Crain's Detroit Business, Feb. 15, 2016 issue by Crain's Detroit Business

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FEBRUARY 15-21, 2016

Suburban Collection Showplace to expand By Sherri Welch swelch@crain.com

Novi’s Suburban Collection Show place has another expansion in the works, just two and a half years after completing the last one. Pending city approval, owner Blair Bowman plans to begin construction after Labor Day on a 200,000square-foot addition on the event and exposition center’s west side. The addition will provide flexible event space that can accommodate

State senator’s plan would burn DPS debt with tobacco revenue

everything from the circus to product expos. It will also have more ballroom and conference space. Bowman declined to say what he will invest in the project. He expects it to take just under a year to complete, opening in the fall of 2017. Driving the expansion is demand for more space among consumer and industry show clients, along with increased bookings for meetings and events at Suburban Collection ShowSEE SUBURBAN, PAGE 18

Special report From airplane hangars to “fowling,” corporate events go nontraditional, Page 11. Largest venues, Page 15. Take a virtual tour of some of Detroit’s biggest meeting venues, crainsdetroit.com/ meetings.

“We were too aggressive. That was the problem, and we learned it the hard way.” Michael Ansley,CEO,Diversified Restaurant Holdings

By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

LANSING — A Detroit-area state senator said he is working on legislation that could use tobacco revenue as a funding source to tackle Detroit Public Schools’ massive operating debt, similar to a budget proposal Gov. Rick Snyder introduced last week. Sen. Hoon-Yung Hopgood, D-Taylor, said he initially considered using state tobacco tax revenue in a bill he is drafting to pay for an overhaul of the district that would split it in two to pay an estimated $515 million in debt. But Hopgood said he is open to the idea of drawing money from Michigan’s share of a national tobacco settlement after Hoon-Yung Snyder proposed using $72 milHopgood: Wants lion a year for a decade to reform tobacco funds to the struggling district. help DPS. “I think we’re onto the right path as far as that’s concerned,” Hopgood said, adding that the bill could be introduced as part of a broader DPS reform package. Lawmakers appear to agree that urgent action is necessary if Detroit’s school system is to avoid defaulting on debt. Projections indicate the district will run out of cash by spring. There has been no consensus on how to pay for it. Although Snyder has identified a funding source in his 2017 budget, he’ll still have to convince lawmakers. “All of us agree that the financial piece has to get SEE SCHOOLS, PAGE 18 © Entire contents copyright 2016 by Crain Communications Inc. All rights reserved.

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crainsdetroit.com Vol. 32 No 7

PHOTO COURTESY DIVERSIFIED RESTAURANT HOLDINGS

Bagger Dave’s slide After multiple closings, missteps, burger chain goes into holding pattern By Gary Anglebrandt ganglebrandt@crain.com

If the past year is any indication, the future of Bagger Dave’s Burger Tavern is anything but in the bag.

The Southfield-based restaurant chain suffered the indignity of two rounds of restaurant closings in 2015. The first came in August, when parent company Diversified Restaurant Holdings Inc. shuttered three locations, all in Indiana, gnawing $1.8 million in writedowns off the corporate books. Then in December, eight more locations closed, at a loss of about $10.7 million for $2 a copy. $59 a year. writedowns and other costs. One of them was its downtown Detroit location. The others were in Indiana. The Detroit restaurant had been open for two years. One of the Indiana restaurants didn’t last 10 months; two more barely made it to the one-year mark. The

oldest of the Indiana restaurants, the one in Indianapolis, was just 3 years old. Anyone looking for more upbeat signs than these should avoid cracking open Diversified’s quarterly reports of the past year. The reports start rosily enough. The first, released in March, predicted between 47 and 51 stores by the end of 2017. (There were 24 at the end of 2014.) These numbers steadily fell in subsequent reports. By the time November’s third-quarter report came around, the company had stopped making any predictions at all. “We will not commit to any further development of Bagger Dave’s,” the company said in the report, released seven weeks before the December closings. That doesn’t mean the company had given up on Bagger Dave’s. It opened five last year, including one in Centerville, Ohio, as recently as November, its first in that state. Another is set to open SEE BURGERS, PAGE 19

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MICHIGAN

BRIEFS Snyder proposes $195M in budget for Flint water crisis Gov. Rick Snyder last week proposed spending $195 million to help Flint fix lead contamination in the city’s drinking water, the cornerstone of a broader investment in the state’s infrastructure. Infrastructure, especially in Flint, is atop Snyder’s budget priorities in the 2017 fiscal year that begins Oct. 1, a list that also includes reforming Detroit’s failing public schools (See story, Page 1). But as expected, Snyder led with the public health crisis in Flint during his presentation to members of the House and Senate appropriations committees. “Clean drinking water is a human necessity,” Snyder told members of the legislative budget committees as protesters audibly rallied against him outside the Capitol hearing room. The state has been criticized because Flint was under the control of a state-appointed emergency manager leading up to the crisis, and several officials with the Michi gan Department of Environmental Quality have resigned or been fired.

Snyder said 2017 spending will include ensuring safe drinking

water for residents, education and nutrition support, more blood lead analysis in children, $30 million to offset unpaid water bills and $50 million for future needs. The state has budgeted more than $232 million for Flint since October. In other Flint water-related news: 䡲 The Michigan attorney general’s office will not represent current and former state employees named in a lawsuit over the contaminated water. The Detroit News reported that a federal judge approved the removal of three assistant attorneys general listed as legal counsel for the MDEQ staffers and ex-staffers. Attorney General Bill Schuette has said his office can’t defend both Snyder and individual employees because of potential conflict of interest. 䡲 State environmental and health officials said that MDEQ representatives and licensed plumbers will visit about 400 homes citywide to teach homeowners how to accurately test water so they can submit regular samples for analysis, and Grand Rapids-based nonprofit Great Lakes Health Connect is giving $250,000 to connect all health care providers serving residents affected by the crisis, The Associated Press reported.

䡲 The U.S. House approved legislation that would direct the Envi ronmental Protection Agency to notify residents and health departments if the amount of lead found in a public water system requires action, in the absence of notification by the state, AP reported. 䡲 Years before the lead-poisoning crisis, there were warning signs about the state agency charged with keeping drinking water safe, Bridge Magazine reported. In 2010, a federal audit portrayed MDEQ as a department beset by budget cuts, staff shifts and limited resources, and willing to take regulatory shortcuts in safeguarding Michigan’s water.

Root beer flavor for PopTarts? Soon, Kellogg’s says Amid sluggish sales and financial losses in its U.S. cereal business, Battle Creek-based Kellogg Co. remains optimistic about upcoming products like Pop-Tarts in a root beer and Orange Crush soda flavor, CEO John Bryant said. “That might sound strange, I admit,” Bryant said in an Associated Press report last week. But he said Pop-Tarts are popular with college students and younger adults, who respond to such new offerings. Kellogg has adopted a cost-cutting plan it dubbed “Project K” as it tries to reinvent brands like Special K to be more in line with trends toward wholesome eating, rather than the calorie-restriction message the company concedes has become outdat-

ed. Although sales for its U.S. Morning Foods unit, which includes cereal and Pop-Tarts, were down for all of 2015, Kellogg said they rose 1.5 percent in the fourth quarter.

MICH-CELLANEOUS 䡲 Seattle-based Sur La Table, a culinary-focused retailer new to West Michigan, has signed a lease for a Grand Rapids location, the Grand Rapids Business Journal reported. Construction should be finished by month’s end, allowing the retailer to begin its build-out this spring. The product line includes items for the kitchen, bar and dining room, as well as one of the nation’s largest cooking class programs. 䡲 The Grand Rapids Laker Line Bus Rapid Transit has received $57 million from the Federal Transit Administration , the Grand Rapids Business Journal reported. The 13.3-mile Laker Line BRT system will provide service between downtown Grand Rapids and Grand Valley State University’s Allendale campus. 䡲 Michigan State University researchers will use nearly $250,000 from the U.S. Department of Com merce to examine whether recycling and repurposing building materials is an effective way to deal with blighted areas, AP reported. MSU’s Center for Community and Economic Development and the West Michigan Shoreline Regional Planning Commis sion will study policies, practices and

consequences of human abandonment in the field they’re calling

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . 20 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 DEALS & DETAILS . . . . . . . . . . . . . . . 16 MARY KRAMER . . . . . . . . . . . . . . . . . . . 6 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

COMPANY INDEX: SEE PAGE 21 “domicology.” The test site will be Muskegon, which researchers say has more than 3,000 abandoned residential and commercial properties. 䡲 A Saginaw business that repurposes old shipping containers is planning an expansion. Container Concept Solutions said the 21-acre facility will be used to redesign and convert shipping containers for uses such as disaster relief offices, drive-thru coffee shops, concession stands, medical stations, administrative offices and retail shops, MLive.com reported. 䡲 A four-story, 44,000-square-foot mixed-use development project in downtown Jackson is starting to gain traction, MLive.com reported. Kin caid Henry Building Group Inc. announced the plans, which call for an “urban grocery store” on the first floor with 30 one- and two-bedroom apartments on the upper floors. The construction company said it hopes to start work in July. 䡲

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I-75 plan opens transportation rift Biz planners, mass transit backers differ on 20-year freeway widening project By Robert Snell, Kirk Pinho and Bill Shea Crain’s Detroit Business

An estimated $1 billion plan to widen I-75 in Oakland County has exposed tension between supporters who view the project as a boon to economic development and opponents who favor a greater investment in mass transit. The rift adds a layer of drama to a

20-year construction project that will widen I-75 between Eight Mile Road and M-59. The project is designed to accommodate the region’s continued recovery from the Great Recession, job gains in Oakland County and growth among communities straddling one of metro Detroit’s busiest and most important commercial corridors. Some transit and planning ex-

perts call the plan — touted during Oakland County Executive L. Brooks Patterson’s State of the County Speech on Feb. 10 — a waste of taxpayer dollars. The project flies in the face of younger generations’ preferences for more densely packed urban communities where most of their needs are within a short walk, bike ride or trip on another form of transportation.

Patterson “is promoting the kind of planning that destroyed our cities in the postwar 1950s,” said Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc. , which recently completed a master plan for the headache-inducing I-696/Woodward Avenue area. “It’s going to make Oakland County less appealing to the next SEE I-75, PAGE 20

NATHAN SKID

L. Brooks Patterson wants to ease the

WSU to add housing; other local colleges gain residents By Chad Halcom

mandatory pre-proposal meeting last week for developers, student The traditional college experi- housing real estate investment ence is having a renaissance in trust executives and others interSoutheast Michigan, so much so ested in an estimated $100 million that public universities are plan- new student housing development ning major investments in new project. The university is seeking proposals to build two and improved campus housing this year to acMoving in apartment buildings along Anthony Wayne commodate the trend. See housing Drive by 2019 on the More 18-year-olds and numbers for campus’s northwest side first-time students tradfour schools, and demolish the nearby ing home life for the camPage 17 Helen DeRoy Apartpus might seem counterments — a net gain of intuitive, in a state with 100,000 fewer people than a more than 430 beds for university decade ago, years of falling K-12 students. Proposals are due by March 16. enrollment figures, an aging population and a displaced-worker If all goes well, the university hopes surge from the Great Recession to have a final development plan ready for its board of governors to that has largely returned to work. But the ranks of undergraduates review in September, and open the at most local colleges are getting first phase of new apartments by larger, getting younger and choos- fall 2018, said Tim Michael, associing on-campus housing over com- ate vice president of business and muting or part-time enrollment, auxiliary operations and chief according to recent data submitted housing officer at Wayne State. Washington, D.C.-based Brails to the National Center for Education Statistics, an agency of the U.S. ford & Dunlavey Inc. is consulting Department of Education. with the university on the project. Wayne State University hosted a SEE COLLEGES, PAGE 17 chalcom@crain.com

BRAND

RECOGNITION Whoever wins naming rights for new Red Wings arena to net valuable exposure By Bill Shea bshea@crain.com

Speculation on who will put their name on the new Detroit Red Wings arena, and just how much they’ll pay, is in overdrive after it was announced that a naming-rights deal is done and will be unveiled within a month or two. Chris Ilitch, son of team owners Mike and Marian Ilitch and the day-to-day chief of their business operations, last week disclosed that the namingrights negotiations were finished for the $627.5 million arena during a luncheon honoring him and his father as the 2015 Crain’s Detroit Business Newsmaker of the Year. “There was incredible interest (in the naming rights),” Ilitch said. “We were shocked.”

Sports industry insiders expect any Red Wings arena branding deal to be on par with the most recent National Hockey League naming-rights contracts, which pay around $4 million annually. Others say it could command as much as $7 million to $10 million a year. Olympia Development of Michigan , the Ilitch real estate unit that is overseeing construction of the 20,000-seat venue at I-75 and Woodward Avenue set to open in 2017, has declined to discuss naming rights other than to say companies are interested in putting their name on the new venue. “I would expect it to have the potential to be closer to the Penguins deal,” said Matthew Logue, executive vice president of strategy and COO of

Oakland University last expanded its student housing in 2014 with the opening of

Oak View Hall; the university has plans to further expand its student housing.

SEE ARENA, PAGE 21

PHOTO BY ILITCH HOLDINGS / PHOTO ILLUSTRATION BY PIERRETTE TEMPLETON OAKLAND UNIVERSITY

MUST READS OF THE WEEK Data bridge is a work in progress

Detroit in bloom?

