-reliant on fossil fuels for creating electricity. In fact, it was Michigan’s energy efficiency and renewable energy standards created in 2008 that ensured Michigan had an “all of the above” approach, by requiring utilities to include energy efficiency and renewable energy as a part of their supply portfolio. Before that, their only approach was to build more and more power plants. Most important, Michigan’s energy efficiency standard has been an outstanding success. Michigan’s utility programs have been thoroughly studied by the Michigan

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity.

Email: cgoodaker@crain.com

Public Service Commission, which found that they saved ratepayers $3.75 for every $1 spent on the programs. Ending Michigan’s current energy efficiency standard would be a big mistake: It would raise utility costs for Michigan families and businesses and increase pollution. It would send a terrible message to businesses looking to invest and grow here in Michigan. In order to maintain an “all of the above” approach, Michigan must protect and expand its energy efficiency and renewable energy standards. Martin Kushler Senior fellow, American Council for an Energy Efficient Economy

Free Press, News could learn some lessons in logistics Editor: I have two questions after reading Bill Shea’s Aug. 17 comprehensive article (“Free Press future: Lean, digital,” Page 1). First, when the Free Press and Detroit News finally decided to institute a well-deserved higher copy price, why did they simultaneously decide to cut the number of copies delivered to households? If 56 percent of national readers still read a print edition now, the percentage was much higher 10 years ago. Instead, readers are forced to go on a scavenger hunt four days a week looking for the paper. Can you think of any other product that would do this? Second, why didn’t the papers offer a tablet alternative to download the daily paper? They have a wonderful digital edition that is an exact replica of the paper edition — the format that advertisers most love and longtime readers understand. From the savings of not printing and distributing a paper edition, they could have bought tablets for each subscriber. And if they don’t want to get into the tablet business, I’m sure Amazon would love to have them piggyback on its Kindle service so that Free Press and News readers could be sold other Amazon products. Mr. Huschka has excellent graphic talents, just as Mr. Anger is a very competent journalist and editor. Now if only someone who knows the logistics side could run the business. Mark Maisonneuve Berkley

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New law’s increased funds for training can help close skills gap t

was

great

dire need of this technical skills. “Employers, elected officials and kind of governBy 2025, according to the Manuyear, for the first ment collabora- other stakeholders in our region must facturing Institute, 3.4 million mantime in more than tion. Closing the take advantage of these federally ufacturing jobs will become avail15 years, Congress skills gap among able in the U.S., but 2 million will be passed legislation American work- funded opportunities ... to help left unfilled. If these projections beto modernize the ers is a complex protect Michigan’s continued come reality, Michigan manufacturpublic workforce OTHER VOICES: issue, historically ers will surely feel the pain. Andra Rush system. compounded by growth.” Employers, elected officials and Though the Rush is CEO of Dakkota Integrated ineffective coorother stakeholders in our region law’s principal Systems, Detroit Manufacturing dination among country, we will find ourselves com- skilled trades as a career option, must take advantage of these federaim is to ensure Systems and Rush Trucking Corp. She training agencies peting for a dwindling pool of quali- perhaps because of low awareness ally funded opportunities to foster job seekers and also is a member of the U.S. and employers. If fied workers. or negative perceptions. And our cooperation under a cohesive misworkers acquire Manufacturing Council. we fail to address Baby boomers are retiring by the public education system graduates sion and to help protect Michigan’s the skills and crethe skilled labor thousands every day. America’s too few high school students who continued growth and economic dentials that employers need, some shortage in our region and our young people show little interest in are prepared for jobs requiring prosperity. 䡲 Michigan manufacturers are unaware of this law that delivers a key benefit: increased funding for skills training. The Workforce Innovation and Opportunity Act, which replaces the Workforce Investment Act of 1998 and amends the Adult Education and Family Literacy Act, the Wagner-Peyser Act and the Rehabilitation Act of 1978, provides resources to establish closer ties between employers, unions, workforce boards, community colleges and elected officials. The act brings together core proAscending to the role of Chief Fiduciary Officer for Merrill Lynch Trust Company of America would grams in skills development for be a career capstone for most people. As would the successive trust positions that Claire Rosati held adults, youths, dislocated workers with Allstate, Wintrust, Goldman Sachs, Lehman Brothers, Barclays and Citi. But along the way of and people with disabilities, and offers greater accountability and forpromotions and ever greater responsibilities, the line between her employers’ interests and her clients’ mula grants to states for employinterests was becoming blurred—and, for Claire, worrisome. With one phone call, everything came ment services administered by the into focus. “There’s a great company in Birmingham, Michigan, looking for trust experts,” said U.S. Department of Labor. While it was signed into law last a friend, referring to the Family and Foundation Services Division at Greenleaf Trust. year, its major provisions just took effect on July 1. They are: In Claire’s exploratory visits and conversations with us, she was struck that every client 䡲 All states will be required to discussion focused on the client’s interests. She saw that being privately held enabled us submit a four-year unified strategy to implement core programs for to avoid the usual conflicts between corporate and client priorities. Early in 2015, educating and training our workClaire joined us, and is now leveraging her considerable expertise force. in trusts and wealth management on behalf of high net worth 䡲 State and local workforce boards will promote public-private families. And at long last putting their interests first. partnerships that meet the needs of groups of employers. There’s never been a better time to be a client of 䡲 Funds will be available for inGreenleaf Trust. All it takes is a call. cumbent workers, on-the-job and customized training. 䡲 Funds also will be available for registered apprenticeships and transitional jobs. 䡲 Local areas will be required to more than double funding to serve out-of-school youths and earmark dollars for youth internships, preapprenticeships, summer jobs and on-the-job training. 䡲 Roughly 2,500 providers in the American Job Center system will see improvements in the form of Financial Security from Generation to Generation new certification criteria and easier ways for employers and job applicants to find their local centers. 䡲 Programs will be evaluated at least every four years and required to measure effectiveness of services offered to employers. 䡲 Performance reports for state and local agencies, along with training providers, will be made public. Still, what is most exciting is the law’s emphasis on job-driven training that leads to skills recognized by industry, and higher reimbursement rates to employers for self3 4 9 7 7 wo o d wa r d av e n u e birmingham, mi 48009 248.530.6200 greenleaftrust.com administered training programs. The manufacturing sector is in

I news when last

With expertise in law and trusts, Claire Rosati could have gone anywhere. So she did.

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Biz owners in Goldman Sachs program top peers Automation By Chad Halcom chalcom@crain.com

Maybe the poet Langston Hughes was right: A dream deferred really can explode — at least when a business owner who has one finally stops putting it off as impractical and starts to execute. Small-business owners in metro Detroit who took part in the first few groups — or “cohorts” — of Goldman Sachs Group Inc.’s 10,000 Small Businesses program have outperformed their peers in the 20 other local markets that have joined the national program since 2010, based on revenue and jobs growth after six months. Andrew Androff, co-owner and sales director of Professional Movers.com Inc. in Walled Lake, thinks that may be partly because companies here have more opportunity to make a name for themselves than small businesses in more crowded or competitive markets. Another reason might be the potential to diversify here. Androff, a graduate of the third cohort, said his company has added 11 employees since he completed the program this year. Head count is around 40 right now, including some summer help. Revenue is on pace to top $3 million this year, compared with about $2.6 million when Androff applied to participate in 2014.

COURTESY OF PROFESSIONALMOVERS.COM

Founder Chris Androffand co-owners AndrewAndroff and Patrick Crowley in front of one of the two trucks that ProfessionalMovers.com added to support the company’s growth. “I had friends outside of my business but never really had the chance to work in a group of people like this,” he said. “There were business owners of various sizes, people who were where we were five years ago or were where I wanted to be in five years. It was a good selection of business in different stages and each of the issues they face.” About three-fourths of the local participants in 10,000 Small Businesses had achieved revenue growth within six months of graduation, compared with about two-thirds of participants nationally. The program was introduced in Detroit in late 2013

by Goldman CEO Lloyd Blankfein and hosted by Wayne State University, Macomb Community College and Oakland Community College. Nearly 52 percent had added employees in metro Detroit in the same period since graduation, compared with 46 percent nationally. “It seems like once they committed and put the program in Detroit, it’s been very satisfying to see Detroit outperforming its peers,” Androff said. “They can see now that we were a leading city, not a trailing one or a pity invite.” Sean Gray, associate director of 10,000 Small Businesses at Wayne State, said the graduates not only outperformed the national average but also are doing better as a group than participants in any other region thus far. About 125 business owners have completed the program to date, while a fifth cohort of 31 participants began training in June and will complete it in October. A sixth cohort begins Nov. 6, and registration ends Dec. 11 for a seventh cohort that starts next April. “One challenge in metro Detroit is that people compete in a way by hiding their best ideas,” Gray said. “But one of the things we analyze is what gives you identity. If your biggest two contracts walk out the door, what is your business about now? What still makes you special?”

Gray said it’s too early to have any research on why Detroit is doing so well in the program, but he suspects some industries are so structured to encourage conformity and tailoring skills to customers that some business owners find an untapped market when they break out on their own. “If I’m doing $4 million a year, and $3 million is in this line of low-margin business I don’t really like but it’s what I’m expected to do, and the other $1 million is in something that’s highmargin where I have a lot of ideas — well, what if you took your capacity and instead did more of that thing?” he said. Androff said his company, founded by father Chris Androff in 1978, found new life five years ago after acquiring a formerly unavailable Web address and rebranding from Professional Movers Inc. to ProfessionalMovers.com. The company also shifted from a primary emphasis on freight and delivery service to office and residential moving services, which is now a majority of its sales. The company, with offices in Walled Lake and Detroit, also hopes to grow geographically with locations in western Wayne County and possibly Macomb County under a business plan Androff developed during the Goldman Sachs program. 䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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Ŷ Facilitative mediator for U.S. District Court –

Western District of Michigan and Michigan Courts. Ŷ Arbitrator and mediator with National Arbitration and Mediation, Inc., the American Settlement Centers and the National Arbitration Forum.

Alley: Trade missions spark exports By Dustin Walsh dwalsh@crain.com

Trade missions coordinated by Automation Alley have led to more than $507 million in export sales for participating companies, the organization reported today. Since 2001, 170 companies have participated in 24 trade missions to Mexico, Indonesia, Chile, Saudi Arabia and other countries. Company growth as a result of these trade missions has led to the creation of 2,817 jobs, the Troy-based business accelerator said in a release. “Our missions are results-oriented,” said Noel Nevshehir, director of international business services for Automation Alley. “These are not junkets; they are purely business, and our goals directly align with our results.” But new international export contracts often don’t come easy, Nevshehir said. “There’s this misconception that companies will go and come back with contracts in hand,” he said. “These trips are about building relationships, and the gestation period between these meetings and a deal can be anywhere from a year to five years.” Automation Alley’s next trade missions are to Mexico (Sept. 2025), the United Arab Emirates (November), Germany (April 2016) and Cuba (fall 2016). The organization said it is expanding its company pool to 14 from eight for the Mexico trade mission to “support Mexico’s extremely weak supply chain,” most of which will be automotive. Nevshehir said 82 percent of the global buying power is outside the U.S., so for small and midsize companies to compete, building international relationships is a necessity. “The future success of any business relies on diversifying globally,” he said. “And U.S. companies have an advantage. … The world craves U.S. brands for our quality and innovation.” 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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“The future success of any business relies on diversifying globally. The world craves U.S. brands.” Noel Nevshehir,Automation Alley

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SPECIAL REPORT: EMPLOYMENT CHAD HALCOM Reporter’s Notebook chalcom@crain.com TWITTER: @chadhalcom

Employment litigation: What are the hot spots?

