Crain's Detroit Business, Nov. 2, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS NOVEMBER 2-8, 2015

McLaren proton center stalled

Health care leaders debate transparency, change at Crain’s Health Care Summit, PAGE 17 Richard Murdock, executive director of the Michigan Association of Health Plans, leads a panel discussion.

“Detroit is becoming a destination. Finally our location isn’t working against us.” Wayne State business school Dean Robert Forsythe

Problems with former JV partner cited By Jay Greene jgreene@crain.com

McLaren Health Care Corp.’s grand opening for its new proton beam cancer treatment center in Flint is expected to be delayed at least until next spring because of problems with its former joint venture partner, ProTom International Inc. The delay is a setback for McLaren as it and Beaumont Health each push to open the state’s first centers for the highly contentious cancer therapy, which has faced nagging questions about its cost and effectiveness. Officials for McLaren had expected the center to begin treating patients in May or June, as the compa-

ny had already received approval from the U.S. Food and Drug Adminis tration to use the $50 million McLaren Proton Therapy Center. In May, ProTom, based in Flower Mound, Texas, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas . ProTom officials were un-

available for comment. But about a month before ProTom filed for bankruptcy, McLaren took over project management of the proton beam center, which is next to the 458-bed McLaren Regional Medical Center in Flint, said Greg Lane, McLaren’s COO. SEE PROTON, PAGE 18

Special report: University Research

Troy firm gets license for pathogenidentifying device

By Chad Halcom chalcom@crain.com

Talk about a beer nut: A Michigan State University startup makes chestnut chips used in craft beer. It’s among the university spinoffs profiled on Pages 9-13

NEWSPAPER

crainsdetroit.com Vol. 31 No 44

fter sealing a $40 million donation from the Ilitch family for its new business school, Wayne State University has more work remaining to make the downtown building a reality. Wayne State will immediately begin seeking about $15 million likely still needed for construction of the $50 million Mike Ilitch School of Business project in The District Detroit, and could narrow its search for a contractor later this week. The donation, formally announced Friday, promises new technology and 21st-century design for business school students. For the Ilitch family, the school promises to provide a daily flow of foot traffic into the area around the $532.5 million arena being built for the Ilitch-owned Detroit Red Wings, offering a ready-made group of customers for

thenderson@crain.com

SEE PATHOGEN, PAGE 18

Down to business Next step for new WSU building: Raising funds

By Tom Henderson

Quick diagnostics on whether a patient’s illness is caused by a virus or bacteria — or what chemicals are involved in an industrial spill — are among the applications for the technology being brought to the marketplace by Troybased Medical Engineering Partners LLC. Medical Engineering Partners has built a luggage-sized prototype of its device for use in the field and a hardened portable prototype for military use. It’s also developing a handheld device for use in a clinical setting. The company has been granted an exclusive worldwide license by Wayne State Univer sity to sell the devices, which could be used for many other functions, ranging from identifying chemicals in a war zone to alerting officials

OLYMPIA DEVELOPMENT OF MICHIGAN

The Mike Ilitch School of Business, expected to cost $50 million to construct, will require an additional $15 million in fundraising beyond the Ilitch family’s $35 million donation.

surrounding restaurants, retail and other business. The $40 million donation, which comprises $35 million toward development costs and a $5 million endowment for the school itself, wraps a courtship between the school and the family going back at least 15 years. Business school Dean Robert Forsythe said the university’s agreement with the Ilitches includes a deal to lease property on the southwest corner of Woodward Avenue and Temple Street for $1 per year for the business school, with options that can continue the lease up to 90 years. The Mike Ilitch School of Business project cost could run as high as $50 million, Forsythe said, as one building west of the intersection will need to be razed, and the school hopes to seek a silver certification under the Leadership in Energy and Environmental Design standards of the U.S. Green Business SEE BUILDING, PAGE 21

What it means to add a business school to a sports-themed entertainment district, Page 20

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Are you managing your entire databerg? (see the back cover of this Crain’s edition)

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MICHIGAN

MICH-CELLANEOUS

BRIEFS

Johnson Controls Inc. will repay the state $3.75 million and have its tax-exempt status revoked as a result of not creating enough jobs at its Holland lithium-ion plant. Milwaukee-based JCI, which operates its automotive experience business unit from Plymouth Township, received $75 million in incentives from a program designed to spur automotive advanced battery investment in the state and has invested $1.75 million to open in Holland, but fell short of the target of 400 jobs, said a Michigan Economic Development Corp. official. The world’s largest creative arts distributor is getting bigger. Notions Marketing Corp. is planning to spend up to $33 million to expand its Grand Rapids operations and will add 250 new permanent positions to its current 800-person year-around workforce, MLive.com reported. Grand Rapids-based earlystage venture capital firm Start Gar den LLC and Emerge West Michigan, a public-private partnership focused on services for entrepreneurs in 13 counties, are exploring a merger, MiBiz reported. A goal of the possible union might be to grow and streamline services for entrepreneurs and startups in West Michigan, an Emerge West Michigan official said. About 100 employees of advanced battery maker XALT Energy in

Net news: Flint called ‘New Detroit’; ArtPrize defaced During a week in which state metropolis-related news seemed to emerge from the Twilight Zone, perennial dartboard Flint was all but gushed over by a prominent national website, and West Michigan media darling Grand Rapids saw its most popular event slammed. First, the better news: The food, drink and travel website Thrillist published a piece headlined “Guess What. Flint Is the New Detroit. Here’s Why.” It cites five reasons — housing costs, culture, music, food and drink, and the opportunity to “be part of something” — as reasons Flint could be in line for the same kind of comeback that has lately lifted Detroit. The story about GR’s ArtPrize that appeared on Gawker.com was not as enthusiastic, dismissing the annual art competition as “radically open” (which in the insular fine arts community translates as “too populist”) and “far-right” (a reference to the politics of the DeVos family, a prime funder of the event).

The trip to Michigan by New Yorkbased writer Peter Moskowitz — which he described as “three days of hedonism and amateurish art” — was paid for by event organizers; he was accredited as a journalist working for Al Jazeera and The Guardian of London, an ArtPrize official told MLive.com. “We feel that his objectives were politically based, and we were misinformed,” the official said.

Costco closer to a go in Traverse City after vote Costco is one step closer to establishing its first location in northern Michigan with a membership-only warehouse club in Traverse City. Cherry Capitol Airport commissioners voted last week to accept the Issaquah, Wash.-based company’s letter of intent to lease about 18 acres of airport-owned land for 20 years followed by renewable fiveyear increments, the Traverse City Record-Eagle reported. The proposal still has to clear several hurdles before becoming a reality, including site studies and various approvals and permits.

Midland are being laid off, representing about a third of its workforce, MLive.com reported. According to a company statement, XALT is experiencing a “delay from its customers” in the performance of contracts for its lithium-ion batteries. It’s the second round of layoffs since September by XALT, which has a contract with China-based Hybrid Kinetic Group to supply lithium titanate batteries. The state says a planned $325 million particleboard manufacturing facility for Chile-based Arauco’s in Grayling Township is expected to create about 250 jobs, The Associated Press reported. Construction at the 600-acre Crawford County site is expected to begin by spring, with completion by the end of 2018. The Michigan Civil Rights Com mission chose Agustin Arbulu as executive director of the state Depart ment of Civil Rights, The AP reported. Arbulu, a former member of the commission, is an attorney and health care consultant who was a president of Farmington Hills-based

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . 19 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 MARY KRAMER . . . . . . . . . . . . . . . . . . . 7 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

COMPANY INDEX: SEE PAGE 21 Metro Care Services . He replaces Matt Wesaw, who announced plans in July to resign when his contract ends this month. Implosion of the decommissioned Marysville Power Plant is set for Nov. 7, a date announced last week by city officials, The Times Herald of Port Huron reported. Crews began to dismantle the former DTE Energy Co. plant in 2014 to make way for new development. St. Louis-based Commercial Develop ment Co. owns the property.

CORRECTIONS Fred Yaffe is stepping aside as CEO of Southfield-based Yaffe Group Inc. but will remain with the company as executive chairman. A People Spotlight headline Oct. 26 misstated Yaffe’s status. An Oct. 26 story on the Detroit Workforce Development Board misstated the first name of DTE Energy Co. Chief Administrative Officer David Meador.

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Study: Number of Michigan women in top jobs stagnates

Drugstore diagnosis: Fewer stores

By Sherri Welch swelch@crain.com

The Walgreens across the street from a Rite Aid in Livonia isn’t unusual and could open up opportunities and heartaches in real estate.

PHOTOS BY DUSTIN WALSH

Walgreens’ purchase of Rite Aid could bring shakeout By Sherri Welch swelch@crain.com

he Michigan market could see a surge of drugstore closings or property sales as a result of Walgreens Boots Alliance Inc .’s pur-

chase of Rite Aid Corp. Last week, the companies confirmed the $9.4 billion deal and said it is expected to close during the second half of calendar-year 2016. While Rite Aid (NYSE:RAD) will operate as a subsidiary of Walgreens (Nasdaq: RAD) under its current brand name at least initially, some local real estate experts believe Walgreens could close stores operating near each other. The two chains don’t overlap in several states, including Illinois, Florida and Texas, according to the Wall Street Journal, but they do overlap in Michigan, in many places within a block or two of each other. Walgreens had 231 stores in Michigan as of the end of February. And Rite Aid, which in 1995 acquired Perry Drug Stores Inc. , then the state’s largest pharmacy chain, had 276 stores in the state. In Michigan, there are 96 Walgreens within a mile of a Rite Aid store, 37 of those in metro

Detroit, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. “We’re thinking there will be close to a third reduction between the two chains and all the stores,” said Thomas Guastello, owner and president of local retail developer Birmingham-based Center Management Services Inc ., which owns five drugstore locations across the country, including a Walgreens in Livonia and a Rite Aid in New York. “So you say, ‘Do I have a strong store in a strong location?’ ” He believes Center Management’s Livonia

store at Farmington and Six Mile roads and its New York store are both in good position to weather any consolidation that may happen. Rite Aid’s decision to locate more of its stores in strip centers rather than as freestanding sites on prime corners, is likely to result in more Rite Aid closings, said Jim Bieri, president of Detroitbased Stokas-Bieri Real Estate. Walgreens stores have been, by and large, built as freestanding locations on corners, and that’s the model the chain still favors, Bieri said. Some who own Rite Aid buildings will be big winners, he said. “Now that Walgreens is acquiring Rite Aid, and it’s responsible for the rent, the assets are worth more because the Walgreens credit is better than Rite Aid, and therefore the cap rate goes down.” Cap rate, short for capitalization rate, is the ratio of net operating income to property asset value. The lower the cap rate, the higher the amount the seller gets and the less return the buyer gets, Bieri said, estimating that Rite Aid building owners have seen a 15 percent increase in the value of their asset, at minimum. SEE WALGREENS, PAGE 21

The number of women in top spots at Michigan’s top 100 public companies has stagnated over the past two years, according to the 2015 Michigan Women’s Leadership Report. But for the first time since Inforum’s inaugural study in 2003, there’s at least one woman on the board at all Michigan Fortune 500 companies. The biennial study, which is researched by the Wayne State University School of Business Administration for the Detroitbased Inforum Center for Lead - Terry Barclay: ership , was Inforum leader says scheduled to be data hasn’t released Mon- changed much. day at www.inforummichigan.org. The topic of women in key corporate positions has been part of a national and global conversation over the past couple of years. That has been fueled by the release of “Lean In: Women, Work, and the Will to Lead,” co-authored by Face book COO Sheryl Sandberg; Mary Barra moving into the top job at General Motors Co. in early 2014; and the current talent shortage, said Inforum’s CEO Terry Barclay. That conversation has led many to believe the challenge of creating opportunity for women in the workplace must be solved, she said. But when you look at the overall data for the number of women in key spots at Michigan’s top public companies, “they haven’t changed much in 12 years,” Barclay said. Research shows diversity of thought and experience leads to better operational performance — higher stock prices, better earnings and all of the other measures that investors look at, she said. “We’re in an environment with a SEE WOMEN, PAGE 19

MUST READS OF THE WEEK Bowl of cherries wasn’t for life

Urban design

Short-lived Cherry Bowl at Silverdome had a fairly sweet debut but went sour soon after, Page 4

Lawrence Technological University’s Detroit Center for Design + Technology opened Friday in Midtown, with officials from the school and the city, as well as Gov. Rick Snyder, in attendance. Photos at crainsdetroit.com

Egner leaves Hudson-Webber As he readies for new job, nonprofit leader ponders future of New Economy Initiative, Page 8

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LOOKING BACK: On Nov. 4, 1985, Crain’s reported on an effort to turn a college football game at the Pontiac Silverdome into a top-tier bowl. The Cherry Bowl didn’t last long, but that didn’t stop the drive for postseason games. More at crainsdetroit.com/30

Cherry Bowl wasn’t fruitful, but college games didn’t stay away Mississippi beating Marshall Universi ty 34-31 in front of 43,340.

By Bill Shea bshea@crain.com

When the Lansing-based Michi gan Cherry Committee found itself

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locked out of buying commercial TV airtime during Super Bowl XVI at the Pontiac Silverdome in 1982, the idea was born to create an annual college football bowl game. The thinking was that the committee, which promotes the state’s famed cherry crop, could use the event as a platform to tout the cherries and encourage tourism. That led to creation in 1984 of the Cherry Bowl — the brainchild of Michigan Cherry Committee President and Grand Rapids native Tom Martin and former Michigan State University football coach Frank “Muddy” Waters. After the inaugural game — Army beat George Perles-coached MSU 10-6 in front of 70,336 fans at the Pontiac Silverdome in December 1984 — they had plenty of reason to be optimistic that their five-year plan to develop a major bowl game was working. Thirty years ago this week, Crain’s profiled the bowl organizers’ efforts to make the game a first-tier event that would be second only to the Rose Bowl. The business strategy was to lure crowd-drawing powerhouse Midwestern teams such as the University of Michigan, Ohio State University and Penn State University with the promise of financial payouts that rivaled the top bowls. The inaugural game saw MSU and Army each paid $741,000 out of $2.1 million in revenue generated by ticket sales and corporate sponsorships sold to General Motors, Chrysler, Elias Bros. in Warren, Saginaw-based Michigan Sugar Co. , Blue Cross Blue Shield of Michigan , Country Fresh Inc. in Grand Rapids, and others. That sort of cash gets attention. But the second year of the Cherry Bowl saw the University of Maryland beat Syracuse University 35-18 in front of just 22,580 fans at the 80,638-seat Silverdome. The reasons for the drop-off were no mystery: The participating teams were not local or within an easy drive, and the game was being played three days before Christmas in a northern state rather than the traditional sunny climates of all other bowls. Organizers had predicted 60,000 fans. Missing that mark by nearly 40,000 was a financial catastrophe. Bowl organizers failed to persuade GM to sign on as title sponsor, and they ran up a reported debt of $1 million. Worse, they were unable to pay either school the promised $1.2 million each — a breach of contract that saw the NCAA postseason football committee strip the

The matchup of Michigan State University and Army got the Cherry Bowl off to a promising start in 1984. Cherry Bowl of its official sanction. Maryland and Syracuse each received just under $500,000 by mid1986, payouts the schools said barely covered their expenses to play. Former Detroit Lions coach Rick Forzano bought 50 tickets to the 1985 Cherry Bowl to give to clients of his manufacturers sales representative business, Bloomfield Hills-based Rick Forzano Associates Inc.