Coverage declined

“Seamless” database tracking Medicaid-Medicare patients encounters seams, Health Care Extra, Page 8

Birmingham-based Blossoms is in store for a corporate sibling in the D as florist owners Norm Silk and Dale Morgan (pictured, right) expand, Page 4

Fewer employers offered health insurance in most recent survey, Page 7

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Blossoms returns to Detroit roots with store in Midtown By Sherri Welch swelch@crain.com

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The owners of Birminghambased florist Blossoms plan to bring a store back to Detroit this spring in the former Willis Showplace Bar building they’ve owned for more than 30 years in what is now Midtown. And they’ve leased the former bar space in the building, a former jazz hot spot shuttered in the mid1970s for prostitution, to a West Coast investor who plans to reopen it this summer as a bar called Shag. “We’ve lived in the city for 35-40 years and seen it at its worst,” said Norm Silk, who owns Blossoms with partner Dale Morgan. “When we moved here ... we had a vision of what it could be. I think we’re finally seeing that reality and ... we just wanted to be part of it.” Silk and Morgan, self-proclaimed “urban pioneers,” launched their floral business in 1977 from their former home on West Canfield, the same street companies including Shinola/Detroit LLC and Jack White’s Third Man Records now occupy. As their business grew, they needed retail space and leased the former Willis Showplace building, with its three storefronts, a block away. A topless shoeshine parlor had once occupied 4152 Third Ave., with retail space at 4154 and the bar at 4156 before they were closed in the mid1970s and the building was vacated. Blossoms used the building as a floral design center for the next decade and eventually bought it on land contract from the suburban doctor who owned it, Silk said. At the time, the florist took its arrangements to “fancy” country clubs and temples in the suburbs and rarely entertained customers at the design center, Silk said. But every now and then, a customer would come calling to see the design center. At the time, Third Avenue was still a red light district, with “hooker bars” and rent-by-the-hour hotels, Silk said. Before customers arrived, “I’d say, ‘Look, girls, this is my corner today. There’s some people coming, so you have to find another corner.’ And they were OK with that.” In the late 1980s, Blossoms moved the design center to Berkley and leased the Third Avenue building to a neighborhood activities program, which operated there for several years before the florist moved back into the building in the early to mid-1990s, using it for warehouse space, Silk said. By that time, Blossoms had opened retail stores, first in Millender Center across from the General Motors Renaissance Center downtown, then Birmingham and one in Grosse Pointe. “And then it got way out of hand with 50-some employees,” Silk said. As the leases on the stores expired, the owners consolidated the stores into a single location and moved to its current store at Woodward Av-

A rendering of the planned storefronts, including Blossoms florist, which are planned for the former Willis Showplace Bar building. enue and Adams Road in 1998. Today the florist has 12 employees and annual revenue approaching $1.7 million, Silk said. And the time is right to open another store, this one in Midtown. Silk said he and Morgan have invested about $400,000 since last July to renovate and restore their 1949 Art Moderne building at Third and W. Willis Street. They put on a new roof and stripped the remodeled elements added to the exterior over the years, along with layers of paint, to reveal the original, enameled steel panels in burgundy, peach and green, Silk said. “It’s not as perfect as if you built something brand new,” he said. “It’s got little chips, but that’s really what Midtown is all about — it’s embracing the old and polishing up what’s there.” Inside the 4152 storefront Blossoms will occupy and the adjacent retail space at 4154, the building owners installed new bathrooms, plumbing, electrical, heating, ventilation and air conditioning, with Keego Harbor-based Barrett Building Co. serving as contractor. Renovations are nearly complete, with another inspection set for the end of this month, Silk said, and expected occupancy by mid-March. When completed, the florist will look like a “vintage, earthy garden,” Silk said, with a lot of rust, peeling paint, natural metals and galvanized metal, a concrete floor and moss climbing the walls. “When you walk in ... it will be a refuge, like walking into a beautiful old garden,” he said. It will also include an area to display the works of local artists, perhaps displaying ceramic vessels with Blossoms arrangements, Silk said. The new store will be a convenience for many of Blossoms’ customers in Detroit, including local companies and many of the major arts institutions, Silk said. “We have a reputation of being expensive, but ... we’re not going in there expecting people are going to spend hundreds of dollars,” he said. Blossoms’ owners have not yet signed a lease for the retail space next to the florist storefront. Silk said he’s being “picky” about a tenant for that space. He’s leaning toward a deli sandwich place or café, based on feedback from others in Midtown, and working with Midtown Detroit Inc. to locate a tenant for the space. “There’s hardly anything for lease

in Midtown for retailers, so we are getting a lot of calls,” Silk said. West Coast investor Gordon Hyndford, principal of Cambria, Calif.-based 2XD Productions, a production and events management company, has leased out the former bar space in the building and is investing a “significant amount” to renovate that space, Silk said. A Toronto native, Hyndford said he became enamored with Detroit over the past 15 years that he’s worked on exhibits for European car groups exhibiting at the North American International Auto Show. “There have been a lot of local ambassadors ... who took me into areas I probably wouldn’t have (otherwise) experienced,” Hyndford said. “The people attracted me to set up a business there ... their friendliness and that people in Detroit seem to want to see you succeed.” He’s investing an undisclosed amount to gut the bar space in Blossoms’ Midtown building to convert it into a new bar amusingly called Shag, given its storied past. It will pay homage to the 1970s but with a more modern feel, Hyndford said. Detroit-based Steven C. Flum Inc. and a German architect friend of Hyndford’s are working on the design for a lounge area with midcentury American Danish furniture (no shag carpet), new bar space and a kitchen to serve pub fare inside the 3,000-square-foot bar. The renovations will retain the architectural curves and coves of the original drop ceiling, and Hyndford will tap his lighting experience to backlight it. There will also be a dog-friendly patio area. He has yet to name a contractor but has hired two local general managers for Shag, who will oversee operations and eight-10 employees. He is still waiting to hear back on the liquor license application, but ideally, the bar will open in June. “We feel it’s going to be a locals’ destination,” Hyndford said. The new Blossoms store and Shag will be great for the neighborhood, said Midtown Detroit President Sue Mosey. Having a bar in the classic, former Willis Showplace Bar space again and a small Blossoms store “with all of their wonderful, creative flower arrangements will be a great addition to that Third Avenue corridor that’s rebuilding,” she said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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CRAIN’S DETROIT BUSINESS

OPINION More lanes just one piece of transit puzzle T

he exasperation of sitting in traffic gridlock on I-75 is a feeling many of us understand all too intimately, especially the section right around Oakland Mall — or near the I-696 interchange. Brake lights. Exhaust fumes. Frustrated drivers. But are more freeway lanes, as announced last week, the answer? The estimated $1 billion plan, as noted in our Page 3 story, adds a fresh time element to a decades-long debate. The upsides of the project are relief to at least some congestion — and valuable contracts and jobs to those in the road construction business. But what about the larger issues? As Ferndale Mayor David Coulter pointed out, helping suburban drivNATHAN SKID ers save a few minutes of time on their commute downtown doesn’t solve the larger regional issues of transit. It’s important that state and county officials also make mass transit planning a priority — including common-sense ideas on rapid bus transit that have already been on the table for years. This November, the Regional Transit Authority plans to bring to voters a millage to support a regional transit plan for Wayne, Macomb and Oakland counties. For those who simply prefer not to drive, don’t have access to a car or are too young, too old or have health issues, rapid bus transit is a viable option that needs to be a regional priority. While the details of RTA’s plan have yet to emerge, the general principles make sense. There are commuters for whom a bus commute may never make sense — suburban parents who need to drop off kids to school or child care not near the bus route — or those who just prefer to carpool with a colleague or drive themselves. But regional leaders need to work hard to serve ALL constituents. There are too many single-passenger vehicles on I-75. We know some of those folks would rather have another option. Bus rapid transit can work as part of the solution, and that’s been observed in communities such as Grand Rapids and Cleveland. At a minimum, funding for a comprehensive reinvestment in mass transit should be at the same level as funding for this massive I-75 widening project. In addition, beyond freeway widening, it’s equally important that the state and regional leaders look at all related road infrastructure issues on major freeways. This is a time to highlight bridges and overpasses that need repair, or other roads or off-on ramps for which resurfacing has been deferred or delayed. The state is in the midst of an economic recovery. Let’s stop putting off the infrastructure repairs — and important mass transit investment — that have been postponed far too long.

To reach 100, smart companies look forward rates of startup compaF ailure nies can swing wildly by industry, but you’ve probably seen reported rates as high as 50 percent or 60 percent after five years. So to see companies survive — and thrive — at 100 years is quite a feat. It takes a lot to survive a century, so it’s tempting to simply look back. But smart companies and organizations look forward. Crain Communications, which owns Crain’s Detroit Business and 25 other titles, hits that milestone this year, and we’re pleased to see our company continue to evolve. Newly launched products include digital city business news publications in nine major cities and a new Canadian edition of Automotive News. Henry Ford Health System began as a single hospital founded by auto pioneer Henry Ford in 1915. Last year, CEO Nancy Schlichting orchestrated a leadership transition and charted a path for the future, including the acquisition of a system in Jackson. On March 11, 1916, George Walbridge and Albert Aldinger started a

MARY KRAMER Publisher construction company today commonly known as Walbridge that has, over 100 years, built 5,000 factories, offices, schools, homes and even infrastructure. These are, says CEO John Rakolta Jr., “the essential structures of our lives.” Not a bad way to look at the heritage of the company. But the company is also focused on a strategic plan for the future. Looking back while looking forward is bittersweet for Dave Hammel as he agreed to sell the accounting firm his grandfather founded in 1920, just four years shy of that centennial milestone. We reported on the acquisition by Cleveland-based Cohen & Co. in mid-January. Godfrey Hammel started what became Godfrey Hammel, Dan-

neels & Co. PC and set up shop as the first tenant in the Detroit Free Press building in downtown Detroit. He specialized in tax. So what’s the future? First, Hammel and Cohen partner Robert MacKinlay are already eyeing the opening of an office in downtown Detroit, a re-entry after moving to St. Clair Shores in 1971. The bottom line, Hammel said, is his firm needed to grow, and Cohen & Co. is a “good fit of Midwestern values.” It means the local CPA team can now compete with larger accounting firms — Baker Tilly, Rehmann, Plante Moran — for business. “I have a multibillion-dollar client,” Hammel said. “I could do their employee benefits work, but not their tax. Now we have the depth to do both.” 䡲 Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

Change can be refreshing, daunting hange is wonderful. Change is

C scary. Changes cause you to

“turn and face the strange” (R.I.P. David Bowie). But, most of all, change is part of life, part of business. It’s February. During the last month and a half, we’ve noticed a remarkable swirl of leadership changes at many area organizations, from a new athletic director at the University of Michigan (Warde Manuel) to a new chief federal judge for eastern Michigan (Denise Page Hood). Now, this is not surprising given the time of year or the factors at play in local organizations. For example, in the nonprofit community, last week we learned the Royal Oak-based Judson Center named Lenora Hardy-Foster as its new president and CEO, effective in March. She’s leaving another nonprofit, Southwest Solutions. Another local nonprofit community change was Dave Egner assuming his post Jan. 1 as CEO of the Ralph C. Wilson Jr. Foundation after leading the New Economy Initiative and Hudson-Webber Foundation. Besides following Egner’s moves, many in the entrepreneurship community are eager to see how Pam Lewis, the new NEI director, will focus her efforts. Other notable shifts, in vastly different areas of expertise: The Detroit Lions named Bob Quinn general manager (and have replaced many other executives), and there have been lots of staff and adviser changes — and controversy — swirling around Gov. Rick Snyder’s current and recent administration during the last several months.

JENNETTE SMITH Editor It’s not necessary to provide a litany of all the state names for purposes of this column. But it’s clear leadership changes were a given, considering the circumstances developing over the Flint water issue.

Lessons on change A leadership change can be helpful for an organization. It’s a chance for fresh ideas, energy and points of view. It’s sometimes even a chance to dust off some old ideas to see if they now make sense. It’s a chance to review workplace processes to see if they need a tweak. I’m relatively new in my own role as editor, having been named to the post last September. It’s been refreshing — and daunting at times — to infuse some new ideas about content and challenge our team to try some new ways of doing things. It’s all about pacing, keeping a fluid mindset, and accepting the fact that “change” is never done. It’s always running in the background. It’s important to be constantly cognizant of staff members who might perform better in a different role, or that your product mix or customer demands may change, sometimes faster than you think. The best leaders understand

this and keep that admirable balance between consistency with firm strategic plans — and a healthy dose of flexibility to change the plan on the fly when circumstances change. And sometimes, those winds of change blow in fast. I do not pretend to have the art of strategy execution figured out at age 41. But I am fascinated by the topic. Please let me know what you’d like to see us cover in the arena of change management, strategic planning and leadership. It’s a little different than the hard news, analysis and local business coverage we focus most of our editorial efforts on, but leading through change is one of the recurring themes in our monthly Second Stage features. (These always appear on the second Monday of the month.) The goal of the monthly report is to provide pragmatic lessons on how growth companies can go about making change the right way.

Making waves Finally, I congratulate all the new leaders in town or leaders in different roles. I hope your year is off to a great start. The first couple of months of the year are wonderful times for reimagining how the last couple of months of the year may shape up — if you can move the ship. May you strike just the right balance between diving in and driving needed change — and taking the time to do your homework before making seismic shifts. Contact Jennette Smith at jhsmith@crain.com.

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Survey: Number of small firms offering health insurance falls By Jay Greene jgreene@crain.com

The number of small companies offering health insurance in 2014 dropped to 33 percent from 40 percent in 2013, according to a new study by the Ann Arbor-based Center for Healthcare Research and Transformation. The decline comes despite a relatively low 2.8 percent average annual increase in health insurance premiums from 2009 to 2014 for small businesses with less than 50 employees. Fewer companies with 50-99 employees in Michigan also offered health insurance in 2014, down to 84 percent from 93 percent in 2013, the study found. “We don’t think this is because of the Affordable Care Act,” said Marianne Udow-Phillips, the center’s executive director. “The (percentage) now is back to historical trends.” Udow-Phillips said the 2014 small-business decline represented a return to Michigan’s typical rate and comparable to the national average of 32 percent. More than 90 percent of larger Michigan employers offer health insurance, she said. “(2013) showed a surprising blip, an anomaly, where we saw an increase in small firms offering health insurance (to 40 percent of companies), said Udow-Phillips, who couldn’t account for the blip. The Congressional Budget Office has projected that over the next decade the Affordable Care Act will lead to a 4 percent reduction in employersponsored coverage as firms drop coverage and some workers switch to other coverage options. Since 2009, the share of employers offering coverage has dropped to 57 percent last year from 59 percent. But despite pundit predictions, said Udow-Phillips, the Affordable Care Act has not created “massive drops in health insurance.” She also said health insurance rate increases for businesses in Michigan are below national averages. Data for CHRT’s study came from the Medical Expenditure Panel Survey that is part of the federal Agency for Healthcare Research and Policy. Last year, several other industry reports projected business health insurance costs for 2015 and showed rate increases that averaged 3 percent in Southeast Michigan and 5 percent nationally. For example, Troy-based Marsh & McLennan Agency LLC projected midsized Michigan employers last year expected to average a 10-year low of 3 percent health care cost increase. Nationally, total family premiums for employers and employees increased 4.2 percent to $17,545, said Kaiser Family Foundation. Still, Michigan was one of eight states that experienced a significant drop in the number of the uninsured, according to the Centers for Disease Control and Prevention. Michigan’s 2015 uninsured rate dropped to 7.8 percent from 11 percent in 2013, as 700,000 people gained coverage through Medicaid and an additional 300,000 purchased insurance on the exchange. Nationally, the uninsured rate

dropped to 9.1 percent last year from 14.4 percent in 2013. Overall from 2009 to 2014, single coverage in Michigan has increased by 14 percent and family coverage by 19 percent, the CHRT report said. However, those five-year increases are lower than the national average increase of 25 percent for single coverage and 28 percent for family. Udow-Phillips said she expects historic trends in Michigan will continue for the near term. The unknown factors, however, will be Obamacare’s employer health insurance mandate, which kicked in last year for companies of 100 or

more, and this year for employers of 50-99. Jennifer Kluge, CEO of Michigan Business and Professional Association in Warren, said one unnamed company with more than 100 workers decided to pay the IRS penalty this year because it did not offer every eligible employee insurance. The penalty ranges from $2,000 to $3,000 per employee. “The ACA is hindering their growth plans as they are not sure if they can make additional hires,” said Kluge. “If they go up in staff (they have an acquisition opportunity), they have to recalculate if they prefer to offer coverage or to pay a penalty.”

Kluge said several other member companies have experienced rate increases of 30 percent to 40 percent. To lower costs, some have purchased high-deductible policies and passed along increased costs to employees. But some small companies have experienced improvements in health benefit costs by shopping around and making other adjustments. Michael Wilson, owner of Cardus Inc., a Farmington Hills-based health care information technology company, said health care costs are lower now than three years ago. He employs 32 full-time and 10 part-time workers.