LAW

Marlo Johnson Roebuck, 45, became managing shareholder Aug. 1 for the Michigan offices of the workplace law firm Jackson Lewis PC. She succeeds Maurice Jenkins, who founded the firm’s Southfield office in 2008 and is now Marlo Johnson Roebuck: Working returning to a fulltime law practice. on OT litigation. We hear worker misclassification and overtime eligibility are hot spots in employment law. What other areas are active?

Overtime accommodations are particularly a hot spot right now. But we’ve also had a share of matters involving ADA (Americans with Disabilities Act) and making reasonable accommodations for the Family and Medical Leave Act. For employers, there can be a lot that goes into managing (FMLA) leave. But we also handle retaliation claims, like an employee who (later) says a promotion didn’t come along that they expected ... because of medical leave. Employers, we find, want to make the right decision and get the best person for any job. But issues still come up, and so we handle them. Your Detroit office has a majority of woman attorneys, and nearly half are African-American. How did you reach that level of diversity?

Diversity is definitely one thing the firm is very committed to. Maurice did a very good job attracting and cultivating a diverse group, and six, or two-thirds, of the attorneys here are female. It’s also a priority nationally, but we are always looking to attract the best talent regardless of background. Our clients expect to work with attorneys who are very qualified but who also represent the community where they practice. We represent automotive companies, some financial institutions, health care companies and some retailers.

OVERTIME

ANGST

Changes from the U.S. Department of Labor could up the ante in employer liability, change classifications

What are some growth areas where you think Jackson Lewis might need new local expertise or look for new hires?

I’d anticipate some need for growth in immigration law. We’ve represented employers on matters with the Department of Homeland Security (over hiring practices); and we represent a number of governmental entities in the area, too. We also handle privacy matters like data breaches and audits to help employers comply with certain federal acts. 䡲

By Chad Halcom chalcom@crain.com

vertime rules and employee misclassification already seem like hot-button topics in corporate human resources departments, but workplaces haven’t seen anything yet, attorneys and statewide business organizations say. Two July directives from the U.S. Department of Labor, each interpreting the federal Fair Labor Standards Act, could make more than 5 million salaried em$50,440 ployees eligible for overtime pay The proposed minimum pay for an and allow an additional 2 million employee to be salaried and exempt workers or more to have health from overtime eligibility, up from the current $23,660. insurance benefits or organize into labor unions. The proposed overtime rules, which President Barack Obama directed the department to update in June, would increase the minimum pay for an employee to be considered salaried and, therefore, exempt from overtime eligibility to $50,440 a year from $23,660. Labor market analysts have estimated the proposal could increase the number of overtime-eligible employees by as much as 5.9 million. Two weeks later, Labor also released a new set of guidelines distinguishing a company employee from an independent contractor under the Fair Labor Standards Act’s definition of employment as “to suffer or permit to work.” The guidelines suggest most workers are employees — the SEE OVERTIME , PAGE 10

Sexual stereotyping or biz owner prerogative?

A transgendered employee’s case against a Detroit funeral home tests the boundaries of discrimination law, Page 11

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OVERTIME FROM PAGE 9

definition of â&#x20AC;&#x153;employeeâ&#x20AC;? is broader than what many employers use and what some court rulings indicate. The overtime proposal is open to public comments until Sept. 4, and an internal review will follow before Labor issues a final rule. Experts think that could be late 2016 at the soonest, since the last round of overtime and salary exemption rule changes in 2004 were under review for about a year.

More litigation? The two changes are also likely to accelerate an employment litigation trend in the federal court system. Federal lawsuits alleging violations of the FLSA reached 8,160 nationwide in fiscal 2014, up 8.8 percent from the previous year and the highest since 1993, according to data released in March by the Ad ministrative Office of the U.S. Courts. Detroitâ&#x20AC;&#x2122;s federal court alone has seen six new FLSA cases as of July, up from three in the preceding fiscal year. Since 2012, the Wage and Hour Division of the Labor Department has been ramping up enforcement practices in certain industries that carry a heavy payroll of nontraditional workers. Heather Ptasznik, an attorney in the labor and employment practice at Kotz Sangster Wysocki PC in Bloomfield Hills, said that law firm alone has handled four claims of employee misclassification against its employer clients since January, compared with

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surance products in Escanprobably one case to handle aba and neighboring Gladin the preceding five years. Most are resolved well stone in Delta County. A before litigation, but all majority of its 18 employees have involved recently separe salaried, Magowan said. Generally, those workers arated employees or conmake between $25,000 and tractors. Ptasznik said that $40,000 a year â&#x20AC;&#x201D; a livable most workers are unlikely to rock the boat while they HeatherPtasznik: wage in rural northern are still employed and that Most workers wonâ&#x20AC;&#x2122;t Michigan, Magowan said. if they have any classifica- act until after they But the new federal standard might not take differtion concerns, they tend to leave company. ences between communicome up later. â&#x20AC;&#x153;They tend to go look for advice or ties into account. â&#x20AC;&#x153;Salaries in New York City or even help right after theyâ&#x20AC;&#x2122;ve left, and the employer typically moves to resolve it Detroit would be far different than very quickly,â&#x20AC;? Ptasznik said of the here, and the Department of Labor paints with a very broad brush,â&#x20AC;? he labor trend as a whole. â&#x20AC;&#x153;The fear in some cases is the one said. â&#x20AC;&#x153;I understand why, but to me it employee might only have one puts an unfair burden on paying claim and itâ&#x20AC;&#x2122;s manageable but will employees fairly. I donâ&#x20AC;&#x2122;t pay barget an attorney and petition the gain-basement wages. We pay what court to try and get it certified as a our local market avails us to.â&#x20AC;? While the insurer generally keeps collective actionâ&#x20AC;? on behalf of all business hours, Magowan said, insimilar employees. The new guidelines from Labor surance claims will surge after semean those kinds of disputes are vere weather, and part-time or conlikely to increase, particularly if the tingency labor wouldnâ&#x20AC;&#x2122;t have the overtime rule takes effect next year, training or skills to fill that gap. â&#x20AC;&#x153;There are times where work just Ptasznik said. Because employment litigation is backs up, if a hailstorm or weather often countercyclical and lawsuits event comes through town and we all tend to climb during recessions, she have to spend extra time if we hope to said, any future economic slow- process claims for our customers in a down could cause layoffs or work- timely fashion,â&#x20AC;? Magowan said. Restaurants, retailers, health care place restructuring and accelerate companies and small manufacturthe trend even further. ers are the most likely to have Employers at center salaried workers in the range that Watching the overtime regulation could be most affected by the overchange closely is Jeffrey Magowan, time rule, attorneys said. Construcowner of Garceau Insurance Agency tion, janitorial services, staffing, IT Inc. in Escanaba. Garceau offers services and other industries are home, auto, business and other inmore likely to be affected by the

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tions may vary. classification guidelines. About 10.6 million peoâ&#x20AC;&#x153;The idea that employple were in classified selfers are going to stay static employed or independent and simply pay overtime contractor jobs in 2012, up and not do anything else is 14.4 percent or more than just wishful thinking,â&#x20AC;? Klotz 1.3 million from 2001, acsaid. â&#x20AC;&#x153;Some things that cording to Economic Model even (Labor) has anticipating Specialists International , ed happening include that Gary Klotz: a CareerBuilder company. Employers wonâ&#x20AC;&#x2122;t people will just be reclassiThe largest self-employed just pay overtime. fied as nonexempt, or there occupations included child will be a change in the mix care workers at an estimated 556,523 of workplace duties or companies jobs, carpenters at 459,116 jobs and will hire a few part-time people. And construction laborers at 380,226 esti- some might just be modestly paid mated jobs. The latter two profes- more to get them over the new cap.â&#x20AC;? Klotz said many employers tradisions could be significant because both are mentioned as classification tionally have used salary as a status examples in the Labor guidelines symbol to differentiate between the from July, and employer groups have people they consider management previously said the new rules could or administration versus the rankexpand collective bargaining be- and-file worker. This has changed somewhat over cause unions are not allowed to ortime. The Obama administration ganize independent contractors. The Small Business Association of probably is stressing overtime beMichigan and National Small Business As- cause the Bush-era changes that sociation have estimated that the over- advanced the overtime threshold to time rule could cost a small business $455 a week did not keep up with an average of $100 to $600 in direct inflation since the last major costs and $320 to $2,700 in new pay- changes in the 1970s. roll costs per employee within the Some businesses could turn to ruleâ&#x20AC;&#x2122;s first year and could lead to ad- outsourcing certain departments or ditional administrative costs from functions or try adding part-time scheduling and monitoring employ- workers to share the workload. But ees who are overtime-eligible. Klotz said that may not do much to The proposal â&#x20AC;&#x153;will have a signifi- relieve payroll costs from people cant negative impact on small busi- with limited supervisory roles, such ness and startups. This rule change as an assistant manager. affects both flexibility on how a small â&#x20AC;&#x153;Many of the people youâ&#x20AC;&#x2122;re talking business operates but also adds about are supervisory or administracosts to their day-to-day balance tive people, and just picking up a sheet,â&#x20AC;? SBAM President and CEO couple of new people canâ&#x20AC;&#x2122;t really do Rob Fowler said in a statement to much to relieve their administrative Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;This would be a significant duties,â&#x20AC;? he said. â&#x20AC;&#x153;The law is as much new challenge for job creation right about work duties as work hours.â&#x20AC;? at a time when we are starting to see Klotz agreed that employee classia real recovery in Michigan and new fication and eligibility for benefits is a employment opportunities.â&#x20AC;? hot period of litigation, locally and Ptasznik and Gary Klotz, a share- nationally. He expects the overtime holder at Butzel Long PC and an em- rule wonâ&#x20AC;&#x2122;t go into effect until late ployment attorney of more than 30 2016 or early 2017, but itâ&#x20AC;&#x2122;s unclear years, both said employers probably how much that will add to the trend. will make several changes to adapt to â&#x20AC;&#x153;There may be some of that for the overtime rule. One popular solu- overtime,â&#x20AC;? Klotz said, â&#x20AC;&#x153;but the mistion would be to give modest raises to classification issue has more potenemployees making nearly $50,000 tial in court.â&#x20AC;? äĄ˛ Chad Halcom: (313) 446-6796 now as a cheaper alternative to overTwitter: @chadhalcom time. For lower-paid workers, solu-

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SPECIAL REPORT: EMPLOYMENT LAW