Looking back, he said the problem with the bowl was the teams. “When you bring in Syracuse and Maryland, people here have no interest in that game,” said Forzano, 86, who coached the Lions from 1974-76 and also had been head coach at the University of Connecticut and the U.S. Naval Academy. “It’s like any bowl game. Some of them just draw to capacity because they have the right two teams playing. If you don’t have the right teams, people don’t come.” Forzano, who was on the Cherry Bowl’s team selection committee and still has a sweater from the game, gave credit to the bowl’s organizers for chasing a dream, but lamented the financial problems. “It’s a calculated risk when you start a bowl game. When you promise money to teams, you better have some corporation that’s going to back that,” he said. “Cash flow is always a problem with a startup, whether it’s a bowl game or a company.” The Cherry Bowl committee was unable to raise $1 million in corporate sponsorships for a third game, and the NCAA decertified the game in October 1986. That wasn’t the end of postseason college football in Michigan. Fast-forward to 1995, and it was Perles, who coached the Spartans from 1983-94, and former MSU sports information director Ken Hoffman deciding to organize a new bowl at the Silverdome. Two years later, the Motor City Bowl kicked off with the University of

The game was initially sponsored by Ford Motor Co. and then also by GM and Chrysler by its second year. It pitted Mid-American Conference teams against a variety of other conferences. Organizers relocated the game to 64,500-seat Ford Field when the Detroit Lions opened the stadium in 2002. The bowl set its attendance record of 60,624, a crowd that watched Pur due University edge Central Michigan University 51-48, in 2007. The worst attendance was 23,310 for 2012’s CMU 24-21 victory over Western Kentucky University in a game played during a blizzard. When the recession crippled the automakers, who pulled almost all of their sponsorship dollars, the game got a new name: the Little Caesars Pizza Bowl. Detroit-based Little Caesars , founded and owned by the Ilitch family, and the Auburn Hills-based Independent Organization of Little Caesars Franchisees took over the

Motor City Bowl’s title sponsor role in 2009 under a three-year series of annual options worth less than $1 million each. The fate of the Pizza Bowl was cast in doubt when the Lions announced in 2013 plans to host a new bowl matching Big Ten Confer ence and Atlantic Coast Conference teams at Ford Field in a six-year deal that began in 2014. Organizers tried to find an alternative location for the Pizza Bowl, but finally decided to cancel it for good in August 2014. The bowl, which aired on ESPN and usually was played Dec. 26, drew 740,924 fans, an average of 43,583 per game, over its 17 games. Teams in the Motor City/Pizza Bowl each were paid $750,000, a figure that remained consistent over the life of the game. The Lions didn’t find much success last year with their first Quick Lane Bowl , which is sponsored by Ford’s Quick Lane Tire & Auto Centers service outlets. Rutgers University routed the Uni versity of North Carolina 40-21 in front of 23,876 fans who attended the 4:30 p.m. game on the day after Christmas. That attendance number was lower than all but one of the Motor City Bowl/Little Caesars Pizza bowls — the 2012 blizzardridden bowl. This year’s game got a new home on the schedule: It will air at 5 p.m. Dec. 28 on ESPN2. The participating bowl teams are selected by the conferences and the bowl staff at the end of the season. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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Smart Strategies for Fighting Fraud CFOs play a strategic role in cyber risk

yber fraud presents a constant and growing threat. The average cost of theft per fraud incident is $3 million, according to the 2015 Association for Financial Professionals Risk Survey.

James Carpenter Market Manager Bank of America Merrill Lynch

A data breach can be harmful to fast-growing companies in two key ways: A business could experience significant financial damage and loss of brand value could bring expansion plans to a complete halt.

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• Create a culture of transparency and encourage employees to ask questions about unusual requests or activities. • Create a fraud prevention hotline and thoroughly investigate any suspicious activity. To bulletproof the plan, it should be reviewed regularly and be part of new employee training. Staff should use secure, encrypted web browsers and conduct online banking from standalone systems with no email or web-browsing access. Workers also should be reminded not to use personal devices to conduct company banking transactions and to not open suspicious emails or attachments. COMMITTING TO DATA SECURITY Data from the 2015 Association for Financial Professionals Risk Survey shows that 57 percent of U.S. consumers would either discontinue or reduce the relationship with an affected company following

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CRAIN’S DETROIT BUSINESS

OPINION Razing Silverdome may lift up Pontiac The Silverdome is going to be demolished next year — more than 13 years after the Detroit Lions moved out — and if all goes well, that could be a boon for the city of Pontiac. Last week’s announcement came about six months after the property was put up for sale for $29 million, but the market wasn’t interested. So owner Triple Investment Group, which paid KIRK PINHO $583,000 for the A debris-filled Silverdome photographed in August. building in 2009, plans to raze the structure to make the property more attractive for investors. The idea is a mixed-use development combining retail, industrial, commercial and housing components. That plan seems to fit; the site abuts residential areas and is near the Oakland Technology Park. This should have been done long ago. The stadium, which opened in 1975, was in Pontiac because of its lower construction costs relative to downtown Detroit. But it required state and local subsidies for years — and Pontiac had no tax revenue coming in from the government-owned site. However well-intended, it contributed to Pontiac’s longterm financial problems. Its demise could accelerate the good work Pontiac has done in recent years to rebuild.

Failed petition drive costly snafu The DeVos family should get more for their millions. Members of the wealthy Grand Rapids-area clan largely bankroll the Michigan Freedom Fund, which has, in turn, supported the group working to repeal Michigan’s prevailing-wage law. The fight has drawn lines between smaller, nonunionized contractors and many large construction firms in Southeast Michigan that rely on skilled trades unions to help develop the workers they need for their jobs. Gov. Rick Snyder sides with the pro-prevailing wage team. But the anti group, Protecting Michigan Taxpayers, was embarrassed last week by sloppy detail work on its petition drive. A pro-prevailing-wage group found thousands of duplicate signatures in petitions filed in September. By Friday, PMT had cut bait and rebooted the whole petition process. But if enough petition signatures are eventually approved, it gives the Freedom Fund folks a path to have the Legislature take an up-or-down vote on the prevailing-wage law in a way that cannot be vetoed by Snyder. Or it could go to a statewide vote in November 2016. The failed petition drive was costly. The drive has cost nearly $1.5 million to date, at roughly $2 per signature, based on the $800,000 PMT paid a Las Vegas-based signature-gathering firm from July to October. It’s all in the details, as veterans of political campaigns should well know by now. Looks like somebody wasn’t minding the details.

LETTERS

Children benefit if parents read to them early In response to Mary Kramer’s Oct. 19 column, “Biz should back state plan to make sure 3rd-graders can read”: It is encouraging to see the focus being placed on reading proficiency in the third grade. This is vital for success of the individuals and society as well. In addition to the current efforts, a focus should also be placed on the root cause of inadequate reading proficiency. Parents need to be taught the importance of reading to their children. Many parents say they are waiting until the child is old enough, which shows the ignorance leading to the poor scores.

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

Just when should parents start reading to their children? The American Pediatric Society recommends at birth, but many mothers report advantages to reading while pregnant. Indeed, the brain has begun to develop by the end of the first trimester. Anything and every-

thing the mother does after this point has an effect on the growing unborn child. In the 1950s, a study was conducted by the Los Angeles Unified School District with third-graders that showed children whose parents read to them at an early age were far more proficient in reading than children whose parents did not spend time reading to their children regularly. Let’s start at the hospitals. Let the mother know the importance of reading to her child before she leaves. Wayne Brillhart Hartland

TALK ON THE WEB Re: Ilitches to give Wayne State $40 million for new biz school This is wonderful news. It has special meaning to me because I received my degree in business administration, with an accounting major, from Wayne State’s business school.

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity.

Carolyn Mazurkiewicz

What a wonderful investment in Wayne State and Detroit. Mike and Marian Ilitch continue to put their money where their hearts are. Anyonebutyou

a non-English language. It would be very difficult to get around, and their are few language skills available in the terminal. Any progress will be an improvement. William J

Re: State, Metro Airport develop Pure Michigan campaign Metro Airport is very unwelcoming

compared with other major airports outside the U.S. I cannot imagine landing at Metro and speaking only

Pure Michigan ought to take over the international arrival experience at

Re: State biz execs predict little growth in economy in 6 months As the owner of several smallbusiness startups since the mid 1970s, I think it is time to discuss reality. The Snyder tax cuts have had minimal impact on improving the business climate in this state, and should be reversed. Sure, all of us want to reduce our expenses, but the tradeoff is not enough money for essential infrastructure: roads, public K-12 education, public colleges and universities, and cities. The business tax cuts did not produce the growth needed to replace the lost revenue, and the result is that Michigan is sliding into a decline.

the Ambassador Bridge. Today, entering Michigan has all the charm of entering a military compound.

Nat Pernick

Brian Mulloy

SEE TALK, PAGE 7

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As consumers spend more on health care, transparency becomes hot issue Who do you think spends the most on health care in the U.S.? More than 450 attendees at last week’s Crain’s Health Care Leadership Summit got it wrong on a multiple-choice pop quiz. From a list of five choices, the No. 1 pick was “Medicare and military/VA.” Other choices were Medicaid, private business, health plans or “other.” Only 3 percent of attendees — keep in mind these were mostly folks deeply ingrained in health care and employee benefits — got it right and chose “other.” (No surprise: Jay Greene, Crain’s health care reporter, was among them.) So who — or what — is “other”? “Other” is “us” — consumers. People who have high-deductible health plans at work and pay a larger percentage of income for their share of premiums and out-ofpocket care. Today, about 28 percent of all health care costs in the country are picked up by consumers. Which means the ability to shop for care — using cost and quality measures — is important. And it’s hard to do in Michigan because there’s no requirement that hospitals, doctors and insurers offer up

MARY KRAMER Publisher data for an “all-claims” database that in many states consumers can use to shop and compare for procedures, tests and prescriptions their physician orders. That’s why some health care rankings have awarded

our state an “F” on transparency. Ideally, if that data were used, providers would quickly discover ways to bring down costs — and keep quality high — in order to compete in the marketplace. State Sen. Jim Marleau, R-Lake Orion, wants consumers to have that tool. Last week, he introduced Senate Bill 590 to require health insurers to submit data to the state, which in turn would create a usable, consumer-focused resource. Michigan’s largest health plan, Blue Cross Blue Shield of Michigan, opposes an all-claims database, preferring to analyze its own data

for its own members and client/employers and creating ways to incentivize providers to reduce costs and hit quality targets. Bottom-line takeaway from our summit: “Transparency” is the new buzzword in health care. We need to turn our “F” into an “A” and make it easier for consumers to shop for care. The auto companies are likely going to pressure insurers and providers to plug into some kind of central pool of data. Why is it easier to shop for your next car by price and quality ratings than it is for a major medical procedure? 䡲

“Transparency is the new buzzword in health care. We need to turn our ‘F’ into an ‘A’ and make it easier for consumers to shop for care.” Mary Kramer

TALK FROM PAGE 6

Re: Egner named president, CEO of Ralph C. Wilson Jr. Foundation I can’t imagine anyone more capable

of leveraging these resources more responsibly and creatively than David Egner. Congrats to the Ralph C. Wilson Foundation for such a great choice. Donna Dauphinais

Re: Proposed bill has doctors, nurses at odds over anesthesia It is a misstatement to call nurses a cheaper alternative. Medicare pays the same fee for anesthesia services. The fees are then split. Health care is becoming more and more of a team effort. One example is ICU rounds. In addition to the ICU doctor, pharmacist, physiotherapist, respiratory therapist, chaplain, nurse manager are all present. Very different picture from many years ago. I ask then a question: Do you break the team or do you strengthen the team? I am a physician. Zulfiqar Ahmed

Certified Registered Nurse Anesthetists have been providing anesthesia for many many years and are the sole provider of anesthesia in almost 100 percent of rural America. The restructuring of America’s health care is happening, and measures that increase safety, decrease costs and add value are required. The opposition from physician groups is always the same fear-mongering spiels about patient harm. Nothing is more important to CRNAs than the safety of their patients. CRNAs over150 years

Discovery driven Whether it’s helping a life science startup dream become a reality, developing multilayered digital map products or discovering ways to “tune” abundant semiconductor elements for solar cell applications, Western Michigan University scientists are creating higher ed/ private-sector partnerships that are changing the world. • WMU engineering faculty are leading Midwest efforts that are part of a $171 million national manufacturing initiative funded by the Department of Defense and other entities and designed to put flexible hybrid electronics to work for both military use and the consumer marketplace. • The WMU Business Technology and Research Park is home to 42 firms including Newelll Rubbermaid’s global design and innovation center that is responsible for consumer brands such as Calphalon, Graco and Sharpie. • The WMU Bioscience Research and Commercialization Center has invested in 43 life science companies, leading to the creation of hundreds of skilled technical jobs in Michigan and providing startup and gap funding to Michigan-based firms.

wmich.edu/research

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Egner to exit, thoughts with NEI future By Sherri Welch swelch@crain.com

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As Dave Egner prepares to join the Ralph C. Wilson Jr. Foundation as CEO Jan. 1, one thing dominates his thoughts as he winds up his work at the New Economy Initiative — the future of its foundation-led economic development. NEI’s steering committee has been discussing the possibility of raising a third round of funding to continue the initiative’s work, Egner said, adding that nothing has been decided. “We’re seeing the fruits of six years of NEI’s work in entrepreneurism pay off in amazing ways,” he said. Dave Egner: “This ecosystem To join Ralph C. that’s been built Wilson Jr. is producing Foundation outputs that are unparalled by any similar effort.” Egner also announced last week that he is leaving his role as president of the Hudson-Webber Foundation. NEI has helped more than 6,000 existing businesses since its 2009 launch with $100 million in funding and a second $35 million round last year. In addition, NEI has funded support that’s led to the creation of 1,600 new businesses, Egner said. Forty-four percent, or 704, of the new businesses are minorityowned, compared with the U.S. average for minority business ownership, which is 15 percent, he said. And 39 percent of the high-tech businesses created through the NEI-funded entrepreneur support network are minority-owned, compared with the national average of 4 percent minority ownership of high-tech businesses, said Egner. “This notion of inclusion from grass roots to high growth is driving culture change around entrepreneurship ... and it’s (helping) ... to close the (wage) disparity gap,” he said. But NEI cannot yet say how many of the new businesses are still operating or if they are growing. It’s in the midst of trying to create a metric to measure the impact of entrepreneurial systems, Egner said. “To pull back now would be a terrible mistake. We’re just starting to see the ouputs,” he said. Additionally, the Michigan Eco nomic Development Corp. has pulled back its funding in recent months. “So suddenly this entrepreneurial ecosystem is at risk because the two largest funders of it ... are NEI and MEDC,” Egner said. “My concern is a lot of this work would not be sustained,” without another round of funding for NEI, he said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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SPECIAL REPORT: UNIVERSITY TOM HENDERSON thenderson@crain.com Twitter: @tomhenderson2