“We were paying $300 per employee in 2013 to Blue Cross and they canceled our policy and gave us a new rate of $490 per employee” for 2014, Wilson said. Wilson said he purchased a lower-cost policy in 2014 through United Healthcare for $350 per employee. Last year, United cut its rates to $330 an employee after Wilson decided to cover only his younger information technology staff. “I have a medical transcription business (with older workers) and went to a health reimbursement account where I contribute 50 percent (half of premium) or up to $175 per employee,” he said. 䡲

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JAY GREENE Senior reporter jgreene@crain.com Twitter: @JayBGreene

Dual-eligible program goals difficult to reach mproving quality and reducing costs are primary goals cited by participating HMO and mental health organizations in Michigan’s dual-eligible demonstration program. (See story at right.) Executives I interviewed believe they will improve quality by improved care coordination. The cost reductions, or savings, are baked into the blended rates paid to the participating organizations. For example, monthly rates per member have been cut by 1 percent the first year, 2 percent the second year, and 4 percent in year three. Those guaranteed rate cuts have made providers nervous. As one of the more ambitious pilot projects in President Barack Obama’s Affordable Care Act, the dual-eligible program projects to cut at least 7 percent of costs over the next three years. But two new reports — from the Government Accountability Office and RTI International — concluded that reducing costs and coordinating care is more difficult than expected. Dave Tigue, president for Concerto Healthcare, which operates four clinics in Detroit, said it is too early into the program to know whether the payments are adequate to cover costs. “We wanted a little higher (rates), but we don’t see a problem now,” Tigue said. Dick Miles, the top state administrator of the program, thinks the rates are adequate and hasn’t heard any complaints about the rates. He said it also was too early to tell if quality and care coordination has improved for the 35,000 enrolled patients. Another goal is to improve care in 74 monitored measurements, including rate of falls, body-mass weight assessment, breast cancer screening, colorectal cancer screening, annual flu vaccine, readmission rate and satisfaction. Kerry Branick, an administrator with the Centers for Medicaid and Medicare Services, said she expects to have interim quality and patient visit data on Michigan this summer and first-year evaluation completed by the end of the year. Joe Ferguson, former CEO of Advantage Health Centers, said the number of dual-eligible patients treated at Advantage’s five health centers in Detroit have tripled the past two years to about 9 percent of 25,000 annual patients. “We are seeing more patients because some doctors are leaving their practice and their patients are coming to us and re-enrolling in the program,” Ferguson said. “We are OK with those payments,” he said. But their effect can be hard to predict. “We are different than primary care offices. We don’t get additional resources to manage those patient populations, and our patients tend to be more distressed.” 䡲

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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HEALTH CARE ALL SYSTEMS AREN’T GO Almost a year later, Care Bridge database still not fully operational Executives say the bottom line is Medicare-Medicaid patients enrolled in the n electronic database central to a program are receiving coordinated care that project intended to coordinate meets state and federal quality standards. health care for some of the sysMichigan also expects to reduce overall tem’s most expensive patients is a costs by at least 1 percent this year, 2 per“work in progress” nearly one year into the cent in 2017 and another 4 percent in 2018, three-year program, officials have told Crain’s. said officials for Medicaid and Medicare The system, called Care Bridge, who are overseeing the program. is supposed to seamlessly transfer As of January, 34,800 people patient information among health FAQ have been enrolled in MI Health plans, mental health organizaLink in the state’s four-region The nuts and tions and physicians for people pilot program in 25 counties, inbolts of who qualify for both Medicaid and cluding Wayne and Macomb. Michigan’s efforts Medicare — known as “dual-eligiOther challenges include low on dual-eligible ble” patients. enrollment (32 percent of eligipatients, Page 10. But executives at several mental ble beneficiaries) and higherhealth organizations and HMOs than-expected disenrollment involved in the demonstration rates. Provider and enrollee eduproject, called MI Health Link, say they have cational efforts are still developing. developed workaround systems — though “It took a lot of work, and not without some of them include old-fashioned phone bumps, to get off the ground to make it operacalls, faxes and emails. tional with people getting services,” said Theories on why the electronic system isn’t Richard Miles, director of the Bureau of Medicaid working range from the state’s decision not to Policy and Health System Innovation in the Michirequire standardization of information-tech- gan Department of Health and Human Services. However, Miles acknowledged that Care nology systems among participating organizations to proprietary concerns about shar- Bridge, which includes a software module called Care Connect 360 to link unaffiliated ing the data between competing companies. By Jay Greene jgreene@crain.com

care organizations and several other software components, is being installed piece by piece. Some data already is available to providers, he said. But Miles said participating HMOs, mental health authorities and providers have different levels of access and the entire system could take two to three more years to complete. “We didn’t anticipate it would be operational when it came out of the gate. This is a demonstration, and it will evolve,” Miles said. Tim Pletcher, executive director of the Michigan Health Information Network, which is developing electronic systems to exchange data among hospitals, health plans, mental health organizations and providers, said much progress has been made the past two years to help organizations share data. For example, HMOs and other providers are receiving a variety of data that includes hospital admissions, discharges and transfers, and care-plan files that describe patients’ conditions, he said. “I do think it is fair that at the clinical level they are still moving data the old-fashioned way, but I think (the system) is making progress,” Pletcher said. Miles said, however, that the state-develSEE SYSTEM, PAGE 9

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FROM PAGE 8

oped Care Connect 360 database — a portal intended to allow patientcare data sharing between care organizations — contains only Medicaid data. Michigan HHS is working to integrate Medicare patient data. Kerry Branick, deputy group director of models, demonstration and analysis with the Centers for Medicare and Medicaid Services, said Michigan’s contract is different than the other states in the demonstration program. “We have been working with Michigan since 2012, and the state has taken a little longer than the other states to plan for implementation of the demonstration,” Branick said. Unlike other states, Michigan asked to keep separate the HMOs and the medical side of care from the mental health authorities and the behavioral side, she said. Under the federal contract, Michigan agreed to create Care Bridge, which is a combination of electronic health record systems and care coordinators employed by HMOs and mental health organizations. Care Bridge was necessary because Michigan wanted to keep its historic contractual separation of medical, long-term care and behavioral health services, Miles said. But Rick Murdock, executive director of the Michigan Association of Health Plans, said Care Bridge is only needed because there are two separate care systems in Michigan for physical and behavioral health. “The dual program was intended to be a single system for Medicare and Medicaid. We are doing it as separate streams that are met in the middle with Care Bridge,” he said. Murdock said the creation of Care Bridge adds complications because of the technology limitations inherent between different operating systems. The state did not require a standardized approach, he said. Murdock said other states have contracted with single prepaid health plans to manage medical, behavioral and long-term care. For example, Texas HMOs coordinate all care and are responsible to manage, for a monthly per-member fee, all Medicare and Medicaid services, including nursing homes, mental health rehabilitation, medical and targeted case management. Still, despite the twin systems in Michigan, Murdock said the dualeligible program is still necessary. “We should have been doing this years ago to make it as easy as possible for beneficiaries to be wellserved,” Murdock said. “You are dealing with an elderly population that has income and disability issues. They should be in programs like this.” John Kinch, executive director with Macomb Mental Health Authority, said delivering medical and behavioral care to the dual-eligible population is difficult because of the immense needs of beneficiaries. Kinch said Macomb is overcoming electronic shortcomings by relaying information to health plans and physicians the old-fashioned

way — telephone calls, faxes and emails. “We don’t have electronic transfer,” he said. Renee LaVigne, Macomb’s dualeligible administrator, said care coordinators assigned to members work closely with health plan coordinators to improve care. While Macomb gets data for prescriptions and hospital admissions, discharges and transfers the same day, LaVigne said Care Bridge “isn’t working” as conceived. “We have a workaround,” she said. “It is not an information highway that goes back and forth.” The goal is for Michigan’s Care Connect 360 to allow all health plans and mental health organizations to view enrollees’ service, diagnosis, and medication history. “It is a work in progress,” LaVigne said. “It is a challenge to work with the five (health plans). They have very different systems and have proprietary concerns.” Officials for Detroit Wayne County Mental Health Authority said the organization has good working relationships with the five health plans in the county. However, “Care Connect 360 does not allow for the fluid exchange of clinical information for the purpose of better care coordination,” the Wayne authority said in an emailed statement. Dave Tigue, president with Con certo Healthcare in Detroit, which operates four health centers that also serve dual-eligible patients, said he is aware data exchange has been slow between the mental health organizations and the health plans. “It is a slower process, but transfer of data is happening to us from the (health plans),” he said. “The (mental health organizations) have had more issues than everyone else from exchange of data perspective.” Tigue said Concerto also has developed a workaround process outside of Care Bridge to access behavioral health information. At Concerto’s health centers, where doctors, nurses and social workers see dual-eligible patients, Tigue said it is crucial to have up-to-date medical and behavioral information. “If we know there are mental health issues, we need to know the prescriptions they take because that can prevent complications,” he said. Danielle Devine, deputy director of operations with Detroit-based Meridian Health Plan of Michigan, said Meridian and Southwest Michigan Behavioral Health in Portage also created a workaround to exchange patient files on the program’s 4,900 enrollees. “As part of integrated care bridge, we set up an SSTP (portal) to supplement the information while we wait for Care Connect 360” to become fully operational, said Devine, noting that Meridian receives all other information from hospitals, doctors and other providers through Care Connect 360. Miles agreed that sharing electronic information between medical and behavioral care “has been a challenge to work through the operational protocols.” 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SYSTEM

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Dual-eligible 101: A guide to MI Health Link’s goals, problems What are dual-eligible beneficiaries?

They are people who qualify for both state-run Medicaid programs for the poor and the federally run Medicare program, which covers seniors age 65 or older and those considered disabled. These patients are the sickest and most expensive population to care for in the nation. Most have multiple chronic diseases, and more than half require behavioral health services.

demonstration program approved under a 2014 contract with the Centers for Medicare and Medicaid Ser vices . The program goes back to

2011 when Michigan was awarded a $1 million planning grant. Michigan is now one of 14 states participating in the program serving four regions and 25 counties including Wayne and Macomb, part of southwest Michigan, and the Upper Peninsula.

What is Michigan’s MI Health Link?

What is the goal of MI Health Link?

It is the name of the dual-eligible

To reduce costs, eliminate dupli-

cation of services, expand access to needed care and improve care for up to 110,000 eligible patients. So far, 35,000 dual-eligible patients are enrolled. Statewide, Michigan has 300,000 people eligible for both Medicaid and Medicare. How costly are dual-eligible partici pants?

In Michigan, dual-eligible beneficiaries represent 12 percent of Medicaid enrollment but account for 38 percent of the more than $11.2 billion in Medicaid spending, said the state Depart-

ment of Health and Human Services.

Nationally, 10 million dual-eligible patients account for nearly 20 percent of all enrollees in Medicare and Medicaid but up to 40 percent of spending, which is $320 billion a year, or 9 percent of the nation’s $4 trillion annual health care tab. Michigan originally projected saving about $10 million during the three-year pilot program. That is a small percentage of the $3.6 billion the state spends taking care of the dual-eligible population. Medicare spends an additional $4.2 billion.

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What services do the enrollees receive?

Medicare typically covers hospital, physician, pharmacy and some short-term rehabilitation and longterm care costs. Medicaid covers some medical, dental, pharmacy and the majority of nursing-home costs. Lack of coordination between the two programs drives up costs and lowers quality. How are patients receiving care in Michigan?

In 2014, Michigan received approval to implement its program, which required special Medicare permission because it wanted to maintain the historic separation of HMOs and mental health organizations. In Michigan, the state requires the HMOs, called integrated care organizations, to contract with mental health organizations, called prepaid inpatient health plans, for behavioral health services. For Southeast Michigan, following a bid process, six health plans and two regional mental health authorities were selected by the state for the pilot program to care for approximately 62,000 dual-eligible patients. For Wayne and Macomb counties, the health plans are Molina Healthcare of Michigan , HAP Midwest Health Plan , AmeriHealth Michigan Inc. , Aetna Better Health , and Fidelis SecureCare of Michigan Inc. The regional mental health authorities are Detroit Wayne Mental Health Authority and Macomb County Mental Health Authority Services. In southwest Michigan, Meridian and Aetna are the health plans and Southwest Michigan Behavioral Health

is the mental health authority. In the Upper Peninsula, the health plan is Upper Peninsula Health Plan LLC and the mental health authority is Northcare Network in Marquette. What are the results so far?

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Last month, a Government Ac countability Office report concluded that Medicare needs to do a better job overseeing the dual-eligible program. Data provided so far between the states aren’t comparable, making it difficult to assess whether care coordination and cost reductions are being achieved, the GAO said. The office recommends Medicare require states to standardize core data measurements, including quality measurements, consumer surveys and care plans. A second report, by RTI Interna tiona l, analyzed effectiveness of care coordination programs in California, Illinois, Massachusetts, Minnesota, Ohio, Virginia and Washington. RTI concluded that care coordination is more costly and time-consuming than the states anticipated. For example, most states grossly underestimated costs of revamping information systems, polices and procedures. Enrollment has been slow nationally with many patients confused about participation. Jay Greene

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MEETINGS & CONVENTIONS

The College for Creative Studies held its Art of Wine auction at a repurposed hangar at Detroit City Airport in October.

By Sherri Welch swelch@crain.com

CHANGE OF

VENUES From airport hangars to bowling alleys, today’s biz functions serve up atmosphere

The historic, executive terminal hangar at Detroit City Airport — formally known as the Coleman A. Young International Airport — is anything but a typical black-tie venue. And that was the attraction. As its name suggests, the hangar traditionally housed airplanes, lawn mowers and other equipment, but it cleaned up well and provided more than 30,000 square feet of white box space when emptied. It was exactly the type of creative venue the College for Creative Studies was looking for to set the scene for its Art of Wine 34th Detroit International Wine Auction last October, said Elizabeth Klos, director of annual giving and donor services. It provided space for CCS to create a staging area for its auction and live entertainment and separate areas for the cocktail reception, seated dinner for 600 people and afterglow. And it provided a perfect backdrop to creatively display faculty and alumni artwork for the silent auction, she said. With help from a number of vendors, CCS brought in carpeting, couches, tables and chairs for dinner; cocktail tables; staging and lighting;

PHOTOS BY ELAYNE GROSS

The airplane hangar allowed for the wine auction and enterainment, with separate areas for cocktails, dinner and a performance by Macklemore. and food prep and serving equipment to create the exact atmosphere and experience it wanted. “The hangar was fabulous because it was a blank slate — we could transform it into the look and feel of a ... 1950s, first-class airline, with a ‘Mad Men’ (feel),” Klos said.