Fired funeral home worker may shape transgender rulings to follow next year. Stephens was let go in August A Detroit funeral home is headed 2013; the EEOC filed the suit against to trial after firing a transgender Harris Funeral Homes on Stephens’ employee in a case that has the po- behalf about a year later. In April, tential to create a court precedent Cox decided that the 2014 lawsuit for federal officials to make sexual should be allowed to proceed, in identity a protected status in em- part because the EEOC could make a case that Harris had based an employment discrimination law. Funeral director and embalmer ployment decision on Stephens’ reAimee Stephens, formerly Anthony fusal to conform to certain “sex Stephens, was fired from the Gar- stereotypes” under federal law. Bloomfield Hills civil den City location of Derights attorney Deborah troit-based R.G. & G.R. Harris Funeral Homes Inc. two years Gordon, managing partner ago this month, shortly of Gordon, Laughbaum & Prescott PLC in Bloomfield after revealing to the owners he was transitioning to Hills, said the commission is become a woman. making two separate claims The family-owned Harris to bolster a case that Harris Funeral Homes, which had Funeral Homes made a employed Stephens since Deborah Gordon: gender-based, not trans2007, allegedly informed EEOC stresses gender-based, decision beStephens that what she was gender, not cause the latter is not pro“proposing to do” was un- transgender. hibited under the law. acceptable and fired her. Gordon is not an attorThe business tried to have a subse- ney in the case. Attorneys for both quent lawsuit by the U.S. Equal Em - sides did not return phone calls ployment Opportunity Commission seeking comment. dismissed in court, but Judge Sean In its motion to dismiss, Harris Cox of U.S. District Court in Detroit Funeral Homes claimed that the denied that request this spring. EEOC is “attempting to shoehorn A motion hearing is scheduled ‘gender identity disorder’ into Title for this week, and a trial is expected VII as a species of sex discrimination By Marti Benedetti Special to Crain’s Detroit Business

(and) unilaterally extend the reach Homes in a July 2013 letter that he of Title VII to a class it (the govern- was undergoing a gender transition from male to female and intended ment) knows is not protected.” Title VII prohibits a business or in- to dress in the appropriate business dividual from discrimination based attire as a woman. Stephens also on sex, race, age, religion or national asked for their support and underorigin — but does not include gender standing. According to the suit, the identity, said Susan Koval, a funeral home’s decision to partner at Detroit-based Nemeth Law PC. fire Stephens was motivatThe lawsuit also indied by “sex-based considercates Harris Funeral Homes ations,” adding, “She did has a strict dress code and not conform to the funeral provides male employees a home’s sex or genderclothing allowance to wear based preferences, expecsuits in performing their tation or stereotypes.” duties but did not accom- Susan Koval: Harris Funeral Homes modate female employees Educating contends in court that the employers on LGBT government lawsuit is viothe same way. Attorneys said the judge issues. lating its rights under the will evaluate the case based federal Religious Freedom on a 1989 Price-Waterhouse (now Restoration Act, which prohibits enPricewaterhouseCoopers LP ) sexual croachment on certain kinds of stereotyping dispute. That company business owners’ religious convicwas in litigation over an employee’s tions without a compelling governidentifying and expressing herself as ment interest. It was not immedia woman but who employees ately clear from court documents thought was not behaving in a femi- what the convictions might be. nine manner. Besides Garden City, Harris FuWhile employed by Harris Funer- neral Homes has locations on Deal Homes, the suit states, Stephens troit’s east side and Livonia. The “adequately performed the duties company also owns and houses the Cremation Society of Michigan at its of her position.” Stephens told Harris Funeral Detroit location. The facilities are

co-owned by Thomas Rost and his son, Matthew Rost. The EEOC is asking the funeral home to institute policies and practices that provide equal employment opportunities regardless of sex, including gender identity. It also wants Stephens to get appropriate back pay and compensation for medical losses, job search expenses and the lost clothing allowance. This Detroit case is the second of its kind filed by the EEOC nationally — both for transgendered professional employees who were fired after presenting themselves as women. In the first case, Lakeland Eye Clinic in Florida fired its director of hearing services after she began to present as a woman. That case also involved a claim of genderbased stereotypes. But the eye clinic settled in April for $150,000 and adopted a new gender discrimination policy and training for its staff. “These are the first cases filed in the modern era,” Gordon said, “and this one will work its way to the federal Court of Appeals and probably the Supreme Court unless Congress gets its act together and amends Title VII.” 䡲

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St. Joseph projects aim for healthier community By Jay Greene jgreene@crain.com

Is a hospital’s role to treat sick people or help forge healthier communities? Increasingly, the answer is both. And efforts by the St. Joseph Mercy Health System show the system is doubling down on its funding for community improvement projects — with an eye on the bottom line, government mandates and a commitment to local population health management. St. Joseph Mercy, a six-hospital system based in Ann Arbor, has added $3 million this year to its $12 million budget for community improvement projects primarily because charity care has declined from Healthy Michigan Medicaid expansion and the system finished fiscal year 2015 in June on a financially strong footing. Another broader reason for expanding community projects — which will focus on obesity prevention and behavioral health care — is that the Roman Catholic system be-

an effort to manage the lieves its mission goes behealth outcomes of a yond hospital walls, said group of individuals in a Rob Casalou, CEO of St. geographic market. Joseph Mercy. If population health “St. Joe’s is a health and measurements of such wellness company with chronic illnesses as diatrue community health imbetes, heart disease and provement as part of its hypertension are increasmission,” said Casalou, Rob Casalou: ing in the community your who also is chairman of the Need to improve Michigan Health and Hospital community health. hospital serves, Casalou Association. said, more needs to be Casalou told Crain’s he delivered done to reverse those trends. this message to fellow hospital “We are talking about the total CEOs at the association’s recent an- cost of care imposed on society. We nual meeting to encourage others need to lower per-member-perto increase their efforts because it’s month costs overall,” and working the right thing to do. on public health improvements can “It is not good enough to say our accomplish that, said Casalou, nothealth system made a lot of money ing that St. Joseph is cooperating and did great things with the pa- with local organizations in Southtients we treated,” Casalou said. “We east Michigan on community imneed to be able to say health improvement projects. proved in our community.” Some St. Joseph projects in the area of community health: Tracking member costs 䡲 Expanding the obesity prevenCasalou said some hospitals give tion program for teens called lip service to population health Shapedown from Ann Arbor and management. Population health is Livingston County to Canton Township and Pontiac. 䡲 Further investing in programs that provide housing and behavioral health programs to homeless people and veterans, namely the FUSE (Frequent Users Systems Engagement) and SOAR (Social Security Outreach, Access and Recovery) programs. 䡲 Contributing $25,000, and another $25,000 in matching funds, to help complete the city of Ypsilanti’s $125,000 Heritage Bridge project, a biking and jogging trail that crosses the Huron River between Riverside Park and Michigan Avenue.

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Other hospitals’ community health efforts Over the past two years, many hospitals in metro Detroit have increased efforts to improve community health. Beyond St. Joseph Mercy Health System, here’s a rundown of other efforts: Oakwood Healthcare has focused on decreasing numbers of uninsured patients with diabetes, heart disease and obesity. Beaumont Health provides monthly health education and screening events in Brightmoor, one of the most medically underserved neighborhoods in northwest Detroit. Henry Ford Health System is using a $2.2 million grant to fund community health workers to help young pregnant women in Detroit reduce infant mortality rates. Barbara Ann Karmanos Cancer Institute has expanded its prostate cancer education outreach program with community events.

“We will continue to do direct care through safety-net clinics, but widen it a bit and look at things more upstream and invest in social determinants.” Miller said investing in community projects can improve health outcomes and therefore end up helping St. Joseph, as many of those people end up as patients in the hospital or emergency department. In 2012, St. Joseph Mercy spent $134 million, or 8 percent of net revenue, on community benefits, according to IRS Form 990. “We have three buckets for community health,” Miller said. “One is uncompensated care (charity care and bad debt), the second is medical education and research, and the third is programming.” Miller said the additional $3 million, a 25 percent increase over the COURTESY OF ST. JOSEPH MERCY 2014 budget, allocated for commuHEALTH SYSTEM nity improvement projects is conSt.Joseph Mercy Health System’s sidered the programming budget. projects in community health included Going forward, Miller said, St. helping fund Ypsilanti’s Heritage Bridge Mandated push Joseph is using a two-part strategy bicycling and jogging trail. Historically, most hospitals have to identify how to spend the $3 milinvested money on community im- net revenue, on health system com- lion on community projects. provement projects to improve munity benefit projects. St. John foFirst, invest $1.5 million on shovoverall public health and fulfill re- cused on increasing dollars spent el-ready projects and initiatives that quirements under 501(c)(3) tax-ex- on taking care of the poor and vul- it has identified in the past but had emption laws. nerable, increasing from $2.7 mil- no extra funding to accomplish. However, new IRS rules that went lion in 2014 to more than $3.6 mil- Projects include obesity prevention into effect in 2012 under the Patient lion this year. and homelessness reduction. Protection and Affordable Care Act Of that amount, St. John providSecond, gather input from comof 2010 mandate hospitals identify ed more than $700,000 in sponsor- munity organizations and analyze and fund projects that address sig- ships and grants to nondata to focus on long-term nificant health needs. profit community agencies investments to improve The law also requires hospitals to serving area residents, health. develop an implementation strate- Taueg said. “We have significant netgy to address those needs and reIn June, St. Joseph works in Washtenaw Counport the projects and expenditures Mercy’s board approved ty and the Southeast Michion Schedule H on the annual Form the system’s second comgan region, and also across 990 to the IRS. munity benefit report since the country with Trinity Cynthia Taueg, vice president of the Affordable Care Act was Health,” Miller said. “We community health with Warren- approved. The report in- Michael Miller: want to look at successful based St. John Providence dentified obesity Investment projects and consider repliHealth System, said the fiveprevention and improves health cating them here.” hospital system expects to behavioral health outcomes One way St. Joseph is complete its second, threeissues as the top seeking input on projects is year community health two needs. through what it calls its “Join Me” needs assessment by next Michael Miller, St. campaign. The campaign was started June 30 when its 2016 fiscal Joseph’s chief mission offi- by Casalou to encourage people in the year ends. cer, said the system will community to improve their personal Taueg said St. John’s pricontinue to fund a variety health. It also encourages healthier orities continue to focus on Cynthia Taueg: of community projects, lifestyles for St. Joseph’s 14,000-emreducing infant mortality St. John focused on but decided to increase ployee workforce, Miller said. rates, diabetes prevention poor, vulnerable funding in the obesity and But Miller said “Join Me” also is and management and imbehavioral health areas as providing information on additionproving access to care for the un- a result of its 2015 report. al long-term community benefit derserved. “We wanted to step back and re- projects the system could add. 䡲 Jay Greene: (313) 446-0325 In fiscal year 2015, St. John’s spent think how our community benefit Twitter: @jaybgreene $103.2 million, or about 6 percent of budget is balanced,” Miller said.