Tough task: Turn science into revenue

RESEARCH

he first mission — proof of concept — has been accomplished for Fulcrum Engineering LLC, a spinoff from Oakland University that is based in the school’s incubator facility, OU Inc.; and Detroit Materials Inc., a spinoff from Wayne State University now based in Wixom. Now comes the tough part: Turning successful science experiments into companies with customers and revenue. Or at least finding enough interim funding to keep things rolling. In 2010, the U.S. Army Tank Automotive

Research, Development and Engineering Center in Warren wanted to fund projects

to minimize damage to military vehicles from improved explosive devices. Michael Latcha, an associate professor at OU’s Fastening and Joining Research In stitute , had an idea: Install a heavy false floor beneath vehicles and use airbag technology to explosively detach the floor, rapidly dispersing energy and reducing the impact to those inside. OU got a grant of $950,000, and eventually Latcha’s team was able to detach a false floor weighing 660 pounds in 0.00013 seconds, reducing the transmitted force inside a vehicle by 56 percent. Oakland filed patents, and in April, Fulcrum was launched. But the project needs at least another $1.5 million for further development. Latcha says the same technology would have applications for the train industry, decoupling, for example, the rest of the train after one car left the tracks. Meanwhile, SearchLite , in Ann Arbor, has been engaged to look at possible markets for Fulcrum. Detroit Materials is based on patented research by Susil Putatunda, a professor of chemical engineering and materials science in WSU’s College of Engineering , which involves austempering, a heat treatment for steel and iron that results in improved mechanical properties. That makes it possible for cast steel to replace forged steel, a savings of cost and weight. Detroit Materials has done prototyping through a Wixom firm, CMI Prototype Specialist LLC , making auto and truck parts that are significantly lighter because they have thinner internal support features, 3 millimeters compared to 6-12 for traditional parts. Tests by Paul Sanders, an associate professor of materials science and engineering at Michigan Technological Universi ty, showed that the prototype parts are as strong as forged parts. On Sept. 25, the U.S. Defense Logistics Agency signed a contract for an SBIR of $99,932 to see if Detroit Material prototypes can replace heavier forged steel parts in tanks. Guillen said six suppliers, including those in defense, agricultural and transportation industries, are evaluating 12 prototypes for possible contracts. “The next couple of months will be critical,” he said. 䡲

LON HORWEDEL

Treeborn CEO Brian Polowniak hoists a beer glass full of chestnut chips in the atrium of the Michigan State University Innovation Center, where his company, and several other startups, share office space.Treeborn uses the chips to make craft beer, like the growler full of Bad Brewing Co. beer Polowniak is holding in his

other hand.

From NUTS to BEER Company builds revenue as craft brews grow By Tom Henderson thenderson@crain.com

rian Polowniak sliced and diced business plans and spreadsheets from 2011-13 for the $100 million investment arm of 5-Hour Energy entrepreneur Manoj Bhargava, deciding which early-stage companies were worthy of investments. Today, Polowniak is still slicing and dicing, but it’s chestnuts he’s working with, not spreadsheets, as president and CEO of Jackson-based Treeborn Inc., a spinoff from Michigan State University that has started to provide chestnut chips to the fast-growing craft beer industry as an ingredient in specialty beers. Chestnuts have long been used in European beers but are something of a novelty here.

Genomenon gathers cash, Page 11 Outside funds for UM spinoff, Page 11

Treeborn was incorporated last year. Polowniak said the company has several customers already, including Dexter-based Jolly Pumpkin Artisan Ales , which uses the chips in its Fuego del Otono beer; Roak Brewing Co., a brewer in Royal Oak that launched in June; Grand River Brewery in Jackson; Short’s Brewing Co. in Bellaire; and Perrin

Brewing Co. in Comstock.

Polowniak said 39 breweries in 15 states are in various stages of testing his chestnut chips in its beers. John Leone is president of Roak Brewing. He said he decided a year ago that he wanted to make a winter beer using chestnuts, Michigan maple syrup and porter ale. “I’m an Italian kid, and I’d grown up eating chestnuts around the holidays. And I knew chestnuts were a growing industry in the state,” he said. “But we couldn’t get it to taste right. Then one of my guys came across Treeborn on the Internet, and we called them and got some of their chips. We created some sample beers, and it worked.” Roak said he then bought 388 pounds of sliced nuts from Treeborn and is making a SEE BEER, PAGE 10

Rubicon finds niche in analysis kits, Page 12 Akadeum founder joins full time, Page 13

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BEER FROM PAGE 9

batch of beer called Chestnut Head that will be out about Dec. 1. “I just tasted it. It’s not quite there yet, but it’s delicious,” he said. Leone said this batch is 90 barrels, which will make about 1,000 cases and 150 kegs. Minnesota Town Hall , which has been making craft beers in Minnesota for 18 years, is another customer. Brewmaster Mike Hoops said he has been experimenting with Treeborn chips and plans to launch a new brew for the Christmas holidays that blends the chips with a popular coconut milk stout. “We’ll sell it at one or two of our restaurants and see how people like it. I think it’s going to be quite good. It should add quite a depth of flavor,” said Hoops. He said Treeborn reached out to him earlier this year and asked him if he was interested in testing its chips. “I said sure. We deal with lots of ingredients that are interesting, but I’d never used chestnut chips,” Hoops said. “When we got some, we spent the first few days munching them. They were very tasty.”

Investing to operating So how did Polowniak go from funding startups to running one? After leaving Bhargava’s Farmington Hills-based Stage 2 Innovations LLC at the end of 2013, he was recruited by Spartan Innovations , a nonprofit founded by the Michigan State University Foundation to commercialize university research, to be one of its CEOs in residence, vetting technologies to see which lent themselves to commercialization. Before joining Stage 2, Polowniak had been president and CEO of his own Brighton-based consulting company, Solution Strategies Inc. , a practice he still has. He previously was a sales executive at Procter & Gamble and Johnson & Johnson. One technology he vetted for Spartan Innovations involved processed chestnuts and whether there was a snack market to go after. Polowniak said that after he determined it would be too expensive to market sliced chestnuts as a snack food, he thought that the craft beer industry, with all its claims of nut brown ales, would be interested. And it was, he says. The company was founded with a convertible note of $107,000 last year from Spartan Innovations, with Polowniak; Dennis Fulbright, a professor emeritus at MSU; and Roger Blackwell, president of Chestnut Growers Inc. , a cooperative, as cofounders. Fulbright is vice president of product development, and Blackwell is vice president of business development. Polowniak said the company employs five, all of whom receive equity in lieu of salary as they ramp up production. He said revenue this year will be about $50,000, “but if any of the large craft breweries that are making samples now come on line as real customers, we can go to

Treeborn cofounder Dennis Fulbright loads chestnuts into a roaster. Fulbright is vice president of product development. COURTESY OF TREEBORN

$500,000 in revenue overnight.” Treeborn is based at the Rogers Reserve, a farm donated by Ernie and Mabel Rogers to MSU in 1990 so Fulbright could plant and grow chestnut trees. In 2002, at the bequest of the Rogers, an endowment was created to improve buildings and equipment on the farm, including a chestnut peeling line. The peeling line was purchased from Italy by the Midwest Nut Producers Council , a nonprofit affiliated with MSU. According to the 2012 U.S. Census of Agriculture, Michigan has more chestnut farms, 115, than any other state. It also has the largest annual harvest, estimated at 150,000 pounds.

Polowniak said most of that supplies grocery stores such as Whole Foods with whole nuts. He buys the secondary crop of smaller chestnuts the grocery stores don’t want. He said the smaller nuts are just as tasty as large ones and fine for making beer. Treeborn slices them and bakes them light, medium or dark, depending on how mild or strong the brewmaster wants. “We think we can fund our growth out of sales, but if all of a sudden we had some very large breweries say, ‘We’re going to feature you,’ and need 20,000 pounds of chips, we’ll have to go out and get funding,” Polowniak said. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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Genomenon gathers UM spinoff started with grants, cash as it incubates receives its first outside funds By Tom Henderson

thenderson@crain.com

Genomenon Inc. , a University of Michigan spinoff that is being incu-

Ann Arbor-based Phasiq Inc. , a University of Michigan spinoff that

bated in the office of technology transfer’s Venture Accelerator on the north campus, has closed on a seed round of $1 million. And it will be looking to add another $500,000 later this week.That’s the first prize in the annual Accelerate Michigan Innovation contest in Detroit, where Genomenon is one of the competitors. In early 2014, the company, which has developed software that could improve cancer diagnosis and treatment, won a statewide entrepreneurship contest organized by the Center for Entrepreneurship at UM’s College of Engineering. The startup won $40,000 for first place as well as winning first in the health category of the Michigan Collegiate Innovation Prize. Earlier, the company’s three founders — CEO Mark Kiel, M.D., a former pathology resident at the UM Medical School, and former pathology professors Megan Lim, Mark Kiel: M.D., and Kojo “Genome sequenc- Elenitoba-Johning is going to have son, M.D. — won a huge impact.” a three-month training program that helps inventors commercialize their technology, using curriculum from the National Science Foundation’s Innovation Corps. Lim and Elenitoba-Johnson have since taken positions at the Perelman School of Medicine at the Uni versity of Pennsylvania . She is still Genomenon’s chief science officer and he is chief medical officer. Genomenon wants to solve what is termed the bioinformatics bottleneck. In recent years, advances in DNA sequencing has made it possible to sequence an entire human genome in a day for $1,000. And, in theory, develop personalized medicine based on a patient’s DNA. “For personal medicine, genome sequencing is going to have a huge impact,” said Kiel. But that pace of sequencing hasn’t been matched by improvements in techniques to analyze the raw data. Genome data is currently reviewed in a time-consuming, errorprone manual review process. Genomenon has developed several cloud-based software tools that automate the interpretation of genome sequencing as well as automatically finding current journal articles on genome research, deciding which of them are most likely to be of value to medical decision makers. Its Savant software is for use in clinical labs to diagnose individual

has been funded to date with large federal grants, has received its first institutional funding, an investment of $36,000 from the school’s student-run Zell Lurie Commercialization Fund. Phasiq was founded in 2012 following $400,000 in grants from the Coulter Translational Research Partnership, a program of the Wallace H. Coulter Foundation in Miami, which aims to improve patient care by accelerating the commercialization of university research. Phasiq grew out of the work of Shuichi Takayama, a professor at UM with a joint appointment in the DeShuichi partment of BioTakayama: Phasiq medical grew from his work. Engineering and the Macromolecular Science and Engineering program. The company is based in the Venture Accelerator, part of the north campus operations of the school’s office of technology transfer. Phasiq develops methods of test-

Megan Lim: Chief science officer.

Kojo ElenitobaJohnson: Chief medical officer.

patients; Prodigy is for academic and pharmaceutical researchers; and Mastermind is a database of genomic information automatically culled from medical literature as it is published. The company has applied for two patents, one for an algorithm that analyzes gigabits of data, the other for an algorithm that evaluates the medical literature. Genomenon expects revenue of $50,000 in the fourth quarter, and its business plan projects 2017 revenue of $2 million and revenue of $50 million in 2020. “There are a lot of genomics companies right now. You go to their home pages and all their opening paragraphs use the same language to describe what they do. Genomenon is different,” said Skip Simms, a vice president at Ann Arbor Spark who is managing director of the Michigan Angel Fund, which invested $250,000 to lead the seed round. The round included angel funding, friends-and-family funding, $100,000 from UM’s Michigan Translational Research and Commercialization for Life Sciences Program; $150,000 from Invest Detroit’s Detroit Innovate Fund; and $50,000 from the University Commercialization Fund that Invest Michigan manages. “What they are doing is taking all the data these other companies are getting and compiling it and making it easier to understand,” Simms said. ... They boil down months of data analysis down to minutes. Not only do they guide researchers to the right sources and most recent discoveries, but they put it in a way that is easy to understand.” Elaine Stiffel, M.D., is director of the Cancer Genetics Clinic at UM’s Comprehensive Cancer Center . She met Kiel when he did a fellowship in her clinic and has applied for a $2 million grant to the National Cancer Institute to fund testing to help Genomenon validate its technology. “Right now, testing looks at alterations in one specific gene to see if there’s a genetic predisposition for cancer. But there could be thousands of genes that have genetic problems. Genomenon can automate the process of interpreting all those results, so you don’t have to slog through millions of bits of information,” she said. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

ing for a wide variety of proteins in a single patient sample, a far cheaper, faster and more accurate process than the current process of testing for individual proteins one at a time. The focus is on research and Francis Glorie: Zell diagnostic tests Lurie investment related to cancer was a milestone for and other disPhasiq. eases affecting the immune and cardiovascular systems. The Zell Lurie investment “is a significant milestone for us because it’s the first outside professional investment we’ve had,” said CEO Francis Glorie. He replaced Takayama as CEO in April. Glorie said the notoriously unreliable PSA (prostate-specific antigen) test to screen for prostate cancer is an example of how if you screened for a variety of proteins at once, you’d get a much better idea of a patient’s health and far fewer false positives than just the one protein the PSA test examines. Phasiq’s patented system, trademarked as Micropatterned PhaseSeparation Technology, promises to do many tests at once.