More going untraditional CCS is one of many local businesses, nonprofits and associations in-

creasingly looking to host business functions in nontraditional venues. They’re booking events at sites ranging from turnkey venues like The Henry Ford , Detroit Historical Museum , the Museum of Contemporary Art De troit , The Fillmore Detroit and the Gar den Bowl-Majestic Theatre to white box spaces like Russell Industrial Center and Eastern Market in Detroit, Noah’s Event Venue in Auburn Hills and the Fowling SEE VENUES, PAGE 12

There’ll soon be more rooms at the inns, hotels in metro Detroit as limited service grows ver the next 18 months, about 2,500 limited-service hotel rooms are expected to come online in Wayne, Oakland and Macomb counties. Those hotel projects are in construction or in the final planning stages, according to Michael O’Callaghan, executive vice president and COO of the Detroit Metro

Convention & Visitors Bureau.

Another 1,258 rooms are planned in the tri-county area, he said, quoting information provided by the

Michigan Economic Development Corp. about six months ago, before the state agency’s downsizing. Three of the new hotels coming online in the near term are in Macomb County, six are in Troy and three are in Dearborn, O’Callaghan said. Among them are a Hampton Inn, a four-story Holiday Inn Express & Suites and Staybridge Suites on Dearborn’s Michigan Avenue and a Holiday Inn Express in Plymouth. Traditionally, limited-service ho-

SHERRI WELCH Senior reporter swelch@crain.com Twitter: @sherriwelch tels don’t have a bellman, banquet space and one or more restaurants

like a full-service property. But limited-service hotels are improving, O’Callaghan said. Some are now offering amenities including a full breakfast, much quieter guest rooms, pools, Wi-Fi and even cocktails for guests in the evening. The new limited-service hotels are built much better than comparable hotels built even five years ago, he said. But can the region support the new, limited-service hotels? O’Callaghan believes it can.

In 2005, the tri-county area had 39,500 full- and limited-service rooms, he said. Now, there are 41,880 —a 5.5 percent increase. There will be attrition of older inventory, and demand is up, with average hotel occupancy in the three counties increasing from 57 percent in 2005 to 65.8 percent last year, O’Callaghan said. “The community can probably pretty easily support these (new) guest rooms,” he said. 䡲

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VENUES FROM PAGE 11

58th Annual

Detroit Boat Show

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Warehouse in Hamtramck, which features lanes for fowling, a hybrid game that combines the elements of football, horseshoes and bowling. “Since the recession, companies are growing again and looking for ways to provide more unique, custom-branded experiences,” said Carol Galle, president and CEO of Royal Oak-based Special D Events Inc. Many of the events companies and other organizations are holding are annual, and the attendees are often the same, she said. Clients don’t want to host an event at the same venue year after year. “The bar is continually raised,” Galle said. More and more, event planners like Special D look to “blank slates we can define based on our client’s brand,” she said. Last year her company planned a product launch for a client at Eastern Market, and it has another event coming up there in May. White box spaces allow an organization to tell its story without the distraction of existing décor, Galle said. Clients can brand the venue as their own with such things as signage, graphics and unique seating. On the other hand, nontraditional venues that are already equipped with meeting necessities such as tables, seating and staging are also appealing to some clients. Special D managed several days of business meetings and tours recently for a large foundation that declined to be named, and in between tours its attendees met for discussions and presentations at locations including the Guardian Building and MOCAD, Galle said. Groups like the foundation are not interested in bringing participants to a city and keeping them indoors and/or in one location, she said. “They want to experience the city.” For that reason, Galle said, she’s always on the lookout for new venues. She is excited about the potential of another nontraditional venue: Lincoln Street Art Park & Sculpture Garden on the grounds of Recycle Here! in Detroit, which showcases unique art work made from recycled materials. George P. Johnson Co . is also seeing more client interest in hosting business functions at nontraditional venues. Many of its clients prefer social venues for events, said Craig Erlich, senior vice president and general manager of the Auburn Hills and Nashville offices of GPJ, which acquired his Ferndale-based events management company, Pulse220, in October. “It’s not enough to just go back to the same old ballroom” anymore, Erlich said. “That’s why you see some of these venues that serve both as a meeting venue but also a place to entertain, like Punch Bowl Social and Emagine Theatres.” Other venues that have either hosted business events or are pitching to host them include, according to Erlich, Dan Gilbert’s Madison

Building rooftop and its small theater; the Great Lakes Culinary Center, a state-of-the-art test kitchen venue in Southfield; and Shinola/Detroit LLC’s Detroit store. Last year, GPJ even planned a new product launch for Verizon at Detroit’s Campus Martius Park. “Part of the service a great, experienced marketing company will provide for you is they’ll help uncover not only the best new place, but the place that fits your culture and brand as an organization,” he said.

What’s driving change Erlich believes the increasing number of millennials in the workforce, along with healthier budgets post-recession, are driving interest in social venues for business functions. Millennials are a much more social group. They embrace more social venues and social technologies, which is feeding companies’ interest in incorporating social media into their events, Erlich said. Galle agrees that millennials are more accepting of nontraditional environments. But she sees corporate interest in nontraditional venues as an extension of demand for unique options in food, hotel and even office design. “I think that absolutely carries over into the corporate event world,” she said. While nontraditional venues provide the opportunity to brand a space, there is a higher cost associated with the venues. Sometimes, the venues “are awesome, and sometimes they’re not,” with infrastructure that doesn’t have adequate plumbing or electrical, or parking, said Suzanne Chandler, senior account executive at Event Source. The Ferndale-based company brings everything from tables, chairs, linens, dishes and flatware to refrigerators, freezers, ovens, stoves, dance floors and drapes to serve as a backdrop, she said. It works with other vendors like the Display Group in Detroit, which brings props and décor to non-traditional locations, and Waterford Township-based Corporate Optics , which provides lighting and trussing for the events. “It takes a village,” Chandler said. On average, hosting an event at a non-traditional white box space costs 15 percent to 20 percent more than a turnkey hotel meeting or ballroom, Galle said. There are tradeoffs on the cost of hosting an event at a non-traditional space, for sure, Klos said. While some things cost more than they would at a hotel banquet room, other things cost less. As it was setting up for its gala at the Detroit City Airport last fall, CCS was able to access the hangar from Thursday night right up until the Saturday night event, Klos said. At more traditional venues, the after-hours access would have come at a price, she said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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Corporate Facility Graphics That Inspire

THE HENRY FORD

A strolling dinner, theme cocktails and 1920s music performed by the Larry Lee Band were highlights of an event at The Henry Ford museum during last year’s American Society of Association Executives’ meeting planner conference.

‘Super Bowl of conferences’ scores new events for region By Sherri Welch swelch@crain.com

Just over six months after the American Society of Association Exec utives’ so-called “Super Bowl of con-

ferences” was held in Detroit, the event is beginning to yield new business for the region. Held last August, the event brought 5,300 meeting planners and association executives from across the country to Detroit. The Detroit Metro Convention & Visitors Bureau pulled out all the stops to welcome the influential group, from The Parade Co.’s papiermâché Big Heads at the airport to legends of Motown performing at an opening night ceremony Saturday and water taxi rides on the Detroit River. “Everyone is still talking about The Henry Ford and Lionel Richie at the Fox Theatre and ... they raved about our new, remodeled convention center,” said Bill Bohde, senior vice president, sales and marketing for the convention and visitors bureau. Additionally, Detroit compares positively in things like airlift and hotel pricing versus its direct competitors, St. Louis; Nashville; Columbus, Ohio; and Indianapolis, he said. “People like to go to destinations that are deeply rooted in history ... (and) this is one of most iconic ... talked-about cities in America.” The positive buzz that’s still permeating in several markets, especially in big association markets like Washington, D.C., and Chicago, is opening doors for the bureau, Bohde said. Meeting planners “are more receptive to talking with us now because of the experience we (offered)

in Detroit.” Since the ASAE event, the bureau has been invited to bid on several larger conferences that would take place at Cobo Center or other large venues like Ford Field , with guests occupying three or more downtown hotels, Bohde said. Those groups, which have not hosted an event in Detroit in the past, could bring events with 4,0006,000 attendees to the city, he said. It’s still early for groups interested in hosting an event here in future years to be in touch, given that events are often booked years in advance and take a while to work through the process and to conduct site visits, Bohde said. “I anticipate (seeing) a lot more bid opportunities presented to us during 2016, with decisions later this year and into 2017.” Out-of-state groups are also beginning to book directly with local hotels and venues like the Detroit Marriott Renaissance Center and The Henry Ford in Dearborn, which hosted the opening night gala for ASAE attendees. Smaller groups have shorter planning windows for their events. Many of those single-hotel groups can get into the bidding process and confirm within three to six months. The Detroit Marriott has had at least five bid opportunities generated from ASAE attendees, Bohde said. It’s booked a new customer, the U.S. Grains Council , for 1,300 rooms over six days for its Oct. 24-27 event, said Jodie Kennedy, Detroit Marriott marketing manager. The council was referred by a meeting planner who attended last year’s ASAE conference here and came toward the

end of the event in August to do its own site tour of Detroit. The hotel is getting good feedback after the ASAE event, Kennedy said. “Meeting planners really got a good vibe on Detroit from it.” The Henry Ford is also seeing direct bookings. The historical museum, located on the grounds of Greenfield Village, hosted 5,000 guests for the ASAE conference opening reception last summer. It brought out the Model T’s, photographers and dancers in 1920s garb dancing to ragtime piano music and offered guests a Traverse City bourbon cocktail as they came into the venue. Guests were invited to a strolling dinner throughout the museum and listened to a Motown revue. And historians stood at every turn to answer questions sparked by the historical exhibits. Since then, the museum has a confirmed booking from the Ameri can Academy of Orthopaedic Surgeons

to host a gala for 300 people in October, she said. And it’s finalizing an agreement with another national association to host 3,000 of its members at a gala in May. The museum is also negotiating to host another three to five events next year, thanks to ASAE leads, said Amy Cox, director or sales for The Henry Ford. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

More coverage online Read how professional business events represent an increasing source of revenue for three local nonprofit venues. crainsdetroit.com/meetings

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CRAIN'S LIST: LARGEST SE MICHIGAN MEETING FACILITIES Ranked by total square feet of meeting space Rank

Facility Address Phone; Web site

Top executive

Total square feet of meeting space/Square feet of largest meeting space

CRAIN'S LIST: LARGEST GREATER MICHIGAN MEETING FACILITIES Ranked by total square feet of meeting space Total square feet of meeting space/Square feet of largest meeting space

Facility Address Phone; website

Top executive(s)

DeVos Place Convention Center 303 Monroe Ave. NW, Grand Rapids 49503 (616) 742-6500; devosplace.org

Richard MacKeigan regional general manager

240,000 162,000

Lansing Center 333 E. Michigan Ave., Lansing 48933 (517) 483-7400; lansingcenter.com

Scott Keith president and CEO

124,118 71,760

DeltaPlex Arena & Conference Center 2500 Turner Ave., Grand Rapids 49544 (616) 364-9000; deltaplex.com

Joel Langlois president

105,000 24,000

365,000 100,000

Grand Traverse Resort & Spa 100 Grand Traverse Village Blvd., Acme 49610 (800) 748-0303 / (231) 534-6000; www.grandtraverseresort.com

Tim Norman general manager

86,500 19,000

Blair Bowman owner and president

350,000 215,000

Wings Event Center 3600 Vanrick Drive, Kalamazoo 49001 (269) 226-0364; www.wingseventcenter.com

Robert Underwood general manager

65,000 20,000

Roger Sobran president

200,000 19,500

Kalamazoo County Expo Center 2900 Lake St., Kalamazoo 49048 (269) 383-8778; kalamazooexpocenter.com

David Rachowicz director

The Masonic of Detroit 500 Temple St., Detroit 48201 (313) 832-7100; www.themasonic.com

62,000 24,000

Fox Theatre 2211 Woodward Ave., Detroit 48201 (313) 471-3333; www.OlympiaEntertainment.com

125,000 20,305

Detroit Marriott Renaissance Center 400 Renaissance Drive, Detroit 48243 (313) 568-8000; www.detroitmarriott.com

Tom Wilson president and CEO, Olympia Entertainment/ Detroit Red Wings Shonda Johnson area general manager

Macomb Community College, south campus 14500 E. 12 Mile Road, Warren 48088 (586) 498-4198; www.macomb.edu/eventservices

James Jacobs president

100,000 61,000

Michigan Science Center 5020 John R St., Detroit 48202 (313) 577-8400; www.mi-sci.org

Tonya Matthews president and CEO

85,000 8,700

Emagine Canton 39535 Ford Road, Canton Township 48187 (734) 721-3456; www.emagine-entertainment.com

Paul Glantz founder and chairman

80,000 NA

Emagine Novi 44425 W. 12 Mile Road, Novi 48377 (248) 468-2990; www.emagine-entertainment.com

Paul Glantz founder and chairman

80,000 NA

Macomb Community College, center campus 44575 Garfield Road, Clinton Township 48038-1139 (586) 498-4198; www.macomb.edu/eventservices

James Jacobs president

75,000 21,000

Star Lanes at Emagine Royal Oak 200 N. Main St, Royal Oak 48307 (248) 414-1000; www.emagine-entertainment.com

Paul Glantz founder and chairman

71,000 NA

Palace of Auburn Hills 6 Championship Drive, Auburn Hills 48326 (248) 377-0100; www.palacenet.com

Dennis Mannion president and CEO

70,000 30,000

MotorCity Casino Hotel 2901 Grand River Ave., Detroit 48201 (866) 752-9622; www.motorcitycasino.com

Marian Ilitch owner

67,000 19,604

McMorran Place Sports and Entertainment Center Kim Appel general manager 701 McMorran Blvd., Port Huron 48060 (810) 985-6166; www.mcmorran.com Richard Winn Amway Grand Plaza Hotel president and CEO 187 Monroe Ave. NW, Grand Rapids 49503 (616) 774-2000; amwaygrand.com Caitlin Doherty Broad Art Musem curator and deputy 547 E. Circle Drive, East Lansing 48824 director of curatorial (517) 884-4800; broadmuseum.msu.edu affairs Tim Rayman Radisson Plaza Hotel of Kalamazoo director of hotels 100 W. Michigan Ave., Kalamazoo 49007 (269) 343-3333; radissonkzoo.com Dana Friis-Hansen Grand Rapids Art Museum director and CEO 101 Monroe Center NW, Grand Rapids 49503 (616) 831-1000; www.artmuseumgr.org Ed Grice Boyne Mountain Resort general manager One Boyne Mountain Road, Boyne Falls 49713 (231) 549-6000; boyne.com Pete Bigford Shanty Creek Resorts general manager and 5780 Shanty Creek Road, Bellaire 49615 COO (231) 533-8621; shantycreek.com Kim Appel Blue Water Convention Center general manager 500 Thomas Edison Parkway, Port Huron 48060 (810) 201-5513; www.bluewaterconventioncenter.com Mike Chumbler Boyne Highlands Resort general manager 600 Highland Drive, Harbor Springs 49740 (231) 526-3000; boyne.com Richard MacKeigan Van Andel Arena regional general 130 W. Fulton St., Grand Rapids 49503 manager (616) 742-6600; vanandelarena.com

Crystal Park 17099 Champaign, Allen Park 48101 (313) 388-9001; www.crystalgardensonline.com

Roger Roels president

65,000 5,500

Kewadin Casino Sault Ste. Marie 2186 Shunk Road, Sault Ste. Marie 49783 (800) 539-2346; www.kewadin.com