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DEALS & DETAILS ACQUISITIONS & MERGERS Doeren Mayhew & Co. PC, Troy, an accounting and advisory firm, has acquired Davis and Davis PC, Farmington Hills, a provider of financial, accounting and consulting services to business owners, primarily dentists. The acquired firm will operate as Davis + Davis, a division of Doeren Mayhew, until Oct. 1, 2016, at which point it will fall under the Doeren Mayhew name. The Farmington Hills staff will move to the Troy headquarters. The firm will continue operations of its satellite office in Raleigh, N.C. Websites: doeren.com, daviscpa.com. Vari-Form Corp., Troy, a manufacturer of lightweight, hydroformed structural parts for pickup trucks, SUVs and light vehicles, has been acquired by Crowne Group LLC, Cleveland, a manufacturer and distributor of aftermarket and OEM parts for automotive and other industrial equipment markets. Websites: vari-form.com. crownegroupllc.com.

CONTRACTS Hamilton Anderson Associates Inc.,

Detroit, a multi-disciplinary design firm, along with a team of designers, is working on MGM National Harbor Casino and Hotel, National Harbor, Md., a new entertainment facility for MGM Resorts International. Website: hamilton-anderson.com. Rochester College, Rochester Hills, has contracted with BT Irwin LLC, Troy, a consulting and project management firm specializing in community relations programming and strategy, as consultant and project manager of Lake Norcentra Park, a $5 million community education and outreach initiative on the college campus. Websites: rc.edu/lake, btirwin.com.

producer of next-generation solid state lighting technology and a subsidiary of Altair Engineering Inc., has added Super Bright LEDs Inc., St. Louis, Mo., to its roster of LED lighting product licensees. Websites: toggled.com. superbrightleds.com. Twisted Concepts LLC, Bloomfield Hills, announced its Nutri-Twist WOW Water is now available in Meijer Inc. stores and gas stations and Wesco Inc. stores in Michigan. Websites: drinkwowwater.com, meijer.com, gowesco.com.

Toggled, Troy, a developer and

AUG. 26

Network Like a Pro. 4-6 p.m. Detroit

Regional Chamber of Commerce. David Phillips and Bob Waltenspiel, cofounders of IT in the D, share tips and tricks for effective networking. The Bird & The Bread, Birmingham. $15 for chamber members; $40 nonmembers. Contact: Maggie Oldenburg, (313) 596-0482; e-mail: moldenburg@detroitchamber.com; website: detroitchamber.com.

UPCOMING EVENTS Asian Pacific American Chamber of Commerce and Google Accelerate Partner Event. 4:30-6:30 p.m. Sept. 1.

Google. Learn about Accelerate with Google opportunities and tips on how to put a business on the map and on Google and measure with analytics. Google, Ann Arbor. Free for members, $10 nonmembers. Contact: Erin Mclin, (248) 430-5855; email: erin@apacc.net.

NEW PRODUCTS Con-way Freight, Ann Arbor, a

FLEXcity Fitness LLC, Lansing, has opened a fitness studio at 43263 Woodward Ave., Bloomfield Hills. Telephone: (248) 451-1004. Website: flexcityfitness.com. Cooper-Standard Holdings Inc., Novi, the parent company of Cooper-Standard Automotive Inc., announced two new facilities in China: a manufacturing and test center in Kushan and a facility in

Build IT Together Detroit Technology Summit. 8 a.m.-noon Sept. 10. Build

IT Together. Southeast Michigan technology summit for IT and business professionals to collaborate, network and share information. Security Research Engineer Chris Czub will be the keynote speaker. Bamboo Detroit, Detroit. Free. Website: buildittogether.co/register-now.

Women of Influence. 8-9:30 a.m. Sept. 30. Women’s Business Forum.

for entrepreneurs on how to present to investors. Learn what is important to communicate and what not to do. Spark Central, Ann Arbor. Free. Contact: (734) 2140110.

Meet four of the area’s top female business leaders. Featured panelists: Ann Bruttell, president, Meeting Coordinators Inc.; Alison Jones, director, global supply chain operations, Delphi Corp.; Munminder LaVelle, executive director of quality, Inteva Products; Debra Thorpe, senior vice president, Kelly Services. $18 Troy Chamber members, $28 nonmembers. An extra $5 will be charged to those who register the day of the event. MSU Management Education Center, Troy. Contact: Jaimi Brook, (248) 641-0031; email: jaimi@troychamber.com.

Digital Summit Detroit. All day Sept. 22-23. Tech Media. Latest

digital marketing trends and practices from Netflix, Zappos, HubSpot, General Motors, Microsoft, Salesforce, NBC Universal, Virgin America, BuzzFeed, StumbleUpon and more. Max M. Fisher Music Center, Detroit. $445 conference pass, $545 all-access pass, $695 platinum. Contact: Eric Gregg, (919) 274-2594; email: eric@ techmediaco.com.

LJPR LLC, a wealth management firm, moved its headquarters from 4555 Investment Drive, Suite 304, Troy to 5480 Corporate Drive, Suite 100, Troy. Website: ljpr.com.

construction on a 2,700 solar panel array on on property owned by Morton Terminal Land Holdings LLC on Citrin Drive in Romulus that will operate by the end of the year. The panels will have capacity to generate 750 kilowatts of electricity. DTE Energy will construct, operate and maintain the solar array for 20 years. Website: dteenergy.com.

New Enterprise Forum. 5-7:30 p.m. Sept. 17. Ann Arbor Spark. Training

To Tweet or Not to Tweet. 11 a.m.-1 p.m. Sept. 17. Davenport University. How to Create a Social Media Strategy for Your Business. Speakers include Marilyn Trent, principal, Trent Creative; Christina Strickland, vice president, Crackerjack Marketing; Gordon Thorsby, account executive, Expetec Technology Services; Kathy Ossian, founder and CEO, Ossian Law PC. Automation Alley, Troy. $20 members, $40 nonmembers, $30 walk-in members, $50 walk-in nonmembers. Preregistration closes Sept. 15. Contact: (800) 427-5100; email: info@automationalley.com.

Bankable Marketing Strategies LLC relocated from 1420 Washington Blvd., Detroit, to 400 Renaissance Center, Suite 2600, Detroit. Website: bankablemarketingstrategies.com.

EXPANSIONS

CALENDAR WEDNESDAY

MOVES

DTE Energy Co., Detroit, has begun

Simons Michelson Zieve Inc., Troy,

an advertising agency, has added Kowalski Cos. Inc., Hamtramck, to its list of clients. Websites: kowality.com, smz.com.

Shenyang, which will produce sealing systems. Website: cooperstandard.com.

TEDx Detroit. 8 a.m.-6 p.m. Oct. 8. Curve Detroit. Part tech expo, part business conference, part revival, TEDxDetroit is designed to spark conversation and foster connections. Fox Theatre, Detroit. $85 in advance, $100 at door. Contact: Charlie Wollborg, (248) 766-9994; email: charlie@curvedetroit.com.

Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

less-than-truckload carrier and subsidiary of Con-way Inc., has purchased 875 new Daimler Freightliner tractors to replace older units. The company also is adding 1,750 new trailers to its fleet this year, built by sister company Con-way Manufacturing, Searcy, Ark. Both tractors and trailers have advanced aerodynamics packages to improve fuel economy. Website: con-way.com.

13 FICO score of 720 and a 42 debt-toincome ratio. Website: uwm.com. Gabriel, manufacturer of automotive shocks and struts and part of Ride Control LLC, Farmington Hills, has launched the Answerman Advantage rewards program for service professionals. Websites: answermanadvantage.com, gabriel.com. Automotive Industry Action Group,

Southfield, is making its e-learning and knowledge assessment tools and training available in Portuguese, Chinese, Turkish and Italian. Also, AIAG’s supply chain sustainability workshop content is being updated for delivery in Brazil, Mexico and China later this year. Website: aiag.org.

STARTUPS KEYS Grace Academy Charter School, managed by Kalasho Empowerment of Young Scholars LLC,

has opened at 27321 Hampton St., Madison Heights. Telephone: 248) 629-7700. Website: keysacademies.com.

NEW SERVICES United Wholesale Mortgage, Troy, a United Shore Financial Services LLC

company, has announced an interest-only financing program available to qualified homeowners. It is limited to those with a 20 percent down payment on the cost of the loan and who have a minimum

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.

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dent/principal, Nurish Brands Inc., Royal Oak, from vice president, director of marketing and sales.

PEOPLE

ON THE MOVE

HEALTH CARE

SPOTLIGHT RICK MEJIA, president, BrassCraft Manufacturing Rick Mejia has been appointed

president of Kopytek

BrassCraft Manufacturing,

Brookes

ARCHITECTURE Bruce Kopytek to vice president, commercial architecture, Fieldstone Architecture and Engineering LLC, Auburn Hills, from senior architect. Also, Brita Brookes to marketing director/graphic designer, from media production assistant, Society for College and University Planning, Ann Arbor; and Mark Galbraith to assistant project Galbraith manager, from architectural designer, Champion Home Builders Inc., Troy.

Novi. Before joining BrassCraft, Mejia, 43, was managing direcMejia tor-Europe for Milliken & Co. and president and general manager of LSP Products Group. Mejia earned a bachelor’s degree in nuclear engineering and political science from the Massa-

ENGINEERING

Arbor, from senior associate.

CONSULTING Matthew Dom sic to director of sales, Cambridge Consulting Group,

Domsic

Tom Keuten to business development manager, Rightpoint Consulting LLC, Novi, from vice president,

Michelle Schreier to controllerconsultant, Aegis Health Perspectives Inc., Livonia. She continues as controller, Jay B. Schreier PC, Bloomfield Hills.

INSURANCE

Telford

Sullivan

Graham

Timothy Sullivan to senior associate, Hubbell, Roth & Clark Inc., Bloomfield Hills, from section manager, water/wastewater group, HNTB Corp., Detroit. Also, Jane Graham to associate, from operations director, Simon Property Group Inc., Estero, Fla.

Michael Gerendasy to MAI (Member of the Appraisal Institute) chief commercial appraiser of eAMC, an appraisal management company, part of Orlans Group, Troy, from MAI commercial appraiser, Gerendasy Valuation LLC, Bloomfield Township.

assistant vice president, banking center manager, Level One Bank, Novi, from assistant vice president, financial center manager II, Fifth Third

Scheer

Satine

Willemse

Inc., Detroit, from executive vice president and CFO. Also, Christopher May to vice president and CFO, from treasurer; Alberto Satine to senior vice president, AAM corporate and president, driveline business unit, from senior vice president, driveline business unit; and Norman Willemse to senior vice president, AAM corporate and president, metal formed products, from vice president, metal formed products.

LAW Glenn Walter

to partner, commercial transactions and bankruptcy, reorganization and creditor rights groups,

Blake Scheer to

president and CEO, Griffioen Consulting Group Inc., Bloomfield Hills.

Jessica Huffman to director of community relations, Better Business Bureau Serving Eastern Michigan,

Walter

Ahrstrom

Honigman Miller Schwartz and

Cohn LLP, Detroit, from partner, Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles.

Petrescu

FOOD Howard Dembs to vice presi-

to president and COO, BLM Group USA, Wixom, from managing director, central region, Ellison Technologies, Novi.