Glorie said the company hopes to scale up production and begin its first shipping of reagents and test equipment, including kits that can handle up to 96 tests at once, by the end of this year and be fully commercial early next year. He said if the company hits those milestones, it will then begin raising an angel investment round of $1 million that would precede a larger round from institutional investors. Glorie has a long track record of entrepreneurship in Ann Arbor. In 1979 he was one of the co-founders of Irwin Magnetics Systems, an early tech company that provided magnetic tape data storage, and its proprietary format was adopted by Compag, Hewlett-Packard and IBM . It employed as many as 600 people in Ann Arbor before being sold in 1989. In 2013, Phasiq got a phase-one small business innovation research grant from the National Science Foundation of $150,000, which led to a phase-two SBIR grant of $650,000 from the NSF in March. Glorie said the company, which employs six, has a large small business technology transfer grant pending but didn’t want to discuss details until he hears whether or not the company gets it. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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ĞůĞďƌĂƟŶŐ ϭϱϬ zĞĂƌƐ Rubicon Genomics ŽĨ WƌŽƚĞĐƟŶŐ tŽƌůĚͲ ůĂƐƐ /ŶŶŽǀĂƚŽƌƐ͘

finds its niche in analysis kits By Tom Henderson thenderson@crain.com

/ŶƚĞůůĞĐƚƵĂů WƌŽƉĞƌƚǇ >Ăǁ ^ŝŶĐĞ ϭϴϲϱ DĂŝŶ KĸĐĞ ŝŶ dƌŽǇ͕ DŝĐŚŝŐĂŶ ϮϰϴͲϲϴϵͲϯϱϬϬ ƌĞŝƐŝŶŐ͘ĐŽŵ

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Emerging tech companies call them pivots, a polite way of describing what is usually a drastic change in operations to figure out how to generate enough revenue to keep the lights on. When James Koziarz, a longtime executive at Abbott Laboratories , came out of retirement to take over as CEO of struggling Rubicon Ge nomics Inc. in December 2008, the company was in too much trouble for sugar-coated descriptions. The company, which spun out from the University of Michigan to do contract research for other companies, was near death and in need of a reinvention. “We were in the valley of death,” Koziarz said. “The recession had started, and money stopped coming in from research grants and contracts.” “In 2009, the strategy shifted to the development, manufacture and sale of preparation kits,” said COO Christine Haackenson. “Prior to 2009, the company focused on service and collaborations.” Rubicon Genomics now makes and sells kits and reagents that speed up genomic analysis, including DNA sequencing, with applications for gene-based research, drug development and diagnostics. Only one pivot has been needed under the new strategy. The company, which now employs 34, has been cash-flow positive since 2011, saw a 40 percent year-over-year increase in revenue in the first six months this year, expects record fourth-quarter revenue of $2.5 million and in July closed on a growthcapital investment round of $2 million. The investment was led by BroadOak Capital Partners , a merchant bank based in Bethesda, Md., and joined by Research Corporation Technologies of Tucson, Ariz. Koziarz said the capital will be

James Koziarz: “We were in the valley of death.”

Christine Haackenson: “In 2009, strategy shifted.”

used to develop new products and ramp up marketing. The company, which has been granted 17 patents and has several pending, recently moved into a larger facility near the Ann Arbor airport on the south side of town. In July, Crain’s named Rubicon No. 6 on its Eureka List for its patent portfolio. It has 12 in-force patents with issue dates from 2004-2014 and had three patents issued last year. Tony Gordon has been a customer of Rubicon or suppliers selling its products since 2007. Then he was president of BlueGnome , a U.K.-based research company studying chromosomes. The company needed to amplify the minuscule amounts of DNA in a cell, about a billionth of a gram, and licensed Rubicon’s technology to do that. “Three years ago, BlueGnome was sold for $88 million, and 70 percent of that value was based on Rubicon technology,” he said. Today, Gordon is president and CEO of Plymouth-based Genesis Genetics, which runs 11 labs globally that do genetic testing for in vitro fertilization. Genesis Genetics uses test kits supplied by San Diego-based Illumina Inc., components of which are supplied by Rubicon. “Rubicon is undoubtedly a world leader in their area. They’ve found a great niche for themselves,” said Gordon. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

Help salute 40 under 40 Every year, Crain’s 40 under 40 awards program honors high achievers who have made an impact as executives, managers, entrepreneurs and community leaders. This year’s honorees will be recognized at a special event Nov. 19 at the Detroit Marriott Renaissance Center. This year’s winners launched successful companies, grew established firms, took on high-pressure projects and more. Individual tickets for the event, scheduled from 5-9 p.m., cost $80. Tickets for groups of 10 or more are $75 each. For past 40 under 40 winners, the cost is $40 per ticket. A strolling dinner and drinks are included. To register for the event, go to crainsdetroit.com/events or call (313) 446-0300.

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SPECIAL REPORT: UNIVERSITY RESEARCH

Akadeum gets $1M seed; co-founder joins full time By Tom Henderson thenderson@crain.com

There have been two recent votes of confidence for Ann Arbor-based Akadeum Life Sciences Inc ., a 2014 spinoff from the University of Michigan. In October, it finished raising a seed round of $1 million, which will fund product development and beef up sales and marketing. Normally that would be the big news. But that was overshadowed by a late September announcement that co-founder John Younger would quit his day job to devote all his time and efforts to Akadeum. The company has a very specific niche in the lab testing world; it uses what it calls buoyancy activated cell sorting, trademarked as BAGS, to make it easier, cheaper and faster to prepare tissue, water or food samples for testing Younger was a well-funded researcher at UM whose announcement took many by surprise. He said he even got a call from Science magazine asking if it was true. Younger, a physician who has a master’s degree in statistical analysis, was a professor and associate chairman for research in the Department of Emergency Medicine at the medical school. There, he ran his own lab, which was focused on sepsis and bloodstream infections. He was also on the executive committee of the Biointerfaces Insti tute , a multidisciplinary program between the School of Medicine and Dentistry and the colleges of pharmacy and engineering at UM. Younger also sits on the surgery, anesthesia and trauma study section at the National Institutes of Health’s Center for Scientific Review. He said he turned more than $1 million in grants from the National Science Foundation and the NIH over to colleagues in the lab. Younger and Brandon McNaughton founded the company in March 2014. McNaughton is a local tech veteran who has been an entrepreneur-in-residence with Invest Detroit ’s Detroit Innovate Fund, a lecturer at the Center for Entrepreneurship at UM and a consultant for startup companies in UM’s Office of Technology Transfer. Younger is chief scientific officer, and McNaughton is CEO. Michigan eLab LLC, a venture capital firm founded in Ann Arbor by three veterans of Silicon Valley, led the seed round with $150,000. Joining was the Detroit Innovate Fund, Invest Michigan, UM’s MINTS program and Jeffrey Schox, the company’s Silicon Valley-based patent attorney. MINTS — an acronym for Michi gan Investment in New Technology Startups — was created in 2011 to

John Younger: Brandon Co-founder now full McNaughton: time with Akadeum. CEO of Akadeum. allow direct investment by UM in its spinoff companies. In September, the school’s board of regents approved up to $2.5 million in equity investments in Akadeum through what could be several rounds of financing. Akadeum has begun putting the seed round to use, hiring a director of sales, Brian Kierce, and a principal research scientist, Leo Ostruszka, who was a research scientist at Accuri Cytometers Inc., a medical device company in Ann Arbor sold to New Jersey-based Becton, Dickinson and Co. in 2011. Akadeum now employs four at its headquarters and lab south of Ann Arbor. Akadeum was unusual for a biotech startup when it got its first commitment for funding of its seed round from Michigan eLab last January. At the time, it had eight paying customers, a total that McNaughton said has more than doubled. Akadeum’s patented technology involves tiny glass beads, which the company calls microbubbles. They are coated with antibodies to quickly gather and concentrate such antigens as toxins, bacteria or viruses. The microbubbles are about 15-18 microns in diameter. There are 25,400 microns in an inch. While traditionally it can take two or three days to grow enough target cells in a culture to make an identification, Akadeum’s technology can reduce that time significantly. The company is about to start marketing the next generation. In the first iteration, customers had to attach their own antibodies. The microbubbles would then be dispersed through the sample. Because they were buoyant, they would rise to the surface as antibodies grabbed onto target antigens, making it easier to gather them up and concentrate them for analysis. Now, Akadeum will offer a suite of microbubbles already attached to any of a suite of 10 common antibodies. It will also do custom microbubbles for customers working with other antigens. McNaughton said the plan is to achieve some internal milestones, including ramping up sales, before going out to raise a substantially larger Series A funding round. Melanie Tomczak is director of

the biological and nanoscale technologies division at Dayton, Ohiobased UES Inc., which does projects for the Air Force Research Laboratory at Wright-Patterson Air Force Base. “We’re building a water-quality sensor that will be looking for pathogens like e-coli, and their products take large equipment and multiple stages out of the process,” she said. “We’re really excited to work with them.” William Hyun, director of the Laboratory for Advanced Cytometry at the University of California, San Francisco , a new customer, said, “Cell isolation technologies are becoming more and more important. Everyone is looking for easy, simple, low cost, and this promises to take care of all three. As far as early-stage technologies go, this is as promising as I’ve seen.” He said the company’s microbubbles promise to be far superior to magnetic beads, an established technology with many limitations, and far cheaper than cell-sorting cytometers, which can cost hundreds of thousands of dollars. “This can be a paradigm shift,” he said. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 2 , 2 0 1 5

CRAIN'S LIST: INTELLECTUAL PROPERTY LAW FIRMS

% ! #%

Rank ' #

$ ! " ( )

! ! &! % #% #% ! & ! * # # *

Mark Cantor president

77 75

Brooks Kushman PC 1000 Town Center, 22nd Floor, Southfield 48075 (248) 358-4400; www.BrooksKushman.com

Harness, Dickey & Pierce PLC 5445 Corporate Drive, Suite 200, Troy 48098 (248) 641-1600; www.hdp.com

Executive committee

58 62

6,796

Dickinson Wright PLLC 500 Woodward Ave., Suite 4000, Detroit 48226 (313) 223-3500; www.dickinsonwright.com

William Burgess CEO

38 34

170 160

David Foltyn chairman and CEO

34 32

214 204

3,778

Trademark and copyright, patent and intellectual property litigation practice groups

Honigman Miller Schwartz and Cohn LLP 2290 First National Building, 660 Woodward Ave., Detroit 48226-3506 (313) 465-7000; www.honigman.com

Howard & Howard Attorneys PLLC 450 W. Fourth St., Royal Oak 48067 (248) 645-1483; www.howardandhoward.com

Mark Davis president and CEO

30 31

66 67

1,253

Patents, trademarks, copyrights, licensing, technology acquisitions or sales; patent infringement, trade secret, trademark and unfair competition; copyright infringement enforcement and defense

Young Basile Hanlon & MacFarlane PC 3001 W. Big Beaver Road, Suite 624, Troy 48084 (248) 649-3333; www.youngbasile.com

Andrew Basile Jr. president

26 29

26 30

714

Patent and trademark litigation, prosecution and counseling; technology-related transactions, including licensing, acquisitions and divestitures; representation of emerging growth companies; and commercial and employment litigation

Reising Ethington PC 755 W. Big Beaver Road, Suite 1850, Troy 48084 (248) 689-3500; www.reising.com

William Francis chairperson and president

20 19

920

Patents, trademarks, copyrights, trade secrets, counseling, opinions, portfolio management, litigation

Carlson, Gaskey & Olds PC 400 W. Maple Road, Suite 350, Birmingham 48009 (248) 988-8360; www.cgolaw.com

Theodore Olds III president and CEO

20 19

1,761

Patents, trademarks, copyrights, trade secrets - worldwide. Intellectual property and commercial litigation

Brinks Gilson & Lione 524 S. Main St., Suite 200, Ann Arbor 48104-2921 (734) 302-6000; www.brinksgilson.com

Steven Oberholtzer managing partner Ann Arbor

17 16

Patent prosecution, intellectual asset management, trademark litigation, green tech licensing, biotech/pharma, nanotechnology

Bodman PLC

Ralph McDowell chairman

16 16

136 131

Quinn Law Group, PLLC

Christopher Quinn president

16 16

Dinsmore & Shohl LLP B 2701 Troy Center Drive, Suite 330, Troy 48084 (248) 647-6000; www.dinsmore.com

Thomas Anderson office managing partner

16 16

2,701

Fishman Stewart Yamaguchi PLLC C 39533 Woodward Ave., Suite 250, Bloomfield Hills 48034 (248) 594-0600; www.fishstewip.com

Michael Stewart and Michael Fishman founding partners

15 21

Trademark, copyright, patent, patent prosecution, trade secrets, social media, due diligence, litigation

Miller, Canfield, Paddock and Stone PLC

Michael McGee CEO

13 12

139 138

Patents, trademark, copyright and trade secret prosecution, counseling and litigation

Warner Norcross & Judd LLP

William Jansen executive partner

12 7

38 38

Copyright law, intellectual property, IP enforcement and litigation, patent prosecution and portfolio management, technology and IP licensing, purchase and sale, trademark portfolio and brand management

Cantor Colburn LLP

Scott McBain partner

11 11

7,278

The Dobrusin Law Firm PC

Eric Dobrusin president and shareholder

10 7

11 8

824

Patent practice, trademark practice, IP strategy and counseling, patent opinions, IP due diligence, technology transfer, government contracts, customs enforcement

Bejin Bieneman PLC

Thomas Bejin and Charles Bieneman members

10 6

306

Patent prosecution, IP litigation, trademarks, licensing, due diligence

Garan Lucow Miller PC

John Gillooly chairman of executive committee

7 7

66 67

Trademark, trade dress and copyright infringement actions, litigation, trademark, trade dress and copyright applications, trade secret, confidentiality, non-disclosure or non-compete clauses

Darrow Mustafa PC D 410 N. Center St., Suite 200, Northville 48167 (248) 864-5959; www.darrowiplaw.com

Christopher Darrow president

7 0

8 0

168

Floor at Ford Field, 1901 St. Antoine St., Detroit 48226 10 Sixth (313) 259-7777; www.bodmanlaw.com Orchard Hill Place, Suite 520, Novi 48375 10 39555 (248) 380-9300; www.quinnlawgroup.com

W. Jefferson Ave., Suite 2500, Detroit 48226-4415 14 150 (313) 963-6420; www.millercanfield.com Town Center, Suite 2700, Southfield 48075-1318 15 2000 (248) 784-5000; www.wnj.com W. Big Beaver Road, Suite 1101, Troy 48084 16 201 (248) 524-2300; www.cantorcolburn.com W. Lawrence, Suite 210, Pontiac 48342-2813 17 29 (248) 292-2920; www.patentco.com River Place, Suite 1650, Detroit 48207 17 300 (313) 528-4882; b2iplaw.com Brewery Park Boulevard, Suite 200, Detroit 48207 19 1155 (313) 446-1530; www.garanlucow.com

Patent prosecution, trademarks, intellectual property litigation, post-grant proceedings, open source compliance, IP due diligence, trade secrets, licensing, copyrights, legal IT consulting, compliance and e-discovery, technical design consulting Patents, trademarks, copyrights, litigation, transactions/due diligence, anticounterfeiting, foreign rights, appellate litigation Intellectual property, business technology, copyrights, patents, trademarks, intellectual property and trade secrets litigation

Technology transfer, IP litigation, digital publishing, trademark selection, registration and licensing, economic espionage, entertainment Patents and trademarks

Patent, trademark and copyrights

Litigation, patents, trademarks and copyrights, licensing, opinions

This list is an approximate compilation of intellectual property firms in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the firms. Firms with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available.