Lisa Fisher general manager

30,000 NA

General Motors Heritage Center 6400 Center, Sterling Heights 48312 (586) 276-1498; www.gmheritagecenter.com

Greg Wallace manager

64,500 64,000

Dennos Museum Center 1410 College Drive, Traverse City 49686 (231) 995-1055; www.dennosmuseum.org

Eugene Jenneman executive director

30,000 10,000

Edward Village Michigan B 600 Town Center Drive, Dearborn 48126 (313) 592-3622; www.hotel-dearborn.com

Rudy Ferraro general manager

64,000 17,700

Wharton Center for Performing Arts 750 E. Shaw Lane, MSU, East Lansing 48824 (517) 353-1982; whartoncenter.com

30,000 10,000

Music Hall Center for the Performing Arts 350 Madison Ave., Detroit 48226 (313) 887-8500; www.musichall.org

Vincent Paul president and artistic director

60,000 15,000

Heinz C. Prechter Educational and Performing Arts Deborah Duyck district executive Center 21000 Northline Road, Taylor 48180 (734) 374-3512; www.wcccd.edu/about/ PerformingArtsCenter.htm

Kellogg Arena One McCamly Square, Battle Creek 49017 (269) 963-4800; www.kelloggarena.com

Mike Brand executive director Diane Baribeau general manager Ben Randels operations manager

McCamly Plaza Hotel 50 Capital Ave. SW, Battle Creek 49017 (269) 963-7050; www.mccamlyplaza.com

Robert Holsten general manager

25,000 NA

Frauenthal Center for Performing Arts 425 W. Western Ave., Muskegon 49440 (231) 722-2890; frauenthal.org

Linda Medema sales and marketing manager

25,000 4,670

Cobo Center 1 Washington Blvd., Detroit 48226 (313) 877-8777; www.cobocenter.com

Thom Connors general manager

The Henry Ford 20900 Oakwood Blvd., Dearborn 48124 (313) 982-6001; www.thehenryford.org

Patricia Mooradian president

544,020 22,000

Joe Louis Arena 19 Steve Yzerman Drive, Detroit 48226 (313) 471-3333; www.olympiaentertainment.com

439,380 30,197

Ford Field 2000 Brush St., Detroit 48226 (313) 262-2000; www.detroitlions.com

Tom Wilson president and CEO, Olympia Entertainment/ Detroit Red Wings Rod Wood president

Ultimate Soccer Arenas 867 South Blvd., Pontiac 48341 (248) 648-7000; www.ultimatesoccerarenas.com

George Derderian president and managing partner

Suburban Collection Showplace 46100 Grand River Ave., Novi 48374 (248) 348-5600; www.suburbancollectionshowplace.com

902,500 623,000

375,000 100,000

100,000 25,801

60,000 6,000

This list of meeting facilities is an approximate compilation of the largest such facilities in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Information is provided by the venue unless otherwise noted. It is not a complete listing but the most comprehensive available. NA = not available.

B Formerly known as the Royal Dearborn Hotel & Convention Center, Hyatt Regency Dearborn and Adoba Hotel Dearborn/Detroit. LIST RESEARCHED BY SONYA D. HILL

Rank

7 8 9 10 11 12 13

48,000 15,000 47,000 8,750 46,000 4,656

44,000 10,000 37,667 10,437 37,000 10,000 36,000 9,600 34,000 NA

31,500 9,500 30,772 NA

30,000 NA

This list of meeting facilities is an approximate compilation of the largest such facilities in Michigan but outside of Wayne, Oakland, Macomb, Washtenaw or Livingston counties. Information is provided by the venue unless otherwise noted. It is not a complete listing but the most comprehensive available. Actual figures may vary. NA = not available. LIST RESEARCHED BY SONYA D. HILL

Special feature Take a look inside some of the top meeting and convention spaces in metro Detroit at crainsdetroit.com/meetings

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DEALS & DETAILS CONTRACTS Artistic Rugs Inc., Trenton, signed an agreement with U-Haul International Inc., Phoenix, to be a U-Haul neigh-

at the Northwest Activities Center, 18100 Meyers Road, Detroit. Telephone: (313) 578-7541. Website: dtekiosk.com.

borhood dealer. Telephone: (734) 365-7267. Website: uhaul.com/ locations.

Michigan Schools & Government Credit Union, Clinton Township, has

Innovative Learning Group Inc., Royal

Oak, has developed a curriculum for route drivers at Canteen Vending, the vending services company of Compass Group North America, Charlotte, N.C. It includes e-learning, one-on-one coaching and print self-study modules, which Canteen expects to implement before the end of the first quarter. Websites: innovativelg.com, canteen.com.

opened a branch office at 20595 Farmington Road, Livonia. Website: msgcu.org.

MOVES DTE Energy Co., Detroit, has moved

its community customer office from 17227 Seven Mile Road, Detroit, to Focus: Hope grocery building, 1300 Oakman Blvd., Detroit. Telephone: (313) 494-4600. Website: dtekiosk.com.

EXPANSIONS

NEW PRODUCTS

DTE Energy Co., Detroit, has opened

Perceptron Inc., Plymouth, a suppli-

a new community customer office

er of automated industrial dimen-

sional inspection and 3-D products, has launched a 5-axis Coordinate Measuring Machine with scanning probe and a Universal Computer Control controller and software. Website: perceptron.com.

NEW SERVICES Carbon Media Group LLC, Bingham

Farms, a digital media firm, announced that full episodes and seasons of CarbonTV outdoor-related programming, including premium hunting, shooting, fishing, farming, equine, off-road and country lifestyle shows, can be watched for free on the new CarbonTV iOS app. Website: carbontv.com.

The Unlocked Summit. 9 a.m.-5 p.m.

opened at 44905 Morley Drive, Clinton Township. Telephone: (586) 615-5445. Website: pennelaneitalian.com.

A la carte Galore and EmpireLifeMag.com. Learning experience for entrepreneurial-minded women. Keynote speaker and Unlock the City award recipient is Detroit City Council member Mary Sheffield. TechTown, Detroit. $100$150. Contact: TaQuinda Johnson, phone: (248) 716-0240; email: hello@theunlockedsummit.com.

Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

Youth Development Commission

Matt Matuzak, MBA, CPA has joined Rafalski Hare, PC as Shareholder and Integrator. Matuzak brings extensive experience and a comprehensive skill set that will help to expand Rafalski Hare's Business Advisory and Controllership services. Matt Matuzak was most recently Corporate Controller for Urban Science Applications.

In his new role, Counts will expand in-school programs beyond academic achievement and mentoring, and increase the visibility of YDC's mission. Counts earned his Master of Public Administration in Educational Leadership from U of M. Counts, a veteran in the youth development field for over 21 years with an extensive background in nonprofit management, served as the program director at the Youth Development Commission and served as regional manager for 1 to 1 Tutor Michigan.

MANUFACTURING John Hill, Chief Information Officer,

CONSULTING Scott Schilling, President, Kolene Corporation Kolene Corporation announced the promotion of Scott Schilling to President of the Corporation effective January 11, 2016. Schilling succeeds Roger L. Shoemaker who retains the role of CEO and Chairman of the Board. Schilling holds a Bachelor of Science from Purdue University and a Master of Science from Central Michigan University. He joined Kolene from Paragon Technologies where he was an Executive Vice President responsible for all commercial activities.

UPCOMING EVENTS Detroit Policy Conference. 7:30 a.m. Feb. 24. Detroit Regional Chamber.

Keynote remarks by David Maraniss, Pulitzer Prize-winning journalist. MotorCity Casino Hotel, Detroit. $159 chamber members, $225 nonmembers. Contact: Janelle Arbuckle, (313) 596-0340; email: jarbuckle@detroitchamber.org. The 2015-16 Detroit Red Wings Season. 11:30 a.m.-1:30 p.m. Feb. 25. Detroit Economic Club. Red Wings players and coaches discuss the season. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of members, $75 nonmembers. Phone: (313) 963-8547; email: info@econclub.org.

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.

PEOPLE: SPOTLIGHT

President,

Rafalski Hare, PC

FEB. 20

Penne Lane Ristorante Italiano has

Robert D. Counts,

Shareholder,

Fireside chat. 5-8 p.m. Marketing and Sales Executives of Detroit. Global business leaders Steve Miller, CEO of IAC, and Steve Kiefer, vice president of global purchasing and supply chain for General Motors, are the speakers. John McElroy will lead the discussion. Westin, Southfield. $45 members; $60 nonmembers. Website: msedetroit.org.

SATURDAY STARTUPS

EDUCATION

Matthew Matuzak,

THURSDAY FEB. 18

ADVERTISING SECTION

ACCOUNTING

CALENDAR

Carhartt, Inc. Hill’s primary responsibilities are working with Carhartt’s senior leadership team to define and execute its technology strategy for the company’s growth objectives. Prior to joining the Carhartt team, Hill had previously served as the vice president of solutions delivery at W.W. Grainger from 2013-15, and as the CIO and vice president of business transformation at for the Workplace Safety and Insurance Board.

Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonthemove. Guaranteed placement in print and online can be purchased at this website.

Carlone promoted to Detroit Public Lighting Authority CEO Nicolette Carlone, the Detroit Public Lighting Authority’s COO, was promoted to CEO, replacing Odis Jones, who

resigned abruptly amid a dispute with Mayor Mike Duggan. Jones quit after an unspecified power struggle with Duggan over management of the state-created lighting authority, which is overseen by a five-member board appointed by the mayor and the City Council. Carlone, 54, has worked at the authority for two years, starting as CFO. Last year, she was named COO and was instrumental in securing $185 million in financing to install more than 60,000 Nicolette Carlone LED streetlights throughout the city’s neighborhoods. Carlone’s annual salary is $230,000, as was Jones’. Before joining the authority, Carlone worked as a consultant on financial projects, merger and acquisition integrations and treasury services.

Hardy-Foster, 58, joins Judson after a 36-year career with Southwest Solutions Inc. in Detroit, most recently serving as executive director. Prior to that, she Lenora was vice president, Hardy-Foster finance and administration, overseeing the financial, human resources, information technology, risk management, health and safety, and property management functions for Southwest.

DTE names Moody as VP, Nelson to chair foundation Detroit-based DTE Energy Co. named Nancy Moody vice president of public affairs and promoted Faye Alexander Nelson to chairwoman of the DTE Energy Foundation.

Nancy Moody

Hardy-Foster named Judson Center president, CEO The Royal Oak-based Judson Center has named Lenora Hardy-Foster as president and CEO, effective March 7. She succeeds interim CEO David Zimmer, managing partner at Stonebridge Business Partners and a Judson Center board member who had led the agency since October when CEO Cameron Hosner left after three years for personal reasons.

Faye Alexander Nelson

Moody has been director of federal government relations in DTE’s Washington, D.C., office after spending 24 years in Lansing. She has worked for DTE since 1988. Nelson came to DTE in 2014 from the Detroit RiverFront Conservancy

and had been vice president of DTE and president of the DTE Energy Foundation. Chairman Fred Shell is retiring. 䡲

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COLLEGES FROM PAGE 3

Michael said Wayne State is looking for a public-private partnership, where a developer would pay to build the project, lease property from the university and possibly act as property manager, to be reimbursed out of future student housing fees. “We don’t anticipate using any tuition or student fees to pay for the project,” he said. Michael estimates about 20 companies sent representatives to last week’s meeting — a condition for bidding on the project. Wayne State is also converting the former Thompson Home that once housed its School of Social Work and will offer housing for up to 65 students, and plans a renovation that will add more than 150 new beds to the current Chatsworth Apartments. All told, the university expects to expand housing capacity from about 3,100 today to 3,760 by 2022, Michael said. Oakland University, meanwhile, expects to present architectural and engineering reports from Neumann/Smith Architecture in Southfield to its board of trustees on a proposed $77 million residence hall that would be its seventh on the Rochester Hills campus and include more than 750 beds. The university broke ground in 2013 on its $30 million Oak View Hall, which filled all 500 beds within 24 hours after they became available for the fall 2014 semester. OU typically draws about 78 percent of its students from Oakland

and Macomb counties, and traditionally has housed only about 14 percent of its undergraduates on campus. But it topped 17 percent residency after opening Oak View, which also houses the school’s Honors College, and University President George Hynd has said he would like to reach 20 percent. Paul Schroeder, associate vice president for enrollment management at OU, said the university traditionally had a commuter campus reputation, but that is changing as enrollment continues to grow. “There’s a higher percentage of students coming who are interested in living on campus. I believe students want to have the whole undergraduate educational experience, and a number of them are coming to campus with parents who had that experience,” he said. “So we have been at or even a little above capacity for housing students for a while.” Six-year graduation rates, an important performance metric for colleges seeking state funding increases, have also been trending upward at Oakland in recent years — almost 44 percent of students who had enrolled in 2009 had completed a degree program six years later, compared with just 39.7 percent of those admitted to OU in 2004. Schroeder said the growth of campus housing, along with improved academic achievement rates of each new class, could further improve that rate, because more new students are likely to be immersed in their education rather than juggling it with jobs and family

or off-campus interests. The construction at Wayne State will be the first all-new residential housing since it opened Towers Residential Suites in 2005, while Oak View Hall and the new residence hall proposal are OU’s first new housing since the Ann V. Nicholson Apartments in 2002. Eastern Michigan University has no immediate plans for new residence halls, but has been increasing its total on-campus living capacity, via building renovations and converting single- or double-occupant living areas into multi-occupant space, to cope with surging demand, said Kevin Kucera, associate vice president and chief enrollment officer. In fall 2010, Eastern had 2,008 incoming freshmen. This past semester, it had 2,857, a 42 percent increase, and 3,867 of the school’s 4,056 available student housing beds were occupied (or 95.3 percent, compared with about 92 percent of only 3,557 available beds in 2010). The university board of regents earlier this month approved a $30.2 million capital budget for the 2016-17 year that includes $6.4 million to complete a renovation at Wise Residence Hall, which is closed this school year but reopens in the fall semester. “The culture has been changing to serve a little bit more of that 18to 22-year-old group, rather than commuters and retraining, but that I think reflects that Michigan’s unemployment rate five years ago was near 13 percent, and now it’s nearer to 5 percent,” Kucera said. Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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LEGAL NOTICES

Detroit Transportation Corporation NOTICE OF PUBLIC HEARING All Citizens are advised that the Detroit Transportation Corporation (DTC) has prepared an application for State of Michigan financial assistance for fiscal year 2017 as required under Act 51 of the Public Acts of 1951, as amended, and for federal assistance as required under the federal transit laws, as amended. The DTC is requesting estimated total capital funding through the following sources: Section 5307 for DTC Infrastructure and Equipment Upgrades $500,000; Section 5337 DTC Infrastructure and Equipment Upgrades, $1,375,000; Section 5310 DTC Infrastructure and Equipment Upgrades, $440,625 and (MI) Act 51 Operating Assistance, $5,100,000. Notice of these federal funds has been previously published in the Transportation Improvement Plan prepared by SEMCOG.

CLOSING TIMES: Monday 3 p.m., one week prior to publication date. Please call us for holiday closing times.