Jon Gunnells to social and digital media manager, Airfoil Group, Southfield, from manager, Digitas Inc. dba DigitasLBI, Detroit.

MANUFACTURING

Bank, Livonia. Karin Schmitz to partner, tax practice; Vanessa Pawlak to principal, advisory practice; Kristine Howard to executive director, assurance practice; and Marcus Hehl to executive director, advisory practice, at Ernst & Young LLP, Detroit, all from senior manager.

REAL ESTATE Kenneth Howe to interim CFO, Agree Realty Corp., Bloomfield Hills,

from director of tax.

RETAIL Kevin Jablonski

to vice president of operationstechnology, Sanders & Morley Candy Makers Inc., Clinton

Gunnells

Simonte

May

Michael Simonte to president, American Axle & Manufacturing Holdings

Township, from director of information and communication systems. Jablonski

SERVICES Matt Moore to service manager, Southeastern Equipment Co. Inc., Novi, from

MARKETING

Claudia Petrescu to dean of graduate education, Oakland University, Rochester Hills, from professor of public administration and nonprofit management, East-

Southfield, from media relations specialist, Tiffin University, Tiffin, Ohio.

Jeff Ahrstrom

FINANCE

Jan Griffioen to principal, Fulcrum Edge Inc., Bloomfield Hills, from

EDUCATION

Imbrogno

dent, eTitle Agency Inc., eAMC and Towne Auction Co. LLC, Orlans Group, Troy, from director, eTitle Agency Inc. Also, Vince Imbrogno to director of operations, eTitle Agency Inc. and eAMC, from division manager, North American Title Solutions, Pittsburgh.

Sogeti USA, Southfield.

James Van Leuven to senior vice president, Municipal Financial Consultants Inc., Grosse Pointe Farms, from independent consultant, Milford.

to manager, eBusiness support center, from eBusiness support center team lead.

NONPROFITS

Quinn Evans Ar chitects Inc., Ann

Troy, from divisional vice president, Great Lakes Branch, AXA Advisors LLC, Troy.

Kathryn Correll to manager, quality improvement strategy, MedNetOne Health Solutions, Oakland Township, and Andrew Kurecka to manager, outcomes research, both from quality improvement specialist.

Crain’s Detroit Business has listed promotion or job-change announcements in our weekly print editions for 30 years. Hundreds of companies submit items for our People on the Move feature, and we limit them to appointments of management-level and higher. The backlog is sometimes daunting. At the same time, major appointments of new CEOs and other key staff are routinely reported through the week on our website, crainsdetroit.com., and on the news pages of our weekly print edition. They are not repeated in the traditional People column that appears on this page. So we’re putting all coverage relating to newly appointed executives in one place: our website. Beginning Sept. 14, the appointments and promotions that normally appear in this space will move to our website, www.crainsdetroit.com/peopleonthemove . Companies that wish to announce executive appointments in the print editions, and online, may pay a $350 fee to do so. Each paid item will include a photograph and about 50 words. The online list will be searchable and archived by name or industry. Abbreviated online-only listings will be free and can be submitted by visiting the same link. These must be management-level positions and are subject to editors’ discretion. No photos are included in free listings. Also in September, we’ll introduce a new weekly digital feature — a People on the Move newsletter that combines the free online announcements, news stories about new executives and the paid display People items. To sign up for that, visit crainsdetroit.com/peoplenews.

Mike Telford to senior vice presi-

ern Michigan University, Ypsilanti.

Roach

Kurecka

chusetts Institute of Technology

and an MBA in general management from Dartmouth College. BrassCraft, a Masco company, was founded in 1946 and is a manufacturer of products for use in the new construction and repair/remodel markets.

Patrick Roach

to principal,

Correll

Coming next month: ‘People’ changes

Smith

Molly Smith to vice president of operations, ChannelNet, Dearborn, from vice president, customer support and services. Also, David Indish

Moore

regional service manager, Nilfisk Advance, Madison Heights.

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.

Changes to Crain’s People feature begin Sept. 14 (See note, above.)

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Judge kept on expo center case; Adell reviews options By Chad Halcom chalcom@crain.com

President Kevin Adell of Adell Broadcasting Corp. in Clinton Township is still deciding his next move after learning an Oakland County judge will continue hearing a lawsuit over the Novi Expo Center — but he doesn’t consider the matter over. Adell, 48, broadcast entrepreneur and owner of WADL-TV 38, said Friday he has not yet decided whether to immediately appeal Chief Circuit Judge Nanci Grant’s decision last week keeping Circuit Judge James Alexander on the lawsuit, or wait and challenge any subsequent decisions in the same case. Either way, he expects to fight the former Hyman Lippitt PC law firm that brought the 2014 lawsuit, and the dispute could be in court several more years. “That’s the judge’s decision. I don’t agree with it,” he said. “I think (Judge Alexander) acts inappropriately. He’s not a party in the case, but he seems emotionally involved in it. Since my last name is Adell, it doesn’t mean I owe the judgment. The trust that (previously owned the Expo Center) does.” Grant on Friday declined to remove Alexander over what Adell’s attorney claims were “inappropriate,

MARKET PLACE

biased and expletive-filled comments” at a July status conference. Alexander allegedly told attorneys he would deny a request to dismiss Adell as a defendant in the case even before it had been brought, suggesting a bias against him. But Grant found attorneys on each side of the case had widely differing accounts of what happened, and even if Alexander had made such an outburst it would not prove bias. “Furthermore, although the parties agreed that (Adell and co-)defendants have filed a motion (since July) for summary disposition, Judge Alexander has not yet ruled on it,” her ruling states. “Therefore, Judge Alexander has not denied the motion without first hearing (their) arguments.” The Novi Expo Center opened in 1992 on what was once the headquarters of Adell Industries, a maker of automotive guard doors. Owned at the time by Adell Brothers Children’s Trust, it had been vacant since 2005. Then-manager Blair Bowman moved the center’s event management company off the site into what is now Suburban Collection Showplace in Novi. Hyman Lippitt, the former law firm of Lippitt O’Keefe Gornbein PLLC

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week for costs and attorney fees against the Children’s Trust, in a separate lawsuit it brought over the Expo Center property. Adell said he would continue to fight the lawsuit in Alexander’s court, and it could take 10 years to work its way through the appeals court. “It’s not my judgment. I don’t pay other people’s bills. Why should I overpay just because I happen to have the money?” he said. “It’s not about the money, it’s a principle.” Crain’s reported in February that Adell could fetch as much as $380 million in a possible auction of the WADL TV-38 license next year. The FCC in early 2016 will auction portions of the UHF over-the-air broadcast spectrum from TV stations to wireless network providers. But Adell said Friday the price had jumped after the FCC last week announced it had entered a “statement of intent” deal with Canada and Mexico that could govern repurposing the TV spectrum for mobile broadband on international borders. He now expects to fetch $423 million for the station, if he can finalize a relinquishment sale and take the station off the air in first-quarter 2016. 䡲

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founder Norman Lippitt, represented Children’s Trust in subsequent litigation against manager Bowman and his company, but later withdrew from that case. The firm claims Children’s Trust, a partnership of three trusts in the names of Kevin Adell’s late father, Franklin, and brothers Marvin and Robert, didn’t pay about $200,000 in legal bills. It obtained a judgment of more than $428,600 last year. The firm contends the Adell-controlled Kevin Adell/STN.com Inc. created a 2013 mortgage for the trust, then foreclosed on it, because it creates a claim on the Expo Center

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property with seniority over the law firm, and hinders payment on the debt. But Kevin Adell contends he had loaned the trust partnership a total of about $1.2 million over several years when the Expo Center moved off-site, for expenses like property taxes, maintenance, insurance and more than $600,000 of legal fees already paid to Hyman Lippitt. “There were creditors sniffing around (the trust partnership) and I felt my loan was in jeopardy. So I foreclosed on my interest,” he said. “I had the largest amount owed to me, so I come first.” Adell also said he intends to go to court Wednesday when the case returns for a routine motion hearing and hopes to speak with Judge Alexander. “I want to be able to talk with the judge if I can. I’m a landowner and taxpayer in Oakland County,” he said. “I’m not going to be disrespectful, I’ll be courteous … (but) like me or not, I expect a fair trial. And if I don’t agree with the decision from that, I’ll take it through appeals.” Lippitt could not be immediately reached for comment after the Friday decision. A partner at his firm, Daniel McCarthy, noted that Lippitt’s current law firm won an award this

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nities were left out of the legislation. “I’m a little caught off guard,” Heartwell said after learning that the legislation only included Detroit. “We were all on the same page about this, I thought.” Heartwell said he has met with Detroit Mayor Mike Duggan and several of the other communities that charge an income tax about ways to make collection a requirement for suburban employers. Income tax bill sponsor Rep. Al Pscholka, RStevensville, was not available Friday to comment on the matter. “From the city’s perspective, it’s easy for those employees working outside the city to slip under the radar and not pay the required taxes,” Heartwell said. “We don’t know how many we’re missing, so we wanted to make it easy on those citizens by having the companies withhold the tax and make it easy on us by not having to track them down.” Grand Rapids is one of the exceptions in Michigan in that it collects income tax at a rate of 1.5 percent for residents and 0.75 percent for nonresidents that work in the city. The majority of the 22 cities impose an income tax of 1 percent on residents and 0.5 percent on nonresidents. Detroit has the highest rate with its residents who live and work in the city paying 2.4 percent;

MOLINA FROM PAGE 3

State watch list

INDEX FROM PAGE 3

compiled the decade’s worth of data from Realcomp for the Federal Reserve Bank of Chicago. “It’s where the investment is going.” The home sale prices are part of a larger project for Traub that will serve as an economic index for Detroit, and is expected to be used by the Fed and the city for a variety of purposes. Other economic data will include things like income and employment figures, he said. Jerome Huez, president of Detroitbased The Loft Warehouse , agreed that the real estate investment wave is fanning out from the city’s core. “Obviously the market recovery stems from downtown, pushing through Midtown and the east riverfront,” he said. “You also see pockets of value increases in various neighborhoods. The recovery of Detroit is mostly focused on downtown, where employment and services are now similar to a ‘normal’ U.S. city. “That availability attracts people and investors, and as density increases, the property value progresses along the major axis: Woodward (Midtown and New Center), Jefferson (east riverfront), Gratiot (Eastern Market) and Michigan Av-

enue (Corktown).” Areas like the west side, northeast side and the southwest side have not rebounded like Woodward and the east riverfront because of a variety of factors, said Austin Black II, president of City Living Detroit, a Detroit-based real estate brokerage firm. For example, these parts of town have had fewer large publicor philanthropic-led economic developments. Crime and education are also factors with different trends in different neighborhoods. Even areas along Woodward like the neighboring Palmer Woods and Sherwood Forest neighborhoods — far from the investment interest in the greater downtown area — seem to be improving at a steady clip. That’s because during the economic collapse and the foreclosure crisis, residents in those areas did proactive things like starting vacant home committees that kept track of the homes going vacant, Black said. “They were able to prevent a lot of the blight that occurred in some of the neighborhoods,” Black said. “And as we came out of the recession and people wanting a singlefamily home started looking in the city, those were the first neighborhoods they went to.” 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

ANDREW JAMESON/WIKIPEDIA

Even areas near Woodward,such as the Palmer Woods (above) and Sherwood Forest neighborhoods — far from the investment interest in the greater downtown area — seem to be improving at a steady clip.