B Formerly Gifford, Krass, Sprinkle, Anderson & Citkowski PC. Was acquired by Cincinnati-based Dinsmore & Shohl LLP in September 2015. C Formerly Rader, Fishman & Grauer D Opened May 11, 2015. LIST RESEARCHED BY SONYA D. HILL

SPOTLIGHT: IP LAW BOOSTS REGIONâ&#x20AC;&#x2122;S FLAT LEGAL JOB MARKET, DRIVES M&A AMONG FIRMS By Chad Halcom chalcom@crain.com

Intellectual property law continued to be a hot spot in an otherwise flat job market for legal services in 2015, and has even become a driver for recent mergers and acquisitions among business law firms this year. Top law firms in Southeast Michigan collectively employed 484 IP attorneys in Janu-

ary 2015, compared with just 355 attorneys across the region in January 2008, the first year that Crainâ&#x20AC;&#x2122;s Detroit Business ran the IP list, for nearly 37 percent growth over the period. By comparison, the total employment in legal services was about 1.12 million earlier this year, off about 35,000 from early 2008, and averaged about 0.5 percent growth

over the year-ago period in recent monthly jobs reports from the Bureau of Labor Statistics. Legal management consulting firm Altman Weil Inc. reports that intellectual property boutiques have been a popular acquisition target this year, accounting for four of the 20 law firm acquisitions in the third quarter alone.

Local firms growing the most over the period by local IP attorney headcount were Southfield-based Brooks Kushman PC (30 attorneys) and Detroit full-service business law firms Honigman Miller Schwartz and Cohn LLP (29 attorneys) and Dickinson Wright PLLC (16 attorneys). äĄ˛ Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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16 TUESDAY

CALENDAR

NOV. 3

Release of 2015 Michigan Women’s Leadership Index. 11:30 a.m.-1:30

p.m.Inforum Center for Leadership. Inforum publishes the index, a snapshot of the leadership role of women in Michigan’s top 100 public companies. Ruby Sharma, principal, EY Center for Board Matters, will lead the conversation. Marriott Renaissance Center, Detroit. $40 Inforum members, $60 nonmembers, $25 students, $800 sponsor for table of 10 including company logo recognition in event presentation and event signage. Website: inforummichigan.org.

TUESDAY-WEDNESDAY NOV. 3-4

Michigan Green Chemistry and Engineering Conference. Michigan

Department of Environmental Quality. Topic: Advancing toward a safer and sustainable future. Keynote speakers: Andy Hoffman, professor and director, Erb Institute, University of Michigan, and Deborah Mielewski, senior technical leader of sustainable materials and plastics research, Ford Motor Co. University

of Michigan, Ann Arbor. $75, $25 students. (Pre-conference workshop Nov. 3, “Green Chemistry and Engineering 101,” costs $25, $15 for students.) Contact: Chad Rogers, (517) 284-6872; email: rogersc1@michigan.gov.

THURSDAY

together global leaders in industry and academia to share, debate and strategize to advance the worldwide practice of operations. Ross School of Business, University of Michigan, Ann Arbor. $100 industry, $50 alumni, $20 students. Contact: Theresa Ceccarelli, (734) 647-0308; email: tceccare@umich.edu.

NOV. 5

Executive of the Year Luncheon.

11:30 a.m.-1:30 p.m. Detroit Executives Association. Crain’s Detroit Business Group Publisher Mary Kramer will be honored as executive of the year. Detroit Athletic Club, Detroit. $50 individuals, $320 table of eight, $390 table of 10. Registration deadline is Nov. 3. Contact: June Cox, (226) 783-1565; email: execdir@detroitexecs.com. Disrupting the Competitive Landscape Through Operations. 8

a.m.-5 p.m. Tauber Institute for Global Operations, University of Michigan. The conference brings

100 Years in Business — How Companies Survived and Thrived in Detroit. 7:30-9 a.m. Turnaround

Management Association, Detroit chapter. Listen to leaders of three local businesses describe how their companies have made it — from the early days of the automobile to today’s social media world. Panel includes Jason Grobbel, president, E.W. Grobbel Sons Inc.; David Lubin, president, MJS Packaging; Mike Medici, president, SmithGroupJJR; and moderator Tim Weed, partner, Plante Moran. Oakland Hills Country Club, Bloomfield Township. $35 members, $55 guests. Contact:

Sharon Kimble, (734) 757-4689; email: detroit@turnaround.org. Journey From Corporate Executive to Female Founder. 7:30-9 a.m.

Inforum Center for Leadership. Join the Role Model and Investor Series at the sixth annual Accelerate Michigan Innovation Competition for a conversation on the pivotal shift from corporate leadership to entrepreneurial venture. Meet startup veteran Christine Gibbons, president and CEO, HistoSonics; and first-time founder Denise Christy, CEO, iSelect Custom Benefit Store. Westin Book Cadillac, Detroit. Free; registration required. Website: inforummichigan.org. 䡲 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.

ADVERTISING SECTION

Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonthemove. Brief online listings for management-level positions are available at no cost, at editor’s discretion. Guaranteed print placement in this promotional feature can be purchased at the website above.

FINANCE

REAL ESTATE

TECHNOLOGY

Jon Vigi Jr

Tim McCafferty

Nick Lumsden

Financial Advisor,

Vice President of Construction,

Vice President of Technology and Product Strategy,

UBS Financial Services Inc. Jon Vigi Jr. joins UBS Financial Services Inc. as Financial Advisor in the Birmingham Michigan Wealth Management Office. Jon will work with the Vigi Wasserbaech Private Wealth Management team specializing in investment analysis and financial planning.

REAL ESTATE Samantha Eckhout Vice President of Development,

REDICO McCafferty is responsible for supporting design, engineering and construction of new commercial developments at REDICO. His current focus is on mixed-use and build-to-suit projects, including the redevelopment of the Fisher & Kahn Buildings. He was previously senior project manager and joined REDICO in 2007. Immediately prior to joining REDICO, McCafferty was director, design & construction consulting services at the Staubach Company. He holds a Bachelor's of General Studies from U of M.

Online Tech Online Tech has promoted Nick Lumsden to Vice President of Technology and Product Strategy, effective immediately. In 2013, he joined Online Tech as Senior Director of Operations and Product Strategy, responsible for the full technology stack within the company’s five Midwest data centers, including network and cloud infrastructure. After being named vice president, he now assumes responsibility for the gross margin, uptake and profitability of new products as well as management of them.

REDICO Eckhout is primarily focused on American House development and renovation projects. She is in charge of sourcing and the successful delivery of senior housing developments, including management of planning, design and construction. Eckhout joined REDICO in 2013 as senior project manager. Immediately prior to her role, she managed American House projects in a consulting role for four years. She holds a Bachelor's of Science in Public Administration from Oakland University.

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PEOPLE: SPOTLIGHT Here are some of last week’s executive appointments reported by Crain’s:

Cedo named to Crain corporate marketing role Eric Cedo, who most recently worked as director of audience development for Crain’s Detroit Business and Crain’s Cleveland Business, has been named director of marketing communications for Crain Communications Inc. Cedo, 41, will lead the Detroit-based company’s marketing strategy and external communications, especially for Cedo brand awareness, community engagement and media relations. Cedo joined Crain in 2012 as director of integrated marketing for Crain’s Detroit Business and was promoted in 2014 to director of audience development. Prior to joining Crain, Cedo spent 12 years in various marketing and communications positions, most recently as director of marketing for Bloomfield Hillsbased Unitask Inc.

Joseph joins Rock Gaming as VP for new postition Gayle Joseph, who has spent three decades in metro Detroit public relations, was hired for the newly created position as vice president of communications for Detroit-based Rock Gaming Joseph LCC, which includes Greektown Casino-Hotel. Most recently, Joseph, 57, was an executive vice president in metro Detroit for New York Cityand Chicago-based PR giant Edelman. Before that, she was partner/managing director at Lambert, Edwards & Associates .

OU hires FCA exec; new post Oakland University is creating a COO position for Scott Kunselman, who will join the administration after his retirement Nov. 30 as senior vice president of safety and regulatory affairs at Auburn Hillsbased Fiat Chrysler Automobiles US LLC.

Kunselman, 52, is wrapping up 30 years at the automaker and had served on OU’s board of trustees since 2012. 䡲 Kunselman

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Leapfrog CEO: Health cost transparency driven by fear of ‘Cadillac tax’ By Jay Greene jgreene@crain.com

One of the driving forces in pushing employers to demand more transparent price and quality information from health care providers apparently comes from an unlikely source: the Patient Protection and Affordable Care Act of 2010, or Obamacare. And the provision in Obamacare that is responsible for employer enthusiasm for providers and health insurers to open up the books on prices and quality is the so-called “Cadillac tax” on expensive health plans. That is one of the conclusions offered by Leah Binder, CEO of Washington, D.C.-based The Leapfrog Group , in a keynote address to 500 attendees at Crain’s seventh annual Health Care Leadership Summit. When the “Cadillac” tax provision — which imposes a 40 percent excise tax in 2018 on employers that spend more than $10,200 on an employee for health insurance or $27,500 for family coverage — was written, its authors expected few employers would hit that threshold and be subject to the tax. The idea was that employers would take steps, using various competitive pressures, to force

Crain’s Health Care Leadership Summit highlights Summit highlights 䡲 More than 450 attendees gathered at the Detroit Marriott Renaissance Center to hear Leapfrog Group CEO Leah Binder and three panels of top hospital, physician, insurance and business executives discuss breaking down price and quality information barriers. The panelists agreed that discussion time is over regarding whether health care price and quality transparency is a good idea and should be explored. “Hospitals and insurance companies need to stop hoarding data so physicians can make (patient care) decisions and take the 35 percent of waste out of the system,” said Brian Connolly, former CEO of Oakwood Healthcare, which is now part of Beaumont Health. Offering transparency to a consumer like Dorothy is like “pulling back the curtain” on the “Wizard of Oz,” said Jay LaBine, M.D., chief medical officer of Priority Health.

䡲 When employees have the right health care tools, they will choose the best and often least expensive options for their health care, according to a panel of Detroit-area human resources executives. “If the tool is easy to use and relevant to people, they will use it,” said Jessica Gubing, director of North America health, welfare and wellness programs at General Motors Co.

health insurers, doctors, hospitals and other providers to lower prices and develop reimbursement schemes to reduce the inappropriate use of services. Employers have done some of that, including demanding more price and quality transparency for employees, but the clock is ticking down to 2018, and the number of

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employers who expect to exceed the Cadillac tax threshold actually is increasing. A survey of employers who have crunched the numbers showed that 62 percent believe they will be subject to the tax by 2018 and 74 percent by 2020. “The majority of employers are expected to reach that (spending

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threshold) by 2018” because of inflation and rising prices, Binder said. “They don’t want to pay it” and are taking several steps to avoid it. Employers currently average $17,505 spent for family coverage now, Binder said. While employers have been experimenting with many methods to lower health care costs to avoid paying the Cadillac tax, Binder said, demanding transparency and moving away from fee-for-service payments and to value-based reimbursement is at the top of the list.

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Leah Binder, CEO of The Leapfrog Group, addresses summit participants.

Value-based reimbursement has many definitions. But essentially it means that employers and insurers contract with providers that can prove they offer the best price for the highest quality on the widest number of procedures, tests and treatments. Employer strategies to reduce health care costs include contracting with private companies that offer transparency tools, moving to high-deductible health plans, direct contracting with providers that offer best value, using narrow provider networks that select highquality players, and reference pricing, Binder said. For consumers, who are increasingly being asked to foot more of the employer health care bill by increasing co-pays, deductibles and premiums, Binder said their solution is to become “shoppers.” “We will be talking about this more and more.” Already, an increasing number of organizations, including Leapfrog, the Joint Commission , Centers for Medicare and Medicaid Services and private companies like Healthcare Bluebook are beginning to publicly report quality and price data. 䡲

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û EXECUTIVE DIRECTOR POSITION û For a South East Michigan Business Trade Association Located in South East Michigan Seeking a person with Business Administration skills and political interest. Some familiarity with the Construction Industry is helpful. The position is full-time and for a career minded person. The pay is salaried based on experience and includes vacation pay, health insurance, 401K and vehicle mileage. Serves as the Executive Officer, responsible for the effective conduct of the affairs of the Association. Supervises staff members. Recommends and participates in Board formulation of association mission, goals and objectives and related policies. Within that framework plans, organizes, coordinates, controls, and directs the staff, programs and activities of the association. Works at generating new members and retaining existing members. Interested persons please forward a resume, references and pay requirements to:

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HiAMS-AM seeks Proj Manager

GM Financial Co seeks ETL Dev - Int’l Ops: Req BS in Comp Eng or CS & 5 yrs delivering BI & Data Warehouse solutions. Min travel req. Position in Detroit, MI.

[Req HR2015-02] Serve as a Global Cross Functional team leader driving the design, dvlpmt & mfg process interface. Job location, Farmington Hills, MI. Mail resume to Hitachi Automotive Systems Americas, Inc. Attn: T. Menning, 34500 Grand River Ave., Farmington Hills, MI 48335. Must ref req# to be considered.