The DTC ensures that the level and quality of transportation service is provided without regard to race, color, or national origin in accordance with Title VI of the Civil Rights Act of 1964. For more information regarding our Title VI obligations or to file a complaint, please contact the DTC at the address listed below.

FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds

The proposed application is on file at the DTC and may be reviewed from Monday, February 1, through Friday, March 4, 2016 between the hours of 9 a.m. and 4:30 p.m.

Confidential Reply Boxes Available PAYMENT: All classified ads must be prepaid. Checks, money order or Crain’s credit approval accepted. Credit cards accepted.

Written comments or requests regarding the application and/or written requests for a public hearing to review the application must be received by Monday, March 9, 2015. If a hearing is requested, notice of the scheduled date, time and location will be provided at least 10 days in advance. Submittals should be sent to Mr. Oliver Lindsay, Grant Manager, Detroit Transportation Corporation, 535 Griswold Street, Suite 400, Detroit, MI 48226 or 313-224-2160. Barring any changes made in response to the written comments, this document will become final.

See Crainsdetroit.com/Section/Classifieds for more classified advertisements

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2016

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UPCOMING

PARTNER EVENTS

Ferndale Area Chamber of Commerce Ferndale Community Collaborates in Celebration of Student Artists

The Artist in You is a communitywide celebration of student art, featuring works by young people in the Ferndale School District and CASA. Students will have their artwork in local exhibitions and compete to have their work converted into public art. Scholarships will be awarded to winners. 2-D art will be exhibited from March 14 - April 23 at the Ferndale Area District Library, and 3-D art will be exhibited around town from April 29 - June 2, as well as on May 5 as part of Walk and Roll. Winners will be announced at a reception on April 29 at Level One Bank. For more information, visit www. ferndaleareachamber.com/artist-in-you-2016. html, email info@ferndalechamber.com or call (248) 542-2160

place and the growth of the Fifth Third Bank Michigan State Fair, Bowman said. “We want this to function better for existing customers and events,” he said. “But we also want to attract some new events — large conferences, meetings and consumer shows ... amateur and youth athletics events ... entertainment events like concerts and large gatherings like graduations.” Half of the 200,000-square-foot expansion will be flexible event space, 80,000 square feet of it boasting 40 feet of ceiling clearance and no columns. The new exposition space will also provide show rings for livestock competitions during the state fair and another expanded space for livestock. The west portion of the new event space will be developed and built to accommodate a long-term home for the Shrine Circus , which takes place every year during the state fair, Bowman said. The space will include rigging points for acrobats and an area sized for a three-ring circus, with seating for up to 6,000 people, he said.

SCHOOLS FROM PAGE 1

Dearborn Area Chamber of Commerce Chamber Choice Awards & Expo Chamber Choice Awards & Expo features a gala luncheon honoring our community pillars and milestone anniversaries of Dearborn and Dearborn Heights businesses. March 11 • 11 a.m. - 2 p.m. The Henry, Dearborn Tickets: $48

Young Entrepreneurs Academy Investor Panel Presentation Join us for a welcome reception and presentations by the Young Entrepreneurs to a panel of local investors to obtain funding for their new businesses and social movements. Personal investments are not expected. March 24 • 5:30 - 8 p.m. Arab American National Museum, Dearborn Tickets: Free Register online at www.dearbornareachamber.org

Southfield Area Chamber of Commerce State of the City Join Mayor Kenson Siver, city of Southfield, and Mayor Frank Brock, city of Lathrup Village, for the 2016 Southfield State of the City address. March 21 • 11 a.m. - 1 p.m. The Westin Southfield Detroit 1500 Towne Center, Southfield Register online at www.southfieldchamber.com

For more local events, visit Crain’s Executive Calendar at crainsdetroit.com/executivecalendar

taken care of,” said Rep. Al Pscholka, R-Stevensville, chairman of the House appropriations committee. Yet “there might be a better solution” than tobacco money, said Pscholka, adding that he is considering a way to fund the DPS fix without school or general fund money. He would not offer details, saying he is still discussing ideas with Snyder.

Money running out Since Snyder outlined the details of his reform plan last fall, he has faced pushback from Detroit lawmakers over local control and from outstate legislators concerned about using School Aid Fund dollars for Detroit at the expense of other districts. He wants the Legislature to adopt bills by this summer to address the district’s finances. Snyder has been careful not to say DPS could file for bankruptcy, but said if a creditor decides to take the district to court, a judge’s decision could yield more expensive consequences. Most of the district’s debt is owed to the state, backed by the state or tied up in pensions, state Treasurer Nick Khouri said in a presentation last week to a Senate committee. DPS pays about $50 million a year in debt service. Its $515 million in debt has accumulated from long-term bonds, short-term borrowing to improve cash flow, unpaid payments into the state pension system and late payments to vendors, Khouri said. “Bankruptcy is a terrible option for the district,” he wrote. “The bankruptcy process is always uncertain, but in the end, it will cost the state more than double the cost of the proposed legislation.” Bankruptcy could disrupt the district for eight months to a year and cost $75 million to $100 million

The rest of the expansion will include a 20,000-square-foot conference/ballroom space, a pre-function area and shipping and receiving and warehouse space. Bowman has brought back the same architect and contractor that worked on the event center’s first expansion. Ann Arbor-based Bowers and As sociates Inc. is architect on the project, and The Alan Group Inc. in Madison Heights is contractor. Bowman expects to submit the project to the city for approval this month. The new addition follows a 100,000-square-foot expansion completed on the exposition center’s east side in August 2013. The first expansion enlarged the Diamond Center space and added the Fireside Lounge and Hyatt Place Detroit Novi. The Hyatt Place is designed to accommodate an additional tower with 60-120 guest rooms along the expressway side of the hotel, Bowman said. It is likely, given business projections, “that we would be looking at the expansion of the hotel immediately following the addition,” he said. Bowman declined to share revenue

Tobacco money Gov. Rick Snyder has proposed using $72 million per year for 10 years from the state’s tobacco settlement funds to pay for a plan to reform Detroit Public Schools, which must repay an estimated $515 million in operating debt. Michigan is due $284 million in the 2017 fiscal year, which begins Oct. 1. Here’s where the funds go:

䡲 $193 million is left after credits are paid to tobacco manufacturers and the state makes securitization payments related to bonds issued in 2006 and 2007 that got the state through lean budget years. 䡲 $17.5 million is paid into the state’s Budget Stabilization Fund, or reserves, as reimbursement for Michigan’s in fees, he wrote. Snyder’s plan would use $720 million over 10 years from the state’s tobacco settlement to pay for the plan, which would split DPS into two districts. The existing district would be phased out once its debt is repaid, while a new Detroit Community School District would be created to educate the city’s roughly 47,000 students. He estimates the new district would need $200 million in startup funding. DPS would continue to collect a local operating millage for debt repayment, while the new district would receive $72 million in annual payments from the state’s School Aid Fund as its operating funds. The tobacco money would reimburse the school fund to avoid cuts to other Michigan schools. “So (lawmakers) can go tell their school districts, the parents in those school districts, that this money is not at the expense of money that would otherwise go to their school district,” Snyder told reporters last week.

Tobacco settlement Michigan, 45 other states and Washington, D.C., reached a settlement in 1998 with tobacco manu-

but said that business for the exposition center, hotel and electrical and contractor services his employees provide grew by just over 25 percent in 2013, 14 percent the following year and 11 percent last year. He’s projecting about 10 percent growth this year. Bowman said he has already filled 20 percent of the bookings for the new space for the first year, the trigger for moving forward with the expansion. Suburban Collection Showplace and Hyatt Place are within an hour’s drive of big city centers like Lansing, Ann Arbor, Flint and Detroit “and millions of people who are ... demographically the sweet spot for consumer shows,” he said. The Novi exposition center is very successful, with golf, RV, gun and knife and dog shows happening every weekend, many of them coming back year after year, said Bill Bohde, senior vice president of sales and marketing for the Detroit Metro Convention & Visitors Bureau. He’s also getting into a position to attract more state association business with the additional exhibit space he plans, Bohde said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

contribution to the “grand bargain” deal in Detroit’s bankruptcy. That payment will be made over 20 years.

䡲 $75 million is paid into the state’s 21st Century Jobs Fund. 䡲 $72 million is proposed annually for a decade to pay for DPS reform. That money comes from a nearly $49 million fund balance in the tobacco settlement and money that previously paid for other programs. 䡲 Tobacco dollars historically have been used to support Medicaid programs, the Family Independence Program within the Department of Health and Human Services, student financial services programs within the Department of Treasury and for Michigan State Police criminal investigations. facturers that is due to drop roughly $284 million into the state’s general fund next year. About $193 million will remain after some restricted funds are taken off the top, state budget spokesman Kurt Weiss said. More than $23 million of the tobacco funds earmarked for Detroit schools in a new Detroit Public Schools Trust Fund, however, is budgeted for some Medicaid programs in 2017, according to a House Fiscal Agency analysis. The remaining $49 million is available next year as onetime funds. By 2018, Detroit would require about $47 million in tobacco funds from Medicaid, with the rest coming from a projected rise in the amount paid by tobacco manufacturers, according to the analysis. Another $50 million is proposed for DPS in a budget amendment in the current fiscal year to support short-term daily operations. Questions about how the new district would be governed — including the makeup of its board and creation of a proposed Detroit Edu cation Commission, with oversight of city public and charter schools — have not been resolved. 䡲

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near Cincinnati in late March. But that and the 18 Bagger Dave’s (16 in Michigan, one in Ohio and one in Indiana) that survived the closings — and employ 670 people — will be the last for the foreseeable future. This is a marked about-face for a company normally hell-bent on growth. It opened six Bagger Dave’s in 2014 and seven in 2013. And that pales to its Buffalo Wild Wings franchise operations, the largest in the country. Last year alone, Diversified added 20 more restaurants, 18 of which came from the $54 million purchase of Buffalo Wild Wings restaurants in the St. Louis area. That brought the number of Buffalo Wild Wings locations under its umbrella to 62. From the end of 2011 to the end of last year, Diversified increased the total number of its restaurants across the two brands from 28 to 80. This year, though, it plans to add just three — the Bagger Dave’s near Cincinnati and two more Buffalo Wild Wings locations.

Familiar taste Bagger Dave’s has struggled before. Sales took a hit after Diversified embarked on an aggressive growth plan in 2012, opening or buying 16 stores across its two brands. It listed on Nasdaq the following year. The pace distracted management from everyday operations, and it was the Bagger Dave’s side of the business that took the hit in sales. To mend things, Diversified beefed up Bagger Dave’s marketing, launched a corporate training program, brought in an employee-assessment firm and began hiring professionals from national chains such as Red Robin. It brought in consultants from the Disney Institute to go over employee retention and recruitment and rolled out new menus — a first one in early 2014 and another last year. The final rollout wrapped up last September. It included adding more burgers and removing sandwiches that weren’t selling well, switching from a two-patty burger to an 8-ounce one and adding a grilled chicken breast sandwich. Fries are included in the price of a burger instead of added on. The menu’s marketing pitch changed to tell customers about certain points of company pride, such as how it uses prime rib and sirloin in its burgers and carefully sources its food. “I’m much, much more connected to Bagger Dave’s now,” CEO Michael Ansley said last April in a Crain’s interview. Things appeared to pay off. In a conference call for last year’s secondquarter results, Ansley said sales at Bagger Dave’s stores open at least two years had increased 2.5 percent compared with the same quarter a year earlier and 4 percent year to date. Ansley talked about encouraging positive signs showing in things like Facebook “likes” and “net promoter scores,” which measure customer satisfaction. Investments in technology — tabletop ordering tablets, a mobile app, a gift card program, a “RockBot” jukebox app — promised to further brighten the picture. Nevertheless, Ansley had to acknowledge struggles. “Despite the

positives, we fully appreciate the missteps we have made in the past with respect to the brand,” he said. One initiative has proved costly. Management was determined to maintain a base staffing level at Bagger Dave’s restaurants, even if sales were low. This policy was done to bolster service and coax repeat visits out of customers. But this, along with minimum wage increases, pushed up the company’s year-on-year compensation costs by more than 25 percent in the second quarter of last year. This came on the heels of a $2 million spike in compensation costs that brought its tally for 2014 to $9.2 million. Minimum staffing practices like this are rarely used in the restaurant industry, said Darren Tristano, president of Technomic Inc., a Chicago-based restaurant industry research company. “There’s nothing financially efficient about it,” he said. “You end up with staff standing around.” In a conference call on Nov. 5, Ansley and CFO David Burke expressed frustration with the slow pace of results. Burke described Bagger Dave’s as a “Dr. Jekyll/Mr. Hyde concept” because of the changes it had undergone. There were signs of improvement coming out of investments in the menu and training, but “you don’t see an immediate impact in sales from that,” he said.

The financial picture Diversified’s breakneck growth comes with a heavy capital burden. Estimated capital expenditures last year were about $30 million. It spent $36 million the year before. The buildout of a Bagger Dave’s costs $1.1 million to $1.4 million, according to company financial statements. A new Buffalo Wild Wings costs $1.7 million to $2.1 million. Updates to older restaurants cost between $50,000 and $1.3 million. A listing on Nasdaq in 2013 raised $31.9 million. But much of the company’s expansion has been financed by debt. Total debt rose from $61.8 million at the close of 2014 to $123.9 million at the end of September, pushed up because of the acquisition of the St. Louis stores. The company’s share price opened at $2.57 the day the closure of the eight stores was announced. The stock was trading just above $1.50 last week. A pair of lawsuits last year further strained finances. The two cases, brought by the same attorney, alleged employees who work for tips were made to do the work of non-tipped employees who earn a higher hourly rate. The settlement and related expenses cost the company $1.9 million. For the first three quarters of last year, Diversified booked a net loss of $6.6 million, compared with an $85,000 profit for the same period in 2014. The company lost $1.3 million overall in 2014. The company does not believe it made a full-year profit in 2015. (Annual results are expected to be released in March.) Preliminary financial estimates for 2015 show revenue growing 34 percent to $172.5 million from $128.4 million in 2014, in line with the company’s guidance. Same-store sales increased 2.8

percent at Buffalo Wild Wings and 1.3 percent at Bagger Dave’s from 2014 to 2015, but they decreased 7.8 percent year-over-year in the fourth quarter at Bagger Dave’s and increased just 0.8 percent at Buffalo Wild Wings.