On March 9, the Michigan Department of Insurance and Financial Services placed HealthPlus under state fi-

nonresidents who work in the city pay 1.2 percent. Saginaw City Manager Tim Morales said the proposed legislation “should apply to every city that collects local tax.” He said it would be easier for employees to have employers withhold taxes rather than they paying estimates on themselves if they work in the city. “The way it is now, many of the companies in the area voluntarily withhold taxes for the city. So this (legislation) is not very significant for us.” In fact, many large suburban Detroit companies already withhold personal income tax for its employees residing in the city. David Waymire, partner at Lansing-based public relations and strategy firm Martin Waymire Advocacy Communications Inc., said the legislation was written to curry favor from Duggan supporters for the stillpending Republican-led road funding package.

In 2011, 38 percent of Detroit residents worked in the city and the rest in the suburbs.

SEE NEXT PAGE

about 13 offers from competing health insurers based in Michigan and elsewhere before selecting Molina. Because of the Healthy Michigan expansion and other changes brought about by a rebid of contracts this year under Medicaid, Genord said, HealthPlus’ Medicaid business was a “very positive asset. Some saw our 95,000 members and the value in that.” Genord said HealthPlus selected the Molina financial package over the other bids because of amount and because of the insurer’s ability to work with them in the transition phase. “This was the best offer to retain jobs and allow us to move forward with our core HMO and Medicare Advantage business,” Genord said.

nancial supervision because losses in 2014 lowered its capital reserves below the required state minimum. In May, Molina announced it would acquire the Medicaid and MIChild business units of HealthPlus for an unspecified price. Molina has declined numerous interview requests on the transaction. Over the past two years, HealthPlus lost $60 million in its Medicaid, Medicare Advantage and commercial HMO and PPO business, according to state Financial factors regulatory filings and interviews. A variety of actuarial miscalculations, higher-than“It was a perfect storm as all products lost money,” expected medical utilization and said Graham Smith, HealthPlus vice president of sales and marketing. “The (Affordable a flood of new PPO clients led to underpricing its variBy the end of this year, Genord Care Act) HealthPlus ous products the past two years, said, commercial HMO and market Genord said. Medicare Advantage business “There were multiple factors,” will achieve a $20 million turndidn’t he said. “Past financial models around. serve us didn’t serve us well in the future Genord, currently chief medmarket. We had new memberical officer, will succeed CEO well the ship, (many of whom) were unNancy Jenkins on Sept. 1. Jenkins, past derwritten for the first time, (and a HealthPlus employee for 32 it) led to significant losses we didyears, took over for Bruce Hill, who years.” n’t predict.” resigned last October after five years Mike Genord,HealthPlus Genord said HealthPlus’ variat the helm. ous preferred provider organizaAs the first physician CEO of HealthPlus in its 36-year history, Genord said the past tion products with employers and individuals haven’t six months have been difficult for the nonprofit performed well for several years. “At year end, we expect to be out of the PPO marhealth plan. By the end of this year, Genord said, HealthPlus will ket,” he said. “The (Affordable Care Act) market didn’t become a 70,000-member company with $500 million serve us well the past years.” Genord said HealthPlus also is phasing out its PPO in revenue and about 200 employees. In 2014, HealthPlus generated nearly $1 billion in revenue with more contracts with employers at the end of this year. HealthPlus has 43,000 PPO members. than 221,000 covered lives and 500 employees. “We have informed our customers and are looking Genord said HealthPlus downsized its workforce by a combination of natural employee attrition, vol- to move to self-funded options for our PPO cusuntary separation with outplacement services with tomers and offer PPO projects with other health inmore than 100 employees participating, and an un- surers,” he said. Before joining HealthPlus in 2013, Genord, an obspecified number of layoffs. The unspecified amount of capital infusion from stetrician-gynecologist, was in private practice for 17 Molina will allow HealthPlus to restructure and focus years and affiliated with William Beaumont Hospital on strengthening and increasing its 52,000-member and United Physicians Inc. , a Bingham Farms-based commercial HMO and 18,000-member Medicare Ad- physician organization. “I am excited about the turnaround we had this vantage service lines, Genord said. Smith predicted HealthPlus will break even this year with the executive team, employers, community year with a risk-based capital ratio of 300 and “signifi- and employees all going forward,” said Genord. “We cant capital in the bank.” Risk-based capital is a ratio have paid our bills, taken care of our employees and that compares a company’s reserve capital to its risk are proud of what we went through. We have grown as an organization.” 䡲 exposures. Jay Greene: (313) 446-0325 Genord, who conducted the due diligence on the Twitter: @jaybgreene business unit sale process, said HealthPlus looked at

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Cities with income tax

“Clearly, the right policy is for the state to do all it can to assist cities in collecting local income taxes owed by their citizens. But some in the state’s business community have been opposed to this policy, and Republicans have generally supported the business community over the interests of local governments,” Waymire said. “Likely the only reason this issue is moving for Detroit has to do with the House leadership’s efforts to win votes for its transportation package, and a desire to win votes from city lawmakers.” Republican lawmakers are discussing a compromise road funding package that could allow Detroit to spend 20 percent of new transit funding on mass transit. Duggan is on board with the new road funding package. However, there’s no indication that his support is a quid pro quo for the income tax legislation.

Albion, Battle Creek, Big Rapids, Detroit, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield, Walker

It’s also not clear if other lawmakers may propose an amendment or alternative legislation on the income tax issue. Because the legislation is newly out of committee, Sobota hopes Pontiac’s financial director and others will point out the exclusion of other cities and try to get the bill revised. Eric Lupher, president of the Citizens Research Council of Michigan , said it wants equality for all, suggesting that every one of the state’s 276 cities should require employers to withhold city income taxes from employees. “The solution to the problem at hand is if you live or work in a city,

FOOTBALL FROM PAGE 3

cant financial investment in diversification,” Audi said. “I have been in the automotive industry long enough to know that another down cycle will occur, whether it is two years down the road or five. We want to have new revenue streams in other industries to offset that down cycle.”

Neurocognitive research Currently, the majority of Oakwood’s sales, 65 percent, are in metal speaker grills, or in-car speaker covers, for dozens of models including the upcoming Tesla Model X. The remaining automotive business is the energy absorbers, which is leading to new opportunities. In November 2014, Viconic Sporting Inc. , an Oakwood subsidiary created to license the energy-absorbing technology, was selected as one of seven finalists for the Head Health Challenge II initiative sponsored by the NFL, Under Ar mour Inc. and General Electric Co. Viconic was the only private company selected as part of the contest from a pool of 500 proposals from 19 countries. The company received $500,000 to design “disruptive” technologies to protect against brain injuries. Brain trauma is a serious concern for the NFL, which recorded 45 of the top 50 most-watched TV pro-

COURTESY OF THE OAKWOOD GROUP

The Oakwood Group’s energy-absorbing plastics can be found in “blast mats” that line the floor and seats of military vehicles. grams last fall. Earlier this year, an NFL-commissioned study found that roughly one in three retired NFL players would develop a serious neurocognitive condition from head trauma, The Los Angeles Times reported earlier this year. Furthermore, 76 of 79 retired players examined at Boston University showed signs of brain dysfunction. “Our goal is to enhance the head impact protection and safety of synthetic turf systems without sacrificing the speed and playability of those surfaces,” Audi said. “The initial test data … shows the potential of our underlayment system to meet that goal.” Audi believes Oakwood, and Viconic, can reach $10 million to $15 million in revenue related to turf underlayment with a 33 percent market share. “(We want) to become the lead manufacturer of turf underlayments … this could include athletic

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Adell Broadcasting ................................................115 8 Automation Alley ....................................................8 5 Beztak Cos.................................................................5 5 Burton-Katzman......................................................5 City Living Detroit ..................................................118 Coastal Automotive ..............................................117 4 Deloitte ......................................................................4 Detroit Regional Chamber ..................................116 5 DevMar Development ............................................5 Garceau Insurance Agency ..................................110 4 General Motors ........................................................4 Gordon, Laughbaum & Prescott..........................111 3 HealthPlus of Michigan ..........................................3 9 Jackson Lewis ..........................................................9 Kotz Sangster Wysocki ........................................110

The Loft Warehouse ..............................................118 4 McLaren Performance Technologies ..................4 Michigan Economic Development Corp. ............11 4 Michigan Municipal League ..................................4 3 Molina Healthcare of Michigan ............................3 Nemeth Law ............................................................111 3 Oakwood Group........................................................3 8 ProfessionalMovers.com ......................................8 R.G. & G.R. Harris Funeral Homes ........................111 St. John Providence Health System ..................112 St. Joseph Mercy Health System ........................112 Small Business Association of Michigan ..........110 5 Starkweather Lofts..................................................5 4 Visteon ......................................................................4 8 Wayne State University..........................................8

then employers need to withhold tax from you,” he said. “It shouldn’t apply only to cities with populations of 600,000 or more (such as Detroit). “The other thing is we don’t want to create disincentives to living in the cities,” he said. “Most of the Michigan cities are down-and-up cities. They all are trying to revitalize themselves and be attractive in getting people to move there.” In 2011, 38 percent of Detroit residents worked in the city, while 62 percent of city residents were employed in the suburbs, according to statistics kept by the Citizens Research Council. Chris Beltz, human resources director for Human Capital LLC in Rochester Hills, where he manages HR for 150 client companies, thinks the proposed legislation could have a negative impact on people, particularly millennials, moving to the city of Detroit. “If millennials become more aware of these costs, it may hinder

them moving there. Although some tend to overlook these (taxation factors) for the (lifestyle),” he added. However, he said, the administrative effort involved in the change is minimal, especially for a larger company. His company already has software programmed to withhold Detroit income tax from the paychecks of employees who are Detroit residents but work in the suburbs. “The legislation would not affect our administrative tasks because we are already doing it for all our clients,” Beltz said. Brad Williams, vice president of government relations for the De troit Regional Chamber , said Chamber officials have been providing feedback on the city income tax issue to the mayor’s office. The Chamber leans in favor of the proposal but raised concern about the burden on small business. In the bill, small businesses — those with fewer than 10 employees and less than $500,000 in wages — would be exempt. 䡲