REQUEST FOR PROPOSALS

REQUEST FOR PROPOSAL The Detroit-Wayne Joint Building Authority (D-WJBA) owner/operator of the Coleman A. Young Municipal Center (CAYMC) is seeking proposals from qualified firms interested in providing Janitorial Services at the Coleman A. Young Municipal Center. The Coleman A. Young Municipal Center is a 745,000 square foot office building located in the heart of downtown Detroit. Mandatory site walkthrough’s will be held in the 13th floor Erma Henderson Auditorium located in CAYMC on Thursday, November 5, 2015 at 10:00 AM Detailed Request for Proposal may be obtained on or before 10:00 AM Thursday, November 5, 2015 by appearing in person at: The Coleman A. Young Municipal Center 2 Woodward Avenue, Suite 1316 Detroit, Michigan 48226 Or Submit a request via e-mail to Mike.Kennedy@Hines.com Interested firms must submit (4) four sealed bid copies no later than Friday November 13, 2015 at 10:00 AM (with public opening to follow) To: Detroit -Wayne Joint Building Authority Coleman A. Young Municipal Center 2 Woodward Avenue, Suite 1316 Detroit, MI. 48226 Attention: Michael Kennedy Property Manager

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CRAIN’S CLASSIFIEDS WORK! To Place Your Ad Call (313) 446-6068 or Fax (313) 446-0347

CrainsDetroit.com/JobConnect |

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Because of ProTom’s unspecified delays, Lane said, McLaren was forced to hire at least five subcontractors and several consultants to help it complete the project. Lane didn’t specify what caused the delays. “We hired the subcontractors before ProTom filed for bankruptcy,” said Lane, declining to name the subcontractors or consultants. He said they include a legal counsel to the Food and Drug Administration and software consultants. “We have made great progress since our team assumed project management” duties, Lane said. Proton beam therapy is a controversial form of megavoltage radiation that has been suggested by some to be effective in some prostate and pediatric cancers because it causes less damage to surrounding tissues while directing high dosages at tumors. Critics say the therapy is still unproven and that its high cost and similar effectiveness compared with existing treatments makes it an unnecessary and expensive technology. However, supporters contend patients are treated more effectively because proton therapy can more precisely target the tumor with lower radiation doses to surrounding nor-

PATHOGEN FROM PAGE 1

to radiation or nuclear materials. Having raised $200,000 in seed funding, including $100,000 from angel investor Paul Glantz, co-founder and chairman of Troy-based Emagine Entertainment Inc., company officials have begun approaching local venture capitalists for the $1.5 million they say they need to get to market. They say they would use the funding to make 20 hand-held prototypes to be used in beta testing at medical and veterinary facilities. The plan is to generate enough good data to win the business of beta testers and start producing revenue next year. The company was founded in 2011 by Greg Auner, director of the Smart Sensors and Integrated Microsystems program in the College of Engineering at Wayne State; Charles Shanley, M.D., a surgeon and professor at both the Wayne State’s medical school and the Oakland University William Beaumont School of Medicine; and Mark Trexler, the CEO for more than the last 20 years of Technical Enviro Ser vices, an environmental consulting firm based in West Bloomfield Township. Medical Engineering has been developing its sensor-based technology and algorithms since being founded, getting to the prototype stage before going out for equity capital. Shanley, who gave a presentation on the company’s technology at the TEDx Detroit event at the Fox Theatre in Detroit on Oct. 8, is the CEO; Auner is chief technology officer, and Trexler is COO. WSU’s board of governors approved a license for Medical Engineering in July. Medical Engineering’s devices are based on Raman spectroscopy,

MCLAREN HEALTH CARE

McLaren Health Care’s planned opening of a proton beam cancer treatment center in

Flint is expected to be delayed at least until next spring. mal tissues. The therapy has also has been used to treat lung cancer and cancers of the head and neck, although criticism has always centered on lack of peer-reviewed clinical trials. Lane said McLaren’s sub-vendors will provide all the parts and necessary software to keep the proton beam technology operational. “We were very disappointed. It’s unfortunate, and we can’t change what happened, but we are moving forward,” Lane said.

named for Chandrasekhara Venkata Raman, who won the Nobel Prize in physics in 1930 for his discovery that when light passes through a transparent material, some light deflects and changes wavelength. Medical Engineering’s prototypes target suspected pathogens or contaminants with laser beams. The company’s database compares the resulting fingerprint of scattered light against a cloud-based database of fingerprints it has stored from previous tests it conducted as it built up a large library of fingerprints. The result is in many cases being able to determine in 100 milliseconds what pathogen needs to be dealt with and how, whether it’s something causing an infection in a patient or has contaminated food or water. Current devices using Raman spectroscopy are table size, which prohibits them from going into the field or to a patient’s bedside. Fluid or tissue specimens taken from a patient must be cultured for several days, growing enough pathogens for an identification to be made. And it might take three to five more days to determine if detected bacteria are antibiotic resistant. There is no need for Medical Engineering to grow cultures from samples gathered bedside. The laser is aimed at a sample, and if there is a pathogen, it is generally identified almost instantaneously, say the company’s founders. Fingerprints available in Medical Engineering’s database include methicillin resistant staphylococcus aureus (MRSA), all flu types, rhinovirus, human papillomavirus, E. coli and various staph infections. And because the shape of bacteria are altered as they become disease resistant, Medical Engineering’s technology can tell if an illness is being caused by a bacterium that is resist-

McLaren officials said the center is expected to treat 100 patients per day at full capacity with its three rooms, including one for pediatrics. “We don’t envision any disadvantages with running the proton beam center” without ProTom and by using subcontractors and consultants, Lane said. “It is the same product.” McLaren’s proton beam machinery and Radiance 330 cyclotron was made in Russia and shipped to Michigan four years ago. But con-

struction and approval by the FDA took several years to complete. The road to opening Michigan’s first proton beam center has been arduous for McLaren, and Southfieldbased Beaumont Health, which was the first system in Michigan to propose a proton beam center, in 2008. In 2017, Beaumont plans to open a $40 million, single-room proton beam facility on its Royal Oak campus. Beaumont is developing its project with Proton International, an Atlanta-based proton therapy development group. When Beaumont completes its two-story building, the 17,000square-foot proton center will be on the first floor with an 8,000-squarefoot second floor that will house Beaumont Children’s Hospital’s pediatric oncology and hematology program. Nationally, there are 13 proton beam therapy centers operating and at least 12 more facilities are in development, according to the National Association for Proton Therapy. Depending on the size of the center, costs range from $30 million to more than $200 million. Joe Spallina, a consultant with Ann Arbor-based Arvina Group LLC, said many proton beam centers are seeing fewer patients than expected, leading some to speculate that new centers might have a rough go.

LARRY PEPLIN

Greg Auner (seated) demonstrates the loading of a sample specimen into a prototype of the field unit device along with Mark Trexler (center) and Dr. Charles Shanley.

ant to a particular antibiotic, and what alternative antibiotic would be best to use instead. Tom Shehab, the former chief of staff at St. Joseph Mercy Hospital in Ann Arbor who is now a principal at Arboretum Ventures LLC, a venture capital firm in Arbor that invests in medical-device companies, has had a preliminary meeting with Medical Engineering officials. He said it is commonplace for a physician not to know what is causing a patient’s illness, and that there is no quick and easy way to find out. The result, he said, is often an overreliance on antibiotics that don’t work, which also worsens the growing problem of antibiotic resistance. “Both for severe infections and unusual epidemic infections, we often take a shotgun approach. We throw the kitchen sink at someone if they are sick and we don’t know what they have. The sooner we know the right bug and its resistance pattern, the better,” he said.

While acknowledging that Medical Engineering is still in the early stage, Shebab said: “The technology is intriguing. Hopefully, they’ll continue to make progress.” Martin Dober, vice president with Invest Detroit, which manages two early stage investment funds, has also met with Auner and Shanley. “The technology is interesting, and we’d be interested in taking a deeper look at it as things progress and they get closer to commercialization. We haven’t begun due diligence yet, but we’re interested in learning more,” he said. Trexler said the company has hired a consultant to plan a path toward approval by the U.S. Food and Drug Administration , which is required for use on humans. Since FDA approval is not needed for veterinary, food or environmental applications, those markets will be targeted first. He said he is negotiating with a company that has 300 veterinary practices in the U.S. to beta

“I view proton as a maturing market” with several major manufacturers and several smaller players competing for business, Spallina said. “Some startup manufacturers are running into capital and governance challenges. It is not surprising, because there has been a lot of promotional selling.” While Medicare pays for prostate cancer proton therapy, Spallina said, proton centers need to generate at least 50 percent of their business from commercial insurance or selfpay to cover their higher overhead costs. “The reality is payers are reluctant to pay higher rates for services that can be done less expensively by (traditional cancer centers),” he said. “Cancer centers are not going to give up that volume to proton beam.” In 2008, the Economic Alliance for Michigan began opposing plans for several proposed proton beam centers, primarily because of the high construction costs and lack of evidence of superior treatment over traditional cancer therapies. “We still feel the same. Proton beam technology is expensive and only increases health care costs without proving additional patient value,” Jackson said. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

test prototypes as they are made. He expects data from those tests to quickly lead to sales and revenue. “We think we’ll be selling devices to vets within a year,” he said. Robert Gougelet, who recently retired as an emergency physician at the Dartmouth-Hitchcock Medical Center in New Hampshire and was the longtime vice chairman of the National Advisory Council of the Federal Emergency Management Agency, has agreed to serve as liaison for Medical Engineering with various federal agencies. As a national expert in emergency preparedness, he said federal agencies he has worked with over the years include the National Institutes of Health, the National Institute of Allergy and Infectious Disease, the Naval Re search Laboratory, the Department of Homeland Security and the Depart ment of Defense. All are potential large customers for Medical Engineering. “I’ll help open doors for them,” said Gougelet. “What I like about their technology is it is so fast and so broad-based. It’s a very valuable platform that will have a major impact. The technology is fast and accurate, and there’s such a need for it.” Glantz said he met Auner about a year ago through his connection to Wayne State as a member of the business school’s board of visitors and chair of the Wayne State University Foundation investment committee. “I benefited from early stage funding in my career. My theater business was all started with an angel investment,” said Glantz, when asked why he became an angel investor in the company. “I see this as a truly disruptive technology. To immediately be able to detect the nature of a pathogen is a game-changer,” he said. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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talent shortage. Why would you want to have half of your talent sitting on the sideline?” Women make up more than half of the talent pool, earning 58 percent of undergraduate degrees and 60 percent of the graduate degrees in Michigan as of 2013, on par with national statistics at the time, Barclay said. And those born in the early 1980s are 33 percent more likely to have earned a college degree by the time they reach 27 years of age than their male counterparts, according to U.S. Bureau of Labor Statistics research based on 2012 data, she said. Additionally, women will soon be the majority of college-educated workers in the U.S., based on the education pattern of young workers, according to the “Eleven Facts About American Families and Work” report released by the Executive Office of the President of the U.S. in October 2014, Barclay said. Yet, a third of Michigan’s top 100 public companies have no women among their executive officers, board directors or top earners, according to the 2015 Michigan Women’s Leadership Report. And just 17 have at least one female director, officer and top-compensated officer. This year, women hold just 11.5 percent of board seats for the state’s top public companies, down slightly from 11.6 percent in 2013. They comprise 13 percent of the executive officer positions at those companies, the same share as two years ago. And female representation among the top earners in their companies has declined from 9.6 percent in 2013 to 8 percent this year, according to the report.

Women as executive officers The “tier two” publicly traded Michigan companies, which have a market capitalization of $100 mil-

Women’s leadership report by the numbers 11.5: Percentage of board members at Michigan’s top 100 public companies who are women, up from 9.6 percent in 2003. 47: Number of Michigan’s top 100 public companies that have no women executive officers. 4: Number of women in the top 5 executive officers at Kelly Services Inc., more than any other top-100 public company. 100: Percentage of Michigan Fortune 500 companies that have at least one woman director.

lion or more but are not counted among the Fortune 500, have the lowest percentage of women among their executive officers, Barclay said. Collectively, those companies reported 304 executive officers in their filings with the U.S. Securities and Exchange Commission; just 32, or 10.5 percent, are women. Among the leaders are Troybased Kelly Services Inc ., which has four female executive officers for the first time, and Grand Rapidsbased Steelcase Inc. which has three, Barclay said. There are no women counted among the top earners at 70 percent of Michigan’s top 100 public companies. And the percentage of women who are among the top five compensated has dropped to 8 percent, or 33 women, this year from 9.6 percent, or 40 women, two years ago, according to the report. With women comprising just 11.5 percent of the board seats at the state’s top 100 public companies this year, board vacancies present an opportunity to increase their ranks on boards, Barclay said. But 74 percent of board seat openings at the state’s 17 Fortune 500 companies this year were filled with male directors. Twentysix men and nine women were seated on the boards of those companies. Among the leaders in appointing

women to their boards were Kellogg and CMS Energy, which both added two female directors this year, Barclay said. “Those are standouts,” Barclay said.

Board progress at big companies In the midst of it all, the state’s Fortune 500 companies have advanced in one area: For the first time since Inforum’s 2003 launch of the report, there’s at least one woman on the board at all of the state’s Fortune 500 companies. And the percentage of women on the board of those companies increased this year to 21 percent from 17.4 percent two years ago, led by GM and Kellogg, each with five women on their boards. “Michigan is slightly ahead of the country in that regard,” Barclay said, noting that nationally, 19 percent of the directors at all Fortune 500 companies are women. “Inforum’s study is an important source of information for the UAW Retiree Medical Benefits Trust’s work on achieving gender equality on boards in Michigan,” Patricia McCarthy, a spokeswoman for the trust, said in an emailed statement. The trust has been using Inforum’s studies since 2011 to guide that work, she said. In an August article, Bloomberg Businessweek quoted the trust’s chief corporate governance officer, Meredith Miller, as saying the trust since 2010 has been on a letter-writing campaign to press the companies it invests in to add women to their boards. She pointed to growing evidence that diversity among top officers and board members improves the bottom line, according to Bloomberg Businessweek. Four of the 34 companies it’s reached out to so far, including Deerfield, Ill.-based CF Industries Holdings Inc. (NYSE: CF) and Visteon Corp . (NYSE: VC), have added female directors, according to the magazine. 䡲

New state program connects legal immigrants to careers By Dustin Walsh dwalsh@crain.com

The state of Michigan will announce the launch of a new program Monday to connect employers with legal immigrants with advanced degrees. The Michigan Office of New Ameri cans in October created the Michigan International Talent Solutions (MITS) program, focused on returning permanent work-authorized immigrants to the careers they once held in their home countries. The goal is to fill some of the estimated 95,000 open jobs in the state, said Annie Fenton, program director. “There are jobs that aren’t getting filled, and we’re seeing shortages in the STEM (science, technology, engineering and math) fields,” Fenton said. The program is an extension of a program launched in 2013 with San Francisco nonprofit Upwardly Global to retrain immigrants. That program resulted in the placement of

27 immigrants, resulting in an average annual salary increase of $48,650, said Mike Zimmer, director for the Michigan Department of Li censing and Regulatory Affairs, which oversees the New Americans office. MITS will take aspects of the previous program, including job placement, in-house while Upwardly Global will retain onboarding services , Zimmer said. The program has a budget of $280,000 through September 2016 and plans to place 56 immigrants. To qualify for the program, immigrants must have legal status, have a bachelor’s degree or higher, have lived in the U.S. for fewer than five years and have at least a year of professional experience outside the U.S. in their degreed field. Fenton said more than 50 percent of the participants in the Upwardly Global program had master’s degrees or higher. 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

6 state Medicaid health plans appeal rebid By Jay Greene jgreene@crain.com

Six Medicaid health plans in Michigan have appealed the state’s contract rebid decisions on serving more than 1.7 million Medicaid beneficiaries, according to information obtained by Crain’s. They are HAP Midwest Health Plan, Sparrow PHP , Meridian Health Plan of Michigan , Molina Healthcare of Michi gan , F i d e l i s S e c u r e C a r e o f M i c h i g a n and Total Health Care. While decisions on the appeals won’t be made until mid-November before the State Administrative Board, the hundreds of pages of documents submitted by the six health plans in their appeal show the decisions won’t be easy to make. At stake for all 11 of the state’s Medicaid HMOs is a six-year contract worth $42 billion.