The Buffalo squeeze The 18 Bagger Dave’s stores that remain don’t appear to be on much better ground. The eight stores shuttered in December generated $5.5 million in revenue, or $687,500 per restaurant, through the first three quarters of last year and had a pre-tax (EBITDA) loss of $600,000. But the other 18 locations brought in $14.1 million, or $783,333 per restaurant, and had a pretax profit of $700,000. That comes to less than $52,000 per restaurant on an annualized basis, a growth rate of 5 percent. The revenue per restaurant on an annualized basis comes to $1 million, well below the target revenue per store of $1.7 million, the goal stated in a presentation to investors in January. A profit margin of 5 percent is low, especially for company-owned stores, Tristano said. Franchiseeowned stores typically hit at least 10 percent because of the fees to the franchisor they must pay. “They’ve got to be doing better than 5 percent to pay down their debt,” Tristano said. The obvious question that arises is, were the closures enough? All Bagger Dave’s restaurants are company-owned. (Plans to franchise the brand several years ago were scrapped.) With a massive Buffalo Wild Wings operation cranking away, the Bagger Dave’s “baby brand,” as Ansley has called it, has had a hard time getting the attention it needs. Diversified has a contractual obligation with Buffalo Wild Wings Inc. to open 42 restaurants by 2021 and has 15 more to go. The company says it’s ahead of schedule. Ansley also points out that failing to make that obligation bears only a weak cost: Diversified only has to pay Buffalo Wild Wings $50,000 for each store it does not open — far less than the millions it costs to open one. “With our relationship with Buffalo Wild Wings, I doubt they’d charge us the $50,000,” Ansley said. In any case, the moves Bagger Dave’s has made demonstrate the pressure on Diversified to stay focused on the much stronger Buffalo Wild Wings side of the business. “In the year ahead, we plan to focus our resources primarily on growing our BWW portfolio, which represents the overwhelming majority of both our revenue and adjusted EBITDA,” the company said in its third-quarter report. The move toward Buffalo Wild Wings is smart because it’s a more proven brand than Bagger Dave’s, which is “a good brand but not that broadly differentiated,” Tristano said. “The reality in our industry is that there’s no shortage of optimism. We hear about these ambitious goals, but very rarely do we see brands meet those goals.”

The response Last year’s closings, which included one Buffalo Wild Wings restaurant in Florida besides the Bagger Dave’s spots, were the first

for the company. But they were a long time coming. “Bagger Dave’s has given us some fits,” Ansley said in an interview. “We knew we had issues with it two years ago. We made a lot of changes — I can’t even count the changes.” These changes came too quickly and were confusing for guests and employees. “We were too aggressive. That was the problem, and we learned it the hard way,” Ansley said. Casual dining chains face intense competition throughout the country, not just from each other but also from fast-casual restaurants like Chipotle Mexican Grill and Five Guys Burgers and Fries . The parent of the Max & Erma’s chain closed eight metro Detroit locations in January. To counter this trend, Diversified needs to do a better job of marketing Bagger Dave’s by doing things such as telling people of premium ingredients that are mostly sourced in Michigan, Ansley said. He also is heartened to see interest in properties of the shuttered locations. This includes the one in downtown Detroit, which has garnered “a lot of offers,” he said. The company is holding the line

EXPANDING:

on the minimum staffing levels that have driven up compensation costs. “There will be a little deleveraging from” the minimum staffing levels that drove up compensation costs but “nothing substantial,” Ansley said. No more Bagger Dave’s locations will be closed, Ansley said. If the prototype stores do well for the rest of the year, “then we will start expanding again,” he said. The 18 remaining Bagger Dave’s restaurants are profitable, said Ansley, who is especially encouraged by the performance of “prototype” stores. These stores have the new menus and have been redesigned to be smaller and “hipper.” They are in Grand Blanc, Birch Run, Grand Rapids, Chesterfield Township and Centerville, Ohio. The three analysts who cover Diversified’s stock are encouraged. They express concern at the company’s debt but agree that the Bagger Dave’s changes are on the right track. “We think much of the ‘noise’ of the past few quarters is behind the company and management can focus on restaurant operations,” wrote Mark Smith, analyst at Minneapolis-based Felt & Co. 䡲

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I-75 FROM PAGE 3

generation, and it’s a tremendous waste of money.” Not so, others say. The widening of an interstate driven by 174,000 motorists a day will stimulate the economy by creating construction jobs, shave commuting times and help companies that haul goods along the corridor, said Donald Grimes, senior research associate at the University of Michigan’s Institute for Research on Labor, Employment and the Economy. Plus, the project is a better use of taxpayer funds than improving mass transit, he said. “You need a very densely populated core to get a real mass transit system,” Grimes said. “The population is too spread out and there are not enough people who live in Detroit to make it work.” The fourth lane being added to north and southbound I-75 will be a high occupancy vehicle lane requiring two or more people during peak hours, generally 7-9 a.m. and 4-6 p.m. weekdays. The lanes, common in urban areas nationwide, would be the first along a freeway in Michigan. The federal government is bankrolling 80 percent of the project, with the state contributing the rest. The 17-mile stretch of I-75 has not been modernized since being built in the 1960s. The project includes eight phases starting this summer. The phases and start times are:

■ 2016: from north of Coolidge Highway to north of South Boulevard. ■ 2018: from north of I-696 to south of 12 Mile Road. ■ 2020: from north of Wattles Road to north of Coolidge Highway. ■ 2022: from north of Rochester Road to north of Wattles Road. ■ 2024: from north of 13 Mile Road to north of Rochester Road. ■ 2026: from south of 12 Mile Road to north of 13 Mile Road. ■ 2028: from north of Nine Mile Road to I-696. ■ 2030: from north of Eight Mile Road to north of Nine Mile Road. The project reflects an outdated and misguided transit philosophy, Ferndale Mayor David Coulter said. He prefers investments in an M-1 Rail line expansion beyond Detroit and providing bus rapid transit along Woodward to woo millennials. “That is exactly the demographic we’re trying to attract in Oakland County and Michigan and that we’re losing at an alarming rate,” Coulter said. Providing more mass transit hubs along Woodward, instead of adding lanes along I-75, would stimulate economic development and create more walkable communities, he said. “What we’ve seen in other cities that have done this is that housing and jobs cluster around those transit stops,” Coulter said. “Economic development … is about creating a sense of place. There is nothing about an expanded freeway that enhances sense of place in Oakland County.”

BRT lines typically cost $15 million to $25 million per mile, meaning the Woodward project could range from $405 million to $675 million, according to a 2014 estimate from Carmine Palombo, deputy executive director of the Southeast Michigan Council of Governments regional planning agency. The highway project is driven, in part, by Oakland County’s growth and importance to the state economy. By 2020, Oakland County is expected to have almost 19 percent of the state’s total employment and more than 29 percent of the state’s total earnings. More than 23,000 businesses are within three miles of the I-75 corridor — more than half the businesses in Oakland County. Maureen Krauss, the Detroit Re gional Chamber ’s senior adviser for economic development, advocates a balanced approach. “People look at it as an either/or — do better mass transit or expand the freeway,” she said. “But it isn’t either/or. It’s both.” The Southeast Michigan Council of Governments supports the interstate project based on a rise in traffic volumes and the economic recovery. Since the recession, Oakland County has gained more than 79,000 jobs and is on track to add 49,000 more through next year. “This should provide some capacity for trucks and improve the movement of goods,” said Carmine Palombo, SEMCOG’s deputy execu-

tive director. TI Automotive expects the project to

benefit employees, particularly for workers who commute from Windsor to the auto supplier’s new 140,000square-foot offices in Auburn Hills on the west side of I-75, said Frank Buscemi, global communications director. “Obviously, we aren’t looking forward to the construction process, but we do see the improvements in the infrastructure as benefiting the community as a whole,” Buscemi wrote in an email. A 2000 MDOT study showed that rapid transit and an extensive bus system would have little impact on traffic along I-75 and would not eliminate the need for a fourth lane. That’s due, in part, to dispersed residential development and because demand exceeds capacity along the corridor. Any commuter shifting to mass transit would be replaced by another motorist along I75, the study concluded. Gibbs, however, says that expanding the freeway will only induce people who otherwise avoid it by taking local roads to use it. “When you make it easier to use the roadway, people not using the roadway will go slightly out of their way to start using it, and it will reach its current inefficiency,” he said. MDOT announced the project Wednesday, two weeks after shelving an $80 million project that would have reshaped I-375 in downtown Detroit. That project was indefinitely delayed pending further study.

Spending $1 billion widening and restructuring I-75 is not a priority given an inadequate regional transit system, said Joel Batterman, coordinator of the advocacy group Motor City Freedom Riders. “Compared to other metro areas, we really don’t have a serious congestion problem,” Batterman said. “What we do have is a serious accessibility problem for the hundreds of thousands of people who don’t have access to an automobile or who are too young, too old or simply prefer not to drive.” Marie Donigan, a former state representative from Royal Oak who now is transit projects coordinator for the Detroit-based nonprofit Harriet Tubman Center, expressed disappointment that Patterson didn’t discuss regional mass transit alongside the I-75 initiative. “When I met with Clarkston residents and business owners, they said they would love for us southerners to get to a DTE concert in something other than a single family car — on concert nights, they can’t get home,” she said. “A new lane and additional safety features will never fix that. So sure, fix the road, make it safe, but there are other important transportation projects happening in 2016, projects people have been working on for more than 50 years.” Donigan said Patterson should have highlighted the Regional Transit Authority of Southeast Michigan because it will be seeking voter approval in Oakland, Macomb, Washtenaw, and Wayne counties and the city of Detroit for a tax to support regional mass transit such as bus-rapid transit. The RTA will have its financial estimates for what will go on the ballot when a draft of the master plan is released for public comment in the spring, likely May, said Travis Gonyou, the RTA’s communications manager. The plan will reflect MDOT’s I-75 project, and all other transportation and transit-related data in the region, he said, as part of the RTA’s effort to consider the area’s needs and realities. “We’re looking at all the projects out there,” he said. Still, traffic congestion is a key factor that companies weigh when deciding where to relocate offices, so the project could help lure more firms to Southeast Michigan, said Krauss. She supports the project but also would like to see better mass transit. “When companies are making a decision about where to locate and where their employees are coming from, too much traffic congestion is a hindrance to growth,” Krauss said. 䡲 Dustin Walsh contributed to this report.

BANKRUPTCIES

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The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Feb. 5-11. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. PPC Property Management LLC , 32371 Dequindre Road, Madison Heights, voluntary Chapter 11. Assets and liabilities not available. The Girliest Girl Inc., 10709 Morang Drive, Detroit, voluntary Chapter 7. Assets and liabilities not available. 䡲

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ARENA

Little Caesars domain name fetches ‘five figures’

FROM PAGE 3

Toronto-based

consultant S&E Sponsorship Group Inc. , which brokers naming-rights deals for corporate clients. Suburban Pittsburgh-based Con sol Energy Inc. is paying the Pittsburgh Penguins $4 million a year under a deal that runs from 2010-31. The nine most recent NHL arena deals, from 2007 to 2014, average $3.65 million in annual payments, according to data from S&E Sponsorship Group. Banks and financial services companies have paid to put their names on eight NHL arenas. After that are telecom/wireless companies, with four, and airlines, with three. The Red Wings and the New York Rangers at Madison Square Garden are the only NHL clubs to play in venues without a corporate name. A natural tie-in for the new Red Wings arena could be the Little Caesars pizza chain the Ilitches launched in 1959. It fuels much of the $3.3 billion in annual revenue for all the family’s holdings. A Little Caesars Arena branding deal likely would come at a discount. “If it was Little Caesars, they’re going to get the best deal for the venue in the market,” Logue said. “It would be below what they could get from another brand.” Among the criteria driving the value of a naming-rights deal are the prestige of the venue and team, the size and economic condition of the market, and how many events will be at the facility, Logue and others said. In the Red Wings’ case, two nonhockey deals already have been struck to use the new arena: The Horizon League men’s basketball tournament will be played there under a five-year agreement (which includes its first two years at Joe Louis Arena), and first- and secondround games of the 2018 NCAA men’s basketball tournament. Olympia has said the building will be used at least 180 days a year.

Naming-rights trends Naming-rights deals today aren’t just a name on the building. They include a dizzying array of elements that drive the value. “The price is based in part on the inventory given, e.g., tickets, suites, commercial TV spots, radio ad spots, etc.,” said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC. “The more assets

A metro Detroit businessman said he sold the domain name www.littlecaesarsarena.com three weeks ago to an international brokerage firm for “five figures” amid speculation about the name of the new Detroit Red Wings arena. The buyer’s identity remained unclear late Thursday. It’s possible the buyer is another speculator betting big, or it could be a clue that the Red Wings arena will be named after the Little Caesars pizza chain founded by team owners Mike and Marian Ilitch. Belleville resident Richard Williams, who also owns a small manufacturer, said he sold the domain name Jan. 20 after holding onto it for 10 years. He sold it to the domain brokerage firm Sedo, but a team throws into the deal, the potential for a higher value.” Recent arena naming-rights deals are raising the bar on what companies are willing to pay. The Golden State Warriors on Jan. 27 announced a 20-year namingrights deal with New York Citybased J.P. Morgan Chase & Co. to put the banker’s name on the National Basketball Association club’s 18,000seat, $1 billion arena slated to open by 2019 in San Francisco’s Mission Bay neighborhood. While the financial details were not disclosed, industry insiders have estimated the financial services firm will pay about $10 million-plus a year. It’s expected to beat the current top arena naming-rights deal — the 20-year, $200 million contract between British financial services giant Barclays PLC and the Brooklyn Nets (the NHL’s New York Islanders moved into the venue last year). The deal runs from 2012-32. NBA arenas tend to get more lucrative branding deals than hockey. Baseball and football, with their better TV ratings, also command larger naming-rights premiums than hockey venues. For example, New York City-based Citigroup Inc. is paying $20 million annually for the naming rights to the New York Mets’ home, Citi Field, under a deal that runs from 2008-28. And New York City-based insurer MetLife Inc. will pay $450 million from 2011-36 for the MetLife Stadium, home to the NFL’s New York Gi ants and New York Jets. That translates into $18 million a year.

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: 8 Advantage Health Centers ...............................8 Bagger Dave’s Burger Tavern..............................11 4 Blossoms..............................................................4 Cardus...................................................................77 CenterforHealthcare Research &Transformation77 8.9 Centers for Medicare and Medicaid Services ...8 College for Creative Studies.............................111 8,9 Concerto Healthcare ......................................8 Dalsey and Associates .......................................77 Detroit Metro Convention & Visitors Bureau..111, 13 Detroit Public Schools ........................................11 3 Detroit Red Wings...............................................3 20 Detroit Regional Chamber..............................2 Diversified Restaurant Holdings .......................11 Eastern Michigan University ............................117 Event Source ......................................................112

George P. Johnson Co........................................112 3 Gibbs Planning Group ........................................3 The Henry Ford...................................................113 21 Little Caesars .....................................................2 9 Macomb Mental Health Authority...................9 9 Meridian Health Plan of Michigan....................9 9 Michigan Association of Health Plans ............9 Michigan Business and Professional Association .77 8 Michigan Dept. of Health and Human Services ..8 8 Michigan Health Information Network...........8 Oakland University ............................................117 3 Olympia Development of Michigan .................3 4 Shag ......................................................................4 Special D Events................................................112 Suburban Collection Showplace.......................11 3 Wayne State University .....................................3

Williams was not sure whether the firm represented anyone connected to the Red Wings or Little Caesars. The domain name is privately registered through the domain site GoDaddy. A registration history shows that Williams was the previous owner and the domain changed hands on Jan. 20. The timing of the sale and Ilitch’s comments left Williams with a trace of seller’s remorse. “Nobody wants to leave money on the table,” Willliams, 48, told Crain’s. He would not reveal the exact sale price. An Ilitch Holdings spokeswoman had no comment late Thursday on the sale or the eventual name of the arena. Robert Snell

Two of Detroit’s pro sports teams have long-term naming-rights deals. Dallas-based Comerica Bank Inc. is paying the Ilitch-owned Detroit Tigers $66 million over 30 years for the right to brand Comerica Park in a deal signed in 1998 (when the bank still was based in Detroit). That contract averages $2.2 million annually, and doesn’t preclude the Ilitches from doing a deal for the Red Wings with a rival bank. Ford Motor Co. paid the Detroit Lions $50 million in three lump sums in 2002 to put its name on Ford Field for a 20-year term. The automaker and football team are owned by the Ford family. Detroit Pistons owner Tom Gores has been shopping the naming rights for the Palace of Auburn Hills, which Palace Sports CEO Dennis Mannion told Crain’s in January 2014 could fetch about $100 million over 20-plus years. PS&E last year hired Santa Monica, Calif.-based, Premier Partnerships to create a valuation inventory for various naming rights possibilities at the Palace. It talked to more than 200 regional and national companies to get business intelligence on feelings about the building and the region. Companies sometimes opt to put their name on a section of a ballpark rather than the entire facility. For example, MGM Grand Detroit last year signed a 10-year namingrights deal with the Detroit Lions to sponsor the new “MGM Grand Detroit Tunnel Club,” built for $2 million as a VIP experience space inside Ford Field. PNC Bank in October struck a deal to pay the Palace to add its name to the upscale Courtside Club and the Courtside Studio. Terms were not disclosed. The PNC-PS&E deal came a week after Auburn Hills-based automaker FCA US LLC bought the naming rights to the Palace’s renovated West Atrium and renamed it the Dodge Atrium.