fields from youth sports to profes- industries, such as motorsports, sional sports used by FIFA, the NCAA aerospace and defense. Coastal and the NFL,” Audi said. “Though a supplies its foam product to every lot of what we’re doing with (Vicon- team in NASCAR as well as for track ic Sports) could rely on governmen- barrier applications, said Wendel Martin, commercial director for tal regulations.” In June, the NFL invited Oak- the supplier. It also supplies safety wood to present its technology to foam to military units for helmets Congress as part of a briefing, “Giz- and to aerospace for seating. Martin said automotive applicamos, Gadgets and America’s Game: How Technology Is Advancing tions are 90 percent of Coastal’s business, but it has no Health and Safety in the plans to reduce that figure. NFL,” sponsored by the “We get a lot of inquiries Congressional Brain Injury from other industries and Task Force. we’ll support as needed, The NFL is expected to but we’re still very focused rule whether Viconic Sporton automotive,” Martin ing will receive the addisaid. “We still see a lot of tional $1 million in develgrowth for our product in opment funding in Wendel Martin: automotive; we’re still trySeptember, Audi said. Oakwood rival still ing to grow that market Other applications focused on auto. share.” Viconic isn’t limiting itOnly 5 percent of Oakself to sports fields. Audi said there wood’s revenue comes from nonis potential for the same product to automotive industries, but Audi rebe used at playgrounds and “green” mains resolute in reducing the rooftops as well. company’s exposure to the indusBuilding owners, particularly try. those looking for LEED certifica“Diversification is the number tion, can use Viconic’s absorbers to one strategic initiative of our comretain water, prevent runoff and pany,” Audi said. protect the roof from impact dam“We won’t rule out acquisitions if age from falling trees, debris, etc. they make sense, but our preferViconic Sporting already has a ence is organic growth. It allows us contract with Warren-based Warrior to set up product development and Sports Inc., which uses the impact manufacturing according to our technology in its Regulator lacrosse business culture and creates greater helmet. Warrior has sold roughly opportunity to promote from with40,000 Regulator helmets, said in, which is very important to us (as Matthew Gerwolls, director of sales a family company).” and marketing for Oakwood. Paul Blanchard, director of engiOakwood also created Viconic De- neering plastics for IHS Chemical Inc. fense LLC to license its energy-ab- in Houston, said Oakwood’s use of sorbing plastics to protect soldiers thermoplastic is innovative and its in vehicles from improvised explo- only limitations in expansion is with sive devices, Audi said. its design team. The supplier commercialized the “Their technology is useful for its product as “blast mats” that line the (low) cost, performance and flexifloor and seats of tactical vehicles bility,” Blanchard said. “Because of manufactured by military contrac- the lower-cost process and the use tor OshKosh Defense LLC. of material that is light and resilient, Rochester Hills-based Coastal Au- all they have to do is look at the tomotive LLC competes with Oak- world as a designer and see what wood for the same automotive other opportunities they can come clients, supplying energy-absorbing up with.” 䡲 Dustin Walsh: (313) 446-6042 foam for doors and headliners. Twitter: @dustinpwalsh It has also diversified into new

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

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stopped making revenue-sharing payments two months ago. The state could face unexpected budget deficits if tribes decide to withhold payments, as the Michigan Economic Development Corp. disclosed last week. And, since states are barred from taxing tribes or otherwise forcing them to fork over cash under federal law, there’s no easy remedy. The state proceeds from online lottery operations are not linked to economic development; that funding goes toward the state’s School Aid Fund. Net proceeds from online lottery sales — the total amount played minus the amount paid to winners and other administrative costs — total $15.9 million so far in 2015, according to the state. Still, the Match-e-be-nash-she-wish Band of Pottawatomi Indians — the full formal name of the Gun Lake Tribe — believes the state broke the noncompete provision of its compact when the Michigan Lottery started to sell online games last summer. The tribe says this possibility was discussed when its compact was negotiated in 2007. The state disagrees that it violated the compact by expanding the lottery, both via games on its website and new electronic ticket-dispensing machines. (See related story, this page.) Regardless, the Gun Lake Tribe yanked its payments in June.

Lean times ahead? The loss of that single payment blew a $7 million hole in the MEDC’s year-end budget, ending Sept. 30, according to the agency. Its CEO, Steve Arwood, warned of lean times ahead as the agency reorganizes to compensate for Steve Arwood: fewer dollars. MEDC needs tribal Layoffs are poscasino dispute sible. resolved. The MEDC has not yet said what programs or services could be cut or changed, nor how many employees could lose their jobs. The agency declined to make Arwood or other administrators available for an interview last week. But in a statement, Arwood said the financial effects could double in the 2016 fiscal year that starts Oct. 1 if a resolution on the tribal casino revenue sharing isn’t reached and the Gun Lake tribe forgoes its biannual payments this fall and next spring. The MEDC says it also faces a roughly $15 million year-over-year budget cut to its business attraction and community revitalization funding as of Oct. 1. The Legislature also recently eliminated the state’s film incentives program. The MEDC was reorganized earlier this year under the state’s De partment of Talent and Economic De velopment , which has a $1.2 billion

budget for fiscal year 2016. In May, the MEDC alone was working with a proposed $403 mil-

Lottery ticket machines may be unwelcome competition Are Michigan Lottery ticket machines competition to a fullfledged tribal casino? It’s a question that is under review as part of the dispute over whether the state’s online gambling precludes tribal casinos from revenue-sharing obligations. In February, the lottery’s charitable-gaming division launched a pilot program with the National Guard Association of Michigan to test 60 ticket-dispensing machines, similar to pull-tab games, in 20 locations across the state, said Jeff Holyfield, spokesman for the state lottery. They’re set up in buildings that house veterans’ and social clubs. Two in particular are in Allegan and Ingham counties, within the Gun Lake Tribe’s nine-county market area that stretches from Ottawa County south to Kalamazoo County. The tribe thinks those ticket-dispensing machines trigger a provision in their compact that allows

them to eliminate payments to the state altogether if the state allows electronic games in a commercial gaming facility within its market area. The compact defines a commercial gaming facility as offering more than five electronic games, regardless of whether they’re operated by the lottery. A separate provision allows the tribe to cut payments in half if the state authorizes the lottery to offer electronic games. The state maintains that the machines, operated as part of charitable gambling, aren’t true competition to the tribal casinos. “This is a business agreement. The tribe believes that they have an interpretation of the business agreement that the state doesn’t agree with,” said Dave Nyberg, Snyder’s associate legal counsel and tribal liaison, who is based in Marquette. “We continue to have discussions with the tribe about resuming their obligations.” 䡲 Lindsay VanHulle

Other tribes stopped paying Gun Lake is not the first American Indian tribe to stop making revenue-sharing payments in protest of state authorizations of other casino operations. Six tribes that signed the first gaming compacts with the state in 1993 stopped making payments by 1999 after voters authorized Detroit’s three commercial casinos, state data show. Other tribes stopped payments in the mid-2000s when the state lottery introduced Club Keno, only to resume making them upon reaching a court settlement with the state. Separately, Gov. Rick Snyder’s administration is two years into negotiating new gaming compacts with six of the original tribes, whose 20-year contracts effectively ended in 2013. They include Bay Mills Indian Community; Grand Traverse Band of Ottawa and Chippewa Indians; Hannahville Indian Community; Lac Vieux Desert Band of Lake Superior Chippewa Indians; Saginaw Chippewa Indian Tribe; and Sault Ste. Marie Tribe of Chippewa Indians. Tribe revenue-sharing agreements were spelled out in a federal consent decree. But payments stopped after voters in 1996 approved what would become Greektown, MGM Grand and MotorCity casinos in Detroit. Ongoing negotiations are thought to be a way for Snyder’s administration to reinstate some form of revenue sharing with these tribes, though his team will not discuss bargaining items.

lion budget, but lawmaker scrutiny and pressure to cut costs has its operating budget in flux. State officials couldn’t provide a current year or FY 2016 agency budget on Friday. “It goes without saying that the scale and scope of our program must be reduced,” Arwood’s statement said.

Where funding goes The MEDC this spring was the target of lawmakers who proposed yanking the roughly $60 million in annual tribal gaming revenue as part of a road-funding solution — a proposal that hasn’t gone anywhere. An important caveat to the state funding puzzle: Tribal revenuesharing funds are not subject to any kind of state appropriations process that works through the Legislature. They are direct payments. The Gun Lake Tribe, which operates a namesake casino in Allegan County, paid $13.3 million to the state from Oct. 1, 2013, through

March 31, 2014, according to figures from the Michigan Gaming Control Board. That was nearly a quarter of the MEDC’s total tribal revenues of $56.9 million that year, data show. The money contributed by five tribes — Gun Lake, Little River Band of Ottawa Indians , Little Traverse Bay Bands of Odawa Indians , Pokagon Band of Potawatomi Indians and the Keweenaw Bay Indian Community — have funded MEDC community development, business attraction and tribal business programs, agency spokeswoman Kathy Achtenberg said. (See chart, this page.) Tribal funds also are used to pay for programs such as Pure Michigan Business Connect, which matches companies with in-state vendors and suppliers. Revenue sharing from the Not tawaseppi Huron Band of Potawatomi Indians, meanwhile, funds the Michigan Strategic Fund and does not di-

rectly support MEDC operations, Achtenberg said.

Changing markets Tribes may not like Internet lotteries — an attorney for the Sault tribe said most, if not all, of the state’s 12 tribes that operate casinos are “deeply concerned” about expansion — but they’re here to stay. Nationally, the expansion of state lotteries routinely is cited in tribal disputes over revenue sharing, said Eric Dahlstrom, a tribal law attorney with The Rothstein Law Firm in Tempe, Ariz., who is not connected to the Gun Lake case. As for the Gun Lake Tribe’s compact, which authorizes the Gun Lake Casino, the terms of the arrangement call for a graduated revenue-sharing system. The revenue sharing ranges from 8 percent of net winnings up to $150 million to 12 percent of net winnings of at least $300 million. A tribe statement said both parties knew the beginning of online state gaming would change the relationship. “At that time, it was clear that Internet lottery sales would result in elimination of (the) tribe’s state revenue-sharing payments,” the tribe said in a statement, declining to elaborate. “Both parties agreed that if the state introduced Internet lottery sales or expanded other forms of electronic gaming to social clubs within the tribe’s market area, that the tribe would not have to make state revenue-sharing payments.” Dave Nyberg, Snyder’s associate legal counsel and tribal liaison, who is based in Marquette, said despite the disagreement over the issue, the relationship between state officials and Gun Lake tribal officials is amicable, and both sides still believe a resolution can be reached. Gun Lake’s tribal council said in a

statement it made a payment in December 2014, despite its belief the tribe was not required to do so. Nyberg said meetings are ongoing, but would not disclose what is being discussed.

Future of gaming A 2011 U.S. Department of Justice ruling paved the way for online lotteries by lifting a ban on Internet gambling with the exception of sports betting. Today, the Michigan Lottery counts 160,000 registered online players and growing, spokesman Jeff Holyfield said. Overall, it’s still small business — Holyfield said net proceeds from digital games are just 2.3 percent of the entire lottery’s net winnings. But by 2022, the state is projecting online lottery sales will have netted an additional $480 million in revenue, Holyfield said. That’s because of increased options to reach customers on smartphones, tablets and laptops. “This is part of our overall digital strategy,” he said. But because the questions on how tribal casinos and online gaming can operate in tandem remain unsettled, Dahlstrom said he believes there will be more cases that review the terms of state compacts. “The fact that it’s run by the state versus a private entity isn’t really relevant,” Dahlstrom said. “The technology is changing within the lottery world, so that as lotteries start to figure out how to use the Internet … it changes the competitive field. And I think we’re going to see more of that.” 䡲 Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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WEEK Comerica Hatch contest narrows finalists to 4 he Comerica Hatch Detroit Contest narrowed its field of startup finalists to four as voting began at HatchDetroit.com for the public to back one of the Detroit-based businesses: Eskimo Jacks Artisan Cookies + Ice Cream, Live Cycle Delight, Caribbean cuisine business Norma G’s and wine bar/home goods store The Royce Detroit. Voting continues through noon Friday. The winner, to be announced after business pitch presentations at the Hatch Off event Friday, will receive a $50,000 grant from Comerica Bank and legal, marketing, accounting and other support.