Every four years or so, the state Medicaid program, which is now under the Department of Health and Human Services, issues RFPs to rebid Medicaid contracts with the state’s health plans. This time around, the Medicaid program decided to bid out the contracts based on a 10-region approach, rather than by each county, as it had previously done. There were two major losers in the bidding: Sparrow Health System, which owns Sparrow PHP, a profitable 20,000-member Medicaid HMO, and HAP Midwest, a 100,000-member health plan owned by Henry Ford Health System. Both Sparrow PHP and HAP Midwest are financially successful health plans with above-average national quality ratings. If appeals are lost, Sparrow PHP

will be out of business in the Medicaid market, and HAP Midwest is likely to lose half its members, as the region from which it was shut out — Southeast Michigan — includes Medicaid-beneficiary-rich Wayne, Oakland and Macomb counties. 䡲

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Oct. 23-29. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. 䡲 J & L Marks Properties LLC, 6263 Milan-Oakville Road, Milan, voluntary Chapter 7. Assets and liabilities not available. Dustin Walsh

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New WSU school seen as catalyst for district By Bill Shea bshea@crain.com

The deal to build Wayne State University’s new business school in the mixed-use entertainment district anchored by the new Detroit Red Wings arena is a business development strategy torn straight from the playbook of a hockey rival. In Columbus, Ohio, the owner of the Columbus Blue Jackets has spent 15 years populating 75 acres around Nationwide Arena with not only chain restaurants, hip bars and funky apartments, but also corporate headquarters and more than 1 million square feet of Class A office space. That’s the recipe to create density both day and night, year-round, urban planners say. It was announced on Friday that Red Wings owner Mike Ilitch will donate $40 million to Wayne State for construction of a 120,000square-foot multistory building of classrooms, offices and other spaces for about 4,500 students. The facility, expected to open sometime in 2018, will be called the Mike Ilitch School of Business. Wayne State will seek another $15 million to cover the full cost of the facility. Real estate and development insiders laud the decision to bring the business school into the arena district because they say it will create long-term growth. “I like the thinking that’s going on; I like the approach because it has long-term, sustainable objectives built into it,” said Michael Cooper, president of architecture firm Harley Ellis Devereaux Corp. and managing principal of its Southfield office. “It builds buzz, it creates energy, and it gets people coming down there.” More important, it will convince people to stay longer or live nearby rather than going to a game or event and then returning to the suburbs, he said, and that will encourage entrepreneurs to invest in the neighborhood by building apartments and small businesses. “When you introduce the academic component, you’ve got students, staff and faculty living there,” Cooper said. “You’re going to see things that come with neighborhoods, the everyday retail. Those things follow college students. “It’s housing and full-time residents that allow the small businesses to develop.” The business school becomes a second anchor after the $532.5 million arena for the district. “Anchors are important, and I don’t know if there’s a stronger anchor than an educational anchor,” Cooper said. “People are there all the time, people who want to live nearby, and all the things that come with students.” Olympia Development of Michigan , the real estate arm of Red Wings owners Mike and Marian Ilitch’s business holdings, has planned a sprawling vision of residential, re-

“It builds buzz, it creates energy, and it gets people coming down there.” Michael Cooper,president,Harley Ellis Devereaux Corp.

tail, commercial and green space on a dozen acres around the arena, and a wider 45-block rehabilitation of the surrounding area billed as The District Detroit. The agreement between Olympia and the city’s Downtown Development Authority to finance (using a mix of public and private money) the arena calls for the Ilitches to invest, or have third parties spend, at least $200 million in ancillary private development to be built concurrently around the arena. Construction of the 20,000-seat arena began in summer 2014, and Olympia has pledged to do the infrastructure work for the wider district. Work on the hockey venue and surrounding district is expected to take three years, with the arena opening in summer 2017. Olympia’s housing plan at the arena site is 184 units, split between 16 planned townhouse units and 168 loft-style and apartment units. A parking garage and green spaces also are part of the plan. Olympia estimates 12 million people will visit the entertainment district annually. The plan is modeled on the 75acre Arena District in Columbus, Ohio, developed over the past 15 years by Columbus-based Nation wide Realty Investors, the real estate development arm of Nationwide Mutual Insurance Co. & Affiliated Cos.

That district is built around Na-

tionwide Arena, home of the National Hockey League’s Blue Jackets since 2000. The insurance company is the majority owner of the team. Within that district, which stitches together Columbus’ downtown at the artsy Short North neighborhood, are the usual assortment of bars, restaurants, apartments and other elements of an urban entertainment area. But the district is more than nightlife. It is home to 1.2 million square feet of Class A office space built specifically to be within the Arena District concept. Developers wanted companies to locate their operations within the Arena District to give it year-round daytime density to bolster the nighttime visitors. For example, the six-story, 287,300-square-foot twin-building headquarters for Columbus-based Columbia Gas of Ohio opened in December within the district for $101 million, Columbus Business First reported. District officials say the area attracts 6 million annual visitors and has 17,000 full- and part-time employees and nearly 900 residents. An estimated $1 billion worth of new construction has occurred in the district since 2000, and more is under way. The Arena District has five residential buildings that include nearly 800 apartments. It also has the 11-

screen Arena Grand Movie Theater and restaurants such as Max & Erma’s, Buca di Beppo, BD’s Mongolian Grill , Chipotle Mexican Grill and Ted’s Montana Grill , a bison steakhouse chain co-founded by Ted Turner. The area also is home to the Lifestyle Community Pavilion indoor-outdoor concert venue and the 2.2-acre McFerson Commons park. The area originally was the largely derelict Olentangy Industrial Cluster and the ancient city-owned Ohio Penitentiary, which closed in 1984 and was razed in 1997. Nationwide Realty Investors bought 23 acres from the city for $11.7 million, and then it spent another $11 million for four acres owned by American Electric Power Co. In Detroit, the hockey arena and new development are being built on land that was either empty or the site of buildings that have been vacant for decades. Olympia paid about $40 million to acquire parcels since the 1990s. The District Detroit abuts two other sports venues: Comerica Park, home of the Ilitch-owned Detroit Tigers , and the Detroit Lions ’ Ford Field. In Columbus, the Arena District is home to 10,100-seat Huntington Park, opened in 2009 at a cost of $70 million by Franklin County as the home of baseball’s Triple-A Columbus Clippers. Having a varied mixture of attractions and businesses that keep people in a district regularly is how you make it successful, said Robert Greenbaum, an associate professor of urban and regional economic development at Ohio State University’s John Glenn School of Public Affairs. “The restaurants and bars can’t sustain themselves just from events

The cost of getting your name on a university building To get your name on a university building in Michigan will cost you at least $1 million, and probably a whole lot more. Naming rights for an unnamed building at Central Michigan University require a donor to establish an endowment equivalent to 12.5 percent of the building’s fair market value. Additionally, CMU’s guidelines call for the donor to gift at least $1 million. At Michigan State University , the naming rights guidelines call for the donor to have funded half of a renovation or addition, a quarter of a replacement cost, or half of the cost of a new building. Here’s a sample of significant philanthropy that prompted academic naming rights: 䡲 New York real estate developer and Miami Dol phins owner Stephen Ross gave the University of Michigan $100 million in 2004 for its business school, which was subsequently renamed for him. He gifted it another $100 million in 2013. Ross earned an accounting degree from UM in 1962. 䡲 Eli Broad, a 1954 MSU grad who became a real estate and insurance billionaire, gave the school $28 million for the Eli and Edythe Broad Art Museum, which opened in 2012. In April 2014, Broad gave another $5 million to increase the museum’s exhibition endowment and to provide annual funding for exhibitions for five years. His $20 million donation in 1991 saw the business school and graduate school of management both renamed for Broad.

䡲 UM in 2014 renamed the Dennison Building, built in 1964, as Weiser Hall after a $50 million donation from Ron Weiser, a 1966 Michigan grad and founder of Ann Arbor-based real estate giant McKinley Associates Inc. 䡲 Oakland University alumnus and current trustee

Dennis Pawley, a former executive vice president of manufacturing for DaimlerChrysler, gave $4 million in 2004 that led to OU’s School of Education and Human Services building being named Carlotta and Dennis Pawley Hall. 䡲 Western Michigan University in 2014 named its new medical school for alumnus Dr. Homer Stryker, founder of Kalamazoo-based medical tech firm Stryker Corp. His granddaughter Ronda Stryker and her husband, William Johnston, a WMU trustee, donated $100 million to the school in 2011. 䡲 Ferris State University alumnus Phil Hagerman and his wife donated $5 million to the university’s College of Pharmacy, the largest gift in the school’s history. Hagerman is chairman and CEO of Flintbased Diplomat Pharmacy Inc. The Ferris State College of Pharmacy building will be renamed in honor of the Hagerman family. 䡲 The late A. Alfred Taubman’s donations to UM have resulted in the College of Architecture and Urban Planning ($30 million) and Biomedical Science Research Building ($56 million) being named for him. 䡲

schedules at the arena,” he said. “You need 24-7 activity around there.” Greenbaum, who authored a 2008 economic impact study about the Arena District, said Nationwide was “intentionally patient” and didn’t try to fill the entire district from the start. “They had some properties they purposely didn’t develop. They didn’t want to oversaturate,” he said. “The mix of businesses that work in that space is very different than they planned. You need to be prepared to evolve over time.” That’s a lesson The District Detroit has taken from Columbus. “They understand that it’s incremental,” said Richard Heapes, cofounder and managing partner of White Plains, N.Y.-based StreetWorks, the firm hired by Olympia as urban planning and design consultant of The District Detroit. “You keep adding, you keep talking, you keep envisioning. Amazing things come out of the woodwork because people see opportunities you never saw.” Nationwide has said it paid $450 million, which included the $175 million arena, for development in the district. The Columbus Dispatch newspaper, which had a 20 percent stake in the arena district through its Capitol Square real estate unit, spent $10 million. Private investors spent a further $40 million-plus on building construction within the district. Something Detroit has that could hasten density that Columbus does not is the M-1 Rail streetcar line now under construction on Woodward Avenue. The 3.3-mile loop will link downtown and Midtown up to Grand Boulevard, and will pass in front of the arena and the business school. Ilitch Holdings is paying $6 million to sponsor streetcar passenger stations near the arena at Sibley Street and by the Fox Theatre. One other office building within the district has been announced: Olympia in December said it will build an eight-story, 205,000square-foot headquarters for the Ilitch-owned Little Caesars pizza chain at Woodward Avenue and Columbia Street next to its current headquarters inside the Fox Theatre. It will be built on a vacant lot and connect to the Fox at 2211 Woodward Ave. through a pedestrian bridge. Olympia said the goal is to open it in 2016, and Crain’s has estimated the cost could be as much as $71 million. The 186,000-square-foot Little Caesars Fox Office Center will undergo a renovation as part of the project. The new building will include 25,000 square feet for street-level retail. The renovated Fox will have 12,000 square feet for retail. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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Council.

The university hopes to break ground on a 120,000-square-foot building, to be designed by architect Smith Group JJR, next spring and move most of the growing business school there by the winter semester of 2018. To get under way, the university is interviewing four potential contractors this week and hopes to finalize a deal with one over the next several weeks. “This is a partnership with what’s going on in the larger development district. So we will keep our partner well informed about our plans, and should they express concerns, we’ll take them into consideration,” Forsythe said. Marian Ilitch, owner of MotorCity Casino Hotel, said Friday that a revitalization and business presence in downtown and midtown Detroit was coming along considerably and was one factor in the timing of the family’s investment. “It was partly that, but it was also the right time for us as well,” she said. “Businesses will go up and down over time, and this was an opportune time for us to be able to contribute,” she said. She also said it was important that the contribution specifically commemorate her husband’s legacy of investment in the city more than the family as a whole. “That was not how he (Mike Ilitch) wanted it, and even though I have a business of my own, I

WALGREENS FROM PAGE 3

“However, they also have a risk that maybe they’ll be closed,” Bieri said. Fifteen Rite Aid store buildings in Michigan are corporate-owned, according to CoStar data. An additional 18 are owned by large real estate companies. Among them is Bloomfield Hillsbased A.F. Jonna Development & Management Co., which owns four in the state, three in metro Detroit. And its affiliate, Jonna Cos., also owns two Michigan stores, one local. Bloomfield Hills-based real estate investment trust Agree Realty Corp. (NYSE: ADC) owns four Rite Aid stores in the state, two of them local, and a total of six nationwide, putting it among the top 25 owners

thought it was important to make this commemorate his,” she said. Wayne State’s current school of business administration is in the three-story, 112,000-square-foot Meyer L. and Anna Prentis Building, built for $2.3 million in 1964. The business school also uses the two-story, 12,617-square-foot, windowless Helen L. DeRoy Auditorium , which opened in 1964 at a cost of $600,000. Both buildings were designed by architect Minoru Yamasaki, best known for designing the original World Trade Center. Those facilities will still be used for undergraduate business classes because the main campus is more convenient to students juggling a variety of general education classes, school officials said. Business courses for upperclassmen and graduate school students, board room and meeting space, administration and most faculty offices all would be housed within the new building, Forsythe said. The school of business has about 2,400 undergraduate students, 850 graduate students and about 85 full- and part-time faculty, not including adjuncts — most of whom will be housed completely or primarily in the new building and provide a vital component of daily foot traffic in The District Detroit. Forsythe said graduate enrollment this year is up by nearly 100 over previous fall semesters, and the school could boast as many as 3,000 undergrads and 1,500 graduate students, and 90-plus full-time faculty after it occupies the new building. The gift agreement also calls for

$35 million toward the project cost and $5 million to fund an endowment within the business school, meaning administrators will begin soliciting other donations over the next six months. That could be as much as $15 million, as a piece of the university’s larger $750 million Pivotal Moments comprehensive capital campaign. The university was waiting on that phase of solicitation until details of the Ilitch agreement were finalized, Forsythe said. Now, the search for other support can begin. Philanthropy is increasingly important for colleges as state budget funds for capital improvements have largely vanished in recent years, said Judy Malcolm, senior director of executive communications at the Office of University Development for the University of Michigan . But it’s also typical for projects to need other support. “It’s very rare that you would get a gift that would fund the entire amount,” Malcolm said. For instance, a donation announced in 2013 from Berkshire Hathaway Inc. Vice Chairman Charles Munger is expected to fund $100 million of the estimated $185 million cost of a new graduate student living community. Malcolm said sometimes other donors step up to pay for technology or specific rooms or facilities within a larger project. “There are other things still to name,” she said. A downtown move for WSU’s business school has been in discussion for well over a decade, university officials said. The Ilitches have had previous

discussions with former business Dean Harvey Kahalas, and Forsythe said university President M. Roy Wilson broached the subject in his first conversation with Forsythe as he was seeking the dean position in mid-2014. “Probably eight of the first 10 conversations we had in some way involved a new location downtown for the business school,” he said. School officials also expect the new building might include a coffee shop or diner, but will otherwise be light on restaurant or retail space, since the surrounding district should offer students plenty of options. “Place matters, for all the reasons you might think. Technology, workplace environment, access to (surrounding) facilities,” said Dan Hurley, CEO of the Michigan Association of State Universities. A more modern building, close to major employers where many students hope to find work, can be an enrollment draw and boost tuition revenue, foot traffic and spending in the area over time as well, he said. “It sends a message that they’ll be there for decades to come, and a resource in good economic times and bad,” Hurley said. Forsythe also said the new school building will benefit from the proximity to major employers downtown, along with recent investment and millennial attraction to the city. “Detroit is becoming a destination,” he said. “Finally our location isn’t working against us. It’s working for us in a great way.” 䡲

in the country. CEO Joey Agree said the deal improves the credit quality in the company’s portfolio, but declined further comment. Several other local real estate firms own two Rite Aid stores locally, according to CoStar. They are First

in metro Detroit. Nationally, Agree holds 30 Walgreens buildings. Diamond Holdings LLC, which was incorporated in Troy and whose registered agent is listed as William Fowler, according to state filings, owns five Walgreens locations in Michigan, three of them local. Realty Income Corp. (NYSE: O) holds five Walgreens in Michigan, two of them local. Beyond that, local ownership is largely fragmented.