A branding rebound The recession deflated the length of arena and stadium branding deals as companies became skittish about such public spending. The average length of new naming-rights deals in the four major U.S. pro sports leagues was 10.8

years from 2010 to 2014, down from 17.3 years during the 2005-09, according to a recent Chicago-based IEG Sponsorship Report. As the economy has improved, terms have begun to creep back up. Most recently, the average term length for 2014 deals was 13.3 years, up from 11 years in 2013, 8.5 years in 2012, 9.9 years in 2011 and 11.2 years in 2010, the IEG report said.

Why brands buy Companies buy arena naming rights for the value of the brand exposure. “A brand putting its name on the new arena can expect consistent high volumes of media exposure garnered not only locally and regionally, but throughout all of North America, as well,” said Eric Wright, president of Ann Arbor-based Joyce Julius & Associates Inc., which measures the impact of sponsorships across all forms of media. “A company would need to spend tens of millions on advertising annually to approach the sheer number of individuals a venue sponsorship of this size will reach.” Name buyers can get revenue directly back in deals, too. “Some firms will earn a portion of the naming-rights fee back by providing services such as banking, telecommunications, tech firms, etc. Beer is another great example, as they get pouring rights throughout the arena,” Rapkoch said. Companies also will be eager to get their name involved with the Red Wings project because it also involves a 50-block redevelopment around the arena of new housing, offices, retail and a hotel. “You’re looking at the potential to be associated with that entire movement, and be the anchor,” said Logue, whose firm brokered the 20-year, $20 million deal for Toronto-based Scotiabank to puts its name on the Calgary Flames’ Saddledome in 2010.

Keeping the cash Olympia keeps all revenue generated at the arena, including naming rights, under the contract signed in 2013 with the venue’s public owner, the city’s Downtown Development Authority. Naming-rights deals are not shared revenue, meaning Olympia and the Red Wings keep all of the money instead of splitting a portion of it with the NHL’s 29 other clubs. The Ilitches will pay off the construction cost from the arena’s revenues generated from ticket, concession, parking, rental fees and other cash streams. The state sold $250 million in bonds Olympia will pay back from arena revenue, and an additional $200 million in bonds a special downtown property tax already on the books will repay. The subsequently announced arena construction spending that brought the project to its current $627.5 million cost will be assumed by Olympia via private financing. A naming-rights deal of $4 million a year means nearly half the annual bond repayment obligation is covered before a ticket or beer is sold. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy, Audience Development 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 Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 , TIP LINE (313) 446-6766

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 5 , 2 0 1 6

WEEK EMU names James Smith new president

4:49 PM

astern Michigan University

regents named James Smith, president of Northern State University in South Dakota, as the Ypsilanti school’s next president. He will assume the duties July 1. Smith was named Friday, seven months after Susan Martin resigned from her position of seven years. Don Loppnow became interim president last month after former interim President Kim Schatzel left to become president of Towson University in Maryland.

COMPANY NEWS 䡲 Fortis Inc., a power and natural gas distributor based in St. John’s, Newfoundland, agreed to buy Novi-based transmission line owner ITC Holdings Corp. for $6.9 billion in cash and stock, Bloomberg reported. ITC will continue as a stand-alone company and maintain its Novi corporate headquarters. 䡲 The Detroit-based Rock Ventures family of companies launched what it is billing as a stock market called StockX for high-demand, limited-edition products, with its first focus on the secondary market for collectors of expensive sneakers. StockX is an outgrowth of an investment previously announced by Detroit Venture Partners in its newest portfolio company, Campless.com, a website that provided data to those who collect rare high-end sneakers. 䡲 The Macomb Music Theatre in downtown Mt. Clemens is in the process of being sold to the owner of the Royal Oak Music Theatre. Royal Oak-based Hanna Ventures was expected to close on the purchase last week. 䡲 A new hydrant fuel system to rapidly replenish jet fuel stores aboard KC-135 stratotankers at Selfridge Air National Guard Base is believed to be the largest construction contract ever awarded at the nearly 100-year-old airbase in Harrison Township. Spokane, Wash.-based Garco Construction Inc. was the winner among four bidders for the $32.6 million contract, managed by the U.S. Army Corps of Engineers, and expects to finish construction by late 2017. 䡲 Grosse Pointe Farms-based restaurant chain The Big Salad LLC has teamed up with Madonna University for a reality-based learning project for business majors in which students will create, design, test and market new products and business strategies for a partnering business for a semester. 䡲 The Salvation Army of Metro

ON THE WEB FEB. 6-12

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

106,000

The square footage of the planned Motor City Harley-Davidson in Farmington Hills. The new location, moving from 2.5 miles away into the former Sam’s Club site on Haggerty Road, is expected to open in August and cost $8 million to develop.

$25,000

The amount of annual support that Southfield-based supplier Lear Corp. was providing to the Detroit Police Athletic League until deciding to pull that funding over a dispute at the former Tiger Stadium site. The nonprofit plans to use artificial turf on the site for a children’s ballfield, which Lear believes diverts from the spirit of the historic site.

$1.5 M

The amount raised by the Music Hall Center for the Performing Arts in Detroit to avoid defaulting on an operating loan. The nonprofit secured the gifts through sponsorships tied to a fundraising concert. The center needs to raise $1.7 million by April 30 to not default.

Detroit announced nearly $8.1 million in donations during its 80-day 2015 Red Kettle Campaign, shy of its $8.7 million goal. 䡲 The Detroit casinos’ aggregate revenue fell by 1.8 percent to $109 million in January, compared with the same month of 2015, the Michigan Gaming Control Board said. January revenue for the three casinos was 13.1 percent lower than the revenue they reported in December.

OTHER NEWS 䡲 TV host Ellen DeGeneres joined singer Justin Bieber and Lowe’s Cos. Inc. to improve dangerous conditions at Detroit’s Spain Elementary-Middle School. Bieber, who will perform April 25 at the Palace of Auburn Hills, said he will donate a dollar from every ticket sold to Spain Elementary, and DeGeneres secured $500,000 from Lowe’s, the North Carolinabased home improvement store chain, for technology, renovation supplies and additional staff. 䡲 An investment group with members from Southeast Michigan purchased the 350-room Detroit Troy Marriott hotel. Sale price was not disclosed for the hotel, which is expected to undergo renovations in the next 12 months. 䡲 Eastern Michigan University regents voted to end an interlocal

agreement with Detroit Public Schools that helped form the Education Achievement Authority to oversee lower-performing schools in the city, but the move may be moot if a pair of school restructuring bills pass in Lansing. 䡲 AG Selden LLC, an affiliate of Midtown Detroit Inc., received city approval for the waiving of property taxes on a building at 666 Selden St. A key step toward redevelopment of three Midtown buildings into a so-called “Innovation Corridor” is expected to be the renovation of a building at 634 Selden into space for Shinola/Detroit LLC with a café and manufacturing of music equipment. 䡲 An online auction of the City Center office building in Troy fetched a high offer of $20 million from an undisclosed bidder. The 297,530-square-foot structure is being sold by Miami Beach, Fla.based LNR Property Inc. 䡲 DTX Launch Detroit, a 10-week technology startup accelerator for college students and recent graduates, has begun accepting applications for next summer’s program. An information session is set for 6-8 p.m. Feb. 24 at TechTown Detroit. The program runs from May 24-Aug. 4. 䡲 Ida Byrd-Hill, CEO of Detroitbased Weyn LLC, is heading to Silicon Valley after being accepted into the Core Labs Game Accelerator, a six-month program that helps game developers understand the business side of gaming. She is the creator of My Jewel Empire, an app-based game that teaches participants how to create financial health. 䡲 Lifestyle guru Martha Stewart, talk show host and former pro football star Michael Strahan and former astronaut Mark Kelly will headline the second Fuel Leadership event at the MotorCity Casino Sound Board on April 21. 䡲 Detroit sports station WMGC 105.1 FM is moving the show hosted by Sean Baligian, Tom Mazawey and Marc Fellhauer from midday to the 6-10 a.m. slot in place of ESPN’s syndicated “Mike and Mike.” Starting Tuesday, the 10 a.m.-2 p.m. slot will be anchored by the “Ryan & Rico” show and the 2-6 p.m. show will remain with Matt Dery and Drew Sharp.

OBITUARIES 䡲 Heidi Neubauer Jacobus, a longtime local tech community member who co-founded Ann Arbor-based Cybernet Systems Corp., died Feb. 4. She was 63. 䡲 Randy McNeil, founder of the Youth Development Commission

(formerly the Youth Sports and Recreation Commission) in Detroit, died Feb. 8. He was 66. 䡲 Bob Rossiter, the former Lear Corp. CEO who worked with the Southfield supplier for 40 years and led it through bankruptcy in 2009, died Feb. 7. He was 69. 䡲

RUMBLINGS Sources: Google seeking local R&D site for autonomous cars oogle Inc. is in the market for new high-tech space in the suburbs. Sources say the Internet giant has been scouting for locations of at least 30,000 square feet for R&D space related to autonomous vehicles. The locations that have been considered so far include Southfield, Troy and Farmington Hills. Google, based in Mountain View, Calif., leased about 90,000 square feet in the 696 Centre building in Farmington Hills last year, shortly after announcing it would be moving into about 140,000 square feet of space outside downtown Ann Arbor. The move by Google may be influenced by Michigan’s autonomous vehicle testing sites, including MCity and University of Michigan and the state’s plan to transform the more than 380-acre former General Motors Willow Run Powertrain plant into a national test site for autonomous and connected vehicles. News reports in the last couple of weeks say Google is likely to make Ann Arbor a test city for its self-driving cars. The company recently advertised to hire a project manager for self-driving vehicles in the city. Jeff Bell, the CBRE Inc. senior vice president of office services who often represents Google locally, declined to comment.

coveries ever about the universe — the existence of gravitational waves, or ripples in the fabric of space and time, in this instance from the cataclysmic collision of two black holes more than a billion light years away. The announcement came Thursday and is considered a shoo-in for a Nobel Prize. It is the work of more than 1,000 researchers from around the world, including the University of Michigan, and confirmed a prediction made by Albert Einstein in his general theory of relativity in 1915. It was the last of the theory’s predictions to be confirmed. Physicists concluded that the gravitational waves were produced during the final fraction of a second of the merger of the black holes, which produced one much more massive spinning black hole. The waves were detected Sept. 14 by the twin Laser Interferometer Gravitational-wave Observatory detectors in Livingston, La., and Hanford, Wash.

Judge won’t halt contract for Oshkosh / TACOM

Two Tiger Wangs — and a mea culpa

Work will continue for Oshkosh Defense and its $6.7 billion contract

Two weeks ago, we made a mistake — one of the strangest mistakes we’ve made. In the Feb. 1 print edition of Crain’s, we reported on a high-profile meeting between Quicken Loans and Tiger Wang, a top executive at one of China’s most lucrative companies, Alibaba. The Detroit Chinese Business Association, which hosted the meeting, told us all about it, including lunch at the London Chop House, meetings at Quicken, beer tasting at Bar Louie. But nearly a dozen phone calls and emails later, we’ve been informed the DCBA had the wrong Wang. The Wang entertained by the DBCA was not Tiger Wang, Alibaba’s chief marketing officer, but Tiger Wang, one of several country managers for Alibaba in the U.S. The DCBA said it was pitching Wang, and Alibaba, on securing business space in Detroit. But that isn’t on the docket for Alibaba any time soon. “Detroit is an important market for Alibaba’s long-term globalizations plans, however we don’t have any plans to open a Detroit office,” Bob Christie, vice president of international media for Alibaba, said in a statement. Such extreme cases of mistaken identity are rare, and Crain’s regrets the error. 䡲

for the Joint Light Tactical Vehicle with the U.S. Army Tacom Life Cycle Management Command in Warren, after a federal judge refused Friday to stop it. Judge Charles Lettow of the U.S. Court of Federal Claims denied competitor Lockheed Martin Corp.’s request for a preliminary injunction in its bid protest lawsuit, which would have halted early production work while it opposes the award to Oshkosh in court. Lockheed brought a bid protest to the U.S. Government Accountability Office in September, after Oshkosh edged out Lockheed and AM General LLC for the contract in August, but notified the GAO it would take the matter to court instead. The production contract calls for Oshkosh to deliver nearly 17,000 vehicles, plus kits and sustainment services over eight years. The lawsuit continues, however, and Lettow has asked the companies and the government to bring an update on their progress by Feb. 24.

UM researchers play role in gravitational waves find When is a millionth of a billionth of an inch a big deal? When it allows researchers to make one of the most important dis-

NASA

This rendering shows colliding black holes.

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IN MEMORIAM

Robert E. Rossiter 1946-2016

Lear Corporation Honors the Lasting Legacy of Robert E. Rossiter The Lear family mourns the passing of Robert E. (“Bob”) Rossiter, our retired Chairman, Chief Executive Ofﬁcer and President and one of the founding fathers of the modern day Lear Corporation. We extend our most profound sympathies to his family and friends and share the deep feeling of loss echoed by so many around the world. Bob served Lear for four decades and best represented a vision for excellence for Lear Corporation and the relentless ‘can do’ spirit of Lear’s employees. Lear’s success resulted from a culture Mr. Rossiter demonstrated daily and taught consistently, one of industry-leading customer service, continuous improvement, the highest level of integrity, teamwork and support for the communities where Lear does business. These Core Values are the foundation of Lear’s rich heritage and they continue to guide us today. With the deepest gratitude, respect and honor, Lear Corporation thanks Bob Rossiter for his friendship, outstanding leadership in building a world-class Company and for touching the lives of so many during his journey.