ON THE MOVE 䡲 Larry Denton, former chairman, CEO and president of Auburn Hills-based Dura Automotive System, joined Dearborn architectural firm Ghafari Associates as president of its process group. Denton, 65, was most recently president of the Troy-based North American headquarters for Nobel Automotive Group. 䡲 Justice Mary Beth Kelly is retiring from the Michigan Supreme Court to join Bodman PLC. Kelly, 53, will be partner and vice chairman of the Detroit law firm’s litigation and alternative dispute resolution practice group, effective Oct. 15. 䡲 Executive Director Matt Clayson has left the Detroit Creative Corridor Center for an-

other position, the organization said. A Matt Clayson: spokesman Left Detroit Creative couldn’t say Corridor Center. where Clayson is headed; a search for a replacement has begun.

ON THE WEB AUG. 15-21

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

4.5%

The yield on $245 million in bonds sold by the city of Detroit on Aug. 19. It’s the city’s first bond sale since emerging from Chapter 9 bankruptcy on Dec. 10, 2014. The bonds are reportedly 2 percentage points higher than top-rated debt, showing investors still remain uncertain about the city’s future.

211,000

The value of incentives New York City-based Chasing Light Entertainment is eligible to receive for its eight-part HGTV series that chronicles the renovation of the Ransom Gillis mansion in Detroit. The production company plans to spend $844,125 to film the project, including the hiring of 12 Michigan residents.

The years Dave Dombrowski spent as the president, CEO and general manager of the Detroit Tigers. He was fired on Aug. 4, then hired by the Boston Red Sox on Aug. 18.

low-profit limited liability company, effective Oct. 1. The move is expected to help the organization cultivate new investment and new projects. 䡲 Sterling Heights-based Sunnybrook Golf & Bowling Inc. is closing, and the 140 acres of usable land it sits on is expected to be turned into a development for a large-scale user, possibly automotive-related, Crain’s sources said. 䡲 Southfield-based supplier Lear Corp. acquired intellectual property and technology of Autonet Mobile Inc., a Santa Rosa, Calif., software and device developer of automotive applications. Financial terms were not disclosed. 䡲 Ann Arbor-based Esperion Therapeutics Inc. said U.S. regulators won’t require a trial to determine the effects of its experimental cho-

lesterol drug on heart health, smoothing the path toward approval, Bloomberg reported. 䡲 A planned second metro Detroit location, in Birmingham, for the Roasting Plant, a New York City-based coffee shop chain, has fallen through. 䡲 A 500,000-square-foot logistics center for Linc, which serves auto equipment manufacturers, is coming to Detroit’s east side at the I-94 Industrial Park by 2016, AP reported. Linc is part of Warrenbased Universal Truckload Services, owned by Manuel “Matty” Moroun and his family. 䡲 The Zenith restaurant in the Fisher Building was to close Aug. 23 after a little more than a year in business.

OTHER NEWS 䡲 Restaurant and office space are planned for 565 Larned St. in Detroit after a $2.1 million July sale in which New Jersey developer Mitchell Mekles bought the 30,000-square-foot building from Bloomfield Township real estate company Princeton Enterprises.

䡲 Lawrence Technological University pledged $3.5 million in scholarship support to Sampson-Webber Leadership Academy students as it aims to prepare more Detroit Public Schools students for sci-

ence, technology, engineering, arts and mathematics careers. 䡲 The Urban Entrepreneurship Symposium will return Oct. 23 for its second year, this time at the A. Alfred Taubman Center for Design Education at the College for Creative Studies in Detroit. The brainchild of David Tarver, president of the Urban Entrepreneurship Initiative, the daylong symposium was at the University of Michigan last year. More information is at urbanei.org . 䡲 The Detroit Regional Chamber is challenging a ballot initiative to raise Michigan’s corporate income tax to pay for roads by discouraging voters to sign the petition by Citizens for Fair Taxes. 䡲 A federal appeals court upheld the corruption conviction and 28-year prison sentence of former Detroit Mayor Kwame Kilpatrick, AP reported.

䡲 United Shore Financial Services LLC in Troy promoted Melinda Wilner, 40, to its new COO posi-

tion. She had been executive vice president of underwriting. 䡲 Dan Austin, 34, a Detroit Free Press assistant editor who has documented the history of the city’s buildings, was named Mayor Mike Duggan’s deputy communications director.

䡲 Data Driven Detroit, the data collection and analytics service for foundations, governments and other clients, will spin out from a nonprofit to become a

RUMBLINGS Even with injury,Tigers rookie has promising future in retail

etroit Tigers pitcher Daniel Norris, who has become a

media darling thanks to his eccentric story of living in a VW van during spring training in Florida, crushed a two-run home run at Wrigley Field last week in a victory over the Chicago Cubs. It was his first career at-bat. No other American League pitcher has hit a home run at Wrigley in its 101-year history. History! But in this star-crossed Tigers season, Norris later had to leave the game, a 15-8 Tigers win on Wednesday, with a strain in his right oblique muscle. He was put on the 15-day disabled list the next day, likely ending his season. The 22-year-old bearded lefty who surfs and reads Jack Kerouac novels, electrified fans in his Tigers debut Aug. 2 by allowing one run in seven innings in a four-hit victory. His performance was more pedestrian in his next three starts. The Tigers and their concessionaire at Comerica Park, Buffalo, N.Y.-based Sportservice, said they talked about ordering some Norris merchandise Daniel Norris: Hit but didn’t end a home run in his up selling the first career at-bat. prospect’s No. 44 jersey or Tshirt at the stadium. If he heals and performs well in spring training, Norris is expected to have a spot in Detroit’s 2016 starting rotation, and his gear will show up for sale at the ballpark and in metro Detroit stores. At least one third-party seller has Norris apparel now. DetroitAthletic.com sells a Norris No. 44 jersey from official Major League Baseball apparel supplier Majestic Athletic for $109.99. Also, the Toronto Blue Jays — the team that traded Norris to Detroit in return for ace pitcher David Price on July 30 — still has Norris’ former No. 32 T-shirt for sale at the club’s online store (jaysshop.ca). It’s discounted to $26.24 from the original $34.99 price.

Aretha Franklin wants to open Detroit nightclub

COMPANY NEWS NATALIE BRODA

The Detroit Fire Department on Friday unveiled five of its 10 new fire apparatus trucks, built for the department by Snyder, Neb.-based Smeal Fire Apparatus Co. Charlotte-based Spartan Motors Inc. supplied the chassis and cabs.

Aretha Franklin says she wants to open a Detroit entertainment venue that would include a nightclub and fine dining. The Queen of Soul told WWJ 950 in an interview broadcast Thursday that she’s “glad that Detroit came through the bankruptcy with flying colors.” She said that she loves how the city is enjoying

Aretha Franklin: Wants to open a Detroit entertainment venue. a renaissance and that she’s “going to be part of that renaissance.” Franklin says the venue would include “a five-star nightclub for dining and dancing, the band, the whole nine yards” as well as a museum. Franklin says she’s found a potential location downtown, with details to be announced. She was scheduled to perform Saturday at Detroit’s Chene Park.

Madison Heights biz builds swanky beef jerky trailer Madison Heights-based Triune Specialty Trailers has built a

tricked-out display trailer for The Beef Jerky Outlet, a rapidly growing chain based in Seymour, Tenn. The $200,000 yellow trailer, called “The Experience,” has custom stairs, removable sign panels, a generator and Internet capabilities for retail sales, Triune said in a statement. It also has a rear door with a 12volt lift to allow disabled access to the trailer’s retail and display space. Additionally, it has a fold-out stage with a custom-lighted tent that expands the trailer’s retail space for use at large consumer events and trade shows. The Experience is outfitted with custom stainless-steel-accented graphic wraps and rivetless aluminum skin, Triune said. “The idea for the trailer started as a back-of-the-napkin sketch by the customer and evolved into a knock-your-socks-off shopping experience,” Harry Kurtz, president of Triune Specialty Trailers, said in a statement. “No detail was too small, and the latest in trailer design and options were utilized.” The chain is growing rapidly as America’s lust for salt-preserved lean meat snacks has ballooned into a $1 billion-plus industry. It has 37 stores, with plans for 63 more. Triune Specialty Trailers manufactures customized, expandable mobile trailers. Clients have included NASCAR teams, Mit subishi Electric, the Library of Con gress, Cleveland-based Lincoln Electric and rapper Jay-Z’s Ro cawear .

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Thank You

2015 MHCC GOLF OUTING

SPONSORS PRESENTED BY

SILVER (CONT.)

TOYOTA DENSO

Faurecia Lear Corporation Magna Rush Trucking Safelite AutoGlass Scion Steel Three Star Trucking Venchurs

COURSE SPONSORS The Diez Group Gonzalez Design Group Ideal Group Aztec Manufacturing Valley International Supply

CIGAR AKKO Fastener, Inc.

BREAKFAST FANUC

LUNCH Grupo Antolin Primera Grupo Antolin North America

DINNER General Motors

GOLD CNI, Inc. Comerica Bank Dakkota Integrated Systems DTE Energy Fiat Chrysler Automobiles Flex-N-Gate Ford Motor Company Global Parts and Maintenance Kenwal Steel Corp. Steel Technologies Walbridge

BRONZE Benteler Automotive Caravan Facilities Management Continental Automotive Systems Continental Packaging, Inc. Delphi Eagle Ottawa Formosa Gemini Group Hollingsworth Logistics Group International Automotive Components ITC Holdings Group /%/ 5VCHĆ&#x201A;PI Midpoint Construction Nissan Takata Tenneco The Woodbridge Group

SILVER AISIN BAE Industries, Inc. Blue Cross Blue Shield of Michigan CIE USA Devon Industrial Group / Devon Facility Management Doeren Mayhew Epitec EWIE

See you next year at the 25th Annual Golf Outing on August 15, 2016 at Cherry Creek, The Orchards and Greystone www.mhcc.org

TO OUR SPONSORS THE MICHIGAN HISPANIC CHAMBER OF COMMERCE GREATLY APPRECIATES OUR 24TH ANNUAL GOLF OUTING SPONSORS SPECIAL THANKS TO OUR LEADERSHIP Golf Committee Chair Robert Young, Vice President Purchasing, Toyota Golf Committee HBE Co-Vice Chairs Gary Gonzalez, Chairman and CEO, Gonzalez Design Group Frank Venegas, Jr., Chairman and CEO, Ideal Group