But it would have to also consider that the more time left on a net lease investment, the more valuable it is in the open market, he said.

Commercial Realty & Development Co. Inc. in Southfield, Grenadier Properties

in Bingham Farms, Southfieldbased Ludwig and Seeley Inc. and Troybased Stuart Frankel Development Co. Beyond that, ownership of Rite Aid locations in the region is heavily fragmented among individual and institutional investors, each owning a single store building. Walgreens owns 76 of its Michigan store buildings, including 15 locally, according to CoStar. Right behind Walgreens as the second-largest owner of Walgreens locations in the state is Agree Realty, with 23 stores, including seven

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Agree Realty Group........................................... 21 Akadeum Life Sciences ................................... 13 Anton, Sowerby & Associates ....................... 21 Beaumont Health ............................................... 1 Center Management Services ......................... 3 Detroit Materials................................................ 9 Detroit Red Wings............................................... 1 Fulcrum Engineering.......................................... 9 Genomenon........................................................ 11 Harley Ellis Devereaux..................................... 20 Inforum Center for Leadership ........................ 3 McLaren Health Care.......................................... 1 Medical Engineering Partners........................... 1

Michigan Office of New Americans ............... 19 Michigan State University ................................ 9 NewEconomyInitiative forSoutheast Michigan. 8 Oakland University ............................................ 9 Olympia Development of Michigan .............. 20 Phasiq ................................................................. 11 Ralph C. Wilson Jr. Foundation ........................ 8 Roak Brewing ...................................................... 9 Rubicon Genomics ........................................... 12 Stokes-Bieri Real Estate ................................... 3 Treeborn .............................................................. 9 University of Michigan ................................ 11, 13 Wayne State University ...................... 1, 3, 9, 20

Conditions to close Bieri said he doesn’t believe Walgreens will rush to close stores if they are profitable. But when it does look at consolidation, as most expect it to eventually, Walgreens will consider several things when looking at stores in close proximity. They’ll look at the age and condition of the building itself, sales of each store, whether one or the other has an advantage when it comes to access and egress, and the time left on the building’s lease. Most pharmacies on hard corners here in Southeast Michigan are pushing 10, 15 or 20 years old, said Joe Sowerby, president of commercial real estate brokerage Anton, Sowerby & Associates in Mt. Clemens. After taking business performance of the stores in close proximity to each other into consideration, Walgreens may look at shutting down the stores that have less time left on leases, Sowerby said.

Chad Halcom: (313) 446-6796 Twitter: @chadhalcom Kirk Pinho contributed to this report.

Ripple effects Strip center landlords could also be hit by the ripple effects of drugstore closings. Those owners may have to make concessions to other tenants in malls anchored by drugstores if those stores close, Bieri said. And they may even have to allow co-tenants to exit their leases, if it was written into the lease agreement. But store closings could provide new opportunity for redevelopment of those locations, Bieri said. Typically, drugstores are 13,00014,000 square feet, and fast casual restaurants like Chipotle or fast casual pizza places are 1,500-2,500 square feet. Fast casual restaurants typically favor outlot locations close to main roads, but because there’s been so little development of new retail space in the last few years in the region, landlords might be able to move fast casual food places into drugstore buildings, Bieri said. And that’s not a bad tradeoff. Where drugstore chains typically pay $15 to $20 per square foot, fast casual restaurants typically pay $30$40, Bieri said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch Kirk Pinho contributed to this report.

CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Marla Wise, (313) 446-6032 or mwise@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Executive Editor Cindy Goodaker, (313) 446-0460 or cgoodaker@crain.com Director, Digital Strategy Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@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 News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill,(313) 446-0402 orshill@crain.com Web Producer Norman Witte III, (313) 446-6059 or nwitte@crain.com Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 , TIP LINE (313) 446-6766

REPORTERS Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry and education. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Sales Manager Tammy Rokowski Senior Account Executive Matthew J. Langan Advertising Sales Christine Galasso, Catherine Grace, Joe Miller, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Audience Development Director Eric Cedo Events Manager Kacey Anderson Creative Services Director Pierrette Templeton Senior Art Director Sylvia Kolaski Marketing Coordinator Ariel Black Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik, YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos

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WEEK MSU’s Breslin Center to get $50M upgrade Michigan State University’s basketball arena is getting a $50 million upgrade, which will include an addition to promote the history of the men’s and women’s teams, The Associated Press reported. A strength-and-conditioning center named for former MSU star Draymond Green will be built below the Hall of Basketball History at the Breslin Student Events Center. The project was approved by school trustees Friday.

COMPANY NEWS 䡲 The UAW’s tentative labor contract with Detroit-based General Motors Co. includes a commitment to spend $8.3 billion over four years on upgrades to 12 U.S. plants, along with the union’s first significant wage increases in a decade and an $8,000 signing bonus for workers, Automotive News reported. 䡲 Detroit developer The Roxbury Group won state financing in its bid to turn a former medical office tower in Midtown into a $21 million mixed-use complex with apartments and retail. The Michigan Strategic Fund approved a $3.5 million equity investment to convert the tower at 3800 Woodward Ave. into The Plaza, a $21.1 million project backed by Roxbury ownership entity The Plaza Midtown LLC. 䡲 Aerospace industry supplier Global Tooling Systems LLC won a $475,000 grant from the Michigan Strategic Fund to help build out its Macomb Township factory. The subsidiary of Santa Ana, Calif.based AIP Aerospace plans to spend more than $3.6 million on the project and create 70 jobs. 䡲 The Grosse Pointe-based Ralph C. Wilson Jr. Foundation announced $2 million in grants to the Southfield-based Alzheimer’s Association-Greater Michigan Chapter. 䡲 The American Civil Liberties Union’s Michigan chapter is calling on Troy-based Emagine Entertainment to end a policy that the civil rights group says discriminates against teens at the company’s new Emagine Palladium in Birmingham. The policy bars minors unless they are accompanied by an adult or have a membership that costs $350 annually.

䡲 The Palace of Auburn Hills

signed a multiyear naming rights sponsorship deal with Pittsburghbased PNC Bank, which is adding its name to the upscale Courtside Club and the Courtside Studio where the Detroit Pistons’ weekly “Courtside Show” is broadcast. Financial terms weren’t disclosed. 䡲 MGM Resorts International, the Las Vegas casino owner, plans to

Page 1

ON THE WEB OCT. 26-30

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

$2M

The value of last week’s winning bid for the Bert’s Warehouse building in Detroit’s Eastern Market. The 33,000-square-foot building also went to an online auction in July, but the winning bid was not completed afterward.

$3.75M

The amount Johnson Controls Inc. will repay the state of Michigan for failing to create enough jobs at its Holland lithium-ion battery plant. JCI invested $175 million into the plant, but only created 225 of the planned 400 jobs. Milwaukeebased JCI operates its automotive experience business unit out of Plymouth Township.

The percent of executives surveyed by Business Leaders of Michigan who believe the state economy will stay the same in the next six months. Less than a third of respondents — 26 percent — think the state economy will experience modest growth.

put many of its hotel-casinos — including MGM Grand Detroit — into a real estate investment trust to cut debt and boost stock, Bloomberg reported. 䡲 Owners of the semi-pro Detroit City Football Club were to introduce a campaign intended to raise up to $1 million for rehabilitation of Hamtramck’s aging Keyworth Stadium, the soccer team’s home starting in 2016. 䡲 Brothers Thomas and Robbie Buhl will debut an all-new racing team in the Red Bull Global Rallycross series in a new motorsports marketing business collaboration, Buhl Sport Detroit.

OTHER NEWS 䡲 What’s described as the largest development in Sterling Heights in four decades is planned for the former Sunnybrook Golf & Bowling Inc. site at 17 Mile and Van Dyke roads. Detroitbased Sterling Group and Farmington Hills construction company J.B. Donaldson Co. are joint venture partners in the redevelopment of the 144-acre site, to accommodate build-to-suit manufacturing buildings and two new hotels. 䡲 The Michigan Strategic Fund formally approved a $4.5 million, performance-based loan for the nearly $20 million redevelopment of the former Strand Theatre in downtown Pontiac. A week before, developers announced they entered into a naming-rights agreement with Troy-based Flagstar Bankcorp Inc. to finance the project

to create a new theater. 䡲 The Federal Communications Commission’s Connect2Health Task Force visited Detroit to discuss health care innovations such as using broadband to address disparities, drive innovation and spur entrepreneurship. 䡲 The sale of the former American Motors Corp. headquarters in Detroit was canceled after the winner in the Wayne County tax foreclosure auction missed the payment deadline, AP reported. 䡲 Corrugated packaging manufacturer Packaging Specialties Inc., with locations in Warren and Ecorse, won state approval for a private bond sale to finance moving its Ecorse production facility to a larger site in Romulus. 䡲 Thirty-five acres of cityowned land will be leased to RecoveryPark, a nonprofit urban farming initiative expected to spend $15 million in the next three years on Detroit’s lower east side. RecoveryPark would eventually own the land after leasing it and then purchasing it outright. 䡲 The owners of Katoi, a “Thaiinspired, chef-driven” restaurant in Ann Arbor that got its start as a food truck on Michigan Avenue in Detroit, plan to open a brick-andmortar eatery on the same street by year’s end. 䡲 Nineteen of 80 surveyed Michigan hospitals were rated “A” for 2015 by Washington, D.C.based The Leapfrog Group in its latest round of safety scores that reflects how well hospitals avoid medical errors and patient harm. 䡲 The University of Michigan added a three-year diversity requirement to the Ross School of Business undergraduate curriculum, Bloomberg reported. 䡲 The state’s Travel Michigan organization wants to represent its Pure Michigan marketing campaign in a corridor at Detroit Metropolitan Airport’s McNamara Terminal to improve the arrival experience for international passengers. 䡲 Detroit Free Press columnist Drew Sharp is joining Matt Dery as co-host of sports station WMGC 105.1 FM’s afternoon drive-time show, filling the slot created when longtime radio personality Drew Lane couldn’t reach a new deal with the Greater Media Inc. station. 䡲 Protect Michigan Jobs, a group defending Michigan’s prevailing wage law, filed a challenge alleging that supporters of a repeal drive submitted thousands of invalid voter signatures, falling short of the number needed to qualify for a legislative or statewide vote, AP reported.

OBITUARIES 䡲 Flip Saunders, the former Detroit Pistons head coach (2005-08) who was a longtime National Basketball Association coach and executive, died Oct. 25. He was 60. 䡲

RUMBLINGS Sneaker shop debuts shoe inspired by Central Station

BURN RUBBER DETROIT

A sneaker inspired by Michigan Central Station sells for $140 at Burn Rubber Detroit in Royal Oak. oyal Oak sneaker boutique Burn Rubber Detroit released a Michigan Central Station-inspired shoe made by German footwear maker Puma SE. The Burn Rubber X Puma Stepper is designed to mimic tones of the dilapidated depot’s concrete structure and landscape, the company said in a news release. “The train station is one of Detroit’s most iconic landmarks,” Roland Coit, Burn Rubber cofounder, said in a news release. “Anyone who has ever been inside, or just driven by, can see the history and beauty of the building. It was important for us to capture that in the design.” Burn Rubber designed and selected the materials for the shoe. The $140 sneaker went on sale Oct. 31 at burnrubbersneakers.com.

2 businesses coming this month to Eastern Market Shoppers in Eastern Market will soon be able to purchase smoked meats and candles as two new businesses are coming in November. The under $1 million renovation on the mixed-use building at 14001420 E. Fisher Service Drive at Russell Street is nearly complete. Joining the two upstairs floors of commercial office and residential space will be Stache International, a sandwich and smoked meats shop, and DetroitWick LLC, a candle and scent-branding store. The new tenants would join the already operating Thomas Magee’s Sporting House Whiskey Bar and the Pure Shea Store at that location. Scot Turnbull, managing member of Southfield-based FFY LLC, purchased the building in 2013 for $425,000.

Pistons teaming up with Funny or Die for video series The Detroit Pistons have collaborated with comedy website Funny or Die, created by funnyman Will Ferrell, to produce content for the entire 2015-16 National Basketball

Association season.

We’re not kidding. The Funny or Die staff is working with comedy writers and the Pistons marketing department to “create funny, unexpected and engaging content” on the site at funnyordie.com/detroitpistons. The group debuted the series’ first video, “The Longest Oop,” at the Pistons’ home opener last week at The Palace of Auburn Hills. The video features Pistons and Detroit celebrities such as Eminem, Kid Rock and Steven Yeun and Detroit landmarks like the Heidelberg Project and the monument to Joe Louis, “The Fist.”

Detroit landmarks to become Legos at grand opening Lego fans will be able to check out miniature versions of 10 Detroit landmarks when Legoland Discovery Center Michigan opens next spring at Great Lakes Crossing Outlets in Auburn Hills. The landmarks will be featured in the new attraction’s “Miniland,” a miniature Lego brick landscape inspired by metro Detroit’s buildings, attractions and other notable landmarks. Chosen after a first round of voting during which 1,100 votes were cast, the top 10 metro Detroit landmarks were the GM Renaissance Center, Spirit of Detroit, Belle Isle, Motown Museum, Fox Theater, Guardian Building, Comerica Park, Uniroyal Tire, Michigan Central Station and the Heidelberg Project. Legoland Michigan is asking its fans to vote on their favorite of the 10 on its Facebook page (facebook.com/legoland discoverycentermichigan) through Nov. 16. The winning landmark will be announced Nov. 18 and unveiled at a special event before the center’s opening. Legoland Michigan is being developed by United Kingdombased Merlin Entertainments plc, the same company that brought Sea Life Aquarium to Great Lakes Crossing Outlets. 䡲

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